Comprehensive and fully integrated stack of cloud applications and platform services provider, Oracle announced in mid-March that it had beat expectations during its fiscal third quarter of 2020. The company reported $9.8 billion in revenue which is a 1.9% increase compared to last year and its best performance since May 2018. This was fueled by its subscription revenue, which includes cloud services and software updates. However, its stock has not been immune to the recent market downturn.
The remarkable quarter comes amid the coronavirus outbreak, as other companies experience revenue declines and mass layoffs.
Executive Chairman and CTO Larry Ellison tells investors that increased subscription sales, greater reliance on digital customer-engagement, and hardware supply-chain workarounds have kept the COVID-19 pandemic from affecting Oracle’s future revenues. Despite this, the company has been careful to set expectations for the immediate future as well as 2021.
“We are largely conducting business as usual...it is not yet clear what the effect of the virus will be on our business,” said CEO Safra Catz on a Q3 2020 earnings call. “Our business is not a one-time license business very much anymore,” he added, noting in the past quarter, 71% of Oracle’s business was contracted as ongoing subscriptions before the quarter began. “We expect minimal impact of the virus in the next quarter...but I am giving you a wider than normal range of expectations.”
While some have stated that Oracle’s remarkable performance is “no match” for coronavirus, the company’s recent actions signal otherwise. Just weeks following the release of its fiscal third quarter earnings, Oracle has stated that the coronavirus crisis could hit its "largest revenue quarter," although the full impact of the pandemic on its business is unknown.
Oracle shared this more prudent insight in a filing with the US Securities and Exchange Commission on March 30. This is a preliminary prospectus supplement for a new bond offering. Oracle noted that it plans to use proceeds from the offering for "general corporate purposes," including stock buybacks, repaying debt and "future acquisitions.”
Earlier in March, the company laid off 1,300 staff across Europe and specifically Dublin, Ireland as the tech giant's cloud services business failed to meet target revenues to cover its losses in its traditional licensing business.