As is generally known in the high tech and software licensing world, Oracle’s fiscal year will close on May 31, 2022, posting Fourth Quarter Fiscal Year 2022 earnings in mid-June. Even discounting Oracle’s own notoriously optimistic projections, expectations for Oracle’s performance are high.
Just this past week, Zacks Investment Research reported that Wall Street estimates Oracle will post $11.65 billion in fourth quarter sales and will close the year with sales totaling $42.24 billion. If this projection is accurate, it will represent a positive growth rate of 3.7% against Oracle’s Fourth Quarter Fiscal Year 2021 earnings of $11.23 billion and an annual growth rate of 4.4% against Oracle’s Fiscal Year 2021 earnings of $40.479 billion.
Notably, Oracle’s 2022 Third Quarter Fiscal Year earnings were $10.51 billion – nearly a billion dollars (and 10%) less than the current Fourth Quarter projections. What does this huge spike in sales from Third Quarter to Fourth Quarter mean for the Oracle licensee? Deals get done this quarter. Anticipation of negotiations and contract execution entering its annual peak is all the more reason to ensure that the right legal and technical professionals are on your side.
The Benefits of Negotiating with Oracle During the Fourth Quarter Can Be Massive
In our professional experience, April and May tend to be the best months to negotiate with Oracle. While Oracle’s list prices are a starting point for negotiations, and meaningful discounts can sometimes be available year-round, this flexibility typically intensifies as the fourth quarter moves towards its end. In our experience, motivated sales representatives are able to obtain permission for deep discounts that can be exceedingly difficult to obtain during any other time of the year.
Cost savings, however, are just the beginning. Year after year, many of our clients who have been mired in seemingly intractable audits for months (if not years), are surprised to find that the looming close of the fiscal year brings a new willingness to close audits on favorable terms. For example, otherwise elusive virtualization exceptions are granted and term licenses cleaning up inadvertent past use are suddenly available.
We have seen IT systems sanctioned as compliant by typically reticent sales representatives. Often with little to no forewarning or fanfare, roadblocks in Oracle’s stubborn audit posture mysteriously evaporate with a quickly forged path to resolution. Oracle’s legal department seems to relax its standards, powerful releases are given and meaningful contractual exceptions can be granted.
Potential Benefits Aside, the Risk is Still High
The flip side of this temporarily cooperative Oracle can be an increase in threats and intractability as well as in licensee anxiety and vulnerability. The same highly motivated sales professionals who are striving to make good deals can also begin to freely admonish that all deals are on a quick burning fuse and will not be available after the close of the fiscal year. Overwhelmed licensees can panic while fearing lucrative deals are about to dissipate and agree to unnecessary and draconian contractual terms.
Oracle legal can also get overwhelmed, and potentially fearing mistakes, they might decline to even consider contractual provisions that deviate from the norm. While Oracle attempts to close as many deals as possible during this period, licensees who are characterized as high maintenance can be overlooked as sales representatives focus on the clients that they perceive to be easier targets.
Tips For Closing a Deal with Oracle in the Fourth Quarter
Threading the needle at this time of year requires a delicate combination of persistence, patience and guile. While experience is and will always be the most valuable asset in understanding how to strike the right balance, we can offer a few suggestions:
- Start early. Do not approach Oracle three business days before fiscal year-end and hope to accomplish anything meaningful. Even under the best circumstances, it can take weeks to turn around a reluctant Oracle and put the pieces properly in place to close a significant deal.
- Be prepared. Know what you need, what you want and for what you are willing to settle. Negotiations move fast, and opportunities are often lost to the unprepared.
- Determination and perseverance can pay off. Terms that were not acceptable on May 1st could become acceptable on May 20th. If you have Oracle’s attention, keep pushing.
- Don’t be nettlesome. Suffice to say, Oracle needs to be a willing participant before any deal can be executed. If an Oracle representative doesn’t believe that you will close a meaningful deal in time, it will move on to another prospect.
- Pay attention to details. Everyone can get sloppy during these important few weeks. Whether intentional or not, executable contracts can appear with mysteriously missing or added key terms. Accidental execution of a misunderstood deal can be nearly impossible to undo, so diligence is essential.
- Be willing to walk away. If the right deal isn’t in the cards, which it may not be, don’t settle for terms that make you uncomfortable.
And, finally, get help. Along with our friends and partners at LicenseFortress, we have guided many Oracle licensee clients through the close of the fiscal year. There is no substitute for an experienced guiding hand, and we urge you to obtain the appropriate professional counseling no matter the time of year you are dealing with Oracle.
We wish our Oracle licensee friends the best of luck navigating through the year-end and, as always, are available to discuss all issues large and small.
Published on 4/20/2022