Good day, everyone, and welcome to today's Oracle Corporation Third Quarter Fiscal Year 2014 Conference. Today's call is being recorded. At this time, I'd like to introduce Ken Bond, Vice President of Investor Relations, Oracle. Please go ahead, sir.

Thank you, Kelly, and good afternoon, everyone, and welcome to Oracle's third quarter fiscal year 2014 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 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 against placing undue reliance on these forward-looking statements. And we encourage you to review our most recent reports, including our 10-Q and 10-K and any applicable amendment, 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 revisions to these forward-looking statements in light of new information or future events. Before taking questions, we'll begin with a few prepared remarks. And with that, I'll turn the call over to Safra.

Thanks, Ken. I'm going to focus on our non-GAAP results for Q3. I'll then review guidance for Q4 and turn the call over to Larry and Mark for their comments. This quarter, currency was a 1% headwind to new software license and a 2% headwind to hardware and total revenue. In addition, EPS this year was reduced by $0.02 due to a currency remeasurement nonoperating loss for Venezuela that obviously had not been included in my guidance. In Q3 of last year, Venezuela's devaluation had a $0.01 impact. Q3 for us was a solid quarter, and overall, we're pleased with our results. Core businesses were within guidance and areas of investor focus, including cloud, Engineered Systems and hardware, all delivered strong results. My comments today are generally going to reflect constant dollar growth rates, unless I mention it otherwise. Total software revenues were nearly $7 billion, up 6% from last year. Software updates and product support revenues drove nearly 1/2 the total company revenue at $4.6 billion, up 7% from last year. Q3 renewal rates were at a 4-year high, as our installed base of 400,000 customers continues to power earnings and cash flow. New software license revenues were $2.4 billion, up 5%. Looking at GAAP results by region, the Americas grew 9%, with Latin America particularly strong, and EMEA grew 3%. Asia Pacific, though, declined, with Australia and India both down. Within software, cloud subscriptions were $292 million, up 24% from last year. As our cloud business continues to ramp, bookings growth was again much higher than cloud subscription revenue growth. We've been using Fusion accounting for our own financial reporting for 2 years. And revenues for all portfolios of Fusion, including financial, supply chain, HCM and customer experience, grew triple digits. Now as our cloud business becomes more material, I want to share how cloud subscriptions affect our financials. Most obvious is that revenue is initially lower, as subscription license revenue is recognized over the life of the agreement as opposed to license revenue being taken upfront. Over time, since we are providing much more than just the software and the update, the revenue is higher. The additional value we are providing is the hardware, including our Engineered Systems, the hosting and the expertise that only Oracle can provide, while leveraging the economies of scale that we have. So while customers are paying over time, they're using and paying for more Oracle products through cloud subscription. They are paying less in total because they too can benefit from our operating synergies. Net-net, the cloud operating business is attractive for both customers and for Oracle, but especially so given the integration of Oracle hardware, software and expertise. For software, database continues to do very well, with Exadata, Exalytics and Business Intelligence software products all up more than 30%. Also strong was customer experience and/or CRM, both on-premise and SaaS, as well as our communications and project management verticals. The quarter was not dependent on any one large deal. Hardware system product revenue was $725 million, up 10% from last year. Obviously, we're pleased to have exceeded our guidance, but it's also nice to report growth. Engineered Systems grew more than 30%, and this spectacular growth is reflected not only in our hardware growth, but also in the very long list of customer wins we had against IBM. Engineered Systems now account for nearly 1/3 of all hardware product sales. Hardware gross margins are down about 2 points, because we are packing the newest systems with more memory without raising prices. Hardware support was $600 million, up 7% from last year, but down sequentially on normal -- our normal seasonal pattern. For the company, total revenue for the quarter was $9.3 billion, up 6% from last year. Non-GAAP operating income grew $188 million to $4.4 billion, up 6% over last year. And the operating margin was 47%, again. We believe we can invest for growth and make money, as we continue to see leverage in our business model. As I mentioned earlier, included in our nonoperating expense is a foreign currency remeasurement loss of $110 million related to our Venezuelan subsidiary. Were it not for this loss, EPS would have been $0.02 higher. The non-GAAP tax rate for the quarter was 23%. The non-GAAP EPS was USD 0.68, growing 7% in constant currency. The GAAP tax rate was 21%, and GAAP EPS for the quarter was USD 0.56, up 10% in constant currency. Free cash flow increased 11% to $14.4 billion over the last 4 quarters. We now have more than $37 billion in cash and marketable securities. Net of debt, our cash position is approximately $13 billion. As we've said before, we are committed to returning value to our shareholders through earnings growth, stock repurchases and a dividend. This quarter, we repurchased 55.4 million shares for a total of $2 billion. Over the last 12 months, we've repurchased nearly 360 [ph] million shares, for a total of $10.7 billion and reducing -- and reduced our share count by 5%. We've also paid out more than $1.6 billion in dividends this fiscal year so far. Stock repurchases and dividends have totaled more than 85% of free cash flow over the last 12 months, and the Board of Directors declared a quarterly dividend of $0.12 per share. Now to the guidance. And if currency were to stay where it is today, then the impact of currency would be minimal. Of course, this could change quickly. New software license and cloud subscription revenue growth is expected to range from 0% to 10%. Hardware product revenue growth is expected to range from 0% to 10%. As a result, total revenue growth on both a GAAP and non-GAAP basis is expected to range from 3% to 7% in recorded dollars. Non-GAAP EPS is expected to be somewhere between $0.92 and $0.99 in constant dollars and in reported dollars. GAAP EPS is expected to be $0.79 to $0.86. Now I want to remind you that last year we recognized an acquisition-related benefit of $269 million in connection with the Pillar Data Systems earnout. Excluding that benefit, GAAP EPS last Q4 would have been $0.74. This guidance assumes a GAAP tax rate of 21.5% and a non-GAAP tax rate of 23.5%. And of course, it may end up being different. Finally, my guidance does not take into account any additional nonoperating remeasurement losses as a result of exchange rate changes in Venezuela. With that, I'll turn it over to Larry for his comments.

Thank you, Safra. Oracle's Engineered Systems, including Exadata and SPARC SuperClusters, achieved a 30% constant currency growth rate in the quarter, while throughout the industry, traditional high-end server product lines are in steep decline. Our Engineered Systems business is growing rapidly for the same fundamental reason that our cloud applications business is growing rapidly. In both cases, customers want us to integrate the hardware and software and make it work together so they don't have to. As customers shift from -- to pre-integrated hardware and cloud computing in search of lower cost and more rapid implementations, Oracle is presented with new opportunities for leadership in a number of market categories. Five years ago, we delivered our first Exadata machine. In the next few months, we will deliver our 10,000th Engineered System. We believe Oracle's Engineered Systems are well on their way to replacing IBM pSeries as the leader in high-end computing. Eight years ago, we started to rewrite all of our applications for the cloud. Now those, Fusion ERP, HCM and CRM cloud applications are competing effectively with SaaS product specialists like Salesforce and Workday. SAP has not yet begun to rewrite their ERP, HCM and CRM applications for the cloud. This gives us the opportunity to become the leader in cloud applications and replace SAP as the leader in the overall applications marketplace. Strong sales of our cloud applications, Engineered Systems and 12c database demonstrate that Oracle is successfully exploiting the transition to the new generation of cloud computing and big data. Mark?

Sure. Just a couple of comments. Solid results for us in Europe and North America. Latin America was very strong for us, while Asia Pac was mixed. Japan had a solid quarter. In cloud, this was our best quarter ever. Excellent bookings growth, more than 60%. The booking growth more than doubled the revenue growth, as we're just winning in the cloud across all portfolios. Contract sizes are growing. More than 65 7- or 8-figure deals, with many driven by Fusion HCM and sales cloud. We're seeing good growth from acquired cloud offerings and Fusion cloud growth was even better, with HCM, sales force automation, and ERP all up triple digits. In HCM, we added 250 customers or roughly 4x to 5x the number reported by Workday. We're seeing excellent growth across all solutions, core HR, payroll and Talent Cloud, double-digit growth in Taleo and triple-digit growth in Fusion HCM. In ERP, triple-digit growth with a bigger customer base than Workday. And we're growing faster, period. In customer experience, we added more than 260 new customers with strong growth across all our solutions: marketing, sales, service and social clouds. Our 60%-plus cloud booking growth is considerably higher than salesforce.com. Our Fusion products are now in release 8, with 1,000 new features in that release, with improvements. Coming with release 9 again this summer will be a similar number of new features. So release 8, 1,000 new features, release 9 this summer with roughly the same number of features. Along with responses in BlueKai soon, we continue to gain momentum on the product side, the customer side, and you will see this in our financial performance. At hardware, 10% overall growth. We grew in every single region. We're growing while our competitors are declining. We're taking share and we created a new category in high-end computing, Engineered Systems. As Larry mentioned, soon, we will have sold more than 10,000 Engineered Systems, and our 32% growth rate this quarter is against a meaningful comparison. In fact, Q3 last year was the all-time record, at that time, for systems sold. All major Engineered Systems products grew double-digits, SPARC SuperCluster saw triple-digit growth again this quarter. Both the T server and NAS storage saw good growth, and combined with Engineered Systems, these products now make up nearly 2/3 of all product revenue and grow roughly 20%. Database continues to show strong performance and we've not yet begun to see the coming benefits of 12c, which will help drive license growth. Middleware was very strong as well, with double-digit growth, led by excellent performance in data analytics. Cloud and Engineered Systems are 2 hypergrowth businesses inside the largest cash flow company, enterprise technology. And with that, we'll take whatever questions you've got.

Kelly? Can they, please?

[Operator Instructions] We'll go first to Karl Keirstead with Deutsche Bank.

My question is for Mark. I guess the stronger momentum in Oracle's cloud software bookings and revenue growth really jumped out at me among the data points in the release. I know you gave some good color by product. Wondering if you might add a little bit more depth to help us understand what the broader drivers were. Was it Oracle doing a better job cross-selling on acquisitions? Was it the better functionality in Fusion version 7? Maybe any other factors that you think are worth highlighting.

Yes. I mean -- and the good news I'd tell you is that we're just better at almost every part of this. I mean, I really don't know how much, how -- I think we felt we knew a lot a year ago or a couple of years ago. We just know a lot more now. We're better at -- we're better from a product perspective. I talked to you a little bit about what we've got in release 8. I mean, its 1,000 new features across the entire release. So big, big jump from a product perspective. We obviously have more feet on the street than we had. And certainly not just more feet on the street, but they've been in place longer. They've been now trained multiple times. And clearly, the perception in the market now has improved a better cloud position. I think last quarter, our 35% growth was good news, and clearly, this 60% growth is even better news. So I think that will help us as well. But it is broad based, Karl. So there's no one deal in here. There's no one product line that drove it. It's really across all of our product lines. As I mentioned, our Fusion products, our organic Fusion products, really had a fantastic quarter. Fusion HCM, Fusion sales automation and Fusion ERP, all 3, very strong. And it's really true across most regions as well. I don't have a region story that would be unique to the growth rate. It was fairly consistent across all regions. So I hope that's helpful.

We'll move next to Raimo Lenschow with Barclays.

The other area that stood out this quarter was hardware. And it fits -- it's a bit puzzling, because like if I look at the IBM numbers, they are declining quite significantly. You mentioned some of the drivers there already. Can you just kind of go a little bit deeper in there and also kind of how you see that kind of -- we've been waiting for a turnaround in hardware for a while? Now all the things that you're talking are coming through. Is that kind of something sustainable? And how do you see that playing out against the competition going forward?

It's absolutely sustainable because Engineered Systems has been growing rapidly for a long time. We keep talking about it. Now the problem has -- a couple of years ago, was Engineered Systems was a small percentage of the total. Now Engineered Systems has grown up to be over 30% of the total. So there's very -- and soon, it's going to be 1/2 of the total. So that's very, very positive. The x86 commodity business, which used to be a big business when we bought Sun, has now shrunk to almost nothing. So our hardware business has gone through the transition where we've gotten out of the commodity storage business, we've gotten out of the commodity server business and replaced it with computing systems with a lot of our own intellectual property. There -- these businesses are growing rapidly and have very good margins. The reason we compete with IBM pSeries all the time head-to-head. And it's not uncommon for our systems to go -- to be several times faster than IBM. Let me give you one example, without saying who the competitor was. We replaced a system at -- in the world's largest cloud company. You guys can figure out who that is, world's largest cloud company. We delivered an Exadata system to them. They moved their application and got it live in 3 weeks and experienced 10x better performance at a fraction of the cost. This is not uncommon, when we install an Exadata machine or a SPARC SuperCluster, to have a very rapid implementation, deliver terrific performance at a dramatically lower overall cost because all of the complexity of integration is done by us, not by them.

I'd add to your comment, you asked if it was sustainable. What I'd hope you'd be encouraged by was if you looked at our performance over the past several quarters, you've seen the reflection of our execution of our strategy in hardware support. You've seen hardware support continued to incline year-over-year and sequentially in terms of its performance. We grew now at 7% in Q3, which is a reflection of what Larry described. The fact that there is higher Oracle IP directly relates to our attach rates and eventually what turns into hardware support. So we now have our core businesses that have all been refreshed, and that's why I mentioned it. Our T-Systems, our Network Attached Storage or ZFS storage and our Engineered Systems are now almost 70% of our revenue. And all 3 of those are growing. And they are gaining share. So it's sustainable. I -- listen, I can't predict the macro, but I can predict we will continue to gain share. And to add to Larry's point, we just don't compete with the server vendors, we actually do a lot of other things than just compete with an IBM. I mean, we compete with EMC, frankly, when we get into those environments, because we radically change our customer's storage requirements. If our customers got a petabyte of storage, we can -- we know how to compress that data, with Exadata, to where they may only need to use 100 terabytes. And so this opportunity for us to now change the game and the way people think about how they use their infrastructure is, in my opinion, long term, a very sustainable strategy. And we've got differentiation, and that's what we're using.

We'll hear now from Jason Maynard with Wells Fargo.

I had a 2-parter question for you. The first part is -- Larry, maybe talk a little bit about 12c and how you think it influences the hardware business next year. I know there's a -- the c can stand for cloud. But I'd be curious to get your take on the consolidation opportunity. And then as part of that, Safra made a quick comment about, I think, the renewal rates in your largest revenue line around license update and support. I'd love to get a little more color from there and how you're seeing 12c influence maintenance renewals and customers subscribing for support.

Okay. I'll start with 12c in terms of its rate of uptake there. There are 2 key aspects of 12c, one that came out with the initial release, which is the multi-tenant feature, that's why it's called 12c for the cloud. It literally takes any application that you've got, any Oracle application you've got and makes it a multi-tenant application. Even companies like salesforce.com, who we're both a supplier and a -- to salesforce.com and a competitor with salesforce.com. I just recently got a note from Marc Benioff who's excited about bringing in Exadata and 12c and making that the basis of salesforce.com's cloud computing infrastructure, that they put their application on. So we're seeing adopters with very, very high standards in terms of having to supply millions of users reliably and cost effectively in the cloud, talk about moving their entire business to 12c and Exadata. That's just the tip of the iceberg, these hyperscale companies. We think virtually all of our customers are on their way to moving to 12c. Now some -- the early adopters, and then there's the rest of the guys who come down on -- down the road a bit later. But we think it's very attractive to our conventional customers and to hyperscale customers like Salesforce and others. I'll let -- the second piece is the in-memory piece. And we think that comes out this summer, comes out June, basically, June, July, August, something like that. And we think that's going to accelerate the adoption of 12c a lot. I think the performance gains there are so dramatic, we think people will -- even the people who like to wait a while for the new features and make -- maybe wait 6 months or 1 year before they try it out, there are people trying it out now -- hundreds of people trying it out now before it's even released. So we think this is a unique feature in terms of being able to have a huge payoff right away. And we think 12c will be the most rapidly adopted new release in many, many years for those 2 reasons, in-memory and multi-tenancy features. I'll let Safra comment about the renewal rates.

The renewal rates in database are always extremely strong. Folks make really long-term bets on our database. And because we just continue to provide the kind of innovation Larry's talking about, they are -- they always renew. I mean, it doesn't make sense not to. They get just so much enormous value. We continue to invest in the database, as Larry just mentioned. And as a result, renewal rates remain extremely, extremely high for the database, for all our products, to be frank. But database is always great. And it remained again that way this quarter and all year.

We'll hear now from Heather Bellini with Goldman Sachs.

Mark, I was just wondering if you could elaborate a little bit more on the comments you made about modern Middleware and data analytics. If you could help highlight your strategy for us, as well as if you can go over with us your competitive positioning.

Sure. Yes, I mean, I think as I mentioned, the Middleware growth was strong. Underneath it, data analytics was very, very strong. Our growth in data analytics was -- in the tech part of data analytics was greater than 40%. So it's a big number now. We've done several things. One, we've seen a couple of shifts. Well first, we've added a lot of salespeople. Second, with the addition of our Endeca product line, more addition of Exalytics, we brought a lot of new technology to the space. We've also seen the competitors that we compete with shift. Traditionally, Oracle would see BusinessObjects and Cognos, and we actually see Tableau a lot more than we see those 2 at this point. And frankly, I think the integration work we've done within Endeca with Exalytics has paid off. The sales people we brought have paid off. And you see it show up in our results. There are other things in Middleware, Heather, that performed very well as well. But of materiality, that's probably the one to call out, which is data analytics.

If I could just add one thing to that. With the release of Oracle in-memory database with 12c, our data analytics performance is going to increase by more than a factor of 10, some cases it's up more than a factor of 100. So we think this summer, with 12c, our data analytics business is going to take off. And of course, the intention is to sell a lot of those data analytics products in the cloud as opposed to on-premise. We will give customers a choice, but we'll offer that data analytics in the cloud, data analytics on premise. It's a big push for us. As Mark said, we see new competitors and an opportunity, and once again, to move to the front of the pack, to become the #1 data analytics company in the world. We think the new competitors are small and innovative. The old competitors have a lot of market share, and we think that market share is there for the taking as long as we can deliver high-quality technology, and that's what we'll do this summer.

I should have mentioned that, too. Larry triggered that thought. We did announce some BI offerings in the cloud in the quarter. And so while not yet a material part of our revenue, an awful exciting offering to add to everything else that I and Larry mentioned, in terms of what we're bringing to the market. So we're excited about the space. We think there's opportunity for us to gain material share here.

And Rick Sherlund with Nomura has our next question.

For Larry, can you update us on your progress in delivering your infrastructure stack in the cloud delivered as Platform as a Service? And are there any metrics you can give us on the traction that you're seeing there?

Yes. Well, it's available on a limited basis right now. It's going to -- it's going to be available in both Infrastructure as a Service and Platform as a Service. We've done all the pricing. The Infrastructure as a Service, the new price pretty much equivalent to Amazon, that really -- we think that's a commodity business and not in any way a bad -- in a bad sense. To play that game, you have to be -- we're going to have a compute service and a storage service. The storage service is already out, the compute service is going to be released in NAS shortly. And that will be very competitive, we think, with Amazon or anybody else in this business. The big differentiator for us, is along with Infrastructure as a Service, we have a very strong Platform as a Service offering coming out with our infrastructure. And that, of course, our 2 major platform plays. In Middleware, it's Java and the database, of course, it's Oracle. We think that gives us a unique pair of differentiators in the Infrastructure or Platform as a Service as taken together. And we think that's what our customers are going to do. Customers are going to come to us and buy our platform in the cloud, and buy infrastructure in the cloud, and move a lot of their existing applications off -- out of their own data centers into our cloud and they suddenly -- and they can do that without having to change their applications at all. So you can move their applications intact to our cloud and get all of the cost benefits, all of the efficiencies of scale, and they don't have to change the apps at all. We think that's a unique proposition that we offer our customers. And again, delivery time is all this summer.

That will be from Phil Winslow with Credit Suisse.

Just want to build on that last question on the cloud. At OpenWorld, you guys talked about some metrics in terms of Fusion Applications in the cloud and the percentage of customers that are choosing cloud-based deployment of Fusion. Wondering if you could comment on just what you've been saying over the past few quarters there. And then also, just competitively, with Fusion in the cloud, what are you seeing out there, versus Workday, versus salesforce.com? And now that Fusion apps and Fusion apps in the cloud have been out there for, obviously, multiple quarters?

Well, I'll take -- I think what you asked was the deployment of Fusion on-premise versus cloud. I think that's what you asked, and it's cloud, cloud, cloud. So I mean -- let me repeat it one more time, cloud, cloud, cloud is generally where Fusion is deployed. So we've had great success with it. We have great adoption. I think one of the things that's important -- I've seen some opinions. I won't credit a source, there are growth rates -- these exciting growth rates we're describing are coming from acquired properties as opposed to Fusion activities. And I want to make sure I'm clear, Phil, to refute that. Now, it doesn't mean -- I love acquired properties too, so I love them all. But I just want to make sure it's clear in the numbers that our Fusion products are growing very fast, faster than our overall growth rate. Now as it relates to your conversation about Workday, I tried to be as transparent as I could be. I got -- we've got the good fortune that they're transparent in most cases. Although I didn't get to see their customer list this quarter. In previous quarters, I hear their numbers, and we just have more new customers than they do. So it seems like a good metric to me, and we'll continue to see as we move going forward. But we're very comfortable competing with them. We felt very good about release 7. As I told you, we're now in release 8. We're very comfortable with that product. We've gotten our sales organization trained, and we're very comfortable competing with them, and of course, we're growing off a bigger base than them. With Salesforce, we do all of what Larry described, we compete with them. They're a customer at the same time. But in sales automation, were competing with them. We had very strong growth in Fusion sales auto in the quarter. And we're very comfortable with also our position in service cloud. Now that's right now acquired product. But we feel very good about both, but we've added now also the capability in marketing. So we bought a B2B marketing, a leading market automation company B2B in Eloqua. We supplemented that with the leading B2C company in Responsys. And we've now announced our intention to acquire BlueKai. So we believe we have a leadership position in marketing automation, leadership position in service automation. We're on the attack in sales automation, although clearly #2 to Salesforce at that point. But we believe the ecosystem we've now laid out is second to no one and the leading position in the marketplace. And I think it's showing up in our results.

And that will be from Kash Rangan with Merrill Lynch.

First, Mark, any tweaks -- what are the things that are working successfully from a sales execution, go-to-market standpoint that you plan on emphasizing as you look at your business next year? And one for you Safra. Deferred revenues, down sequentially. Can you expand upon what might have contributed to that?

I'll start and let Safra finish. I mean, we've obviously added a lot of capacity. We feel very good about the capacity we've added. We're very focused on those people being very productive. So what you see us investing a lot now is training. I probably mentioned training 3 times during this call. And so as our product set continues to get -- just continues to get better and better and better, and our salespeople now have more time in seat, training is a big deal. Now we will add people next year, as Larry talked about some exciting stuff we now have in platform and in infrastructure, so you'll see us add salespeople. And as we start to compete with again a new competitor, as it relates to platform and infrastructure, you'll see us do some supplemental adding in some other places, but a real keen focus, Kash, on productivity and making these people -- because you can imagine towards -- I guess, the size of our sales force, we have billions of dollars of revenue associated with the productivity gains we can make with the capacity we now have in this company from a sales perspective.

If I can add one thing, I mean, just to scale it. As we roll out Platform as a Service and Infrastructure as a Service, we will have specialists selling nothing but Platform as a Service and nothing but Infrastructure as a Service. And we'll have someplace between 500 and 1,000 of them that we're going to add next fiscal year, starting with the class. This is around the world. So again, we go back to this thing that we have a new set of competitors, and we need specialist sales teams that are used to competing with Amazon, other specialist sales teams that are used to competing with IBM pSeries. It's a different sale to a different customer quite often. And so we have -- we're lining up against all of our new competitors and making sure we have sales capacity, as well as a competitive product.

Okay. Kash, the Q3 deferred revenues are following the exact same seasonal pattern that they always follow, including last year. So though they're sequentially down, that's really because Q4 is the peak for support renewals, et cetera. And it always goes down from Q2 to Q3 sequentially. I do want to remind you, of course, that it is up over $200 million over the same quarter last year. And that's really what you should be looking at. There's nothing going on as far as burning down or whatever. It's simply the same thing we have every Q3, where it's just as it burns down the big Q4 renewals, and it shows up right there in that line. That's it.

That will come from Macquarie's Brad Zelnick.

Larry, big data is obviously a huge opportunity for Oracle, given your strength in database and traction with Engineered Systems. But from an apps perspective, can you talk about the opportunity to differentiate and drive growth by leveraging big data within the apps themselves? And do you see big data as more of its own category? Or a feature of next-generation applications?

I think it's an underlying category. For example, there's no doubt that in-memory databases allow us to analyze large amounts of data more quickly. The fact that our Exadata machines have multiple tiers of caching. We now not only have DRAM and rotating storage, we have a lot of flash memory that we have to manage. It allows us to manage huge amounts of -- huge databases, multi-petabyte databases, and deliver very high performance. So no, we think of big data as an underlying set of technologies. For batch, if you want a big data batch process, the open-source product Hadoop is a very good product, if you're doing batch processing. If you're doing big data realtime processing, then we think the Oracle Database is by far and away, the best manage -- best technology for managing realtime processing of big data. We think this is a category where we're already the leader. And in fact, we're gaining on our competitors. If you look at all of our database competitors, both relational and non-relational databases, we're taking share both on the SQL area and we're growing a lot faster than the no-SQL area. So we're very comfortable that the improvements we've made to our database will allow us to prosper in the big data era. But again, we think of it -- and of course, any application then written on top of Oracle can exploit that data and that application becomes enriched. So our telecommunications billing system, which has to manage huge amounts of transactions with millions and millions of customers, be able to figure out whether to cut off a phone call when someone exceeds their bill and do all of that realtime, that's realtime processing of huge amounts of data by a phone company. Those are the kind of applications we provide that almost no one else can provide.

And our final question today will be from Brad Reback with Stifel.

Safra, year-to-date, CapEx spending's down about 9%. I know in the past, you've been fairly adamant about not needing to really ramp up CapEx like a lot of your competitors have had. But given the really strong 60% bookings growth in cloud, has any of the thinking changed there?

Remember, we have enormous scale that we have not fully tapped. We've been making investments this whole time. And so there'll be -- we will continue to invest as we do now. We have obviously some visibility into our contracts that we've signed. But we have so much scale that we've been investing in for years, much of it still available. And so we're very comfortable where we're at right now. And we budgeted to it, and I don't think you'll be seeing any massive gapping just because our size is so large. And because we have our own hardware, we have our own systems, we can really thoroughly optimize for our applications with compression and all these other things that other folks just don't have the benefit and luxury that we have.

Yes. We think, with our Engineered Systems and our data compression technology, we can deliver the same storage and the same compute capacity of our competitors for a lot less money. I mean, that's what we're selling -- we're selling this technology to our customers. That's our pitch. And we think we can build our own data centers just as efficiently. And that's why I don't think you'll ever see our CapEx approach our infrastructure competitors in the cloud.

No. No.

Thank you. A telephonic replay of this conference call will be available for 24 hours. Dial-in information can be reached in the press release issued earlier today. Please call the Investor Relations department with any follow-up questions from this call. And we look forward to speaking with you. Thanks for joining us today. And with that, I'll turn the call back to the operator for closing.

Again, that will conclude today's conference. We thank you, all, for joining us.