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Oracle (NYSE:ORCL)
Q1 2019 Earnings Conference Call
Sep. 17, 2018 5:00 p.m. ET

Contents:

  • Prepared Remarks
  • Questions and Answers
  • Call Participants

Prepared Remarks:

Operator

Welcome to Oracle's first-quarter 2019 earnings conference call. Now I'd like to turn today's call over to Ken Bond, senior vice president.

Ken Bond -- Senior Vice President

Thank you, Victoria. Good afternoon, everyone, and welcome to Oracle's first-quarter fiscal year 2019 earnings conference call. A copy of the press release and financial tables, which includes a GAAP-to-non-GAAP reconciliation and other financial information, can be viewed and downloaded from our Investor Relations website. On the call today are Chairman and Chief Technology Officer Larry Ellison and CEOs Safra Catz and Mark Hurd.

As a reminder, today's discussion will include forward-looking statements, including predictions, expectations, estimates, or other information that might be considered forward-looking. Throughout today's discussion, we will present some important factors relating to our business which may 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, including our 10-K and 10-Q and any applicable amendments for a complete discussion of these factors and other risks that may affect our future results or the market price of our stock.

And finally, we are not obligating ourselves to revise our results or publicly release any 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'd like to turn the call over to Safra.

Safra Catz -- Co-Chief Executive Officer

Thanks, Ken. Good afternoon, everyone. I'll first go over Q1 before moving on to my guidance. I'll then turn the call over to Larry and Mark for their comments.

Once again, we had another solid quarter. Constant-currency revenue growth was slightly above the midpoint of my guidance, and earnings per share was $0.03 above the midpoint of my guidance. As in prior quarters, I'll review our non-GAAP results using constant-dollar growth rates because that's how we also look at the business. Total cloud services and license support revenues for the quarter were $6.6 billion, up 4% in constant currency.

This accounted for 72% of total company revenue, and the bulk of it is recurring revenues. In terms of ecosystems, GAAP applications total revenues were $2.8 billion, up 7% and GAAP platform and infrastructure total revenues were $4.7 billion, up 2%. Drilling in a little. Total cloud revenues grew in all regions, and in terms of product categories, ERP -- ERP grew in the 30-plus percent; verticals grew in the 40-plus percent; and public cloud PaaS and IaaS grew in the 20-plus percent.

Mark will have much more detail when he speaks. Total revenues for the quarter were $9.2 billion, up 2% from last year. Non-GAAP operating income was $3.8 billion, up 3% from last year, and the operating margin was 41%, same as last year. The non-GAAP tax rate for the quarter was 19.1%, slightly below our base rate of 20%.

And our non-GAAP EPS was $0.71 in U.S. dollars and up 19% in constant currency. The GAAP tax rate was 10.8%, and GAAP EPS was $0.57 in U.S. dollars and up 16% in constant currency.

Operating cash flow over the last four quarters was a record $15.5 billion. Over the same four quarters, capital expenditures were $1.6 billion [Audio gap] billion, of which approximately 64% will be recognized as revenue over the next 12 months. We remain committed to creating value for our shareholders through internal investments and targeted acquisitions as well as with stock repurchases and dividends. This quarter, we repurchased 212 million shares for a total of $10 billion.

Over the last 12 months, we have repurchased 440 million shares and reduced the absolute shares outstanding by over 8.5% while growing free cash flow 10%. The board of directors increased the authorization for share repurchases by an additional $12 billion and again declared a quarterly dividend of $0.19 per share. Now before I go to guidance, a quick comment on ASC 606, which we adopted this quarter. The estimated $86 million effect to Q1 of last year FY '18 revenues, which we had posted on our website last quarter, ended up being $83 million instead of $86 million, so basically about right.

Turning to currency. Exchange rates have moved from a 1% headwind to now being a 2% headwind to revenue and a $0.01 to $0.02 headwind to earnings per share, depending on rounding. Now I'm not sure what it will be by the end of this quarter, so with that, the guidance. Total revenues are expected to grow from zero to 2% in constant currency because we have a tough comparison with last year's revenue, especially license.

I expect second-half revenue growth will be higher. Also, we remain committed to delivering a higher revenue growth rate for all of fiscal year 2019 when compared to that of last fiscal year. Assuming current exchange rates, non-GAAP EPS for Q2 in USD is expected to grow between 11% to 15% and be between $0.77 and $0.79. And non-GAAP EPS in constant currency is expected to grow between 12% to 16% and be between $0.78 and $0.80.

Once again, we expect to deliver double-digit non-GAAP EPS growth for fiscal-year 2019. My EPS guidance assumes a base tax rate of 20%. However, one-time tax events could cause actual tax rates for any given quarter to vary from our base rate, but I expect that in normalizing for these one-time tax events, our tax rate will average around 20% for fiscal-year 2019. And with that, I'll turn it over to Larry for his comments.

Larry Ellison -- Chairman and Chief Technology Officer

OK. Thanks, Safra. All right. Oracle has two strategic products that will determine our future.

Our cloud ERP product is a strategic key to our success in the SaaS applications layer of the cloud. And our autonomous cloud database is the strategic key to our success in the IaaS or infrastructure layer of the cloud. Oracle is already No. 1 in ERP cloud market share with over 20,000 Fusion and NetSuite customers.

Customers are buying Fusion ERP to replace their existing SAP on-premise ERP systems, and customers are buying Fusion ERP to replace their existing Workday cloud ERP systems. ERP is the largest segment in the application business. Continuing our rapid growth in cloud -- in the cloud ERP market puts Oracle well on its way to becoming the world's largest SaaS applications company. That's our strategy and current market position in the SaaS layer of the cloud.

In the IaaS or infrastructure layer of the cloud, we have the world's most popular and technically most advanced database, the Oracle Autonomous Database. The Oracle Database is so much better than other databases. Even our biggest competitors use it to run their businesses. Salesforce.com uses Oracle to run their sales automation cloud.

SAP uses the Oracle Database to run their cloud services and nearly all their on-premise customers. Even Amazon uses the Oracle Database to run most of their business. Now that the Oracle Autonomous Database is running in our second-generation bare-metal cloud infrastructure, customers can both lower their labor cost and cut their Amazon bill in half by running the Oracle Database on Oracle Cloud Infrastructure. The Oracle Autonomous Database automatically patches itself while running to prevent data theft.

No other database can do that. We think these are compelling advantages with the Amazon infrastructure business. We think these compelling advantages will allow us to compete very effectively against Amazon in the infrastructure business. Today, we may be behind Amazon in infrastructure market share, but we are way ahead of Amazon in cloud infrastructure technology.

We think that will allow us to gain market share in infrastructure in the cloud very, very rapidly. I'll turn it -- with that, I'll turn it over to Mark Hurd.

Mark Hurd -- Co-Chief Executive Officer

Thanks, Larry. I'll give you a few numbers and then a few wins in the quarter. First, our apps ecosystem. 91% of our trailing 12-months revenue is now recurring in apps ecosystem, with GAAP apps ecosystem now greater than $11 billion in trailing 12-months revenue, up 7% in the quarter.

We're growing faster than market with, as Larry mentioned, enormous opportunity ahead of us. Nearly two-thirds of applications support revenue for Oracle as ERP or HCM with most on-premise customers at a very early stage of moving those back-office apps to the cloud. I do expect our apps ecosystem to grow roughly double digits for this year. In SaaS, Safra mentioned a few numbers.

Let me give you a few more. Overall ERP and HCM now annualized revenue is greater than $2.5 billion. Fusion ERP was up 40% in revenue organically. NetSuite ERP had a spectacular quarter.

Revenue is at -- I think we've mentioned through previous calls the momentum we've been seeing in NetSuite. We were up 26% in revenue, and bookings were almost up 40%, 39% in the quarter. That follows on a bookings growth that was greater than, call it, roughly 70% for NetSuite in Q4. Our verticals were up 41%, and annualized revenue is now $800 million.

Our tech ecosystem in GAAP is now greater than $21 billion on trailing-12-months basis and Q1 was up 2%. Bring your own license continues to perform well as both Q1 database new license and support revenue were up mid-single digits. Now I'm going to shift to talking about a few customer wins in the quarter. I'm going to try to keep it to a few.

But I want to give you a flavor for some of the wins that we've -- on top of what we did in Q4, what we did in Q1. We'll talk first about ERP and what we did in that category. First, Academy Sports, a nice win for us in North America; Airbnb, they bought ERP, and Larry mentioned, this is actually a replacement of Workday Financials at Airbnb. TOMS, they're a retailer, very nice win for us.

They also bought not just ERP but bought HCM as well as a package back-office deal in the quarter. Legg Mason, many of you may know, is an investment advisor. Legg Mason bought ERP in the quarter. That also was a replacement of Workday Financials.

I'll talk a little bit about a company called Federal Express. FedEx is -- in the FedEx side of the house, a traditional Oracle user. They bought a company called TNT in Europe that was an SAP user, and they are now going to standardize all of their ERP on Oracle Fusion ERP. In addition to that, they bought payroll from us in the quarter.

They happen to be a Workday HCM customer but bought payroll from Oracle. This is one of the more significant transactions we've had over a course of a number of significant transactions but a very strategic and significant one with the replacement of SAP as a combination of a migration of an existing Oracle customer. A few other customers: city of Sunnyvale; Equity Bank in Europe; the Federal Home Loan Mortgage Corporation bought ERP. And I'm still on ERP just to be clear.

Highmark Health; Noble Corporation, obviously a big oil and gas driller, $4 billion, $5 billion company, nice win for us in the quarter; Santander, consumer part of their business is going to Oracle ERP; Saudi Telecom, another combination ERP, HCM customer in the quarter; the state of Nebraska; TIAA, another investment firm, again, another ERP win in the quarter. Talk a little bit about HCM. VITAS Hospice Healthcare bought also a bit of ERP in the quarter, a relatively large HCM transaction for us in the quarter; Canon, that many of you will also know; Allnex Manufacturing Company in Europe; Fortive, a significant customer, HCM win; the government of Saskatchewan. Marriott, one of the biggest HCM transactions that we've ever taken down, we took down in the quarter as well.

I thought I'd mentioned, at the same time, another back-office category that's becoming more significant for us, which is supply chain management. Our HCM product has been out now in a while. The number of customers now, again, significant prospect medical healthcare company: Rotary International; Academy Sports again, as you can see, a portfolio deal for us in Europe in the quarter; Beckman Coulter, a $6 billion company going to Oracle supply chain management in the cloud; city of Sunnyvale, which I mentioned earlier; Noble Energy, which you saw me mention earlier; Zebra Technologies, which I mentioned earlier. So again, significant amount as you can tell in the back office.

Once you win in ERP financials, the opportunity to engage HCM in supply chain management is significant. I thought I'd close by just mentioning a few infrastructure wins in the quarter, and these are both infrastructure and PaaS wins: AIG, Emerson Electric, Hermes Parcelnet, Nuance Communications, Network Rail, Reliance Standard Life Insurance Company, Swiss Re, Toronto Dominion, Standard Industries. And I thought I'd also mention a couple of ISVs. I traditionally don't talk about ISVs as much, but in the quarter, pretty significant ISVs: FICO, Seiko, and HighJump.

HighJump's the leading provider of supply chain software management and warehouse advantage and some of the -- they'll be using our platform and our cloud to deliver their applications into the market. Seiko is an e-commerce payments platform. FICO is a leading analytics software company in the sort of personalization space. All will be using the Oracle PaaS platform as the base by which they bring in the software to market.

With that, I'll close by just saying, listen, our pipeline, as you can tell by these -- I hope you can tell by these wins, our SaaS pipeline is at a record level and to Larry's point, led by both ERP. And that's not just Fusion now but the NetSuite improvement is material and significant. Our pipeline in PaaS is also at the highest level it's been. And it was, overall, a solid quarter for us.

Looking forward to Safra's point earlier, we do expect revenue growth in the second half to be higher than last year and EPS will grow double digits for the year. With that, I'll give it back to Ken, and then we'll take your questions.

Ken Bond -- Senior Vice President

Thanks, Mark. Victoria, if you would please start the audience on the questions. We'll go ahead and get started with the Q&A portion of the call.

Questions and Answers:

Operator

Yes, sir. [Operator instructions] Our first question comes from Kirk Materne with Evercore ISI.

Kirk Materne -- Evercore ISI -- Analyst

Thanks very much. I just have a question for Mark regarding the applications business. Obviously, you spent a lot of time outlining some of the wins this quarter. Can you just unpack maybe a little bit more of your confidence in terms of the business heading into the rest of the year? I'm just kind of curious how much of that comes from maybe some of your existing customers filing, moving onto the cloud in terms of ERP and maybe HCM areas and just your confidence that the improvement in NetSuite you saw this quarter is sustainable as we go forward from here.

Thanks.

Mark Hurd -- Co-Chief Executive Officer

Thanks, Kirk. I just don't know what words I can use to get -- to show more confidence in the apps business than what I've done. I think the NetSuite performance is sort of, Kirk, the way I'd describe it, is sort of the best of NetSuite and the best of Oracle combined. We've -- we've had significant -- I think the management team in NetSuite has done a great job.

Our attrition is down. We've also been able to supplement the NetSuite sales organization with our traditional recruiting, our traditional college hires. And frankly, they've done a fantastic job of incubating them, absorbing them and getting them productive. They probably wouldn't have done it as a public company because of short-term quarterly earnings-per-share requirements.

We invested in them. I think I've mentioned that before, both in R&D and in sales. And to be very blunt with you, it's paid off. In Q4, bookings numbers were spectacular.

That's translated to Q1 revenue growth. Their Q1 bookings were a little bit ahead of the plan that I've had for them. And so again, when you have this sort of bookings growth back to back, we can pretty much predict, not perfectly but pretty close to what the annual revenue is going to be, and I expect that, as I said, I think in the Q4 call, they will accelerate their revenue growth from last year to this year, and it's going to be relatively material, call it, 7, 8, 9, 10 points of growth rate. I'm talking about the growth comparisons year over year.

In the traditional Oracle business, in the Fusion business, I don't know what more I can do to read you this list of customers. I mean, this is just a broad set of customers across regions. And now that we're bringing on both supply chain, as I've tried to mention and outline a few supply chain wins, supplemented by now the maturation in our manufacturing -- the great news about this business is most of the people we compete with aren't in a great position to bring their customers to the cloud. If you will, I'm saying now, Kirk, the traditional ERP on-premise vendors.

So our HCM business, I talked about. So my confidence level on the apps ecosystem is pretty high. 91% of our revenues, as I mentioned, is recurring. So our ability to predict our pipeline, our conversion rates are quite high.

The morale of our team -- listen, let me lay -- end it this way. Our team here at Oracle believes their destiny is to win every deal. That's how they believe -- they believe that we're in a position, from a technology perspective, to be in a position to win virtually every deal, and that's the attitude we go into with this. It's a long answer to tell you, confidence on my side is really high.

It shows up in our pipeline and our results. Next question, please.

Operator

Our next question comes from Sarah Hindlian with Macquarie.

Sarah Hindlian -- Macquarie Research -- Analyst

Hi. Great. Thank you so much. Mark, Kirk asked about the apps ecosystem, and you're clearly bullish on that.

But can you talk to us a little bit about some of the bookings trends you're seeing in the overall tech ecosystem? And then as a follow-up, Mark, I'd really appreciate it if you could let me know what's going on with Thomas Kurian and provide us with some sort of an update. That would be greatly appreciated.

Mark Hurd -- Co-Chief Executive Officer

I got the second question. I think the first question was bookings trend.

Sarah Hindlian -- Macquarie Research -- Analyst

It's really around cloud bookings.

Mark Hurd -- Co-Chief Executive Officer

OK. All right. I got it. First, I'd say, we try to give you as much clarity as I can.

In our next-gen PaaS infrastructure business, we're talking about mid-20s sort of growth rate in bookings. Early days, to sort of Larry's point but very encouraging in terms of these sort of short-term results we have. When you start seeing, as early indicators, ISVs move, and that's one of the reasons I outlined the ISVs, this is really good news because ISVs are some of the most discriminating -- it's sort of like our GBUs. They're probably the biggest ISV I know of.

And their excitement to move to, what Larry's describing as our Oracle Cloud Infrastructure, is how fast can we get that done. And now when you see other ISVs lining up, these are very strong indicators to us of our future as it relates to OCI. And nobody can do what we can do with the Oracle Database on OCI that Larry already mentioned -- already mentioned that. I think I've talked about the SaaS bookings growth.

Our bookings overall in cloud for the quarter accelerated on a rate basis. The growth rate accelerated. So that was, obviously, a good indication for us of overall bookings growth. Again, I'm trying to focus here more on the revenue, long run is, I think the best indicator of where we are.

Bookings does -- was a good description before we had revenue. And so what I'm trying to do now is keep you focused on really what the prize is because if the bookings will translate to revenue, they don't mean anything to us. So we'll try to get very focused on revenue. That has a couple other aspects to us, which is also our renewal rates, making sure our renewal rates, we believe, are continuing to improve if you start looking at our renewal rates as they go forward.

So the combination of bookings and renewals going up gives us a better revenue outlook. On Thomas Kurian, which I think was your question, Thomas is a good guy, works awful hard. He's taking a break, and we expect him back.

Sarah Hindlian -- Macquarie Research -- Analyst

That's very helpful. Is there a timeline on when he'll be back? Or is it just some kind of over the next few months, something along those lines?

Mark Hurd -- Co-Chief Executive Officer

Well, I'll stick to what I said. He's taking a break. We expect to...

Sarah Hindlian -- Macquarie Research -- Analyst

OK. All right. Thank you, Mark.

Operator

Our next question comes from Brad Zelnick with Credit Suisse.

Brad Zelnick -- Credit Suisse -- Analyst

Thanks very much. I've got one for Larry and a quick follow-up for Safra. Larry, with the introduction of Autonomous Database, you've committed to a more accelerated innovation cycle. Can you now have the next major database version 19c just around the corner? How do you envision the newer cadence impacting customer adoption patterns and ultimately, the purchasing cycle?

Larry Ellison -- Chairman and Chief Technology Officer

Well, I think people are moving to the cloud infrastructure. Again, it's very early days. So there are two things that are going on. We're delivering our technology in the cloud prior to making it available on-premise as this allows us to -- it's easier to get our cloud product out and make it available to a large number of customers for their -- for development of new applications, for the lift and shift of existing applications.

So a lot of our customers are now experimenting with a data warehouse here. And there's now an OLTP system that's available for -- with the Autonomous Database, and they're in the process now of trying it in the cloud. And we've gotten a lot of people that were very, very surprised. We had very positive feedback.

I think the strangest one for me was someone who's running Exadata on-premise, which is our -- which is, theoretically, the fastest system on which you could run the Oracle Database. They moved it to the Oracle Autonomous Database Cloud, which by the way, also runs on Exadata in the cloud, and they got a five times performance increase. And it's simply that the machine learning tuning for the Autonomous Database is just better than human beings, and they were shocked. And so now they're moving additional workloads to the Oracle Cloud.

I think the fact that we can upgrade these things faster will actually increase the adoption rate. Albeit now we got to confess, these are pretty early days. We have tens of thousands of database customers. A lot -- an awful lot of them are now moving their first workload and experimenting with their first workloads in the cloud.

Once they get through that process, I think we'll have a very, very rapid migration of workloads from on-premise into the Oracle Cloud.

Mark Hurd -- Co-Chief Executive Officer

Just to add numbers to Larry's point, I mean, if you looked at the quarter, I said we have mid-single digits growth in database, license, and database support. The real driver of that was the options that come along with Autonomous Database. The multi-tenant Active Data Guard at the back were really the leading drivers of that growth.

Larry Ellison -- Chairman and Chief Technology Officer

Yeah. I'd like to just follow up on what Mark said. People are bringing their own database license to the cloud. So what we're seeing is they want to use Autonomous Database in the cloud.

Autonomous database requires the multi-tenancy option, and it requires real application clustering option. And they're trying it. They try it. They're getting great performance.

They're getting terrific availability. They go back and then do a license deal where they acquire the pieces that are missing of multi-tenancy Real Application Clusters, and then they lift their entire license from on-premise and move it to the cloud. And we think that's going to be the vast majority of our cloud -- our database cloud customers are going to be taking their existing on-premise license, augmenting it with certain new features required for Autonomous Database and then buying the infrastructure piece in the cloud while bringing their own license.

Brad Zelnick -- Credit Suisse -- Analyst

Thanks very much. Very helpful color. And just quickly for Safra. We continue to see you express a strong opinion on the value of your stock, buying back $10 billion worth of shares this quarter and the additional authorization as well.

How should we think about the rate and pace of buybacks versus other uses of cash going forward? Thanks.

Safra Catz -- Co-Chief Executive Officer

We think our stock is an unbelievable buy, so we are buying back. And I'm not going to tell you exactly how much, but you can see I've got $20 billion in authorization, which I'll use up when I use it. But at these prices with our growing cash flows, with our earnings growing like they are, it seems like an amazing deal to buy our stocks, so we're putting our money where our mouth is, frankly.

Brad Zelnick -- Credit Suisse -- Analyst

Thank you.

Mark Hurd -- Co-Chief Executive Officer

Next question, please.

Operator

Our next question comes from the line of John DiFucci with Jefferies & Company.

John DiFucci -- Jefferies -- Analyst

Thank you. My question is for Safra. Safra, cash flow grew last year for the first time in several years. So I guess, two questions on cash flow.

One, this quarter, operating cash flow was up modestly and free cash flow was flat. Was there anything affecting cash flow this quarter relative to a year ago? And then two -- I'll let -- yeah, answer that first.

Safra Catz -- Co-Chief Executive Officer

Yes, so let's do this one at a time. So by the way, operating cash flow was a record, OK, both latest 12 months and in the quarter. A couple of things that move around that I don't know, you wouldn't necessarily have visibility into, which is how much of a tax deduction we get when our employees exercise their options. And compared to last year, there was a $300 million-plus difference, so less of that.

In addition, with lower tax rates, you -- the value of that is lower. So I suspect that you're going to see operating cash flows and cash flows in general continue to increase because our business is growing now. And at any one time, you may see some seasonality within the working capital line but when we do, for example, a tax payment or something like that. But other than that, you should see an overall line going in an upward direction.

John DiFucci -- Jefferies -- Analyst

Thank you, Safra. That's my second question. So you answered it. Thanks a lot.

Safra Catz -- Co-Chief Executive Officer

Thank you.

Mark Hurd -- Co-Chief Executive Officer

Next question, please.

Operator

Our next question comes from the line of Heather Bellini with Goldman Sachs.

Heather Bellini -- Goldman Sachs -- Analyst

Great. Thank you. I had a question, Safra, for you, given Mark had great comments to say about the cloud business. But I'm wondering, is it safe to assume that the software support revenue is continuing to grow? And then my follow-up question is also if you could share any color on trends that you've seen in short-term deferred revenue in the quarter.

Thank you.

Safra Catz -- Co-Chief Executive Officer

OK. So yes, you should assume that support is growing. Our base continues to grow. And as far as short-term deferred revenue was, let's see, about $10.35 billion, and the reality is that gross deferred -- gross deferred was up about 4%.

We netted down quite a bit in the quarter for uncollected invoices. So invoices that had been sent out mostly for Q4 bookings and things like that, which are as yet uncollected, we net down. Other folks don't net down. And so that's our short-term deferred revenue, going great.

Mark Hurd -- Co-Chief Executive Officer

One thing on support, Heather, though, just to -- I know you know this but just to be clear, there's multiple things going on inside support. Database support is growing. So it's growing rather nicely, and our renewal rates are inclining slightly. So you know they're very high.

But this quarter, we actually had a slight incline as we did in apps. But apps support revenue is declining and will continue to decline if we do our job because our job is to move them to the cloud, to move them to SaaS. And so when you ask that question, I don't want to give the wrong impression. If somebody's looking for every line of support to grow, we're actually working against that.

Heather Bellini -- Goldman Sachs -- Analyst

Yup. No, no, I just meant the net -- the net of it, like the database where you said it's growing rather nicely. Apps is declining but the net of it is that total...

Mark Hurd -- Co-Chief Executive Officer

That statement's true. I just want to make sure you know that you're seeing an incline, meaning that if you looked actually at our renewal rates, and I'd like you to know this, that our -- as a percent of what we get canceled, more of that cancellation, is moving to our cloud. So actually our net cancellation rate is actually declining in apps as well, but the driver of that is the movement to our cloud. So that -- I just want to make sure we didn't leave you with the wrong...

Heather Bellini -- Goldman Sachs -- Analyst

But then just to be clear, Mark, did you say that database support attach rate is increasing?

Safra Catz -- Co-Chief Executive Officer

Attach rate is 100%. It is just about renewals in database. Database installed base continues to grow.

Mark Hurd -- Co-Chief Executive Officer

Revenue growth.

Heather Bellini -- Goldman Sachs -- Analyst

Thank you.

Mark Hurd -- Co-Chief Executive Officer

Next question, please.

Operator

Our next question comes from the line of Mark Moerdler with Sanford Bernstein.

Mark Moerdler -- Sanford Bernstein -- Analyst

Thank you for taking my call. Got a question for you. Cloud services and license support were slightly less than what The Street had expected. Can you drill in, help us better understand, if you had weakness, where that weakness was? Was it maintenance? Was it PaaS? Was it IaaS? Was it SaaS? How should we think about that? I'd appreciate.

Safra Catz -- Co-Chief Executive Officer

Well, I think -- I think most of -- any kind of what miss from the numbers you have was that, in fact, there was really just some currency difference between when I gave my guidance and when -- and what it ended up being. So it was basically double the negative that I was expecting in the quarter.

Mark Hurd -- Co-Chief Executive Officer

I would say -- so to be very blunt with you, I would say relative to Safra's point, when she gave the guidance, when we sat in the room, relative to that number on that line that you're talking about, Oracle's performance in Q1 beat that number.

Safra Catz -- Co-Chief Executive Officer

Yeah.

Mark Hurd -- Co-Chief Executive Officer

Now the implication of currency during the quarter moved on us from the time we mentioned it to the time we reported. So I don't -- again, back to -- I don't know what's in everybody's model, but relative to our view, we did better in that line than we did based on our forecast at the beginning of the quarter.

Mark Moerdler -- Sanford Bernstein -- Analyst

Perfect. I really I appreciate it. That's very helpful

Mark Hurd -- Co-Chief Executive Officer

All right. Next question, please.

Operator

Our next question comes from the line of Philip Winslow with Wells Fargo.

Philip Winslow -- Wells Fargo Securities -- Analyst

Hey. Thanks, guys, for taking my question. Mark, you highlighted mid-single-digit growth in database license and support. Just a competitive question for both you and Larry here.

What are you seeing just in the competitive environment, in database in particular, because we obviously get questions about NoSQL players and what asset and compliance means there with some of them achieving that and cloud vendors as well such as Amazon with them announcing bringing RDS on-premise. So just competitive environment there, that would be great.

Larry Ellison -- Chairman and Chief Technology Officer

Again, we think we have a very, very large lead in technology. Now there's other -- there might be a reason why you decide to use a database that's not as good. If you're committed to the Amazon Cloud and you get a lot of stuff at the Amazon Cloud and Amazon sells Redshift or -- Amazon sells a number of different databases, right? Aurora is actually the MySQL database that we're responsible for. So people don't -- people say, OK, I'm going to use whatever Amazon has in the cloud and there are -- a number of people that do that.

And that happened to us in the previous generation where a lot of people chose to use Microsoft database because the content is easily available with Windows. So we do see that. We weren't -- we're not the only database around. However, in terms of technology, if you want the highest performance, if you want the highest reliability, if you want the highest security, and if you want the lowest cost, whether that performance translates into cost, the reason we're much -- the Oracle Database is much cheaper than the Amazon database is because Amazon charges per minute.

We charge per minute. If we can do more in one minute -- twice as much in one minute than they can, we're half the price. So we think while people will go to the Amazon Cloud and buy whatever is there as part of the Amazon infrastructure, anyone who's actually shopping for the best database in terms of reliability, in terms of ease of use, in terms of lowest cost, they're all going to take Oracle.

Mark Hurd -- Co-Chief Executive Officer

Yes. Phil, numerically, just to -- and if you're growing mid-single digits, you have half the market and the market's growing three, I don't know, we must have gained 1 point of share. So it's just all the points we talk about, I mean, we just -- all these different names you mentioned, and Larry talked about the technical part, numerically, it's just hard to dispute the evidence that, over the past year, two years rolling in quarters, you're just gaining share.

Philip Winslow -- Wells Fargo Securities -- Analyst

Got it. Thanks, sir.

Mark Hurd -- Co-Chief Executive Officer

Thank you. Next question, please.

Operator

Our final question comes from the line of Michael Turits with Raymond James.

Michael Turits -- Raymond James -- Analyst

Hey. Michael Turits. Mark, question for you on the vertical markets. How are they doing? And how are you doing in terms of moving those vertical applications to cloud? And how do you expect that to impact the cloud growth rate?

Mark Hurd -- Co-Chief Executive Officer

Well, I think the vertical businesses are continuing to make -- I made a comment in my script about their growth in SaaS being in excess of 40% for the quarter, so that's a good number. They've also now to the point where their SaaS business is bigger than their license business. So in terms of the pivot from an applications perspective, they've done, I think, a good job. Their license business, within that license business, there's another opportunity for us to do more of hosting, if you will, some of that business on our OCI cloud.

Again, I mentioned earlier, they're about the biggest ISV in the world, from an applications perspective, and they are perhaps the absolute best ISV test case you could ever have for the applications running in OCI. And they are beginning that move to OCI or, if you will, our next-generation cloud infrastructure. And it's going quite well. So if there's a combination of the SaaS growth, which is that 40%, as I described, and then the movement of some of those applications to our OCI, if you will, sort of a hosting part of the business, both are going well.

So our verticals are also growing. Their license business, by the way, still allows us to grow and support our vertical businesses so overall, quite healthy. I hope that helps.

Michael Turits -- Raymond James -- Analyst

Great. Thanks very much.

Ken Bond -- Senior Vice President

Thank you, Mark. And 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 for any follow-up questions on this call, and we look forward to speaking with you.

Thank you for joining us today. With that, I'll turn the call back to Victoria for closing.

Operator

[Operator signoff]

Duration: 44 minutes

Call Participants:

Ken Bond -- Senior Vice President

Safra Catz -- Co-Chief Executive Officer

Larry Ellison -- Chairman and Chief Technology Officer

Mark Hurd -- Co-Chief Executive Officer

Kirk Materne -- Evercore ISI -- Analyst

Sarah Hindlian -- Macquarie Research -- Analyst

Brad Zelnick -- Credit Suisse -- Analyst

John DiFucci -- Jefferies -- Analyst

Heather Bellini -- Goldman Sachs -- Analyst

Mark Moerdler -- Sanford Bernstein -- Analyst

Philip Winslow -- Wells Fargo Securities -- Analyst

Michael Turits -- Raymond James -- Analyst

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