Oracle (NYSE: ORCL) recently reported its third quarter results that beat analyst estimates and displayed its strongest revenue growth in nearly two years. Even amid the coronavirus impact, its stock surged post the results.

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Oracle’s Financials

Revenue for the third quarter grew 3% over the year to $9.8 billion, beating analyst estimates of $9.75 billion. GAAP net income was $2.6 billion, and non-GAAP net Income was $3.2 billion. Non-GAAP EPS was up 11% to $0.97, ahead of the market’s forecast of $0.96.

By segment, cloud services and license support revenues grew 5% to $6.93 billion, ahead of analyst estimates of $6.9 billion. Cloud licenses and on-premise license revenues were flat at $1.23 billion but above analyst estimates of $1.19 billion. Hardware revenues fell 5% to $857 million below analyst estimates of $878 million and services revenues was flat at $778 million below analyst estimates of $781 million.

For the fourth quarter, total revenues are expected to be range between negative 2% and positive 2%. The guidance was purposefully wide due to concerns about the spread of COVID-19. EPS is expected to be between $1.20 and $1.28. Analysts were expecting EPS of $1.24 and a 1.5% growth in revenue.

Oracle’s Growth Momentum

Two key products are driving Oracle’s growth – Cloud ERP applications and Autonomous Database. Infrastructure subscription revenues grew 4% to $4.1 billion, with total database revenue up 5%, highlighted by BYOL and Autonomous Database revenues, both up over 150%.

Oracle is seeing great momentum across its applications portfolio. Applications subscription revenues grew 7% to $2.8 billion. Fusion apps were up 32%, Fusion ERP was up 38% and Fusion HCM was up 27%. NetSuite ERP was up 26%. Vertical SaaS was up high-single digits and Data Cloud was up low-single digits. Within ERP, it has more than 7,000 Fusion ERP customers and 21,000 NetSuite ERP customers. The company claimed that its primary ERP competitors Workday and SAP are struggling.

During the earnings call, Larry Ellison said that the biggest advantage it has against Workday and SAP is that their applications are built on top of their infrastructure cloud and that they have a very broad suite. Johnson Controls, Unisys, S&P Global, United Services Automobile Association, WECO, SCL Health, Snap, Nomura, Pfizer, Workforce, and GAP were some of the major wins during the quarter.

Last month, Oracle announced the availability of the Oracle Cloud Data Science Platform. At the core is Oracle Cloud Infrastructure (OCI) Data Science, helping enterprises to collaboratively build, train, manage, and deploy machine learning models to increase the success of data science projects. The key differentiating factor for its data science platform is team collaboration features and tight integration with a variety of data sources available in OCI.

Oracle management also allayed fears about the impact of coronavirus. About 71% of the revenue comes from recurring subscriptions. Most of its business is done digitally without any site visits. Their business model has evolved since the dot-com bust of 2000 and the recession of 2008.

Oracle’s stock hit a 52-week low of $39.71 during the week before its results were announced. Its stock had slid about 25% in the past year. However, the stock surged after the result announcement and it is currently trading at $47.93 with a market cap of $153.74 billion. It had hit a 52-week high of $60.50 in July last year.