Dive Brief:
- Oracle is expanding into token-based and outcome-based pricing models as it explores new ways for customers to pay for artificial intelligence capabilities, CEO Mike Sicilia said Wednesday.
- The company is among a growing number of software vendors that are rethinking their pricing approaches as AI upends traditional structures. Token-based pricing charges customers for AI usage, while outcome-based models tie pricing to results generated by the technology.
- “All of this helps our customers control their costs and align their spending with the value being generated,” Sicilia said during an earnings call for its fiscal 2026 fourth quarter.
Dive Insight:
The changes reflect a wider transition in enterprise software toward hybrid pricing structures, as vendors attempt to monetize AI capabilities that do not fit traditional per-seat licensing models.
AI and usage-based pricing are contributing to rising volatility in enterprise software spending, with organizations reporting unexpected charges as vendors layer consumption-based fees on top of subscription contracts, according to a January report from software-as-a-service management firm Zylo.
The research found that new pricing mechanics and AI feature monetization had become leading factors behind rising SaaS costs, overtaking application sprawl.
Sicilia said Oracle has begun a “limited rollout” of token bundles, allowing customers to purchase additional agentic AI capacity “in a simple, predictable way” across application suites.
He said 33 customers, including Aon Services Corporation and Liberty Energy, pre-purchased token bundles during the quarter.
“We are simplifying how customers consume and pay for agentic capabilities,” Sicilia said. “Our new agentic pricing aligns with customer value.”
The pricing updates came as Oracle posted strong earnings for its fourth quarter ended May 31, led by growth in its cloud infrastructure and applications businesses. Total revenue rose 21% year over year to $19.2 billion in the quarter, while cloud revenue increased 47% to $9.9 billion.
CFO Hilary Maxson said the company’s FY 2027 gross margins will shrink due to the ramp-up of data-center projects.
“While these investments are creating pressure on the near term to gross margins in our infrastructure business, we expect margin performance in infrastructure to improve rapidly as we reach full contractual revenue levels at our data centers,” she said during the earnings call.
