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Executives

Roy Lobo - Investor Relations

Safra A. Catz - Co-President, Chief Financial Officer, Director

Lawrence J. Ellison - Chief Executive Officer, Director

Charles E. Phillips - Co-President, Director

Analysts

Sarah Friar - Goldman Sachs

Jason Maynard - Credit Suisse

Peter C. Kuper - Morgan Stanley

Heather Bellini - UBS

Adam Holt - J.P. Morgan

Kirk Materne - Banc of America Securities

Israel Hernandez - Lehman Brothers

Oracle Corporation (ORCL) F2Q08 Earnings Call December 19, 2007 5:00 PM ET

Operator

Good day, everyone and welcome to today’s Oracle Corporation quarterly conference call. Today’s conference is being recorded. At this time, I would like to introduce Mr. Roy Lobo, Investor Relations of Oracle. Please go ahead, sir.

Roy Lobo

Thank you, Operator. Good afternoon, everyone and welcome to Oracle's second quarter fiscal year 2008 earnings conference call. This is Roy Lobo, Head of Investor Relations. With me on the call are Oracle's Chief Executive Officer, Larry Ellison; Oracle's President, Charles Phillips; and Oracle's President and Chief Financial Officer, Safra Catz.

We will begin with a few prepared remarks and then take a few questions from the audience. Let me begin by reading the obligatory safe harbor statement.

Today’s discussion may include predictions, estimates, or other information that may be considered forward-looking. While these forward-looking statements represent our current judgment on what the future holds, they are subject to risks and uncertainties that could cause actual results to differ materially. You are cautioned not to place undue reliance on these forward-looking statements which reflect our opinions only as of the date of this presentation.

Please keep in mind that we are not obligating ourselves to revise or publicly release the results of any revisions of these forward-looking statements in light of new information or future events.

Throughout today’s discussion, we’ll attempt to present some important factors relating to our business that may affect our predictions. You should also review our most recent Form 10-K and 10-Q for a complete discussion of these factors and other risks that may affect our future results or the market price of our stock.

A PDF copy of our press release and financial tables, which include a GAAP to non-GAAP reconciliation, can be viewed and downloaded on the Oracle investor relations website, www.oracle.com/investor.

So with that, I would like to turn the call over to Safra Catz for her opening comments.

Safra A. Catz

Thanks, Roy. Good afternoon, everyone and thanks for joining us. I am going to first focus on our non-GAAP results for the quarter, then I’ll review guidance for Q3 and turn the call over to Larry and Charles for their comments.

Well, obviously we had another great quarter and we’ve again achieved our fastest growth rates in more than a decade, with new license growth of 38%. We are growing revenues, margins, net income, and earnings well ahead of our peers. The strength of our results really comes down to the fact that we are selling more product to more customers in more industries. Our larger, standard based software portfolio means we are seeing more deals and each deal is a little bigger than in the past.

Q2 was really a function of execution. We exceeded our own expectations in all regions and across all product lines. The quarter was broadly distributed and wasn’t dependent on any unusually large deals.

Now, before I go through the numbers, I also want to highlight that we are continuing to grow the top line and the bottom line at the same time. We are extremely pleased with our ability to improve margins in the quarter while also accelerating new license growth. This is really a function of our scale and our ever-growing customer base.

With that, let me go through the numbers. New software license revenues were up 38% to $1.7 billion. Technology new license revenues were exceptionally strong, growing 28% year over year to $1.1 billion, with database growing 19%. We are beating the competition and taking market share away from our competitors.

We grew technology license revenue 32% in the Americas, 23% in EMEA, and 32% in APAC.

Our applications business was also strong, with new license growth of 63% year over year to $553 million.

Geographically, we turned in a strong performance across all regions, with 57% in the Americas, 72% in EME, and 66% in APAC.

Hyperion contributed $71 million in license revenue during the quarter. Software license updates and product support revenues were up 23% on a non-GAAP basis to $2.5 billion and we are on a revenue run-rate to achieve over $10 billion in FY08.

In addition to delivering strong revenues, we are also delivering strong operating income and margin. Our non-GAAP operating income grew to $2.2 billion with our margins increasing 250 basis points to 41.3%, up from 38.8% in Q2 of last year.

EPS grew 40% to $0.31 on a non-GAAP basis, excluding our stock option expenses. Operating cash flows for the trailing 12 months increased $2.3 billion year over year to $7 billion, while free cash flow increased 50%.

In Q2, we bought back approximately 23 million shares at an average price of $21.12, and as we said, the rate of our buy-back will fluctuate from quarter to quarter, taking into account our alternative and anticipated uses of cash.

The currency impact for the quarter was a positive $0.07 on revenue and nine points -- sorry, seven points on revenue and nine points on operating income.

Before I turn to guidance, let me say again that we read the same newspapers you do and we take those reports into account when we think about the business. However, we were able to deliver exceptional Q1 results during August when the macro and sub-prime concerns began and the market dropped 1,000 points, and we were able to deliver exceptional results again this quarter as those same concerns continued.

We have a broad, highly diversified customer base, both by industry and geography, and as a net exporter, we benefit from the weaker dollar, so our guidance for Q3 is as follows: new software license revenues are expected to be up 15% to 25% year over year; total revenue is expected to be up 20% to 23% year over year on a non-GAAP basis; total revenue on a GAAP basis is expected to be up 21% to 24%; non-GAAP EPS excluding stock-based comp is expected to be $0.29 or $0.30, as compared to $0.25 last year; GAAP EPS for the second quarter is expected to be $0.23 to $0.25, up from $0.20 last year.

This guidance assumes a tax rate of 28.8 for Q3 versus 26.4 in Q3 of last year. Now, if current exchange rates hold for the entire year, for the entire quarter, that will result in six points of positive currency impact for Q3. But as you know, currencies are likely to fluctuate and as a result, the currency impact in Q3 could be different than our guidance assumes.

Finally, I’d like to give you a quick update on BEA. Over the last few weeks, we’ve been in contact with their bankers and lawyers and as a result of those discussions we’ve concluded that no friendly deal can be done with the current BEA board at a price and term acceptable to Oracle.

With that, I’ll turn the call over to Larry for his comments.

Lawrence J. Ellison

Thanks, Safra. We had a very, very strong quarter from a product perspective. We gained market share in all of our three major product areas against our primary competitors.

In the database market, our largest and most mature product, our database business grew 19% in the quarter, dramatically higher than the growth of the overall market and considerably faster than IBM’s DB2 growth, so we continue to take share in the database market and grow that business. We continue to extend our lead over the number two player, IBM.

In middleware, our middleware business grew 80% in the quarter. It was our fastest growing business and there, our two major competitors in middleware are Microsoft and IBM. It’s a little hard to figure out how big Microsoft is and whether their business is growing or how fast their business is growing because Microsoft bundles their middleware with Windows, and their middleware is not based on industry standards. But they are, as far as we can tell on our own studies, they are the number one player.

The number two player in middleware is IBM and like Oracle, IBM sells middleware based on Java and other industry standards and we continue to gain share against IBM. Again, our middleware growth, 80% in the quarter, very, very exciting.

Finally, in applications, where our primary competitor is SAP, we grew at 63% versus their reported growth -- their reported growth in dollars. We convert back to dollars. I believe their Euro growth was 11% but their dollar growth was 15%. Double-check those numbers but I do believe that’s correct, and we were 63%. So we are growing our applications business very much faster than SAP and we think that’s a result of our strategy differences.

SAP has elected to stick with ERP and build an all-new ERP system to sell to small businesses. They call that Business By Design. We’ve elected not to go into the small business market because we don’t see any synergy with our existing business, which sells to medium and large scale businesses.

So our existing businesses -- our existing customers tend to be large companies or medium/large companies. If we were to go and sell it to small business, it’s a new set of customers requiring a new sales force requiring a new product. There is just no leverage, no synergy -- it’s a business that we don’t think is right for Oracle.

Instead, what we think we should be doing and what we are doing is selling, is moving beyond ERP and selling industry-specific applications to the same customers that we sell database to, the same customers we sell middleware to, the same customers we sell ERP to, the same customers we sell CRM to, we are now selling industry-specific solutions in banking, in telecommunications, in retail, in government in the tax area, in utilities, in healthcare, in education and other -- and you’ll see us going into more and more industries. That’s our strategy for growth, to go beyond ERP, sell industry-specific applications to the customers we sell other things to.

We think it allows us to leverage our relationships, leverage our support, leverage our existing products via cross-selling and is a more profitable business at the high end rather than the low end.

We think this is already paying big dividends and as you see once again we turned in a pretty respectable quarter in terms of our growth compared with SAP.

With that, Charles will get much more specific and tell you about some pretty spectacular customer wins we’ve had in the quarter.

Charles E. Phillips

Great. Thanks, Larry. Well, we really had great focus and execution in all regions and lines of business, and just fantastic teamwork on these large deals that tend to cut across multiple product groups and sales organizations, but we’ve learned how to manage that and take advantage of our strength. In particular, some great performances, North America, our largest sales organization, did a great job optimizing cross-sell across acquired products and increasing margins at the same time.

Communications global business unit, huge upside in the quarter. They are really becoming a gold standard for telcos, since we are the only company with an end-to-end footprint from order capture to provisioning to billing.

APAC and LAD recovered from a slow Q1 and beat their forecast in double-digit revenues, just great execution.

Let me make a few comments by product area. On database, we’ve gotten a fantastic response from customers and analysts [inaudible] over 479 new features. We’ve had over 170,000 downloads since we introduced the product in August. So during the quarter, we continued with the release of the product and expanded it to more operating systems. We now support all the major operating systems. In addition, we’ve certified 11G with PeopleSoft, Siebel, and [JD Edwards]. We expect EBS12 to be certified by the end of January.

Moving on to middleware, we have some great customer wins I wanted to talk about just for a moment. For instance, we are using our SOA platform as a wedge strategy to go into new accounts that perhaps where a competitive application server is already installed, but because we have a new shelf and better products and the emerging technologies we are able to sell around those products and over time they become Oracle accounts. Let me give you a few examples.

Raytheon -- they are using NetWeaver as an application server but they use our SOA platform this quarter to automate manual approval processes.

[inaudible] -- using BEA middleware for application server, which shows Oracle [built-in] workflow for 1.5 million retirement employees and they are also using our content management. They will buy more Oracle.

China Mobile, a BEA customer, chose us for integration. Hyundai Motors was using IBM and SAP. They moved to us for SOA for their future needs.

We also had a real nice win in content management server [inaudible]. That’s a very strong business for us. So one organization you’ll all recognize, the SEC selected our content management system [Stellent] product to manage financial filings and documentations for 10-Ks, 10-Qs, et cetera.

Other areas that did very well are middleware, enterprise performance management -- that’s the Hyperion product. Some great wins there and that’s been a product that’s been key to getting into many, many SAP accounts and we continue to do that, so one of the top three U.K. banks in the world using SAP for financials chose us to consolidate those financials and now we have a strong relationship in the CFO’s office.

One of the top two German banks, the same thing happened. SAP back-end, as you might expect, but corporate wide financial consolidation chose Oracle.

So all these accounts are becoming SAP and Oracle shops, not just SAP anymore. So there’s no such thing as an SAP account to us, anyway.

In the areas of applications, continued momentum, as Larry described. We had 365 direct wins over SAP in the quarter, the ones that we could count. We probably had more. A few examples -- CellGen Corp., a life sciences industry, which used to be a strong industry for them, they selected us over SAP this quarter. One of the top banks in China, one of the big four, one of the four state-owned banks, we beat SAP there. Korean Airlines, the same thing.

We also had a nice win in Hellmann Worldwide, which is the largest privately owned logistics company in the world, happen to be headquartered in Germany -- nice win for us around G-log.

In the retail vertical, Morrisons, which is the U.K.’s fourth largest super market, this is a prototype footprint deal. They bought everything from merchandising, planning, store activities, HR, finance, [inaudible], middleware, database -- that’s the type of deal that we like, one of the important retail deals in the quarter and a good job by the RGBU.

In banking with iFlex, they had some great wins also. China Trust Commercial Bank, the largest bank in Taiwan in terms of revenues; MDM Bank in Russia, all those banks are going to need new systems. It’s one of the top 10 banks. They’ve selected iFlex for getting the localization done which will help us in the next [ten] deals. And the National Bank of Egypt, the largest bank there.

And in telco, I mentioned a great performance there, big deals at France Telecom and China Netcom, replacing AMDOCS.

In our tax and utilities business, our global business unit there, where we sell time and meter data management and field service, great wins at [Buchane] Light Company, Cleveland Water District, San Francisco Public Utility Commission, all over SAP.

So in summary, we are pleased with the execution in Q2 and we think we are well-positioned as we go into Q3, so we all feel pretty good.

Questions.

Roy Lobo

Thank you very much. I think with that, we’d like to open up the line for questions but before I do that, let me just remind the analysts, please limit their questions to one question so we can hear from all our analysts. Operator.

Question-and-Answer Session

Operator

(Operator Instructions) We’ll take our first question from Sarah Friar with Goldman Sachs.

Sarah Friar - Goldman Sachs

Good afternoon, everyone. Great quarter. Safra, on the margin side, if I take a look at your guidance and by midpoint of the top line guidance and then the margins that you did this quarter, that amazing 41.3, I’d actually end up a little bit ahead of you on an EPS perspective. So I’m just wondering, is there anything inherently about the third quarter that should increase operating expenses or are you leaving yourself a little bit of room there?

Safra A. Catz

No, there’s nothing particularly different about Q3 than Q2.

Sarah Friar - Goldman Sachs

Okay, and then generally, I think last quarter you talked about 100 to 200 bps improvement for the year. Is that still the type of lift that we should be expecting as we look through ’08?

Safra A. Catz

Well, I think you can see we are on track for that, so I don’t see why not.

Sarah Friar - Goldman Sachs

Terrific, and then one other quick one -- Roy, apologies -- just on the application side. There’s obviously concern out there about the macro environment for ’08 and on the app side, people associate bigger deal sizes with areas that could get hit in a downturn. How do you think about how resilient your apps business is if we see a slightly tougher macro environment and how do you think about verticals of real strength that you can go to in ’08?

Safra A. Catz

I don’t know if I or Charles should get that. I mean, the reality is that we are so broadly diversified now, Sarah. We are diversified geographically, as you heard. Charles went through a whole bunch of banks just now around the world picking Oracle, so the reality is that by product line, we are incredibly diversified. Many of our customers do not own the broad, all of our entire footprint. Many of them are interested now that it’s part of Oracle's footprint in buying some of these things, so in general we feel rather good all around.

Larry, maybe you have something to add to that.

Lawrence J. Ellison

Yeah, I think while it’s possible to defer an ERP implementation for a couple of years, because you are really changing your accounting back office, and that’s something that is to some degree discretionary and if you wait a couple of years, it’s not a big deal.

If you are trying to comply with the Basel II laws where we have to put in the money laundering system or a network provisioning system because you are moving to VOIP Internet protocol, some of these other applications are not so easily deferred. It’s core to the business.

I think one of the reasons we feel good about our applications business is it’s a diversified applications business now. It’s not just ERP. It’s not just accounting or human resources. The big telecommunications companies when, as they move and offer new services, new products to their customers, voice-over-Internet-protocol, those kinds of things, they have to put in these new systems that we offer and right now our hottest vertical area is telecommunications as they modernize their software to offer this new generation of products.

I don’t think those companies can defer that for a year or two, like ERP. That’s why the beyond ERP strategy I think is a more resilient strategy during a downturn than let’s say our friends in Germany.

Charles E. Phillips

The sub-prime issue is in the news a lot in the U.S. but it’s a big market, hundreds of banks around the world and there are lots of them outside of the U.S. that we are involved in, and so we are pretty diversified and obviously we are watching it for the ones that have those issues. But I just think it’s a bigger market than perhaps people recognize.

Operator

And we’ll take our next question form Jason Maynard with Credit Suisse.

Jason Maynard - Credit Suisse

Good afternoon, guys. I guess after that question, it’s kind of silly to ask how you are feeling about your strategy relative to the competition, so maybe I can drill in on the question around these vertical markets. Just in that context of being diversified, how much runway do you think you have left within some of these vertical markets? Where are you at and maybe some color on what you are seeing in terms of the pull through with database and the middleware products?

Charles E. Phillips

We think we are very early on in this whole strategy, even for the verticals we are already in, not to mention for the ones that we plan to get into. But the ones that we are in, in terms of the product portfolio that we have, the ability to go in with a full footprint, these companies didn’t buy that way. We are still selling in the verticals who are building applications so we just need to get them to start thinking buying packaged applications. So we have substantial opportunity ahead of us.

Lawrence J. Ellison

Let me chime in again. To some degree, I wouldn’t call it -- ERP is a fairly mature business. I wouldn’t call it saturated quite but it’s a very mature business. Most of the companies made an ERP decision. But if you look at telecommunications companies, they haven’t modernized their network positioning, or their billing. We’re replacing older AMDOC systems.

If you look at some of the banking companies, they are still running on mainframes. They have very old systems, so where ERP is a mature, nearly saturated business, some of these verticals are almost greenfields in terms of modern software. They are running on ancient things that are often homegrown, often run on mainframes and it’s just a huge opportunity.

Also again, these are strategic applications. This is the core of their business. It is not just doing accounting or paying their employees. This is actually someone will be able to log on and get a broadband line and get a cellular telephone line and get that automatically provisioned interactively over the Internet and to be able to then turn that service on, that VOIP service on or that cellular telephone service on completely automatically. The phone companies are doing that and they are using our software to do that.

Safra A. Catz

Jason, you also hit on a very, very major point, which we are one of the few companies that actually benefits, and that is in the very natural pull through of our technology when these products sell. The vertical strategy allows us to pull through other applications, as well as middleware and database and that’s obviously showing up in the numbers also, and in deal sizes.

Jason Maynard - Credit Suisse

Okay, real quick on this BEA situation, and I apologize for maybe a basic question here, but help me out there -- with the $17 proposal, I don’t quite understand why there can’t be a friendly transaction with the current board. What’s the backdrop on that situation?

Safra A. Catz

You know, Jason, you’d really have to ask them. We’ve been out there with our offer and it does not seem like that is possible with this current board.

Roy Lobo

Thank you, Jason, and just let me remind everyone, please limit your questions to one question.

Operator

We’ll go next to Peter Kuper with Morgan Stanley.

Peter C. Kuper - Morgan Stanley

All right, I’ll keep everybody honest here, one question -- Charles, in your comments, you mentioned SOA a number of times here and certainly SAP wins, I believe you said 365 direct wins over SAP, if I got that right. So clearly [inaudible] strategy is working. Is the SOA push here, are you seeing weakness from the NetWeaver adoption or is it just more of a broad-based, SOA kind of a next let’s say anchor point for you guys to keep chipping away at SAP’s market share?

Charles E. Phillips

Well, I’d say most of the customers are already convinced about SOA as a platform and as an architecture, so we don’t have to evangelize anymore. Unless they make that decision, there’s not much out there in terms of -- in our class of quality and breadth of product, so SAP really has nothing. That’s why we can sell so easily into their accounts. They have a core app server and -- that’s a compromised app server -- and what we provide is so current, it’s standard and proven by many third parties, that we walk in with a lot of credibility.

So it’s given us another reason to go back and talk to SAP customers.

Peter C. Kuper - Morgan Stanley

Okay, as part of that, development of SOA platform, I mean, we had some [little bit of turnover] in management ranks. Tom Kurian did a great job on his side. Are you guys feeling good about Fusion’s development track at this point?

Lawrence J. Ellison

Yeah, absolutely.

Roy Lobo

Thank you. Next question, Operator.

Operator

We’ll go to Heather Bellini with UBS.

Heather Bellini - UBS

Congratulations on the quarter. I had just a follow-up on Sarah’s margin question, talking about the 100 to 200 basis points for this year. I heard what you said but looking out to next year, I mean, you really accelerated and are showing the scale and the leverage of the model this year. I’m wondering if you could give us an idea of is that 50% target that Safra, you’ve talked about for the past few years, is that still something that we should expect to see and over what timeframe?

And then my follow-up would be, looking out to the pipeline, you made comments about the size of it before. I was just wondering, given the current macro environment, could you comment on it now and also tell us if you are assuming lower close rate assumptions than what you were using for the November quarter? Thanks.

Safra A. Catz

Now, Heather, that was really cute. You were able to stick in three questions.

Heather Bellini - UBS

I tried.

Safra A. Catz

Okay, let’s see if I can remember them. It was Larry that came up with the 50% target and you know, it remains out there in our future. It’s of course very dependent on our level of investment and our growth rate. So for us, profitability has always been very, very important. We’ve come a long way from the 20%, 22% we were in the late 90s, so we are now in the -- obviously in the 40s for the year. And you know, it is ultimately achievable -- it’s just very dependent on an awful lot of things.

The -- jeepers, what was your second one?

Heather Bellini - UBS

The comment, if you could comment about the size of the pipeline and the closing --

Safra A. Catz

The pipeline, sure. The pipelines remain very strong. As you know, I always assume lower closure rates for the next quarter than the year before and this existing quarter. Clearly this past quarter, once again closure rates were high and above average, above the average of the last six or seven years. That does seem to be a trend but in our forecasts, we can’t assume that and though the pipelines are large, very large, and continue to grow, it all really comes down to getting those deals closed and we won’t know that for quite a while.

There was a third one. What was that? Or did we cover it all?

Operator

We’ll get our next question with Adam Holt with J.P. Morgan.

Adam Holt - J.P. Morgan

Good afternoon and happy holidays to everyone. I had a question about the database growth, the 19%. Charles, as I believe you mentioned, you’ve obviously just started to or fully certified 11G on your application set and across platforms. Could you maybe give a little bit of detail of what was behind the acceleration in that business, particularly in North America?

And then I guess the second part of the question would be the comps get a little bit more difficult there heading into the back half of the year. What should we be thinking about in terms of sustainable growth on the database side?

Charles E. Phillips

Well, I didn’t mention the options but as you know, we continue to add new categories of options with each release and some of the new ones that we released last year, like audit log and database log, are doing extremely well. And I think particularly in North America, they have gotten good at focusing on those options and they are having people who specialize in selling add-ons around the database, and so that is a strategy that has worked well and they are all unique, these options that we come up with.

And I also think just the announcement of 11G, it helped, it kind of refocused people on the core database and they saw the innovation there. That certainly couldn’t hurt us going forward.

Lawrence J. Ellison

I think our database will continue to grow in double-digits. We should grow -- if the overall database market in the world is growing at high single digits, we should certainly grow faster than the market.

Operator

We’ll go now to Kirk Materne with Banc of America Securities.

Kirk Materne - Banc of America Securities

Thanks very much. Just a question on the growth in the middleware segment. Obviously that’s a segment of technology that’s been sort of lagging recently and I was just curious in terms of what, if there was a product in there that’s been sort of a leading indicator for you all in terms of a piece of technology that’s helping you capture customers and then obviously I assume you are surrounding that product with other features and the vertical applications, but just when you look at that business, is there a piece of functionality that you believe you guys are well ahead of that’s bringing more and more customers to the platform or is it just the entire suite of offerings you have there?

Lawrence J. Ellison

Actually, I read the same articles you have in the newspaper. This is about the slowing adoption of SOA, and while I’ve read that, people have to understand when you have a fundamentally new computer software architecture, SOA, it takes a long time for adoption. This is not something someone flips a switch and everyone moves to SOA. It takes about 10 to 20 years to rewrite all of your applications.

So that always was going to be a slow process. However, we see that process accelerating, at least in our middleware business. We think it’s a long-term growth story. It’s a very rapid growth story. We think it’s increasing so we have a SOA suite and in security, we have a single sign-on product. We have business intelligence products, balanced scorecard products, real-time measurement products.

We have a variety of different components well beyond just a Java server, a JVM and a Java container. So we have a complete and integrated suite but we see all of those businesses growing. I mean, 80% growth on a pretty big number, you have to hit on all the cylinders. So we see our middleware business doing extremely well, though understand it will take a very long time for our customers but we think that’s good news. It’s a long time for our customers to have a majority of their applications modernized, that we think this is a growth story for a decade for us.

Charles E. Phillips

I think the other thing we’ve done well is finally get the ISPs on board, went back to some of the database partners and now we have over 5,000 ISPs who’ve adopted our middleware and that’s a pull through for us.

And then I think the second issue is Thomas Kurian has done a great job in terms of making the upgrade process easy, so we have something like 90% of the installed base on the last two releases of the platform and that allows us to continue to upgrade them and sell the add-ons.

Roy Lobo

Thank you, Operator. We have time for one more question.

Operator

We’ll take our last question from Israel Hernandez with Lehman Brothers.

Israel Hernandez - Lehman Brothers

Good afternoon, everyone. Our checks our pointing to some significant pipeline build across the state and local government vertical, as well as higher ed. I was wondering if you could comment on what type of momentum you are seeing out there in those markets and do you see them as being meaningful drivers of business here over the next few quarters.

Charles E. Phillips

That is an area of strength for us. We’ve always been very strong in state and local government, and so has PeopleSoft. I think with the acquisition of SPL, which is now our utilities business unit, which is often sold to those same customers, through our strategy of getting stronger where we are already strong to begin with, this has been very helpful for us. So we continue to round out the footprint. A lot of the products that we bought are definitely applicable in that same vertical, so yes, we are doing well there.

Operator

And that does conclude the question-and-answer session today. I’d like to turn it back to management for any additional or closing remarks.

Roy Lobo

Great. Well, thank you, everyone, for participating in today’s call. A telephone replay will be available for 24 hours. The replay number is 719-457-0820, and the passcode is 1781234. You can also access the webcast replay on the Oracle investor relations website. The webcast replay will be available through the close of the market on December 26th. Thank you and with that, I’ll turn the call back to the Operator for closing.

Operator

Ladies and gentlemen, that does conclude today’s conference. Thank you for your participation. You may now disconnect.

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