ORACLE CORPORATION JAPAN Q2 FY2026 earnings call

• Achieved excellent results in Q2, especially in cloud business, reinforcing leading cloud vendor position. • Shifted focus to cloud but maintained steady order intake in license business. • Announced fourth alloy partner in Japan, SoftBank, to offer services with data sovereignty, with SoftBank launching Cloud PF type A for Japanese market from April 2026 and rolling out AI services. • Examples of cloud customers: ITOKI Corporation developed predictive maintenance system using Oracle's AI technology; Neo First Life Insurance adopted Oracle Database at Azure for policy management; Tokio Marine Holdings implemented Oracle Fusion Cloud EPM for global management.

Total revenue was JPY 134.677 billion, growing at 7.5%. Total cloud revenue was JPY 39.129 billion, up 38.3% and represents 29% of total company revenues. Infrastructure consumption revenues had strong momentum. Operating income was JPY 42.659 billion, increasing 1.8%. Net income was JPY 29.913 billion, up 1.9%. Total revenue and all profit categories hit record high for the second quarter.

• Intends to stick with revenue guidance for the year. • Second half of the year has a robust pipeline. • Expect license to decline in small percentages but cloud revenue growth will overcome the decline, and license pipeline in second half is strong.

Q: About AI-related revenue and the breakdown of the percentage as well as growth rate.

A: We don't break down revenues by AI because AI is embedded in all our products. So we can't identify sort of AI revenue separately. But the fact is that AI is driving and will drive our future growth in Japan. The segments that I have that we already split for public consumption is what you see in the supplementals, and they will continue to be the same.

Q: You mentioned that the second half pipeline is robust. So could you elaborate what kind of pipeline is it? And the license in the first half was a little weak. So could you tell us that the pipeline of the license is stronger in the second half? Or is it the robustness comes from the alloy-related business?

A: It is a mixture of everything. We do have a strong license pipeline in the second half. And by the way, we do expect our license to decline in small percentages because the future is in cloud and our cloud revenue -- growth in our cloud revenue will overcome the decline in license revenues as we go into the future. So yes, our outlook for the second half for license continues to be strong as expected, and growth will continue to come from cloud revenues.

Q: About the financing of the parent company, the Oracle Corporation, and as well as the cash flow. There are some concerns and probably that is impacting the share price of Oracle Japan. We understand that basically, they are not related. But if you can comment on the potential increase of the loan to the parent company as well as this concern about the minority shareholder, we would appreciate it.

A: Oracle Japan is an independent company, and we finance our own growth. We rely on the corporation for the intellectual property that it supplies to us, and it will continue to do so. So I don't think anything that happens at Oracle Corporation impacts Oracle Japan's independent business. I think I would leave it at that.

Q: The first half expenses, the personnel cost especially increased year-on-year. But personnel cost was up from the second half of the previous year. So is it okay to forecast that this growth is smaller than the year before? And are there any other expenses which are likely to increase in the second half?

A: So for overall expenses at this point in time, we don't see any extraordinary increases or changes in the second half. There will be the normal increases that you would expect to correspond to a growing business. Regarding the first half personnel expenses, there was some onetime restructuring expenses. As we continue to look at our organization and refresh our people with the right skill sets to support future Oracle Corporation's growth. Some of these expenses have to be incurred at some point. So it's basically that it's a onetime expense.