On August 10, 2018, Plaintiff's law firm issued a press release announcing the filing of the Complaint. According to the press release, the Complaint alleges that, during the Class Period, Defendants violated provisions of the Exchange Act by issuing false and misleading press releases, filings with the U.S. Securities and Exchange Commission ("SEC"), and statements during investor and analyst conference calls.
Oracle is one of the world's largest software companies. Among other things, the Company offers both on-premises and cloud solutions to a variety of end users. Historically, Oracle's revenues were driven by the sale of the Company's on-premises software services, but those revenues have stagnated in recent years as customers shifted to cloud-based programs.
The Complaint alleges that throughout the Class Period, Defendants misrepresented the true drivers of the Company's cloud revenue growth. In particular, Defendants falsely attributed the Company's revenue growth in its cloud segment to a variety of factors and initiatives, including, among other things, Oracle's "unprecedented level of automation and cost savings," as well as the Company being "customer-focused" and "intimate partners with our customer." In truth, Oracle drove sales of cloud products using threats and extortive tactics. The use of such tactics concealed the lack of real demand for Oracle's cloud services, making the growth unsustainable and ultimately driving away customers. Among other things, the Company threatened current customers with "audits" of their use of the Company's non-cloud software licenses unless the customers agreed to shift their business to Oracle cloud programs.
The truth was revealed on March 19, 2018, when the Company disclosed that cloud revenue growth had stagnated and forecasted significantly slower sales growth for its cloud business than its competitors. Following these disclosures, analysts and market commentators connected Oracle's poor financial performance to its improper sales tactics. As a result of these disclosures, the price of the Company's stock declined significantly.
On December 21, 2018, the Court issued an Order appointing Lead Plaintiff and Counsel. Lead Plaintiff filed a consolidated Complaint on March 8, 2019. Defendants filed a Motion to Dismiss the consolidated Complaint on April 19. On December 17, the Court issued an Order granting Defendants' Motion to Dismiss. Plaintiffs were given leave to amend the Complaint.