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Oracle’s Fiscal Year End is Fast Approaching: Would Your Oracle Negotiations Benefit from a Zero-Hour Push?

As many in the high-tech and software licensing community are keenly aware, Oracle's fiscal year is nearing its May 31, 2024 close with its year-end earnings typically unveiled in mid-June. By every indication, Oracle is expecting a strong finish to its fiscal year.

Oracle’s quarterly revenues experienced a significant 7% year-over-year increase, both in USD and constant currency, reaching $13.3 billion. Oracle anticipates earnings in the range of $1.62 to $1.66 per share for the fiscal fourth quarter. As stated in Oracle’s investor news:

"Large new cloud infrastructure contracts signed in Q3 drove Oracle's total Remaining Performance Obligations up 29% to over $80 billion—an all-time record," said Oracle CEO, Safra Catz. "We expect to continue receiving large contracts reserving cloud infrastructure capacity because the demand for our Gen2 AI infrastructure substantially exceeds supply—despite the fact we are opening new and expanding existing cloud datacenters very, very rapidly. We expect that 43% of our current $80 billion of Remaining Performance Obligations will be recognized as revenue over the next four quarters, and that our Gen2 Cloud Infrastructure business will remain in a hypergrowth phase—up 53% in Q3—for the foreseeable future."

Reflecting on Oracle’s robust performance in Q1-Q3, many industry observers are looking to Oracle to continue its strong performance through the end of the fiscal year.

In light of these internal and external pressure to perform, those currently in negotiations with Oracle should consider this the time when deals get done. Whether grappling with an arduous contractual audit, a stubborn Java "soft audit" (a frequent occurrence with Oracle's often-infuriating and not-so-new Java licensing metric), or any other lingering dispute, it is advisable to line up your resources and give laser focus to those discussions at this time.

The Advantages of Negotiating with Oracle in the Fourth Quarter

Consider it a given that the external pressure to perform in the market touches every Oracle sales and licensing representative you will encounter. With every division and territory eager to hit their respective fourth quarter sales goals, in our experience, there is substantial flexibility with pricing and discounts.

Importantly, it is not just a matter of dollars saved. With every department subject to the same fever-to-close, Oracle's fiscal year end often sees a willingness to resolve audits on favorable non-monetary terms as well. Now is often the time to push for a robust release, your company's desired policy exceptions, a relaxation in reporting requirements, etc.

Tips for Closing Deals in the Fourth Quarter

For those considering year-end negotiations, it is essential to:

  • Start preparations now. Even in optimal conditions, it typically requires weeks to navigate Oracle's processes and secure alignment to successfully close a substantial deal.
  • Be thorough and organized. Negotiations can progress swiftly, and being unprepared can result in missteps and missed opportunities.
  • Be persistent. Conditions that were rejected earlier in negotiations may later be accepted as fiscal year end approaches. 
  • Stay engaged. If your Oracle representative doubts your company’s willingness to finalize a significant deal promptly, they may pursue other opportunities.
  • Focus on the details. Inadvertently executing a misunderstood agreement can be worse than no agreement at all.
  • Do not be afraid to walk away. If your desired resolution is simply not feasible, avoid accepting terms that leave you feeling uneasy. 

And, finally, seek assistance. We have successfully navigated numerous Oracle licensee clients through Oracle's fiscal year end. An experienced guide is invaluable, and we strongly recommend seeking appropriate professional counsel, regardless of the time of year you are engaging with Oracle.

We wish our Oracle licensee friends the best of luck navigating through the year end, and as always, we are available to discuss all issues large and small.

Published on April 5, 2024

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