Good day, everyone, and welcome to today's Oracle Corporation Quarterly Conference Call. Today's conference is being recorded. At this time, I would like to turn the call over to Ken Bond, Vice President of Investor Relations for Oracle. Please go ahead, sir.
Thank you, operator. Good afternoon, everyone, and welcome to Oracle's fourth quarter and fiscal year 2011 earnings conference call. A copy of the press release and financial tables, which includes the 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 attempt to present some important factors relating to our business, which may potentially affect these forward-looking statements. While these forward-looking statements represent our current judgment on what the future holds, these statements are also subject to the risks and uncertainties that may cause actual results to differ materially from statements being made today. As a result, we caution you against placing undue reliance on these forward-looking statements, which reflect our opinion only as of today. And we encourage you to review our most recent report on Form 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 from the audience, we'll begin with a few prepared remarks, and with that, I'd like to turn the call over to Safra
Thanks, Ken. I'm going to focus on our non-GAAP results for Q4 and for fiscal year 2011, then I'll review the guidance for Q1 and turn the call over to Larry and Mark for their comments. As you can see, we delivered yet another exceptionally strong quarter to complete a fantastic year for Oracle. We continue to have a lot of company-specific momentum and we executed extremely well throughout the fiscal year exceeding even our own optimistic expectations quarter after quarter.
For the year, we achieved 25% New License growth in Q1, 21% in Q2, 29% in Q3, and including this quarter, we delivered 23% New License growth for the full fiscal year. Our Software business is now even bigger than IBM's software business. For the year, we delivered 38% EPS growth in Q1, 33% in Q2, 40% in Q3, and including 25% this quarter, we delivered 33% EPS growth for the year, once again, way ahead of the 20% growth we promised.
Our non-GAAP earnings per share for the year were $2.22, well above the consensus estimate of $1.88 when we started the year. And unlike a few of our competitors, we're not delivering this EPS growth by aggressively reducing our share count. Obviously, we're thrilled with our Q4 results. This was Oracle's first $10 billion quarter. New Software License revenue was up 19% to $3.6 billion, accelerating from 14% in Q4 of last year. Currency effects for the quarter were largely as expected. We continue to see broad-based geographic and product momentum as technology and New License revenues were up 18% to $2.7 billion in Q4 and applications grew 22% this quarter to $1 billion, with Asia-Pacific particularly strong, including Japan, which grew during the quarter.
Our North America Applications business passed SAP a while ago, and now, if you exclude Germany, we believe we have essentially caught up to them in Europe. Geographically, the quarter was strong and balanced with New License growing 16% in the Americas, 24% in APAC and 22% in EMEA, and the quarter wasn't dependent on any large deals. Software License Update and Product Support revenues were up 15% to $4 billion. Sun's hardware system revenues was $1.2 billion for the quarter. We're running the Sun business on a more profit-aware model. Compared to Q4 a year ago, we have made a big move away from selling products at a loss or reselling other company's products. Rather, we are focused on selling value-added systems where Sun's differentiation is very clear to our customers. For example, non-Sun storage was down significantly, Sun Storage and Tape grew very well and, of course, Exadata and Exalogic continue to show fantastic growth. This strategy shows up in our hardware gross margins, which were 56% this quarter, significantly higher than the 46% last year. Later this year, I expect the growth of the Sun hardware products to become quite obvious.
Total revenue for the quarter was $10.8 billion, up 12% from last year. In addition to our strong top line performance, we're extremely pleased with our non-GAAP operating income of $5.2 billion, 19% higher than last year as our operating margin extended to 48%. We could be back at pre-Sun operating margins quite quickly as there remains ample leverage in our business model.
For the year, our operating income grew 27% and even with the Sun Hardware business included in our results for the full year, we delivered non-GAAP operating margins only 2% -- 2 points below our all-time high. The non-GAAP tax rate for the quarter was 23.3% due to several favorable nonrecurring items, including agreements with worldwide taxing authorities. EPS grew 25% to $0.75 on a non-GAAP basis. The fact that we were able to put up these top line and bottom line results given our size, once again, demonstrates the strength of our diversified portfolio of enterprise products and the breadth and loyalty of our huge customer base and the strength of our operating model.
We now have $29 billion in cash and marketable securities and operating cash flow increased to a record $11.2 billion. For the year, all free cash flow increased to $10.8 billion. As we've always said, we're committed to returning value to our shareholders through technical innovation, strategic acquisition, stock repurchases, prudent use of debt and a dividend. In this quarter, we repurchased 12.5 million shares for a total of a $422 million. For the full year, we repurchased 40.4 million shares for a total of approximately $1.2 billion. And the board again declared a dividend of $0.06.
Now the guidance. As you remember, we had a spectacular Q1 last year with New License up 25%, non-GAAP EPS up 38% and GAAP EPS up 20%. So assuming exchange rates remain at current levels, which is right now a positive 5% currency impact on license and revenue growth rates, our guidance for Q1 is as follows: New Software Licenses revenue growth is expected to range from 10% to 20%; Hardware Product revenue growth is expected to range from negative 5 to positive 5 and of course, that does not include the Hardware Support revenue; total revenue on a non-GAAP basis is expected to range from 9% to 12%; on a GAAP basis, we expect total revenue growth from 10% to 13%. Non-GAAP EPS is expected to be $0.45 to $0.48; GAAP EPS is expected to be $0.33 to $0.36. Now this guidance assumes a GAAP tax rate of 29% and non-GAAP tax rate of 28.5%, which is nearly 4 points higher than our tax rate in the previous year. Now, of course, this may end up being different.
With that, let me turn everything over to Larry for his comments.
Thanks, Safra. Our Database business grew 28% in Q4 and 26% for the year. That growth rate is twice as fast as any year this past decade. We're already more than twice as big as IBM, the former #1, and current #2 player in the Database business, and we're consistently growing faster than IBM and taking market share away from them.
Why is it the Oracle Database business suddenly growing so fast? Because we've advanced our database technology to take full advantage of the latest trends in the database market: cloud computing databases, in-memory databases and now big data databases. This year, we did a number of cloud computing deals, and including a very large one with Salesforce.com last quarter. And this quarter, we did one with the biggest and best name in mobile devices and cloud computing in the world. That deal included our database software, Exadata machines, our cloud computing billing system and our cloud e-mail system that scales to millions of users, is all based on our technology.
Today, more than 1,000 Exadatas are installed, and we plan on tripling that number this year. We think that's possible because Oracle apps run unchanged on Exadata. That's very different from IBM Netezza, which does not run Oracle apps or IBM DB2 apps or anything else, except applications that are custom-built for Netezza. The expansion of our Exadata business and our rapidly growing Exalogic business, plus a couple of new hardware and software appliances we plan to introduce this fall, should turbo charge the overall growth of our Hardware business, making the top line and bottom line better than ever. We're very excited. Over to you, Mark
Thanks. Safra walked you through the numbers. I'd like to share a couple key points. First, we sold a lot of software and I'm close to history books. I'm not sure this is one of the best numbers I'm ever aware of in the industry. A couple things that have us excited. First, our industry-focused business units grew faster at Oracle again, with broad-based strength across the industries. Second, our 19% new software license growth was broad-based with technology and apps both going at very strong rates. It's the first quarter we've ever sold than $1 billion in apps. We had great performance in every region and delivered license fee growth in mid-teens or higher in every region. Fourth, we've begun to make material progress in the Hardware Support attach rates. I'm not going to explain attach in detail today, but this is good news. The fundamentals of the business now is we're selling fewer units at higher prices, and we have higher margins and they have higher attach rates. These are the fundamentals of a solid hardware business.
Last, Exadata. Our sequential growth was more than 50%. That's big growth and it was broad-based. We sold to more than 150 different customers with close to half buying multiple systems. P&G, JPMorgan Chase, Apple, Fidelity, Boeing have helped us now cross 1,000 systems mark in sold Exadata systems. We have 300,000 database customers running Oracle database workloads. Every one of them is a prospect for Exadata. The exciting news is, in addition to this, the Exalogic ramp has been even better than Exadata and every one of our 100,000-plus Middleware customers is a prime prospect for Exalogic.
Well I'll turn it over to Ken, who will take your questions.
Thanks, Mark. Operator, we're now ready to take calls -- or questions, excuse me.
[Operator Instructions] We'll take our first question from Adam Holt with Morgan Stanley.
Adam Holt - Morgan Stanley
My question is about the Hardware business. Actually, it's a 2-part question. The first is on the actual product. How material was the headwind in the quarter relative to the shift in the model? And what gives you confidence that the Product business starts to grow again? And then, I guess, on the support side, it looks like double-digit growth in Hardware Support, maybe a little bit more detail beyond just attach as to what's the driving the strength there?
Let me start on attach, Adam. The reason attach is important, I think you know this, the eventual Hardware Support revenue is defined by the volume of hardware you sell times the attach rate, which is the service dollars that you charge for that support and then how long the installed base stays there. And what we've done, really, is move to a model now where we've got the service lined up with the sales activity that we attach the service to the actual sale. This may sound so elementary to you, but if you lose control of that in your process, and that had happened previously, it's actually a difficult set to work to get that back and we've done that, and that does start to lead, over time, to that incline in that Hardware Support revenue that you described. So it is an absolute key element. The other point in the Hardware business, Adam, just to add while we're on it, is that these fundamentals I described earlier are really important. Selling units that have no gross margin are easy to do. I could get -- I won't give you examples to like, but we have ways of selling lots of hardware without getting margin. We are focused on selling hardware systems. We are now selling fewer systems at a higher price that are of more value to the customer that stay installed longer. These are, and also we're doing that at higher margins, so these are the fundamentals of a solid Hardware business and then, of course, to the point we have to eventually grow that business on a top line and you have a very, very attractive business model.
We'll go next to Kash Rangan with Merrill Lynch.
Kash Rangan - BofA Merrill Lynch
I guess one for you, Safra, and if I could, one for you, Mark or Larry. Safra, nice guidance, nice cash flow. In fact, the guidance is a little bit better than what we're modeling and we all read the same newspapers. I'm just curious to get your perspective on how you might have incorporated what seems to be a questionable macro outlook in your forecast. And for you, Mark, if you could just comment anecdotally upon the attach rate of database licenses to Exadata and also the attach rate of Middleware licenses to Exalogic, since you have obviously very ambitious goals for tripping the Hardware business that's got consequences for the Software business indeed, there is an attach rate trend there. That's it for me.
Okay. Let me sneak in before Safra answers the macro -- the state of the macroeconomy. The attach rate Exalogic would be 100%, we'd have no other. The attach rate at Exadata would be 100%. One of the nice thing is Exadata and Exalogic will become a larger percentage of our overall Hardware business, having growing up a fairly small base now up to 1,000 machines and hopefully 3,000 machines next year as that gets to be a larger and larger overall base that improves our profitability. Exadata's growing faster than the traditional Sun line. So it improves our top line growth rate. And because of the 100% attach rate, it improves our service growth rate and our service margins. So overall, as we sell more and more engineering systems and fewer and fewer undifferentiated systems, we make more money on the hardware sale, we make more money on the associated service. And actually is an enabler that allows us to increase our rate of sales of our Middleware software, because our Middleware software runs better on Exalogic and that's the best Middleware combination you can buy. Exalogic hardware and Exalogic software from Oracle. The best database combination you can buy is the Oracle database running on the Exadata machine. So we actually sell more database software because of Exadata. We sold more Middleware software because of Exalogic. It's a virtuous circle that we plan to fully exploit at this current fiscal year. So the macroeconomy.
Sure. Well, Kash, I'll tell you nothing's really changed for us in the way we give our guidance. It really is from the ground up and we've got guys around the world who roll in a forecast into us. And we take an additional review of it, but it's very much the same. The truth is, that the economy is sort of as it is, and yet, we continue to grow. I mean, this quarter, in case anyone missed it, was really basically an organic growth quarter for us and the license number is pretty much very little help from any kind of acquisition and, obviously, significantly faster than any of the world economies are really growing. So we've got a lot of very Oracle-specific momentum, and though we read the same newspapers you do, we also have to be sensitive to the fact that our sales force continues to grow, we've done significant hiring and continue to be optimistic enough to continue to hire this next year. So we're giving, I think, guidance that includes all those little pieces of information, but it's mostly based on the growth of our pipeline and what we get from our fields around the world.
So I might add too, that we added 800 people to the sales organization this quarter. So if that gives you an idea of our Oracle-specific confidence in where the market is, that might be a good measurement for -- I told you the last quarter we'd start hiring, we did. And to add to Safra's points, again, this growth was broad-based. I used the region example and the different parts of the business, but I'd add, there were no individual deals of materiality either. This is just good old broad-based organic growth.
We'll go next to Phil Winslow with Crédit Suisse.
Philip Winslow - Crédit Suisse AG
I just got 2 questions here. First one for Mark and then Larry. Mark, there's been a lot of chatter just across Wall Street about some changes, potentially going on with the sales force. I'm wondering if you could walk us through these tweaks that are being made to sort of what the upside are you going for as in, how you've minimized disruption? And then Larry, over the past month or so here, we've had a lot of big data announcements from competitors. You have the dupe boxes, and Netezza this week. And then, EMC talking about the HP violin versus Exadata. I wondered if you could discuss sort of where you see the market going, where is Exadata versus these other guys?
Sure. Let me start by giving you some answers of the sales force. Part of that adding more people is really doing some division of territories. This means that we actually put more territories in the field by being able to get more density of coverage out of our sales force. We believe we're under distributed, full stop. And then when we get in front of more customers, we actually sell more software. And so, that's why we're adding more representation. These are both salespeople and presale people, technical people, if you will. They're in GBUs as well as in our regions and they are across all regions. So, for us, it's a simple case, if the salesperson giving you an example had 20 customers, we think there's opportunities for that salesperson to sell just as much software calling on 5 customers and, therefore, for us to get a higher productivity. And that's what we're doing, and that's probably the chatter you're hearing. But what it puts in and I want to emphasize, continuity of customers, same territories, very minimal disruption, just adding more resource to get more reach out in the market.
Well, we're planning to add a couple of appliances and announcing them this fall. One appliance, that should surprise you is a large memory addition to Exadata for analytics and memory, so we continue to invest. We thought that would -- we've been the leader of in-memory database technology ever since we bought Tungsten. And that's for both for transactions and for preprocessing. We are, as memories become cheaper and larger scale, we've changed as much of our algorithms and this in-memory analytics accelerator is going to be, again, coming out and we'll be announcing it in the fall at Oracle OpenWorld. In addition, attaching to our Exalogic box, there's a lot of misunderstanding about what's a dupe is, and is it a replacement for database. So the dupe is not a replacement for database. It's an adjunct to the database, which we think, is very, very important. It really is a tool for Java programmers. And we're the world leader in Java technology and we are building a big data accelerator to attach to our Exalogic box, which comes out also this fall. The big data accelerator includes some of the standard open source heavy software, HTFF, the heavy file system and a number of other pieces, but also some Oracle components that we think can dramatically speed up the entire math-produced process. And will be particularly attractive to Java programmers who are the ones, who asked for -- aspire to do. There are some interesting applications they do, ETL is one. Log processing is another. We're going to have a lot of those features, functions and prebuilt applications in our big data accelerator. So, Oracle has always followed database technology trends, whether it's object databases, in-memory databases and kept up with this technology and some, quite often led on innovation. Point to our Exadata database machine, where we were the first to take a software product, like Oracle, and marry it to specialized hardware. [indiscernible] came out with the combination before, but IBM has yet. IBM still hasn't come out with an appliance that runs their DB2 database very fast. Instead, they kind of ran out and did an acquisition as opposed to innovation in this area. So we have long been an innovator around the database, keeping it current, watching all of the trends, exploiting the technology and that's been showing up in our numbers. And that 28% in Q4 and 26% for the year is really a stunning number considering the size of our Oracle database business and how much faster we're growing than our rivals, DB2 and Microsoft SQL Server
We'll go next to John DiFucci with JPMorgan.
John DiFucci - JP Morgan Chase & Co
I have a question on the Hardware business. I think it's probably one that people are thinking about, and just want to give you a chance to address it. Hardware margins were strong. They're a lot -- actually very strong and as you noted, and it seems like the higher-margin Hardware business is doing better than the lower-margin business. But at the same time, it is the second quarter in a row where the numbers are a little lower than what you had anticipated or guided to. So I'm just kind of curious, why is that? It really hasn't affected your aggregate results so it's, at least from my perspective, it's not a big concern. But at the same time, just wondering, is it as simple as the Commodity business is sort of drawing down more quickly than you anticipated? Or is there something else happening in that business?
Hey, John, it's Mark. I'll start. I don't think it's any of that. I think we're just following the fundamentals of building a solid business and that's what we're focused on and I'll tell you one more time, I've been doing this a long time -- longer than I want to admit. And I'm telling you these fundamentals are protecting your base. And to be very blunt, as we go through the transition from Sun, we have to get more coverage out in the market. I think you know that, but we are putting more coverage out in the market to make sure we get that done, making sure we attach all the necessary peripheral software, service to that attach, those are the fundamentals we're working on. And if you follow what I told you earlier, there's no question we want to grow the top line right. And so to grow the top line right, getting rid of these low-margin businesses is key, because we don't get the attach, there is no aftermarket. And I tell you from a shareholder perspective, that's valueless revenue. So for us, we're focusing on that value. Revenue you're going to see, material growth in Exadata. You're now going to see growth from Exalogic that's going to participate as that becomes a more meaningful part of the portfolio. We'll be very focused on a couple of our competitors that we think have some vulnerabilities and we will be going after them. And you'll see more alignment across the Oracle sales force as we go forward. So focusing on those fundamentals, we'll be driving for growth, but very frankly through Q3 and Q4, our number one focus has been getting these fundamentals right. And as I tell you, numerically, I feel awfully good about it.
Let me just also, John, add in -- I commented on, that in my presentation a little bit. As you know, we used to resell Hitachi. But the other big storage that we sold was LSI's Eugenio line, which I don't know if you know, but during the quarter, was actually sold to NetApp. And so these are 2 product lines that we sold a lot more of and especially the NetApp Eugenio move happened during this quarter. And so our storage of selling that built-in products is significantly down, while, what you don't see is that our own Storage business is up. It just didn't overwhelm the reduction in that storage and the storage -- the third-party storage that we're reducing aggressively intentionally.
And to add, John, one more time, you could see the same fundamental in the Server business that the higher-end, high-margin stuff has the positive numbers and you would see the x86 line with a declining number, wherein that market, obviously, you get almost no attach either on the peripheral side or on the service side.
We basically make a conscious effort when deals come in here. Sometimes extremely large deals come in at profitability that's just not acceptable. We just don't want to win them. They're not worth winning. And so, we just walk away from those, maybe, from all of you the top line, it would be better, but for us we'd rather just make money than make revenue. We're funny that way.
John DiFucci - JP Morgan Chase & Co
Now that's all fair enough and I don't want to repeat what you said, but just so I understand. We actually are seeing what you're saying. We're seeing it in the margins and the Hardware business...
Yes. I mean, again, we have Mark here. It's not like he doesn't know how to sell hardware. He'll probably $100 million of hardware in an afternoon here and maybe folks would be happier, but we just would make less money, and I just don't think that would really make anyone happy. We'd like to do it the better way.
We'll go next to Brent Thill with UBS.
Brent Thill - UBS Investment Bank
A question for Safra. Just back to the New License guidance that you gave, that was a lot stronger than most of us had forecasted. And I guess, if you could just maybe help us out in terms of -- is that just how you're seeing the natural deals lining up for Q1? Or did you have some spillover from Q4 that's giving you guys better visibility? And I have a quick follow-up for Larry.
Well, Q4, we always have some spillover and so that's always helpful. But it really is exactly like it always is, which is, we look at what the guys are forecasting. As Larry mentioned, these Exadata systems and Exalogic systems, they really help because you got to buy software for those. And on the app side, we've been really on just a roll, and that's been very, very good. So these are really the numbers as they roll up. I add my own little bit of conservatism, but again, it's the summer as it always is, and it's all about chasing the software contracts often at the end of August when folks are on vacation. So this is what we've come up with and the same way we've always done it. And the guys are pretty optimistic.
Brent Thill - UBS Investment Bank
And just for Larry, on fusion apps, at OpenWorld last year, you mentioned that, you thought there'd be 50 to 100 customers in the first half implementing that. I'm just curious if you could just give us a high-level update in terms of how Oracle Fusion's going and what do you think the next milestones we should be watching?
We have a number of fusion customers now that are live. And Fusion is being completely rolled out for accounting, for human resources, for sales force automation. It's something we've been working on for 6 years. We're the only application vendor now that offers the same exact technology as a service, a Software-as-a-Service on our cloud or you can buy the software and put it on your private cloud. And by the way, if you put it on your private cloud, we'll run it for you, if you want us to, behind your firewall attached to your local area network with all the security inherent in that. We are -- our whole approach to kind of, if you will, cloud 2.0 as people say, we're not building multi-tenancy software. Remember that when I started my little company NetSuite and 6 months later, when Mark Benioff started his company, Salesforce.com, that was over a decade ago when virtualization wasn't so common for isolating different customers running on the same machine. So cloud 2.0, we used virtualized elastic cloud technology, very different than, let's say, what Salesforce.com is using more than almost a 15 -year-old multi-tenancy technology. We are offering that much higher degree of security and much higher degree of isolation when you run on our public cloud, which looks a lot more like Amazon.com, let's say, than Salesforce.com. We think that modern technology has such a huge security advantage that will -- Salesforce.com will be basing very, very serious competition for as Fusion's rolled out this year. And SAP has no answers at all. They've got nothing. So we've been competing very effectively against SAP over last several years. We passed them in North America, we've tied in Europe, in separate -- and German-speaking Europe, and now they're faced with, what do you got for cloud? That would be nothing. While we have a completely rewritten suite of applications built entirely in Java, runs on cloud 2.0, virtual and an elastic cloud that's virtualized, we have technology advantages over Salesforce.com but they got nothing over at SAP. So we think this is going to be a huge contributor this year and the following year and the year after that, and it's going to allow us to take a significant amount of share from SAP and some share from our friends at Salesforce, who by the way, the Salesforce guys are, the customers aren't. So, when we make money -- when we sell ours, we make money, we like that.
We'll take our next question from Joel Fishbein with Lazard Capital Markets.
Joel Fishbein - Lazard Capital Markets LLC
This is a question for Mark. Just to follow-up on your comments during your prepared remarks about Exalogic, accelerating your [indiscernible] trajectory in Exadata. Can you just give us some color on what's driving that and maybe some specific customer wins that you may have had in that area?
I think with Exalogic, you've got an opportunity now. You go to Java-based applications and get, in some cases, 2, 3, 4x better performance than what you had before. And most of these middle-tier suites are running on at x86-like architectures. We get the opportunity to sweep up, if you will, that entire tier and integrate with Exalogic and it's got a very similar set of characteristics that we see in Exadata. You get a chance to get a superior TCO. So when I show up with a 2x, 3x kind of number, you can take that in real performance or you can take it in lower cost or you can dial in what piece of which you would like. So it's an extremely attractive value proposition. And to Larry's point, it is 100% attach of our Middleware. 100% attach, and I think Larry said this, but I'll have to say it again, 100% hardware and software attach that goes with it from a service perspective as well. So very attractive value prop and I'll make sure that during the quarter, we're very aggressive with customer wins in terms of our messaging out in the marketplace. But the ramp, if you look per quarter, that we've done with Exalogic, faster than the early days of Exadata.
And we have time for one more question. That question will come from Jason Maynard with Wells Fargo.
Jason Maynard - Wells Fargo Securities, LLC
Right on, guys. I guess, I'm curious [ph] a little bit I'm curious with, I think, you said $29 billion a lot of cash on the balance sheet. And I'm just curious how you guys are thinking about the acquisition strategy? I mean, valuations for a lot of private and small and mid-capped companies aren't necessarily at trough levels. There's also some folks out there who seem to think that Oracle has to buy to keep growing. Just what's your sort of philosophy right now? How would you sort of couch your guidance to think about the use of cash in the M&A front?
Well, we had 19% software New License growth without acquisitions. And I think we're able to grow through acquisitions when they're attractively priced and they make sense and they are by and large not attractively priced now and don't make sense, so we're not doing them. If these assets are wildly overpriced, we're-- we can't make a good business case for buying them. Instead, we can focus our energies on organic growth, which means increasing the size of our sales force, introducing additional appliances, additional engineered systems over and on top of Exadata and Exalogic, a couple that I'd already mentioned here. So we think we've got a lot to sell already and that we can grow organically by expanding distribution. We can grow by acquisitions when the opportunity presents itself and the economics make sense. As they say, anyone who looks at the valuations today and we don't think they make any sense.
Now lucky for us, we are so broad-based that we're not just a software company, we're not just a hardware company, et cetera. We get to look in a lot of different areas, whether it's technology or vertical apps or whatever. And every once in a while we find a jewel. And as usual, we'll buy a little of this and a little of that, but we're not leaving the regular rigor. Pricing, price does matter to us and we just want to make sure it's a good business case when we do it. But luckily, we've got a lot of opportunities just price have been quite ridiculous.
Jason Maynard - Wells Fargo Securities, LLC
And if it's okay, maybe I could sneak one quick one in. And Safra, you teased us a little bit by saying that you'd be back to full year pre-Sun operating margins quite quickly. I'm curious just how you're thinking about that operating margin profile, maybe, not just this year, but sort of the next couple of years in terms of how fast that can ramp, perhaps back to...
I'll tell you, I mean, I'm really delighted at how fast we got already here. I mean, as it is, when you think about it, we invested in an entire hardware company and we still have the -- those losing money. It was losing an enormous amount of money, a shocking amount of money actually. And we ingested it and we still have the highest operating margins in the software industry. So we actually have still a lot of leverage in our model and there's really no reason why this year couldn't really be spectacular and it'll build throughout the year. But as things start to really show up in the numbers, again, you don't really see the ins and outs, the puts in the inside the hardware number, so you don't see what's happening there. Although you do at least have some idea of when you look at the margins. And then, of course, with the Software business doing as well and the enormous install base of customers who renew their agreements with us every year, now, like over $4 billion, there's a lot of room still in our model. And we've got a lot of leverage still in it. So we're very upbeat. I think we look at this past year and we're very, very pleased that we've had a hardware company in our numbers and we're still the highest by a lot of all the companies. Okay
Thank you. A telephonic replay of this conference call will be available for 24 hours. The replay number is (719) 457-0820 or (888) 203-1112 and the passcode is 9992261. Please call the Investor Relations department for any follow-up questions from this call and we look forward to speaking with you. And thank you, I'll turn the call back to the operator for closing.
And this does conclude today's conference. We thank you for your participation.
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