On this episode of The Six Five Webcast, hosts Patrick Moorhead and Daniel Newman discuss the tech news stories that made headlines this week. The six handpicked topics for this week are:
- Luminar Day announcements
- Plus & Nikola Truck Safety Announcement
- Dynamics 365 Viva Sales Goes GPT
- MongoDB Earnings
- Marvell Earnings
- Oracle Earnings
For a deeper dive into each topic, please click on the links above. Be sure to subscribe to The Six Five Webcast so you never miss an episode.
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Disclaimer: The Six Five Webcast is for information and entertainment purposes only. Over the course of this webcast, we may talk about companies that are publicly traded and we may even reference that fact and their equity share price, but please do not take anything that we say as a recommendation about what you should do with your investment dollars. We are not investment advisors and we ask that you do not treat us as such.
Daniel Newman: Hey everyone, it’s Friday and we are back for another episode of The Six Five podcast episode 159. If you think you already saw us this week it’s because you did, but that’s only because we love you so much that we had to do it twice. We’re back from Barcelona, we’re back from a long week, 15 Six Fives in the MWC 2023. But there was so much more news Pat that was breaking because we don’t just cover mobile, we really do chips to SaaS and so much more. What do you say chips to SaaS and we kick ass? There goes the exclusive label.
Patrick Moorhead: Uh-oh.
Daniel Newman: No-
Patrick Moorhead: Beep boop.
Daniel Newman: Always good on a Friday. Favorite part of every single week is the 9:00 Central Standard Time hour and we hope it is for you too. But Pat, how are you doing my friend?
Patrick Moorhead: Dan, great to be here, happy to be here, and it’s good to be here with you. I just wish we could do non-stop pods just the whole time but there’s other stuff we have to do run companies, do research, analysis, give good advisory. It’s good stuff.
Daniel Newman: Superpower buddy. The inside voice as you like to say.
Patrick Moorhead: I know. I’m also happy I’ve gotten to sleep in my own bed two nights in a row, I’m going to make it three tonight, and then I’m going to be gone for a couple weeks. But it’s good to be here.
Daniel Newman: Next time I see you it’s going to be in New York.
Patrick Moorhead: I know. Snow. I hear we’re going to get snow.
Daniel Newman: That’s not a bad thing. We got a big week. Like I said, we covered a lot. And by the way, we are going to try to cover the rest, and there’s already more. Our list of topics for next week’s Six Five is already mounting. But we got a great show today. We’re going to talk Luminar, we’re going to talk Plus.ai, we’re going to talk Microsoft Dynamics, and maybe sneak a little bit about Salesforce in there but we’ll talk more about that later. And then there’s some earnings, and we’ll do that on the tail. MongoDB, Marvell last week, and then Oracle just yesterday. It’s been a very interesting period of time in the markets and then I think we have to talk about that. If this is the first time you’re watching the Six Five we ask you why? And then we will follow that up by saying, this show is for information and entertainment purposes only. And while we do discuss publicly traded companies, please don’t take anything we say as investment advice.
Pat, this is the week that Luminar did their big Luminar Day investor event. And I know while you and I would’ve loved to have been there, we were at MWC. So let’s talk about it here. Let me see. Whose number should I call? Oh, I’ll call mine. We’ve had a lot of interactions with Luminar and we, of course, saw them at CES, and we talked about it quite a bit there. But Luminar, in the midst of what I would say as an autonomous driving and safety revolution, continues to be a company that the market needs to pay attention to.
And so CEO Austin Russell took his strategy, his vision, his roadmap to the investor community when they did their investor event on February… Was it the 28th, Pat? I believe it was the 28th. And so what happened at this event? Well, the company unveiled its future technology, it talked about its partnerships, it looked into some of its safety profile capability, talked about its future AI engines, and then also announced some new interesting commercial deals. I believe, Pat, and this is interesting, established itself as a semiconductor company. So now it’s Luminar Semiconductor, and that’s out of a combination of semi subsidiaries.
At scale, what’s going on? Well, I think first and foremost investors want to know who’s using Luminar. While they have a number of different partners, I think one of the big ones that it was really able to lean into is Mercedes-Benz. Now, you and I, as F1 fans, know Mercedes tends to always be a strong competitor in that space. More interestingly is Mercedes-Benz is one of the leading automotive manufacturers in the world. It’s a company that’s not only known for luxury but also known for safety. And with this, Luminar continues to get support including the utilization of its next-generation Iris Plus sensors into their vehicles.
Who else though? Well, the company was able to talk about Volvo, talk about Daimler, talk about Polestar, and a number of others, Pat. Was it The rising that was in China? Many, many others. The new Iris Plus is all about expanded range. And lidar is all about adding that next layer of sensor depth that creates safety that we often see is unachievable using current vision technology that is mostly and best known from Tesla. The company had a number of other announcements, and I’m going to just pick a couple things and then I’ll leave a little bit for you to talk about. But one is it’s really leaning into its manufacturing in Mexico, which is pretty interesting given the global supply chain and what we’ve heard across the market as it relates to manufacturing in Asia. Luminar deciding to manufacture in Mexico is something I think we’re going to hear more about across the semiconductor industry in the coming years.
I guess I would say, Pat, the other thing that I thought was really interesting is the company’s getting creative with its partnerships. I’m not sure if you’re familiar with Swiss Re, but a reinsurance company. Luminar-equipped vehicles, the bet is there safer and have a lower likelihood of a crash than other vehicles. How can a market benefit from that? How could a potential buyer of a vehicle with this technology benefit from that? At their investor day, the company announced a partnership with Swiss Re to basically move into finding new ways to deal with insurance, and lower costs, and ideally over time give more benefit to drivers in the secondary insurance market that are going to use cars that are equipped with Luminar’s lidar technology.
And Pat, I just think this is really interesting and creative. Why do more people not get focused on safety features? When lidar technology is now under $1000 or can be done in under $1000 per vehicle, you’d have to think that over the course of an insurance lifespan, just an order of magnitude, lower percent chance of an accident, should be repaid to somebody through a lower cost of ensuring that vehicle. While this first move may or may not be the thing that breaks into this space at scale, seeing the company think about it this way is really interesting to me as the insurance market really hasn’t caught up with technology available to personalize how much each driver pays. And you and I buddy, I don’t know that we actually really want that, but I think that you could, right, the snapshot concept. That’s a couple things. Like I said, so much more but I’m going to leave a little bit for you to cover here.
Patrick Moorhead: I mean, they just had a tremendous amount of announcements. I’m a little disappointed that I wasn’t able to attend but lock in on something and we got to go from there do first in first out. No, it was a huge day. I mean, new sensors manufacturing ahead of schedule. They updated their number of design wins. They have a new AI engine. And like you had just discussed, a new insurance program, which by the way, I absolutely freaking love. I don’t know what was a little bit of a turnoff to investors because it did dip, stock did dip after this day after going up about 60% based on the deal with Mercedes.
Two things that investors had to think about, right? How does this insurance program fit in and how does the chip roll-up fit in? I think investors are missing the point. Again, we’re not giving investment advice this is for entertainment and educational purposes only. It’s a means to an end. I don’t look at the insurance program as a business, I look at it mostly as an exclamation point to go out there and say, “The cars that have lidar are safer.” It’s disappointing that the traditional insurance companies haven’t embraced that, but I actually think this is where this is going. You can imagine insurance that’s half the cost of other insurance carriers if it has a Luminar lidar sensor in it. That in itself is a huge statement. I think people shouldn’t confuse combining three other semiconductors subsidiaries into something that is dramatically different. To me, I looked at that as a streamline and the ability to better bring together the combination of receiver, laser, and the processing chip to get extra advantage up there on the competition.
This isn’t new, these companies are already working together. I am interested to see in the future where it goes, right? Do they sell pieces and parts to different customers aside from it? That is an absolute TBD there. Listen, the company’s on a roll. Their stock even going down is up 44% in the past month. It’s up 45% down from going up around 60%. Wall Street is not always the best indicator of value or growth. We look at it but it is one measuring stick and they are moving up and to the right.
Daniel Newman: And Pat, this week has been an absolute macro mess. The commentary from Fed chairman Jerome Powell has been incredibly hawkish. We saw a run on a big Silicon Valley bank where people are now worried about potential stability of our banking system. Sometimes when you look at how individual stocks perform, you just have to remember the arbiter isn’t always the actual performance of any individual company but the bigger macro picture. I think it’s gotten a nice jolt, and I think it’s doing the right things, and over time equilibrium will be found. Pat, let’s talk a little bit more about autonomous, but let’s move from passenger vehicles to semis, and not semiconductors, semi trucks.
Patrick Moorhead: Dan, you and I have talked about a company called Plus, formally called Plus.ai. Essentially, Plus is the safety and automation play for trucks. These systems get a lot of mileage, cha-ching, when we’re talking about cars but very infrequently are people talking about trucks. Dan, as you know well coming from a family of truckers, truck-owning people, the amount of insurance and the amount of danger is high When you have a big rig coming down the highway. Now, stepping back, trucks have a lot more safety features in them than cars today for obvious reasons. But as we get into this new generation of trucks, which then can be defined by advanced safety systems and also electrification, this is where Plus and Nikola come together. Nikola announced that it’s the first company equipping their trucks with Plus’s PlusDrive, which you and I got a great demonstration of when we were out visiting the company and talking with CEO David Liu.
A little bit of backstory on the PlusDrive. Really look at that as technology that uses AI and automation to make the driver of the truck more like a pilot. This is not fully autonomous at this point, but when it comes to things like lane change, predictive braking, steering, and which lane to be in to optimize for safety and fuel economy. And also, electric fuel economy when it comes to these trucks from Nikola. Nikola’s going to use the PlusDrive for its tray battery electric vehicles, another acronym that we’ve brought in here, BEV, and its hydrogen-electric vehicles in the US, and they are going to be available at the end of 2024. This Nikola system gets 330 miles charging time of 90 minutes with a 300-kilowatt performing charger. It’s great to see the future of technology, and these two companies, Nikola and Plus are absolutely bringing it to the table.
Daniel Newman: Pat, I thought that the whole announcement is really interesting. Of course, Nikola has had a bit of a interesting run. This is the company that was allegedly rolling a truck downhill. It’s one of those things where I believe that the market has been unscrupulous in many ways and has been incredibly difficult in how it’s treated companies in phases of rolling out this tech. It’s just been an interesting storied history here. Now, I believe long term that Nikola, first of all, has some really great designs, has some very interesting technology. More importantly, Plus, you and I have had that chance to actually spend time in their vehicle with a driver experiencing L2 Plus, seeing the truck work on the highway, and seeing that the investment being made is going to carry forward a really important industry.
Now, you mentioned my history as a family of trucking. My father always said to me, “We’re one lawsuit away from being broke.” These are large machines. This is a highly skilled job, it’s a job that’s often in short supply. We saw it during the pandemic, and, of course, we’re seeing adjustments in the labor supply market right now, but you couldn’t get drivers, and this was something that went on. We’re not looking at L4 yet, at this point, but we are looking at next-generation L2 Plus that’s going to enable drivers to work more safely and deal with more complexity. The partnership’s important but the technology in my view is even more important. We need the company to continue to build technology that doesn’t only end up in Nikola but ends up in the vast majority of semis to make sure that drivers can balance the work, the safety, the profile, the roads. We all know infrastructure in this country lags. In the US it’s going to be very critical.
And, of course, Plus has a big role to play in China. And, of course, the volume of transit and of goods and services being moved around China is going to be even higher and more voluminous. By the way, the infrastructure’s better and largely. The ability, especially between large cities to have autonomous or fully autonomous in the future is going to be something I could see coming even sooner in that part of the world. Partnership’s important, the technology’s important. The safety profile, I think that’s a theme. We mentioned it with Luminar, we’re going to mention here with Plus. I’m happy to see it. I’m looking forward to seeing more companies glom on to Plus and what the company is providing technology-wise.
Patrick Moorhead: Two very exciting automotive technology companies, it’s fun.
Daniel Newman: It is fun, Pat. We talk a lot about big tech. It’s good to see disruptive companies breaking into important markets. And both of these companies, I think, are companies to watch heading into the future. Now, Pat, it wouldn’t be a podcast in the month of March in 2023 if we didn’t talk about ChatGPT.
Patrick Moorhead: I know, we got to do this, Dan. We must do this.
Daniel Newman: What we’re seeing is the evolution. You and I went to Redmond to see Bing, Bing, and the next generation of Bing, Bing search. I’m going to do that a few more times before we’re done. AI, ChatGPT powered search and adding it to the Edge browser. I don’t know about you, are you using it?
Patrick Moorhead: I am, I’m using it. If nothing else a logic check on some things but also really checking out the experience and see how it’s improved. They added that slider bar for do you want it to be creative, do you want it more balanced, do you want it more precise? And I thought I’d want more precise but I left it on more balanced, it’s a lot more fun.
Daniel Newman: Interesting, interesting. I’m using it and I think… I’m starting to understand it and find it increasingly more value. What did you and I say that was going to be most interesting wasn’t really the open internet and the next-generation large language models.? We said, “What’s going to get more interesting is when the data that we create, the proprietary data that we create, through our systems of record that sit in our data warehouses, that is part of our meeting data, that is part of our customer daily interactions that can be then incorporated into and added to the open data of the internet, and then, of course, the social graph that companies like Microsoft have from technology like LinkedIn.” And you start putting all this together and it gets really, really interesting.
Microsoft, I think the evolution is beginning to become clear. This particular announcement was around Dynamics 365, Viva Sales which is customer service, sales, CRM, and it’s about the Copilot. And Microsoft’s going to be very consistent in its explanation that Copilot is all about, this technology is supposed to work alongside you not in place of people. Having said that, it does some pretty important things and it takes it most of the way there. In customer service, it’s going to have advanced chat capabilities to generate emails to customers, summaries of meetings that you have, and even being able to import product pricing, product information, and create proposals instantaneously. It also has marketing capabilities that could help you drive customer insights. You can recommend customer segments to work with and even make suggestions of topics in terms of what should be put in front of customers. This is moving very, very quickly, Pat, and it’s being streamlined.
Copilot was originally part of the GitHub and you’re seeing how this is manifesting throughout Microsoft’s entire ecosystem to create a very streamlined AI builder, and that’s going to allow developers to use low code to incorporate generative AI models across the portfolio. So where does it go from here? My take is we’re going to see ChatGPT incorporated across every part of the Microsoft ecosystem. Not to mention, in the Viva Sales announcements, they also announced that this technology would work inside of Salesforce. And the reason I think that’s really important to mention is, of course, Salesforce came out with their GPT, and we’ll talk more about that. Let’s do it in another podcast. But the point is, the arms race isn’t only about the large language models for the open internet, now we’re seeing an arms race of large language model and generative AI incorporation into these applications. And this is pretty exciting.
So I see this as spanning – you’re going to see more GPT in Azure, you’re going to see more GPT in security tools and modules, you’re going to see more GPT in data and analytics tools that are going to sit at the PAS level, you’re going to see GPT everywhere. The Copilot is going to go everywhere. It’s eventually just going to be the Microsoft Copilot. That’s my take, no proof. What’s really cool here is we’re streamlining workflows, Pat. You and I do 100 meetings a week, wouldn’t it be great at the end of the week, when you’ve done 100 meetings, to just get a quick summary? What you met about? What’s important? What follow up you’ve committed yourself to? Can it actually write that? And by the way, it’d be pretty cool if all of our commentary on shows like this, “Hey, Copilot, write a blog post in my voice that takes the summation of the second segment of this week’s Six Five podcast and turn it into an article for my Forbes column.” Dude, I mean really.
Patrick Moorhead: No, I know. I mean, I’m super excited about that. That does push the lines of, I don’t know, analyst credibility and stuff like that but it sure is exciting. Actually, let me restate that. If it’s based on what we’ve already said and what we’ve already talked about, I do think that’s fair game.
Daniel Newman: Pat, that’s not only credible, incredible.
Patrick Moorhead: No, it totally is. And by the way, getting generative AI into Dynamics 365 is where, for my estimation, the excitement starts. I mean, Analytics have been around I mean forever. I mean, I started work in 1990 and we had Analytics to a structured database, and it did move the ball forward but there was very little automation and intelligence that would just be there. What I’m super excited about as it relates to things like supply chain, things like CRM, things like HRM. Those to me are super exciting as to what this technology can bring. Because it’s operating on a smaller dataset and a private dataset, I believe that what comes back will be more accurate. So you train on a gigantic dataset but you apply the data of your enterprise which is going to be smaller by the way, you bring in multiple data sets to help you make that control.
And with a company like Microsoft too when it comes to things like security, it really does just follow the same lines of how the data is secured in the first place. I know there needs to be that security check box because it’s important. But I also think that enterprise search we saw the same exact thing which was oh my gosh, some stuff came back in my enterprise search that I didn’t know was open to everybody. And we’re going to have little oopsies like that but none of this is new.
Daniel Newman: Absolutely, Pat. And by the way, one thing that is worth mentioning is the pace of innovation is mind-boggling. The speed in which Microsoft is doing this. And, of course, it’s putting pressure on all the competition to move faster, but I’ve never seen a pace coming out of big companies at quite this rate. It’s really interesting to watch. So let’s jump to the next topic, Pat. I think we’re onto earnings here, we’re into the back half here. Let’s talk MongoDB.
Patrick Moorhead: NET(net), the company, destroyed on EPS. I mean, a number so high that… Okay, I’ll say it: 697% above expectations. Revenue beat by 7%. And that beat on the revenue line was in line with the previous three-quarter beats of nine, eight, and 7%. But I think the big shocker to folks was a very soft guide. I dug into that, and it is amazing what you can pick up in the call. I don’t listen to all calls, I really prefer quite frankly for there to be a robust PowerPoint deck, but it all came down to consumption, right?
As MongoDB has done a really good job moving their revenue to an as-a-service and to a product called Atlas. And Atlas interacts with the top public cloud providers out there. So they can impact sales, what they can’t impact is consumption. If you look at the holiday quarter consumption from some of their core customers, and some of those are retail customers, it went down and they do see that continuing. The fun part on the call is they did say, “Listen, we’re not having any issues selling here.” And again, it gets back to this sell-in versus consumption with Atlas. And they went out of their way to say, “unlike our peers.” And I think that was a smart thing to say. They did say they were going to slow headcount from double digits to single digits in the year, they’re going to increase quota-carrying folks.
And I also appreciated some of the customer stories that they brought out. And I appreciate them doing this and I appreciate when Oracle does this – I love it when customers do this – they put a percentage on either the improvement to their business or even something like cost. Their CEO came out and talked about a bunch of customers who are using MongoDB as their primary database delivering uninterrupted user service while reducing expenses by 40%. I love that type of aggressiveness on a call, it captures the value prop really well.
Daniel Newman: I think their transition to cloud with Atlas is going well. I think the company’s really working on building not only that developer ecosystem but scaling up and becoming more core and critical to everything that companies move forward. I keep talking about we come off Microsoft, we’re talking about this future generative AI, well it’s going to be these data – it’s going to be data tools, data warehouses, data ecosystems that are going to be made available that are going to provide that unique plumbing that’s going to be utilized for companies to get to these better insights or to drive and build apps that are going to be able to incorporate this technology. You can’t do what we’re seeing with Copilot and GPT without data. Where that data’s going to reside is going to continue to be interesting.
And I like Mongo because it actually has a good strategy for both handling prem and cloud, and it’s moving towards an ecosystem that enables that sort of highly consumable Atlas-driven tool. But also it’s traditional in legacy database technologies. The growth is good, Pat. I mean, look, companies are never seemingly going to be – sorry – investors are never going to seemingly be satisfied with what is it a 36% increase in revenue. Losses are continuing to get slower, it’s making bold moves into the cloud, it’s showing strength and wins in customers.
And yet, the macro makes people concerned. People want to see you grow faster, people want to see you profitable more quickly. And so when you’re a company like Mongo that’s sort of having to trade off profitability and scale on a quarterly basis, I think it’s all about sticking to the plan. If you stick to the plan and you continue to grow, and you continue to deliver these key data infrastructure and data fabric that companies need to function, operate, build applications, tools, I think that in the long run, the company will win. I’m encouraged. There was even a 47% revenue growth.
People can be “complainy” and whiny, but again, this is another one of those instances where the macro, more than the micro, this isn’t about Mongo as much as it’s about the macro. Growth will come back in vogue. Is it now or is it six months from now or is it a year from now? We shall see, but I like where the company’s heading. I like this space that the company’s in and so I’m optimistic. All right, so let’s move on. Another company that did earnings while we were gone at Mobile World…Oh darn! I’m the host… Alright so let’s move on, you know another company that did earnings while we were gone at Mobile World – gah, it’s like couldn’t they plan it differently.? Don’t they know that they-
Patrick Moorhead: Plan around our schedules.
Daniel Newman: Don’t they know that the commentators, that could do the best commenting on earnings, are going to be at MWC and are not going to be available to comment immediately on all those earnings? Plus, those 11 PM CEO calls. It’s really nice and all. Here at 11 PM, we’re just heading to dinner at that time when you’re in Spain. But anyway. So let’s talk a little bit about the quarter and the full year. I mean, Marvell’s story was up and to the right. It was up and to the right, up and to the right, up and to the right. Like all semiconductor companies, or nearly all semiconductor companies there has been an inflection where at some point the slowing of the economy, the increased supply was going to start to create a little bit of turbulence in terms of growth. Q4 was the first for Marvell where it was – the slowdown – became really evident. But still, the company grew on a 6% year over year and saw a slight decline on a quarter-over-quarter basis. Slight decline on income.
The data infrastructure business for the company grew 7%. And that’s been the key. I’ve said quarter after quarter after quarter, Pat… I mean, the fact is, this company’s diversity of its revenue has been key. The company was able to actually say this year it declared, in its earnings Pat, 88% of its revenue now is data infrastructure. The business on a year-over-year basis performed incredibly well. So while the quarter was a little bit soft, data center revenue 35% up year over year. Cloud led the way. Enterprise networking up 51%. Carrier infrastructure up 32% on the 5G ramp. And then, of course, automotive grew 43% with automotive ethernet networking leading the way. 33% on the year, 35% non-gap growth of earnings. What’s the point of reading all these numbers because we do analysis not news, Pat? The analysis is really good year. Now the question mark from Marvell is, now it’s finished the year, the quarter sort of dragged it a little bit, when does it come back?
And here’s my take on it, Pat. The company’s well diversified. We’re seeing strength from infrastructure companies like Cisco. These are the companies that Marvell is supplying. You’re seeing partnerships with infrastructure providers like Nokia that are going to be providing and helping generate the demand and growth for 5G at the telco and carrier level. The companies partnered closely with cloud providers like AWS to build cloud-scale silicon. I tend to believe that being in the right markets: enterprise, cloud, 5G, and automotive, having 88% of your revenue sitting in that space, and knowing that digital transformation, buzzword aside, is going to continue to be the deflationary capability that’s going to offset cost containment, that’s going to be done in other parts of the enterprise, that Marvell will be robust. Will growth slow versus a year ago? Yes. We are in a semiconductor gully right now across the board. But well-run companies that are in the right spaces, that have the right partnerships are going to persevere, especially those that have very low exposure to this consumer glut that we’re in, and Marvell’s in that space.
Is it a perfect situation? No. Was it a great year for Marvell? I would say yes. Are we heading into maybe a two or three quarter period of tougher results for the company? I would believe that to be the case but I think you’re going to see a nice turn because of the way the company’s positioned.
Patrick Moorhead: So this is one of the results that it’s important to split the businesses up. They have four main businesses. They have data center which is actually cloud, enterprise which is the enterprise data center, and edge, carrier, and automotive industrial. Enterprise was up 39%, carrier was up 14, and auto and industrial was up 25. And that leaves data center. So I drilled in, I listened to the call, and this 13% decline in data center was all about the storage business and the cloud folks and it was an inventory challenge. They had more inventory so there had to be some write-downs. And, obviously, sales were reduced as well as all storage inside of that data center. The company did project that data center storage was going to decline again across hard drives, SSD, fiber channels. And all this makes sense.
Now, what I’m trying to peel together is which one of the cloud folks is actually pulling back. My guess is it’s likely AWS just because I believe that Marvell is a huge supplier on nitro SSDs. That’s the only thing I can come up with right now. But again, as industry analysts, I mean, I like to look – I really don’t care about the stock price and the value. I think the way that I am looking at it is, was this a self-inflicted wound? Are they losing market share? And the answer I believe is no. This is an absolute market. It’s like the discussion we’re having around the PC folks which is, was this bad management or a crummy market? It’s a crummy market. And for the data center market with Marvell they got hit and we’ll have to see how many quarters – typically these inventory balances or pauses out there in the cloud market take two, maybe three quarters – but we’ll have to see.
I did want to give a shout-out. They did do the entire year recording, which 33% year-over-year increase in revenue, non-GAAP EPS of 35%, data center infrastructure increase of 39%. You talked about the re-balancing that the company has done over the last five or six years. Data infrastructure revenue is 88% of total revenue so that leaves 12%, I guess, for the other maybe “consumery” stuff that’s out there. Tough quarter. It’d be interesting to look in the future. The great thing is it’s a diversified company, and when it comes to the copper-to-optical transition, it’s hard for me not to look at them and say they’re a leader if not the leader.
Daniel Newman: I think our sentiment is similar, Pat. And I think the macro zoom out is that Marvell’s prospects are good, a well-positioned company. All right, well let’s take it home, Pat. I was on Squawk Asia yesterday, talked a little bit about Oracle so my opinion’s out there but I hadn’t heard yours yet. Why don’t you kick this one off?
Patrick Moorhead: I mean, Oracle beat on the bottom, right, they beat by about 1%, they missed on revenue by 0.21%. Is that a hitting expectations or missing? And let’s also remind people that expectations are Wall Street expectations, not the guide, right? But with all that financial mumbo-jumbo said, their IAS growth is on fire: 57% growth constant currency. They’re nearing a $6 billion run rate business, that’s incredible. SaaS growth, the 44% constant currency. That’s nearly a $12 billion business. Here was a big surprise, Daniel, I had. ERP SaaS. We have seen overall enterprise SaaS decline when you looked at the quarter before with Salesforce and a couple other companies, but they keep knocking it with big double-digit numbers in the 20s. I think we should no longer look at SaaS as this homogeneous glob. I mean, we have to parse it out. ERP changes are based on the changing calculus in supply chain is keeping ERP SaaS growing. And in fact 28% growth for fusion, 26% growth for NetSuite.
I listened to the call and there were some pretty fun stuff. I mean, anytime that Safra or Larry get on the phone you’re going to get some fireworks. They had customer lists, right? There’s 10,000 Fusion ERP customers, 34,000 NetSuite ERP customers. Cerner, right, big acquisition they made, they’ve increased their healthcare contract base by $5 billion since they acquired the company. A little smack-talking here. They were talking about Austin FC and quote-unquote. Austin FC sidelined AWS and Snowflake and chose Oracle Cloud infrastructure. That was fun. I think the final Larry smack-talk that came out was quote-unquote my favorite quote from big phone company in the United States was “The difference between Oracle Cloud and other clouds are simply that Oracle cloud doesn’t go down.” Man, that’s a slippery slope if you ask me. I’m sure if that not going down continues in the future we’re going to start hearing about it a lot more and we’ll probably hear their IAS competitors potentially talking smack back.
Daniel Newman: So, Pat, look, the stock fell on a $20 million miss on over $12 billion in revenue on top line. It’s a rounding error. I mean, a 0.01 move of currency could’ve changed that in a moment’s notice. But like I said, yes, this week’s it’s more the macro, and everybody’s feeling bad again this week. We got to be more prescriptive here. 55-plus percent growth of IAS, 45% overall cloud growth, $16 billion run, 42% on the apps business path. Now again, all these numbers are significantly higher than the biggest in these categories. You’re growing faster in apps than Salesforce, you’re growing faster in infrastructure than AWS. We got to call a spade a spade, that’s our job as analysts. We got to call a spade a spade. The company is growing well.
And it has a really interesting juxtaposition because of its huge database business. And this database business is a fire and gasoline for growing its cloud business. Because it’s very easy for them to say, “Look, we’re going to make it worth your while to run your cloud, your data in our cloud.” I don’t even think the company’s fully turned the screw in terms of that, and so this is going to be something that’s really interesting to continue to watch.
The other thing is just, like I said, about MongoDB, the plumbing here is really interesting. Oracle has probably the largest system of record in data set of enterprises in the world. I think SAP and Oracle are probably the two that have the most data under – in terms of system of record data. All that data is going to create a really interesting long-term opportunity for Oracle to step into this generative AI arms race. We all know how expensive it is to move data so it’s a “Hey, you got all this data on Oracle, you run it all in Oracle Cloud,” and we start building generative and AI models that are going to be beneficial. That becomes a really powerful combination long term to look at. I still think enterprise AI is the biggest opportunity, not actually this sort of open internet AI that everybody’s so excited about. We’re really just witnessing Siri 2.0 right now, this is the next Siri that works a little bit better. That’s really what we’re seeing right now. But how this gets applied on our proprietary data is going to be the interesting output.
They raise the div, guidance is good, the growth is good, Oracle’s good, I like the company. I’m in the middle of working on another op-ed for MarketWatch of four companies I think are really interesting to keep an eye on during this sort of austerity period. Oracle is among them for all the reasons that we mentioned. Congratulations to the company. It’s going to be fierce for them to ever climb into being out of the three, four race because there’s just so much growth to catch up with Microsoft and AWS, but Larry’s confidence…it can’t be shaken.
Patrick Moorhead: I mean, who would’ve thought? I mean, look back three years ago, I mean, their IAS was just terrible, right, and they were getting to Redwood with Fusion. I mean, NetSuite was still growing but you know had a bunch of uncoordinated code basis on the SaaS side. Credit to them. Seriously, credit to them.
Daniel Newman: Absolutely. There we have it, buddy, we did it. We’re a few minutes past the hour but things had to be said and we had to get it covered. I want to thank everybody here for tuning in, it was great to cover all this ground this week. Pat, we’re going to be back next week, you and I, and we’re going to be off and moving to New York City where we’ll actually catch up with everybody again on some things that are going on. You got an IBM event, I’m heading up for a ServiceNow event so lots cooking, lots going on.
Patrick Moorhead: Lots cooking, man.
Daniel Newman: A great week. Appreciate all you. Hit that subscribe button. Join us for all of our Six Five podcasts. We’ve got our Six Five Summit coming up in June so make sure you check that out. Be sure to sign up it’s going to be a big one. But for this week, for this show, for this episode, for Patrick Moorhead, the number one analyst in the world, power-ranked, and myself, we appreciate you tuning in. We’ll see you next time.