Oracle Corp (ORCL) — Q1 2023 Earnings Call Transcript

Thank you, Josh. Good afternoon, everyone, and welcome to Oracle's first quarter fiscal year 2023 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. Additionally, a list of many customers who purchased Oracle Cloud services or went live on Oracle Cloud recently will be available from the Investor Relations website. On the call today are Chairman and Chief Technology Officer, Larry Ellison; and CEO, Safra Catz. 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 being 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, 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 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'd like to turn the call over to Safra.

Thanks, Ken, and good afternoon, everyone. We had an excellent quarter with total revenue growing 23% in constant currency and beating the high end of our guidance. We also had a great organic quarter with total revenue growing 8% in constant currency. This was on top of a fantastic Q4 last quarter. And as you can see from the numbers, we continue to get excellent returns on the investments we've been making over the last few years in products, infrastructure and our sales organization. We are seeing company-specific and product-specific momentum. We continue to expect organic revenue growth and our cloud business will accelerate substantially in FY '23. The currency headwind this quarter was much higher than the 3% headwind that was present when we gave guidance. It was actually 6 points, even though due to rounding, it may look like 5%. And that's a currency headwind to total revenue; it was in fact 6 points. And yet we still exceeded our forecasts on a reported basis and we beat our constant currency revenue forecast by $200 million. We saw similar currency headwinds in EPS which had an $0.08 negative effect, much worse than the $0.05 headwind present at the time of guidance in June. It's because of the significant and volatile swings in currencies that I always discuss our results using constant currency growth rate, so that you have a clear view of the business as we manage it. Now to the numbers and there's a lot here. I'm going to go over the revenue results, including Cerner, and then some of the results, excluding Cerner, which many of you are focused on. I hope you're pleased with our expanded disclosure this year. So total cloud revenue, that’s SaaS and IaaS including Cerner, was $3.6 billion, up 45% in USD and up 50% in constant currency with IaaS revenue a smidge under $900 million and SaaS revenue at $2.7 billion. Total cloud services and license support revenue for the quarter was $8.4 billion, up 20% in constant currency driven again by fusion autonomous database and our Gen2 OCI. Application subscription revenues, which includes support were $4 billion, up 37% in constant currency. Again, Q1 cloud application revenue that’s SaaS was $2.7 billion, up 43% in USD, up 48% in constant currency. Infrastructure subscription revenues, including support were $4.4 billion, up 7% in constant currency. And to be clear, that's actually 7% organic growth with no contribution from Cerner. Q1 cloud infrastructure or IaaS revenue was $0.9 billion, up 52% in USD, up 58% in constant currency, again, with no contribution from Cerner. Now, the revenue results excluding Cerner. Total cloud revenue, that's IaaS plus SaaS, excluding Cerner was up 29% in constant currency at $3.1 billion. Organic revenue growth for both IaaS and SaaS was significantly higher than last quarter. Application subscription revenues, excluding Cerner were up 12% in constant currency. Our strategic back office cloud applications now have annualized revenue of $5.8 billion and grew 33% in constant currency, including fusion ERP, which was up 38%. NetSuite ERP was up 30% and Fusion HCM was up 26%. That means that SaaS revenues, excluding Cerner were $2.2 billion, up 20%. Infrastructure cloud service revenue was up 58% in constant currency. Excluding legacy hosting services, infrastructure cloud services grew 70% with an annualized revenue of $3.2 billion, including OCI consumption revenue, which was up 103%. Cloud@Customer consumption revenue was up 92%, and Autonomous Database was up 56%. And it's not only that our growth rates are higher than our hyperscale competitors; maybe you'd expect that because we're the newest and thus the smallest, but our growth rates are increasing as we get bigger. Our second generation cloud launched after our competitors' first generation cloud, and so we've been able to architect it more performantly, more securely and more sustainably. As a result, as more companies test our cloud, they discover how much better it is on price, security, performance and sustainability. In addition, we now have cloud regions in more countries and cities than AWS and Azure, giving our customers more choices for their sovereign data. And finally, many of our customers appreciate how flexible our service and business model is. All of this is amazing our customers, and I can't wait to share the stage with some of them at Oracle CloudWorld in October. Now, to license revenues, including Cerner, were $904 million, up 19% in constant currency led by database options and Java. Total database revenues were up 3% in constant currency. So all in, total revenues for the quarter were $11.4 billion, up 23% in constant currency, excluding Cerner revenue of $1.4 billion, organic revenue was up 8% in constant currency. In addition, I want to point out that since we no longer operate in Russia, this negatively affected revenue by over 1 point of growth. Had we still operated there, actually, our growth rate would be over 9% this quarter. Operating expenses were up 34%, mainly due to adding in Cerner's expenses, and the mix of our business. The gross margin for cloud services and license support was 81% and the associated gross profit dollars grew 15% with Cerner and 7% excluding Cerner. In fact, the gross margin percentage on IaaS increased dramatically in the quarter. Non-GAAP operating income was $4.5 billion, up 10% from last year. And I expect that we'll see strong operating income growth again in Q2. The operating margin, including Cerner was 39%, which is lower than in the past since we only just began to integrate Cerner in the quarter. As we drive Cerner and its profitability to Oracle standards, and continue to benefit from economies of scale in the cloud, we will not only continue to grow margin dollars, but also grow margin percentages significantly. The non-GAAP tax rate for the quarter was 19.4%, slightly above the guidance rate and non-GAAP EPS was $1.03, unchanged in USD and up 8% in constant currency. GAAP EPS was $0.56, down 34% and down 26% in constant currency, that's our GAAP EPS. Over the last four quarters, operating cash flow was $10.5 billion and free cash flow was $5.4 billion with capital expenditures of $5.2 billion. For the quarter, operating cash flow was $6.4 billion and free cash flow was $4.7 billion with capital expenditures of $1.7 billion. At quarter end, we had $11.2 billion in cash and marketable securities. In the short term, deferred revenue balance was $10.5 billion, up 11% in constant currency. The remaining performance obligation or RPO balance is $16.7 billion, up 62% in constant currency due to strong bookings as well as the addition of Cerner. However, I would note for you all that the organic RPO growth accelerated to 22% in Q1 from 17% in Q4, approximately 49% of total RPO is expected to be recognized as revenue over the next 12 months. As we've said before, we're committed to returning value to our shareholders through technical innovation, strategic acquisitions, stock repurchases and prudent use of debt and our dividend. This quarter we repurchased 7.5 million shares for a total of $559 million. In addition, we paid out dividends of $3.4 billion over the last 12 months, and the Board of Directors today declared a quarterly dividend of $0.32 per share. Our fundamental principle is to grow non-GAAP EPS, while substantially increasing cloud revenue. Given our increasing confidence, we will continue to prudently invest as there is strong demand for our cloud services. Now, let me turn to my guidance for Q2, which I will provide on a non-GAAP basis. Now we are assuming the currency exchange rates remain the same as they are now. That's not a prediction; that's just giving it to you as a translation as it currently is. In that case, currency should have a 5% to 6% negative effect on total revenue, and at least a $0.07 negative effect on EPS in Q2. As I say every quarter, the actual currency impact may be different by quarter end. My EPS guidance for Q2 assumes a tax rate of 20.5, which is up from 19.2 last year. However, one-time tax events could cause actual tax rates for any given quarter to vary. So now to guidance. Total revenues for Q2, including Cerner are expected to grow from 21% to 23% in constant currency, and are expected to grow from 15% to 17% in USD. Total cloud growth, again including Cerner, is expected to grow from 46% to 50% in constant currency and 42% to 46% in USD. I expect that total cloud growth for the fiscal year excluding Cerner will be above 30% in constant currency. Non-GAAP EPS growth is expected to grow between 1% to 5% and be between $1.23 and $1.27 in constant currency, again due to currency headwinds, non-GAAP EPS is expected to decline 1% to 5% and be between $1.16 and $1.20 in USD. As I've said before, Cerner will be accretive to earnings this year, including in Q2. And with that, I turn it over to Larry for his comments.

Thank you, Safra. Last quarter, Microsoft and Oracle announced that we had built a high-speed interconnect between Microsoft Azure Cloud and the Oracle Cloud. The purpose of this Multi-cloud interconnect is to enable Azure customers to directly use the very latest Oracle Database technology, even if their application is running in Azure. In other words, customers can now use any combination of Microsoft and Oracle Cloud services together as if they were in one cloud. That was last quarter. This quarter, Oracle is making the latest version of our MySQL HeatWave database available in Amazon's AWS cloud. Multiple published customer benchmarks have shown that MySQL HeatWave delivers 7x better performance than Amazon Redshift, 10x better performance than Snowflake and up to 10x higher throughput than Amazon's own MySQL database called Aurora. The Multi-cloud era has begun. Customers are already buying applications and cloud infrastructure from several different providers, including Microsoft, Amazon, Salesforce, Oracle, and others. Our job is to give our customers the ability to choose application and infrastructure technology from multiple clouds and then have those different clouds coexist and interoperate gracefully. Multi-cloud interoperability is an important step in the evolution of cloud computing. Multi-cloud interoperability is one of the reasons our infrastructure business is booming, growing over 50% in USD and almost 60% in constant currency. We expect Oracle's total cloud business to exceed a $20 billion annual run rate next year. Now I'll highlight some of our big new infrastructure wins in Q1. Overall, we added about 1,000 new paying customers for infrastructure in Q1. Let's start off with NVIDIA. NVIDIA chose OCI to build their SaaS products for data scientists for machine learning and inferencing along with moving their entire healthcare platform called Clara to OCI. Mosaic has developed a state-of-the-art neural network on OCI, and they picked OCI because OCI outperformed all of the other clouds when running machine learning and AI. The Avis car rental company is moving their entire Oracle estate, along with their Oracle applications, to OCI. The Chicago public schools are closing data centers and migrating their Oracle estate to the Oracle Cloud. Tanium, a leader in cybersecurity, chose Oracle Cloud Infrastructure to help safeguard their customers with industry-leading security. OCI deployment will be a part of its multi-cloud strategy and delivering its SaaS platform Tanium as a service. Cigna, a healthcare company, is migrating their existing Exadata on-premise to the Oracle Cloud. Additionally, their SaaS ERP system is being integrated with Oracle Cloud Digital Assistant. Tennessee and Oklahoma are both new government cloud customers. This was the first group of customers who were all from North America. I just finished my list beginning with NVIDIA and North America and Tennessee and Oklahoma in North America. I'm now going to move to wins in Latin America. AT&T in Mexico is the first case of any telco to move their entire Amdocs stack to a cloud and they're moving their Amdocs stack to OCI's New Mexico cloud region. Avianca, one of the largest airlines in Latin America, will move all of their workloads to OCI. Entel, another telecom, in fact, the largest telecom in Chile is now moving all of their critical workloads from AWS to OCI. Banco Digimais, a fintech bank in Brazil, is moving their entire on-premises VMware estate to run in OCI 100%. Serasa Experian, a financial services company, is moving AI training for OCR biometrics and facial recognition to OCI. Bionexo, another infotech company in the healthcare business, serving 15,000 hospitals and clinics, is migrating their data lake and their data warehouses from Amazon Web Services to OCI. Santander, a large bank, is moving all of their databases from mainframes and Oracle databases to the Oracle Exadata Cloud Service. Unimed, also a healthcare insurance company, is beginning the migration of all of their applications and databases to OCI. Sky Mexico, the largest satellite paid TV producer in Mexico, will move all of their data lakes and all of their data warehouses to OCI in the New Mexico region. That's Latin America. In JPAC, and maybe this is the most interesting customer I'll talk about, NRI, Nomura Research, is continuously expanding their dedicated cloud region. In Japan, they've just added a second data center. The Oracle Cloud in Japan, the NRI Oracle Cloud in Japan already runs 50% of all transactions on the Tokyo Stock Exchange. That's a mission-critical application. ICI Bank, Financial Services is the new customer in JPAC, Japan, Asia Pacific. Hitachi Construction in Japan is moving their critical manufacturing systems to OCI. This timing technology, an infotech company, is the new customer in Asia Pacific. Daiichi Sankyo is the first big pharma in Japan that is moving their database workloads to the cloud. Pacific International Lines, the big transportation company, is the new customer in Asia Pacific. Li & Fung, a trading company, is another new customer; again, eventually, we had about 1,000 new customers this quarter in OCI. Another fintech company is again another big new customer for us in Asia Pacific. H2O Retailing is moving their entire VMware on-premise VMware estate to OCI. They're one of the largest retailers in Japan. Again, the Asian Development Bank is a new customer in Asia Pacific. We have a bunch of new customers in OCI all over the world. That's JPAC. Now let me move to EMEA. Dojo, a financial services company, chose Oracle Cloud Infrastructure for their payment platform because their benchmark showed that the Oracle Cloud OCI is more secure and has better availability than the competition. Al Rajhi Bank, the world's largest Islamic Bank, is in the process of moving all of its applications and databases to the Oracle Cloud. Unilever is integrating their Oracle Fusion Applications with the autonomous database to build a next-generation super secure, super agile platform for Unilever. Atlantic Financial Group, an infotech company, hosts core banking functions on the Oracle Cloud Infrastructure, which to many of their banking customers. Centrico, an infotech company, is moving all their workloads from their old data centers to a combination of OCI using OCI's multi-cloud services to access other clouds. Mio, a big telephone company, is moving over 300 Oracle Databases to the Oracle Exadata cloud. The government agency is migrating all databases off their IBM mainframes and UNIX systems to the Oracle Database and to the Oracle Cloud. And I'll close with the U.K. Home Office, the department is moving to the Oracle Gen2 Cloud Infrastructure with a focus on dramatically improving both security and reliability. With that, I will turn it back over to Safra.

Thank you, Larry. Josh, if you could go ahead and queue up the audience for questions.

Thank you. Hi, Safra and Larry. A little surprised to see your strong results here when most software companies, other than some of the pure security names really faltered against the macro backdrop. And frankly, you just didn't hear. But I want to focus the question on one area that we've gotten the most questions on since we launched coverage, and that's on organic constant currency cloud services growth. It looks like you came in above the high end of your guidance for the quarter and you reiterated Safra that you expect greater than 30% growth for the year, which doesn't seem like a stretch like it did when you gave that first. We understand the way a subscription model works, but we obviously don't see everything that you see. Can you give us some more color around what's driving the results this quarter and what gave you the confidence in this outlook for cloud services? Was it previously contracted revenue that's just starting to ramp up with an expected increase in consumption, or something else or all the above?

So let me tell you, it is all of the above. But let me tell you what's really happening down at each customer level. When customers try us for some reason, whether they're using Fusion and they start using OCI for their own applications, or they hear really from word of mouth and from a real need to run some of their Oracle workloads or otherwise, when they give a try to Gen2 OCI or to Fusion, for that matter, what they find is that it is phenomenal. Our Gen2 cloud is so much better than what they're used to and is so much more flexible, and can be much more local, gives them so many more opportunities to really match to their needs. But they're overwhelmed by the technical capabilities of our cloud and how great it is. So what happens is, they may start small, and then they accelerate in their consumption. And they sign larger and larger and more significant contracts. As you see in our RPO, there's a lot already contracted and that's without us adding a single additional customer or expanding the use. But we have, as I said, so much company-specific or product-specific momentum that as customers discover us, use us, give us a chance, they become honestly overwhelmed by our capabilities and how much less expensive, more flexible, more secure and how differently we’re architected so that we're also more sustainable for them. And so it's just incredible company-specific, product-specific momentum. And nothing really has to happen for us to continue to do very, very well here. And whether they're trying to save costs or expand growth, we help them do that in an incredibly flexible way and super, super cost competitively for them.

Yes, let me just add one sentence to that. We are the only infrastructure company that builds enterprise scale applications. As a result of building these enterprise scale applications, we have made our infrastructure much, much better. So we not only provide infrastructure and sell infrastructure, we consume the infrastructure ourselves. I think that gives us certain insights as to what we need to build at the infrastructure layer to make our application secure, reliable and so on. And easy to use and make people productive. That's why... I think that's why what customers are discovering when they come to our cloud is that they're more productive, the system runs faster, it's more secure, it's easier to use, all of that. And that's what gives us confidence that we can build the next generation of healthcare applications because we do both. We do both applications, enterprise applications and infrastructure. And we're the only one.

So it sounds like the expansion within your customer base of cloud services is becoming or has become more predictable. And that makes a lot of sense. Thank you.

Thank you, John. Next question, please.

Hey, thanks for taking my question. Congrats on another strong quarter of organic growth. Now obviously, Oracle has been delivering accelerating growth in its infrastructure and database businesses for multiple quarters now. Safra, can you give us some more color on just what the drivers are behind this and how sustainable they are, be it BYOL, database add-ons, Autonomous Database, etc. And then a question for Larry. Obviously, the expanded partnership with Azure announced in July received pretty universal positive feedback. And you just announced today that Oracle's MySQL HeatWave will be available on AWS. How do you think about these multi-cloud partnerships impacting the already positive existing momentum in your database business going forward?

I will do that. One concern that many have had for years is whether Oracle can maintain its leading market share in the database sector. It's evident that if our databases are accessible across multiple clouds, the answer is clearly yes. If our databases aren't available in various clouds, then it raises questions about our ability to sustain this only within our own cloud. We've chosen to provide our top technology across multiple clouds, which gives customers options; they can utilize it in OCI or use MySQL HeatWave on AWS. They have the flexibility to choose between options like Amazon's Aurora or Oracle's MySQL HeatWave, as well as between Snowflake and the Oracle Autonomous Database. As long as we are present in multiple clouds, we will remain strong and highly competitive against other companies and technologies.

And answering for you on how is the Oracle database doing? Well, you saw we had an amazing Q4. And in Q1, again, the Oracle database is what people choose if they have real work to do. It's very secure. It's very performant and they know it has so many capabilities that you don't have to have 16 different databases to get a complicated job done. You can do everything with it in different ways. And the database options are continuing to be acquired. Many more customers still want enterprise agreements so they can BYOL, bring your own license to the Oracle Cloud. Our technology remains unbelievably strong with Java. And so the business overall, our tech business remains incredibly strong, even though it's enormous. And for many of the reasons, I think there was a period a few years back when folks were thinking they would try lots of other things and things that were maybe more 'fashionable'. I think they've realized that actually getting your job done securely, performantly, sustainably, and also really least expensively is to actually use our products to do that. And so they've been doubling down and committing and bringing those workloads to the Oracle Cloud again, propelling just incredible momentum, whether it's Cloud@Customer, dedicated regions or our public cloud.

Thanks, Phil. Next question, please.

Thank you very much for taking the question and congratulations on the strong quarter. Larry, Safra, historically, in increasingly difficult economic conditions, organizations focused on what drove revenue growth or immediate savings and thus products like Salesforce automation, with similarities received funding while back office projects were delayed. What is different this time, both from an ERP point of view and an HCM point of view? What's going to drive the sustained growth and strength that you're expecting in Oracle's strategic back office? Thank you.

Sure. So let me start by since I'm also the Principal Financial Officer, if I would say that in another company, I'd be the one making the decision to buy Fusion ERP and Fusion HCM. And what is absolutely clear is that saving money in the back office is basically automatic when you use our products, when you move from especially from our competitors' products, which are so expensive to maintain and run. When you move to Fusion, you can save so much in your back office that you can use that money to invest in things that help you extend the differentiation of your business. Now, today's the 12th of September. In fact, I signed off with our auditors on Friday, but we don't do our earnings on Friday. So we had to wait all the way till Monday. Now, no other companies report on the 9th or the 8th. In fact, most companies were reporting their July quarter last week. And here we are announcing an August quarter. Well, what does that have to do with costs? Well, I can tell you that when you are in a position to know your results, and to announce them, and to file your earnings with the Securities and Exchange Commission, you've not only saved time, you've saved millions in process dollars, and in the way you run your business. And I just want to point out that we were able to do this after acquiring in the quarter, Cerner by putting their data from their old system into Fusion and consolidating it in Fusion. So we actually believe that one of the most important ways to drive business transformation is to move to a much more streamlined cloud product than running old back office systems.

Let me just add one thing. I’m sorry, let me add one thing, which is Safra addressed the issue of using modernizing back office to save money. Let me tell you another way you can save money. I personally have been talking to some of Amazon's most famous brands that are running at AWS. And the AWS bill is getting very large, and they can save a huge amount of money by moving to OCI. And we expect next quarter we'll be announcing some brands and companies moving off of Amazon to OCI that will shock you.

I'll stop there. Amazing.

Thank you, Mark. Next question, please.

Great. Thanks. And I'll echo my congratulations. And Larry, thanks for all the color on the OCI wins. I was hoping to get an update on your go-to-market strategy for OCI when it's clearly becoming a more critical growth driver for you guys. Is there a dedicated Salesforce? Are you doing more bundling of OCI with other offerings? Just hoping to get an update on how you're going to market and what kind of resources you're putting around us?

Yes, because with 58% growth, it certainly seems like you're now gaining share in the cloud infrastructure market. It's a big market to go after. So any color on that would be helpful.

Let me start, Larry. Absolutely.

So, one of the enormous changes we made in the past year, year or so, is that we've invested in a lot more engineering talent in the field to help our customers bring over workloads. And once we've shown them how to do it, and the enormous benefit they get by doing it, this is the ultimate sales accelerator because there's nothing like the customer who realizes that our solution is just so much better and so much less expensive for them. And you have to do that often, by let's say, priming the pump by sending engineers, field engineers who can help the customers move those workloads, and that's really propelled what's been going on in our OCI Cloud. Larry, you go ahead. Yes, I think exactly what Safra said, and I'll add what I just repeat what I said earlier. The amount of money these huge companies, these very famous companies spend with Amazon is kind of staggering. I mean, everyone assumes, hey, I move to the cloud, and I'd save a lot of money. It depends which cloud you move to. And Oracle is much less expensive than the competition. One, partially because we're faster, which time is money when you're paying by the hour. So again, I'm going to repeat, we're talking to the most famous brands that are running at Amazon, and some of them are going to be moving very soon.

Exciting. Thank you.

Thank you, Derrick. Next question, please.

Excellent. Thank you, and congrats on the solid execution. Larry, we've heard of some very exciting things happening with Cerner pretty quickly after the deal just closed with some hospital networks, we heard from significantly expanding their existing contracts. Can you talk about the unique value you're able to deliver now that Cerner is a part of Oracle and the broader expansion opportunity that you see ahead? And if I could just sneak in one for you as well, Safra, $1.7 billion in CapEx in Q1 is a pretty big number. And I know very well that you don't spend frivolously. What can you tell us about the big step up here?

Okay, I'll start by discussing our capital expenditures. There's a significant demand in the market. We now have more data centers in more countries and cities than either AWS or Azure, and we are expanding due to this demand. We anticipate a growth rate of around 50% for our cloud services, which means we will need to add substantial data center capacity and open many new facilities. Notably, our Oracle Cloud data centers support half of the Tokyo Stock Exchange, while other cloud providers cannot claim the same for stock exchanges. Our services are highly secure, reliable, perform well, and are very cost-effective. This presents a tremendous growth opportunity, which is why we are investing in expansion. We are determined not to miss this chance for growth, but as always, we remain cautious and prioritize profitability. We need to focus on both our top line and bottom line to leverage this growth opportunity. I believe I may have missed part of your question.

Cerner, he asked you all about Cerner. Cerner is a big other part. Yes, one of the things I think that we don't really talk about, but I alluded to the fact that we both build applications, and we run them on our infrastructure. The tools we use for building applications, our latest generation of tools, are the autonomous database, very different than all the Oracle databases or any other database that came before. There are no DBAs. There is no human labor associated with running the Oracle Database anymore. So there can be no human error. The costs are so much cheaper. Our own internal cloud, our own cloud OCI, uses autonomous database to run all the control systems because claim management doesn't want to hire a lot of DBAs to lower costs. Also, he doesn't want any errors of commission. It's much more reliable than when you have human beings driving the car. We use that for the next generation of Cerner, the Oracle Autonomous database. We pair that with an all-new application development tool called Apex, which is a low-code tool. So our newest applications, our very newest applications that we were built, we are building, we're building any autonomous database with Apex, which allows us to do stuff that would have taken three or four years in less than a year. So we expect to have our first pretty complete new Cerner health management product out within 12 months, which I think is going to, again, it's something we never could have done with the previous generation of databases or the previous generation of application development tools. But all of that has changed. We have these phenomenal low-code tools. I mean, one of the things about the low-code tool is you almost don't have to do security audits because security is built into the tool. You can't build an insecure application using Apex. Tolerance is built into the tool; if the application should fail, it's a stateless application. So it immediately failovers into another data center in a millisecond and keeps running; no one will even know about the failure. So our new generation of application development tools is going to enable us to modernize the Cerner technology at a rate that would be inconceivable a couple of years ago.

Thank you, Brad. That does appear to be our last question. So a telephonic replay of this conference call will be available for 24 hours on our Investor Relations website. Thank you for joining us today. And with that, I'll turn the call back to Josh for closing.