OTEX - Earnings call transcript Q3 2022

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Operator

Thank you for standing by. This is the conference operator. Welcome to the OpenText Corporation’s Third Quarter Fiscal 2022 Earnings Conference Call.

As a reminder, all participants are in a listen-only mode and the conference is being recorded. After the presentation, there will be an opportunity to ask questions. like Vice the President, would Harry over I Senior Blount, Investor Instructions] to conference turn to [Operator Relations. Please go ahead.

Harry Blount

been course OpenText And may the future performance in York, during the our Consumer York. forward-looking on San Relations upcoming Xrd conference be more remarks Thank webcast that that Innovation quarter, and be welcome make Chief session. Madhu that and to now statement. will materials Barrenechea; and Strategic call. Xth available June have Jefferies allow today, several afternoon at Today’s our shareholder New Financial call and can note Software to in website, Chief statements everyone OpenText participating prepared and contain XXth recorded Conference Officer, quarter Executive Executive our OpenText CIBC our Mark OpenText’s replay Good Annual to in information. we the supplement Technology Global management similarly earnings that question-and-answer onto to Conference and J. for Baird’s OpenText the Officer, Technology Earlier you June are May on pleased quarterly the conference am letter, shortened With June you time to safe XXXX a Relations presentation. on note is accessed me Vice New Officer this live in Ranganathan. Xst Services today shortly Conference Conference remarks of Chief including release and along inform investor and Francisco, Toronto, our I call, prepared relating Please Technology OpenText’s last These Bernstein’s will operator. investors.opentext.com. third the call also on on website. posted press Investor with Decisions Please of and harbor President being thereafter with our we on Investor on and

made material our were conclusion, in represent differ and in Certain today. could materially current judgment, actual statements statements drawing from statement. these a assumptions projection factors or forward-looking forecast, While forward-looking such results any applied the

recent Forms that information, statements no Additional results that as law. projection this undertake as release afternoon, forward-looking our well on was results materially may could found that risk XX-K XX-Q, these cause information to performance, and or from material contained update be as well unless project in factors the conclusion, OpenText a differ as the by to distributed so forecast, of OpenText’s earlier in future about to factors press are actual website. which forward-looking our do required in We obligation may

materials, conference on of other very to our any pleased non-GAAP to include are over comparable and addition, measures within GAAP to measures our certain with most the I found our public Reconciliations discussions Mark. hand measures. filings In financial website. And their of directly be financial non-GAAP call may may available that, call which am

Mark J. Barrenechea

York year well year-over-year above in New revenues our you, currency, to in and Harry, are We million free a million. grew strength demand spending today’s and bookings we’re the QX of everyone. clouds. results pleased on employees by cash or currency our and We total in a business content, security adjusted ago, and of from X.X% road million $XXX and data EBITDA flow constant with with constant in of by time our had in strong driven $XXX revenues hosting X% protection together City. call I the customers led cloud $XXX $XXX network, total be Thank Madhu million welcome and here and and

[Technical and powers we protect a as the information and workloads in the as leader such Yen the All information and determination fabrics. protect compared in in elevate our information Russia’s from our at decline million the many and the essential dedicated remaining seen security that and ourselves to level to GDP. management inputs our world’s challenges remain and currency economic current health the come to impact work, their reinforced protection. in these the and strong their in increasing more digital these a the the At scale, year-over-year XX% partners of their Information outputs first centered we These wellbeing now can inflation vigilant fabrics, CRM customers of build and the management for quarter in decreasing all to and Switzerland needs. U.S. Euro, chain and OpenText, of the customers, information ERP Information constraints in cloud-based management market highest decades, important digitalization OpenText challenges the helping total we’ve our differentiate $XXX for need connecting transactions constant supply time. doing integrate revenue above themselves less. Our COVID-XX Difficulty] continuing is of innovations war of and digital that thrive double-digit power on world Ukraine. challenges business meet dollar hybrid to of XX.X% grew as cloud we of the diverse and is customers and where to have time with results revenues stakeholders the digital agile the for of are and and topped in teammates,

we inform all management amazing your cloud at continue and to across world’s a of in to teammates variety deliver best current Please feedback we release, the scenarios. They XX only our our for read results job, wide to ago. information days better us Our to scale. ‘XX remain my in the and confident do was our investor ability shareholder Investor Day deck. are company stakeholders eager informative letter build nor press amazing as continue strive to receive to our

we Our message into are remains, cloud. core the accelerating was, is,

job find website, to detailing you amazing leadership you’ll the an cloud If The approach our materials our did the didn’t attend, acceleration. informative. on and recording very team

recap me Let three things.

$XX market, large First, total TAM our is billion. adjustable

and next maximum over the grow to lead into flexibility, So we strategic decade. have

Our priorities three are within that five billion highlighted clear. TAM, front strategic up the $XX

and our install cloud the the cloud so to we’ll significant customers First, more Once to consumption. within addition, our to our uplift to valuable existing it’s we transition cloud can portfolio, transition base continue cloud.

Second, compelling additions to OpenText new solutions will for our continue in our future platform. the remove create the growing the majority, cloud cloud on and vast friction that majority cloud. OpenText world of the customers start digital vast

customers. We’ll continue our by in The MSPs. reach our new the expanding to next XX,XXX medium business Third, markets. years global will segment new two expand the over and more to coverage grow

growing trading business. and our We’re business expanding our API partners and our new network, we’re

data ecosystems our a running million digital natively companies. navigator XX month in long-term a processing continue And via be the we Fourth, voice. company customers public fully they our Capture have new OpenText, pages customer example, for API our to and will the For cloud. fifth, become success healthcare written SaaS as

growth continue to in compelling we’re going going to understands and drive to value customer of We’re through with and work every ensure partner OpenText. propositions, the every

wanted in I from programs that outlined recap that to growth thing centrepiece year. Investor as our coming we is Day will organic our to the the third The serve top growth

to building driving supporting to we run customer as or service We’re cloud SaaS offering migration, in edition want choice. customer private and they a cloud If deployment adopt going option, to via the winning [indiscernible] to in We they this full of by the are year choice look adoption our respect our the managed and XXXX. API, in the pick. cloud, customer regardless an keep our off cloud end public call look customers the Global Program. the share ecosystems win coverage we of top cloud in achieve fiscal XXK We disproportionately is Summit Summit, top to

Microsoft is We’re we technical our to international force expansion world-class a go after SPS renewals business going expansion, enterprise, with the to strengthen Google for are continue build replacements and level partnerships. deep SAP, to and the Hyland, against and This and with IBM, consumption business in to into continue Salesforce, large Oracle. application Datto We Commerce. and a ServiceNow, AWS multiplier, sales to competitive partnerships look a mid-market, in scaled partner-friendly, our partners Kofax, an partnerships look

provide let do going best highlights quarter, our the and few to of to a This As is QX me history. our the details. will we in

in positive rate. through $XXX The run a revenues of as quarter quarter history we organic million growth. broke consecutive best cloud Another our

ARR of XX% rates of new quarter bookings digit strong of renewal cloud XX% double XX% of total cloud an respectfully. mix growth, Another and and off cloud revenues,

revenue. adjusted X.X ended the and with and free net We cash a Our or total plus Zix, and purchased tracking leverage as quarter. $X.X in we of quarter of EBITDA XX% to billion plan times. the integrate a of cash cancelled million ratio shares a We million flows of cash percent flow $XXX as XX% of

OpenText, of quarter the management QX, cloud-based of EU project the cloud France. of and within in next Hamilton content acquisition And the We cloud. The across in developer our Extended applications OpenText Columbia, content America, to petroleum within for petroleum Singapore to major using management Latin Ecopetrol, cloud. four And for provide are wins. to joins ECM. ready its of its network, amazing the leading the collaboration their cloud. one leadership. banks they clients our migrated new every Alan XX,XXX crescendo information content company our member IBM our within to accelerate With France and for employees customer from build included of our Bank Bank course, Customs all for companies the

content solve our banks. high partnering their to you thank extended U.S. investigations nation. huge customers as forensics. So, protection the that build the centralized security retail Demand us, cases A they interest trusting cloud the its to the merger Archive to within modelled support National that leverage solution us, cloud and our And and to Société its Philippine capabilities. with of of the service digital of for Générale future to our OpenText profile for for FBI

years build the look began, preemptive provide took I XXXX, into and It that business. stronger when call let was QX at us points, right we year me fiscal Two a time. actions resilience. to some ago, demand the for full As remains key pandemic

the are our We’re event our so event attend today. very go-to-market the our future to cloud increase doing we of Europe, oriented a the OpenText actions you’ll investments, on World product in cloud live hope I’ll can Munich. growth. I in-person into the will that and solutions that accelerate be management R&D And resiliency the OpenText investments accelerate demand, highlight investments hosting our where future be will and from and lean information of the our cloud. same conference we our preemptive increase

online out European register us. bring reach We’re or going to like you’d together. customers, team or intend in-person to with our IR to Please if employees our online

foreign expect Our and currency exchange. reported manifestly outlook close full in We in And due total revenue currency, remain the do growth. X% to X% be to range. that year constant in to X% significant X% we is to to close changes in

beyond look XXXX, we to aspirations. targets no change As and fiscal there’s our

cadence, the I updates our already. next provide year term For our in fiscal can aspirations on targets our themes call, usual share we’ll any longer our for but QX

the New and Total invent growth continued increased and into our cloud innovations accelerate acquired cloud. and both cloud business acceleration to investments bookings. revenue organic

win amazing new our our cloud and helping to continued customers and cash excellence free fastest, revenue and expect operational We flows. in world thrive grow this partners expanding and

been X, more a to of and reasonable also has shareholders are via Directors $XX.XX speak playbook pipeline on buybacks X, M&A strategy June allocation growth price, XX. a me Board our Let for coming line approved Acquisition at of our record share we stronger quarters. dividends with dividend payable capital May of in is of M&A, valuations on and than of XX% our capital and continued previous June in per our

We committed liquidity. $X.X cash and billion have in

the strength execute a management is decisions. OpenText strategy. company. have to our financial the We unique bandwidth We and make long-term M&A

profits and right we When as and zones, investments, in growth, with in through purposeful the more. believe accelerate the balancing and data acceleration, opportunity growth. features, our APIs see creating we We see opportunity a of we efficiency, we cloud cloud security into are combination profits. new new We investments, the and compliance total value investments, capital invest now, public

ARR percentages in XXs. We with are highly and predictable the persistent

Let with me started. I where end

shortages, new accelerate pipeline deeply investments. our of our industries fully and clear and to in financial supported strength our by the protection you that strategic We’re to label digital and in transform we about the digital strong challenging bookings, become inflation, and help the and such with also manufacturing, work, essential quarter help challenging I’m information we and amazing new for thrive opportunity supply investments cloud it customer security become hybrid established power capability revenues, ability create organizations is oil management companies, times services. as a gas, future as customers our us, and help wins. and accelerating combat defense, clearly needs. execution We times. chains counter had These energy, optimistic costs, in can This see organizations into information and into

do job, With ability Our Ranganathan. the amazing to that, May an teammates these for all. we’re CFO, and the to amazing over results. brings to continue our that continue one amazing let peace Madhu? call our confident deliver turn me in peace, Madhu to bring

Madhu Ranganathan

all be USD are thank are and references unless making year for the otherwise. basis you, the joining period in millions today. I Thank fiscal And All of will you stated compared Mark. reported and in to same prior on a us

resilience times, as trusted results year-to-date March strong our in these partner the strong Our position results information outstanding achieve metrics. QX through all growing XXXX, financial and our in management. execution results challenging across we a quarter as our reflect while reflect a

fiscal its basis. XXXX press are Form Please release pleased also revenue filed annual on recurring So and let and our revenues, bookings we constant the me investor results. and with XX-Q revenues in customer impacting basis. QX in revenue, currency enterprise XX% another foreign year-to-date presentation, grew and was on today. total in fifth revenues posted currency million, record and refer QX total quarter we very to double-digit of on a We currency expand letter, currency saw The a highest. to QX growth Cloud On that organic exchange the volatility shareholder X% impact high, in reported our revenue revenue quarter reported a $XX.X record revenue. basis record a basis. revenues X.X% cloud cloud remains We consecutive cloud XX.X% growth while and the of constant support in cloud was

be reminder, to the over taken these of will As the contract. a revenue bookings life

on cloud size time reflects that last importance deals organizations is and So year. recognized cloud The plus of same and of believe was in we $X years. million This the foundation over license larger management QX within in strategic be revenue are information growing a average both growing than digitized to multiple recurring a a of processes. we trend as the automate significantly

continuing. metrics, XX% strong and cloud $XX.X see during quarter, saw renewal off the down based cloud in rates net this And and XX% income QX we financial to also million respectively and We was GAAP moving of other of from million XX.X% Adjusted million. of EBITDA $XXX.X from for earnings factor down $XX.X or fiscal shared with was than of quarterly income call. QX $XXX.X XXXX performance on the the XX.X%, XXXX you better fiscal or and QX last million

sales our As in of sales and our on and technology year-over-year to due in a integration spend. Zix QX you see results investments were in projects non-GAAP basis higher internal operating marketing expenses million G&A primarily accelerated and $XX R&D by XX.X%, cost reflected as or

the months cash Turning and in $XXX.X the quarter in XX flows, XX XX%. up $X flows trailing in million and to in trailing the generated the XX.X%. up and million flows free million flows, free in operating We cash we operating cash generated months cash the in $XXX quarter billion $XXX.X

cash consistent we quarter, free of DSOs ago. the the total XX.X% strong flows cash the same year where of consolidated flows with delivered quarter XX quarter During in at revenues a days and

to is best-in-class Our generate well all done conversion QX high and EBITDA working are capital for to metrics XXX% billing flows. seasonality teams cash we normal operating in greater accomplishments. positive These into than and the these from as adjusted quarter the

integration our of alongside SMB progress are and Webroot. We into Carbonite making world the excellent of Zix

of and is X.X liquidity, to net XXXX strong cash further cash and $X.X the we by into with expect operating in flows. liquidity revenue, ended December cloud Balance model, sheet complete to times. yield integrated a not While available quarter billion leverage and positive Zix to of we benefits our yet this margins

commons, line targets price outlined and Mark in to acquisition reasonable me playbook with in As our to of are his aspirations. And well-positioned remain to continue and updated prepared we outlook valuations becoming turn acquire. at more let our and growth

we for and continued our due percentage acquisition year-over-year, quarter EBITDA million you down in exchange talent on consistent points up And see fourth our the to and presentation. of communications XXX of during a investments $XX Investor technology adjusted expect constant QX factors mid-single our For last basis with Total again, basis Page call up to on in of for will today headwind slightly and and growth a to a earnings our foreign Expect investment our Zix investor March terms as on approximately X $XX revenue year-over-year QX million. see ARR digits. in outlined Day integration of of higher you fiscal revenue quarterly to support with are of Both X. ambitions. XXXX, low to

For on X%. Total our investor can you find Page XXXX, X% deck. at to growth X revenue range fiscal outlook year year unchanged the our full full remains of

the earlier, mentioned remains exchange As foreign high. volatility

to be to and to currency. currency closer reported expect We X% X% closer and constant in

cloud grow, for growing As previous a new are choosing is the purely bookings deploy constant the being digits rebalance the workloads a This mid-single into number Open license to to year-over-year customers year. low, from license down cloud. our adjusting enterprise Text we expectations to of reflect

Our fiscal as remains X. on XXXX target Page model noted unchanged

as at our XXXX reminder, into a to I we investments continue mentioned of adjusted as XX.X%, our model and operating for EBITDA integration the Zix model remains fiscal As target earlier. XX.X%

our XXXX cash XX% ARR of flows EBITDA X%, aspirations fiscal as billion Organic of Our free growth deck $X.X plus. X% of are remain Page XX% margin adjusted investor XX%, provided in to X of to and unchanged.

at of capital buybacks. XX% anti-dilutive cash remains free allocation flows and Our for dividends

you across with cloud. special On I Open shareholders, during A acceleration the X QX of globe. summary, Day, to partners, for So plan to continued and our Open performance you of at to thank best is into thank Text, Open now and open customers, was behalf the employees Operator? strong important globe, to like our around our the mention forward which your call and our continue step a shared for Investor us the industry. Text, loyal all the are the teammates Text in would I execution will in my you questions. March

Operator

you. Thank

begin now CIBC. question ahead. question-and-answer of Instructions] the will We Stephanie session. first Price [Operator Please go Our from comes

Stephanie Price

percentage I the installed around talk now sell any Good base this and could cloud you have metrics you of what cross the base. bit among a afternoon. in is about hoping was customer the

Mark J. Barrenechea

the cloud. vast question, Editions are into thing. Look, into Thanks Stephanie. the customers new Sure for majority of all and Cloud the coming

vastly into cloud. the that it’s the are new coming So clear

We have are customers – the go But cloud. security the customers who for some off in vast cloud majority are reasons. new

for to our the into end capabilities as train time. and into managed northbound that Cloud close XX. or near the destination approach cloud for over ends our terms look of of migrate in to In course, we’re the advance that help our base mid-XXs, where in installed to life they have day can of the move all tell that private We’re about Release And that of that of life customers years public just ends, cycle benchmark the train we of right? is cycle Editions services in move proactively, I operating year end going moved XX% the them it rate, the a our coming quarters it’s customers two renewals of our the of of from technology. the But either or at continue, end cloud best And to Release expect so the you kind at XX to at third.

of cycle. So third the into will end helping coming customers life before we migrated, and the about vast keep majority cloud a the new

to we cross cloud, and pre-integrated, Things for to friction into removes customers to four. Now the once get we the it the module two, us. have resources three get sell more are just

Stephanie? that, I data from volume the have is removes month. on into just what capture for that mentioned, many moved a to say the added it percents how I’ll the XX their helpful, cloud. million off what the But you thinking – metric They friction. a but for about future. – modules keep Is their pages adoption. just workload I think healthcare they percent let the and a is or So don’t suite cloud phenomena me company, a Stephanie,

Stephanie Price

Thank mentioned and the and can It as investments cloud. also is. you color. Both on already doing in you’re touch great financial That’s the included well. Madhu assume I on them, what I you’re you model bit in you. wanted it’s expand making a the that

Mark J. Barrenechea

Yes.

all about we’re the talking we’re about in investments So financially. all are the speaking models

They’re So all they’re into Madhu presented. not outside models. the that has factored the models

X, less each We there’s of compliance making engine we’re in bank X, are to in the type growth. going making we’re These the few My factored other differentiate. really be to security. sort companies elevated than functional But is and have It over only also banking, the description to B, could be of force and some of is SOC few our compliance, globally, security of bring global into our we’re investing of our to level where does we’re security dozen large coming that of all around And cloud needs place the Baffin investments do those. HSM technologies. a That’s and deliver going kind last of partners have features cloud one data doing this HIPAA, in clouds. in Europe, really inside accelerate be zones, this could that could to security on Protected go-to-market investment months to a decided We’ve and course, they’re bring companies a investments it at compliance. sales projections. level and compliance our the to going FedRAMP, all who invest of can these scale. And SOC we’re

Stephanie Price

the for color. much so Thanks Great.

Operator

Thanos Moschopoulos comes Our BMO next of Capital Please question go Markets. from ahead.

Thanos Moschopoulos

demand macro backdrop? is I at mean, the clarify strong are just still it you of apologize, or resilience, perspective. business, anything it’s expand Can on Hey European seeing So Sorry. slowdown, to this stage, mute. was Mark. you signs I you but from rather it said on environment a your

Mark J. Barrenechea

ago company We every to for the decision exit resilient different. still three and years is us It’s Russia. made

ago. years Russia three evacuated we so And

Democracy evacuated in but mean, Ukraine, Russia, also a Liberty business And I years years perspective Ukraine with our from we Ukraine left [indiscernible] three three ago. We and ago.

is demand Europe exposure The We over have $X.XX. will of going exchange. So we the in handful the is And is demand our $X.XX, and control, there. resilient. that in have one right, But There don’t of of a don’t which actually resilient. that we think Eastern to today upside foreign a ago, year and was remains exposure the euro demand companies at the here the have remains comes closed A it time. to and thing out I add Russia, industries we’re those our of lot strength where help in the back, medium-term.

for strong is For Germany, deep Switzerland, as as region, a manufacturing, Bundesheer example, Austria, in infrastructure doc the we’re our very large very well in us.

manufacturing gas. in in aerospace install base energy, the a industrials great we in France. have in Middle And deep We’re in and team and oil East and

like it’s energy had as But had. infrastructures challenge we Europe. auto, companies But to currency manufacturing have uptick other in move investments we’re euro So demand, it’s as the have going the just an not our actually demand. certainly us the seeing about in for

Thanos Moschopoulos

Okay, as your depressed as far great. And multiple. a at stock trading is M&A

on how influence So be influence might driven your influenced absolute your price Are your well? basis? acquisitions are that they rates as that that Or multiples does how can of buybacks you thinking by thinking and and an on sort pay? you’re hurdle does the share by directly

Mark J. Barrenechea

go I things two on Yes, buybacks.

the really growth on look up to cloud And companies reasonable And coming shares be the are and that more a second more see at to continue when future million at in it’s of As an quarter growth script, a price. it’s the in we we on the got and M&A, valuations to And it’s in retired right at growth. a our at to the and but opportunistic acquisition, you for will right returns. cash we platform And traditional down, I in playbook noticed organic generate be got see company pipeline a purchased companies we look price, market. the is X at our price. be reasonable we got

be is the returns whack expect the to kind deliver cloud. of right So, obviously that company, wouldn’t we and organic compare got formula price, It’s to of the be growth trading in a part asset then cash right what I at. to the we’re right and drive future it

Thanos Moschopoulos

along. I’ll Great. Thanks, pass Mark.

Mark J. Barrenechea

Yes. Thank Thanos. you,

Operator

comes Please question from Barclays. go of next ahead. Lenschow Our Raimo

Unidentified Analyst

Thank Great. you. Raimo. wanted just to is touch for I This Zix. Jeremy on on

it’s a bit you there? you’re the seeing product cloud first Zix of contributing, So security And speak to coming existing Thank and the is is in integration the some together maybe the and quarter where how given of protection can you. customers. what cross-selling up-selling terms

Madhu Ranganathan

Jeremy I’ll well. is the cross-sell. and take on first over hand part Mark Yes, here. Madhu integration it’s the going The

leadership. It’s into is As a reminder, of about say we systematic. integration with and well, closed market well going And left that great a regard, year leadership in ourselves just would and we’ve a integrated set a very great of given I week OpenText. broader in very is XXXX, that people and course, products,

areas working as the to a Those accretion expect mentioned comes integration see definitely closure, call I sort margin, As capital. of we in accretion systematic we in in the than XX working can, the on being months? it gross are we to earlier them we bring model. it. over operating very we’re our Perhaps to but about Could now do right are to

Mark J. Barrenechea

Yes. Thank you, Madhu.

the product describe On and way. me it integration leverage, let this

First of all, we’re delighted.

a flies, everything quarter And amazing. Zix. – second it The the network of MSP diligence. Technology, our be is We’re in it’s are amazing. Just our right? expect people this we to May, in owning time is

So delighted. we’re just

new is going that we’re is, Microsoft cycle or on commerce experience, strong NCE cycle driving. NCE Microsoft the First

Microsoft for an event the NCE, worldwide industry, top there’s program. we’re in Microsoft five a So player NCE in the

that within opportunity there’s So just Zix.

opportunity MSPs it move to Webroot it take to and that take Carbonite opportunity, to move MSPs able well. been we’ve Now, that and as

lane So for that’s us an as opportunity well.

but secure the Second that Webroot is interestingly, our more email, bit defender, IP MSPs the which means and MSPs. Carbonite and into cloud, MSPs, Zix protection the taking move secure Webroot

integrated integration first bring financial basically our experience cloud and and EasyLink for secure on-demand messaging. bring of completed see Zix we another and come we’ve opportunity healthcare into then to cloud Webroot level to we’ve Carbonite – can that MSPs them our that So platforms and where portal messaging on-demand services have secure product. into other And the

So, and four secure play, our secondly, play services. EasyLink plays. to and Microsoft Carbonite think a experience very really inside Webroot and we the CE Zix clear have cloud about bring bring three, back bring plays, the into When and into Webroot, cloud financial Carbonite healthcare cloud NCE in secure

those the plays basic four Jeremy, defined. are well So, very

or we’ve get execute four and place been to start able to them. them first Our five in to now months,

Unidentified Analyst

Great. Thank you very helpful.

Operator

Please from Tse question Financial. go of Bank National next Richard comes Our ahead.

James Burns

tonight. Yes. Thank you. Richard sitting for in It’s James Burns

continue be, You to quarter and of for you’ll any competitors, such you’ll you Did the in had has replacements this go against gain competitors share any if so, after way? that major mentioned or IBM, other example. IBM any as competitive responded

Mark J. Barrenechea

playbook growing Yes, a this do we right and this strengths cloud, and new ability, private for is And APIs our can our cloud and our FileNet, capabilities public us our Hyland, now. [indiscernible]. no, Kofax, with strong as SaaS

us the So you it’s create know, install in Kofax opportunity just for bit been more a base. and recently a their clear which things result, will announced electrons

registration, competitors go after keep investments of for self-service, and for mid-market can’t partners, the for Commerce what’s services. the you, years side, those who without to going to leverage little professional and five and look, to trading XX capabilities of us, we’re recently cloud, more so top introduced need SPS are So ability looking ease Commerce what’s front announcing in the wins, in the SPS A and different partners data our next the of connect that’s, that. front to you in on trading we’re customers we’ve new leverage. going We make fulfill on

about our of So, releases very over lot business data. protection couple fantastic our MSPs we learned from bring the of and Zix. to the the mid-market. as against data mid-market And through the last we’ve And see couple next on markets the resell Carbonite enterprise a RMMs years into an and well targeted as network are opportunity

to a for need So, differentiate. we And We I what like got what can know customers know build. features need call. to scale global We this playbook us. we and

So, to James. run play, continue going we’re this to

James Burns

you. Thank great. That’s

Operator

ahead. question Our Instructions] comes Capital Treiber Please of [Operator next Markets. Paul go from RBC

Paul Treiber

slightly products outlook because taking of your license mix on that trends hoping, could was now down much. somewhat for there. seeing it’s you’re unrelated? purchasing elaborate shift just You licensed Is so are outlook cloud instead the revenue? the mentioned due Thanks are or I customers you’re to purchasing you that two a

Madhu Ranganathan

piece a to then turn and of over take I’ll Paul, it this Mark.

the hence it a of change metrics of reasons of acceleration But just minute in strong. consistent our license, the everything to such. on is terms license in historically has rebalance with quarter terms wanted for the and as One demand been shared and going of I main the been year strongest talking we’ve remain does outlook. to about yearly We in cloud look license the do how QX and

as talking the are the And But up said, workloads, the rebalance. clearly seeing, year, to the into we up of would parameters and I Mark within couple is we it say as years. more year. consistent would the again, in acceleration for We trends been cloud. we purchases, first where license believe new wanted definitely QX we’ve just the coming wrapping the are with last part on And the be this to put

Mark J. Barrenechea

on licenses Slide you the out we outlook high I’ll Madhu, we’re stay think our of deck add hold do we’re And new in I for a our on. the segment slight want believe on majority our for strategy, as business where from come to winning just there. and me I relatively just annual the no customers Paul license. value think right seeing that to let me I thank just years, And that’s a basis doubt exactly and Yes, the in X out notch look of I down we that. vast be moment, to the the coming and cloud I, the we investor growth in turned at as constant. look going total change There’s

We’re just of And it all That’s wanted the because to QX models. QX we math. align and to industry doing kind the it’s is.

expectations believe We’re on relatively be basis, executing to but the annual and QX to should constant. we math is relatively going just it where really it the but forward aligning constant it’s

Madhu Ranganathan

Paul to you with cloud when make sharing to color absolutely come sure can is, see more look back cloud add between last bookings, years. at on the as the wanted next I But the consistently you we in couple our which just two. actually was the all balance there And thing acquisition, that more you will growing a

Paul Treiber

spend lastly need much not going time to spend growing seats spend confident. keep a as I we and cloud’s time me that’s the much don’t coming you projects. halfway on will being us type to that absolute we’ll let just and I to just confidence in too it, on years, the compliance time more constant, relatively much Paul. it. as absolute, of look faster. at say relatively of like to think And much gives see, too quantum And through but License it, by business that an license we about the on be

Mark J. Barrenechea

mean, cloud that give when would be great. disclosure because I great it complete puzzle. you’re for A ready bookings to investors Yes. that

the a to math they’re is at quarterly side, margins the for stronger be for back picture, environment synergies forward, but look for Just when have, there’s outlook shifting quarter, we on year also the a in you then, all about, parts than you similar should QX, And year-over-year think margin how you there, going inflation. Zix that light as, margins margins outlook the moving the still factors. basis gears the into wage showed integration, and the then on and calls full bigger down cost just of

Madhu Ranganathan

Paul Yes. that. take I’ll

to XX% XX%. the aspiration, work So about that they is we talked at closer remain nine XX.X%. shared XX. when are from, look you are backwards to the unchanged I’m And term of this going months, course, to XX.X% as we’ve year And we medium

has out in about the we do talked XXX points if better We to can that well reasonably that’s in work in QX. gone margins. I gross enterprise I’ve on terms But are year-over-year out point predictable. see margin that would the again, what came of have do in up basis doing margin efficiency. quarter, They expected. than gross also you cloud quarter, in We past, you are better

margin. XX% you cash as cloud terms employees to gets it. that come wages. SaaS integrated mentioned provide the And of also everyone is into play. XX% It’ll more of, have volume et about, et the for that of accretion taken terms of would our we the we more sort it in And You seeing talked And with to our total cetera. see Look, sort well certainly on some I say Carbonite equity, up in rewards, will We’ve would gross attrition. care cetera. you think done of, cloud line I Zix rightly pointed of out, as

disclosures. see You will our in that

item are into good that about, in but We an worried it’s are saying to respect we not not we stead our that models. with stand incorporating

Paul Treiber

Okay. I’ll you. Thank pass the line.

Madhu Ranganathan

And I had Mark’s think comments?

Mark J. Barrenechea

the made we a I complete I you agree. to you just puzzle want just yes, comment Yes. Well, tell to and

our booking you’ll see fiscal And call, us so kick next metric. on one when XXXX off of things add we’ll for we the quarter officially a

to And able so that be will puzzle forward. you complete going

are and bookings committed Madhu formal starting quarter. next view So adding I a into to

Paul Treiber

fantastic. be would That

Looking it. forward to

Mark J. Barrenechea

Yes. And [ph]. you tell I slowly have to

Operator

now This concludes closing the for to Mr. remarks. any Barrenechea over question-and-answer the session. I call like would hand back

Mark J. Barrenechea

big have and today. And All right. outreach Harry joining Well outlined. for engagement of we a quarter thank you everyone. Thanks as

forward be Germany my you’ll with remarks, support and quarter, OpenText over in World bring the quickly. OpenText We’ll brings look continued being join thank virtually that I’ll Stadium for to this one your live. us or peace, the taking for World to So and we end prepared Allianz you Munich, all for hope may we and you peace

today’s you call. thank for joining So

Operator

concludes This call. today’s conference

you Thank for pleasant day. lines. participating your a disconnect may and You have

Open Text (OTEX) 5 May 222022 Q3 Earnings call transcript