Oracle Q4 License Orders: Perpetual Obligations

Quick reminder (here in Oracle's Q4) that license orders initiate a perpetual financial obligation. And … perpetual means forever. This is especially important if the license order rolls preexisting software support into the new deal.

I used to say that #Oracle makes decent software but is actually a support collection agency. It says as much in every Form 10-K back to at least 2006: "Substantially all license support customers renew their support contracts with us…"

To that end, Oracle's financial strength through 2017 was this recurring revenue, one of the most profitable in enterprise software history. If the cloud era eroded that model (given the lower profitability of building data centers), then the #AI era seems to be destroying it. See chart, based on 20 years of financial data and estimate for FY26.

Oracle's two core businesses now are collecting software support … and … being one of OpenAI's landlords. I expect Oracle to update its software just enough to integrate agentic #AI and ensure data security.

This means the value to Oracle of your software support payments is increasing, desperately so, whereas the value to you is diminishing, and at an increasing rate. I mean this both technically via waning innovation and the 8+ percent annual inflationary adjustments.