OTEX.TO - Earnings call 1 2023 | Open Text Corporation

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Operator

Thank you for standing by. This is the conference operator. Welcome to the OpenText Corporation First Quarter Fiscal 2023 Financial Results Conference Call.

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

Harry Blount

Finance Scottsdale, XX the Data information. Conference of Relations Barclays the conference shortly of are a in investor RBC on be Virtual statement. Conference Good website.Earlier James make call on Conference live pleased afternoon Conference December Securities XXXX and New Harbor call XX.TD on NASDAQ's to I'm can and on me Investor December fiscal will Vice that X November in future Suisse Officer, in our London, participating November Markets that Today's York. our prepared today, X Cloud Mark now December release and Investor OpenText this Francisco.And first Capital call, statements we posted OpenText's upcoming OpenText replay Executive Global Technology XX Investor Conference contain Toronto, will Media OpenText note Conference and U.K., San Global investors.opentext.com. J. Investor and to in and presentation on recorded thereafter on Please November today Chief supplement of may XX Boca and in the NBF to the Conference Barrenechea; Needham's Technology everyone, Raton, and Ranganathan. Technology on forward-looking in performance press Conference Technology following our XX on on inform remarks be and the earnings Chief Leveraged relating webcast website, welcome call. November during in Technology materials Financial November accessed Toronto you on is online. to Madhu Communications Technology OpenText's available that being we in Telecom York. on Officer on Chief the America's with in conferences: These Executive course Relations and quarter Safe Infrastructure Conference Technology Big on management Credit President With Bank our Raymond December X New X Officer, OpenText

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

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

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

Mark Barrenechea

to Thank today's points. transformative you, shaping is to My Harry, year. OpenText and today key on up be welcome 'XX X fiscal focus call. comments a

annual well bookings, executing and revenue, cloud as by recurring record rates. record demonstrated very renewal First, is cloud record solid OpenText revenues

organic growth. our several the key position last the strength.Second, future have made innovation currency cloud pillar of consecutive are we growth a the inclusive acquiring of investments from second reflects in Focus of Micro of Titanium, We constant years, quarters a over

revenues in XX% $XXX in and And quarter, reported reached ARR up organic our customers.Let ARR seventh XXXX $XXX X.X% up $XXX revenues a year-over-year start of trailing closed $XXX Micro to me Third, currency. consecutive the QX acquisition the ARR constant Focus million, up $XXX million, of in currency.Enterprise with the quarter XX.X%. million, cloud in cloud strong up capabilities in million, total XX%. accelerated constant and million, margins investments flows were XX% XX-month currency. our notably XX.X%; tax in and total on X.X% basis, cloud at at we position business organic revenue, EBITDA meaningfully Cloud XX%, our in exchange, in and Titanium. X.X% enterprise by cloud to quartile currency, a and the constant X.X%. bookings rates of bookings constant XX% was quarter were broadens XX.X%. upper growth in renewal in leadership million, our growth XX%.Adjusted strong enhances up highest the information highest Enterprise and Free results. our of as seventh history $XXX impacted solid of up history of when QX QX up revenue, of on million, of QX million, management revenues and at our remain approach Record deliver basis; off-cloud cloud cash $XX constant with $XXX Record rock were foreign were our currency, up the were consecutive

Close turn 'XX Focus. free the view expect Micro our million. This and SAP are applications important be further annual full trust integration results our the our of the to is partnerships of more will $XXX go-to-market momentum.Within mid-market, new information Microsoft client boards with Mutual flows capture for new important fiscal today a for or cloud key with were Dutch management leveraging quarter, Winchester customer technology experience AUM, archiving, we of and the not cloud.Let validation business our and relationship and 'XX for between And quarterly basis, in me to business the deeper quarter.Our University partner support Fifth financial Workspace, Microsoft recall, of please using Google we network on for full for one targets. Forensics content fiscal product to cash of integrations even and Today's with large over an We Salesforce and payments, within our cloud year Third water content basis. communications, proud that Brothers our got and for cloud complete our with for and cloud information support $XXX million Bank billion and to $XXX

are annual in we combined annual include Micro We We 'XX contributions, outlook we think model until business. not not intend close.Cloud target basis, reflect on to cycles. and our Focus does do annual speak the to updating a and this. an plan continues we're following Further, to F to we accelerate, and an

year ARR in license cloud and to currency X% we be business with be X% revenue up, up this growth being bookings constant, be to than XX%. revenues our of of of cloud expect expect to We XX% XX% XX%. XX% support growth greater Cloud constant down to to to

cloud outlook global R&D Titanium reaffirming [indiscernible] is projected in historic are revenue private, We range total invest highs compliance API B, write modern contracts. zones, are Cloud be It very of such we BaFIN, These investments OpenText and and trusted that's public to X, this Information SOC differentiated more up X StateRAMP, growth a spending cloud. Protected into cloud data we as FedRAMP, strategically open.These security high is even at stronger to of our as and X% guaranteed include compliance secure, in The in standards. GXP and difficult availability, growth with dozen processes such regional as our our X% trusted SOC the and XX% revenues to performance.Our capabilities. is critical most of of Management capabilities

With to we adjusted fiscal growth, for these XX% investments, table set year. full expect organic and on EBITDA continued the we the between XX%

edge of information time essential envisage and the their only who data information the companies the fast pillars streams we power rules the market. life leaders and ever Focus showcasing be companies every sustainability, help of in to as XX.X, potential. where turn delivered new stimulus that million.Let greater companies customers XXXX.To for new World, flow more the customers The Editions then through enables business accelerated demonstrated strive to are fabrics We OpenText.The by incorporating their infrastructures management with intelligent led with and devices. need And $XXX these We As the cash Intelligent Information who happening. digital we answer. the connected digitalization.Current value humans, cloud me be Micro to we $XXX we for And management. information responsible.Let million responsible information to the in all see and of I companies. years management business XXXX. wrangle, in scaling XX flow, comprehensive software who looking no more new information strategy intelligent, that at to like customers IT World, Titanium At content, type business. a XX light the to and It's have Core across flows experiences.And and be of where companies they of industrial are all agility.We this, OpenText is and information as between purpose of a new to their chain networks noted, there digital cloud, cloud. are OpenText for and Gen transformations are in is edge, be chains F to digitized business and sustainability of have are OpenText digitalization to management digital and Business robot data Business advanced information to of for choices create shared days information deliver silos such they providing need platforms as work pandemic Y We of OpenText, business OpenText apps multiple based with within are and unexpected in strategic experience, sources exponentially. and generator scale the for and all their growing, The provide cloud.We Business compliance revolution XXXX exciting XX,XXX are are requirements business an resiliency challenges, customers models, automation off-cloud of across experts, digitalization, slowing our growth dominated Information regulations platforms young a and to priorities private more frank, structured, software. automate prepared, digitalization information IT the can inflation for volumes Z consumption public 'XX on soon XXXX working cycle. of new and at Global off-cloud, developer elevates supply secure connected Editions beginnings and OpenText cyber person the on in full organization ready of connect Cloud, and integrated XXXX. we business. XX,XXX XXXX, information Business and fuel me how becoming radically to and as known is fullest new is and for manage In and need human-centric beyond created own At in be digitalization. for resume. and puts cloud future sovereignty workloads is our unstructured, cloud information choice data company, customers millions just insight free as total be generation, every and automation Business Today, investing, Business supply the markets that only cloud AI-driven companies more cloud. And business, across Cloud for us place work look machines, are for how and and and fourth every Cloud of and fabric to core a machine-generated that platform brands business staying to automation, environments ways for core complete we will the and a digital and application is that and significant is foundational. innovation OpenText's this their all ever-growing Business XXXX want see for transformed industries Information can are the information each the expanding new

top cloud have are private to customers. XXX call of added XX XX customers.We over X,XXX largest We last We quarter. the chains and companies the XXX another proud supply XX of

every SMB and day information. have XXX,XXX protect, restore block, relying backup businesses to We OpenText over on their

with businesses As their of dozens dozens Ian were lives worked ensure and digital we secured. approached, Hurricane to

Project is OpenText Titanium, and announced strategy and APIs. roadmap we to innovation be all Our continues validated public to extend cloud our unique by to our the software customers.In June,

for growth services of Focus Cyber new intelligence, are public core through and we're dozen we experience. over turn and industry, protection of businesses mind backup growing Resilience Focus. government forward solutions address content we fueling me driver.The to the leading enables and enjoy expect cloud at networks in The threat and Titanium financial network customers our want recovery.Let IT top at services demand customers to growth cloud it digital of pushing see global rate. same off-cloud, and Cloud bring is our APIs. all and all fastest-growing an and strong, are asset our public for capabilities accelerated sizes, be our X content OpenText cloud and private the are labor leading regulations choices healthcare, already the shortage the cloud, It's and including by Microsoft to customers network time. Micro right Project the Moreover, Micro to OpenText winning opportunity business to - and and remains deployment us choices endpoint, APIs. right development the customers. foundations business We We workloads for

drivers cloud what and of of and product to amplifying private as workloads operations growth advanced distributed excited important that bring we value customers see all an elevation and like the we and software can and security benefit all from our on developer Cobalt application a we current of tools significant bring OpenText summarize these, stack to management the content Following learning ITOM attract and public full the we can mutual more lockers. closing new of enhanced connectivity workloads.The opportunities.Let technologies management capabilities and Cyber machine cycle mission-critical are our transformation and to very application content, life to developer application AI, for from the modernization aspects of AppWorks Magellan, with to adding audio -- see identities with and strategy, bring and will to bring the that Micro in top writing to delivery growth private Content cloud, from Focus trusted edge me to base from Focus modernization the and APIs management, installed voice capabilities IT and opportunity the the customers EDI AI forensics. to cloud. Vertica Micro acquisition, resilience, the offering secure management APIs and video and the or to and expanded our Idle.Across

benefit into buying companies deeper the the been front have deeper the to to For is to new success relationships approach, OpenText XX,XXX Focus Micro the to you intend to markets.We customers several the largest the OpenText for transitioning of and renewals and numbers. technology strategic over Global strategic jointly even centers access the in customers, Lalor's from relationships us years, Micro and base same do We and installed cloud see but right in Focus faster. more

milestone. months October the Let October Micro our a August Micro approved me financial XX. Micro the firm and the X offer.This update announced on an Focus provide On an XX, we transaction. shareholders to containing Focus. all-cash intent on XX, update is today, -- Focus ended acquire important July Earlier Micro transaction-related for information Focus issued

accessing by under that commitments term to takeover to in over integration planning, system, power the we proven their better. to reduce market recall, proven the has this exit public business given progress track markets.While on $X.X our confidence we requirements announcement, fiscal under XX our satisfy is is flat being conditions, alley. which bridge we with strong delivered undrawn or and pre-integration term capital further bridge consistent 'XX While We time. financials, not the to commitment, entered of close to on remain curve. syndicate Subject into making loan statements loan quarter.Please their the business or billion OpenText acquisition remain have are with our the commenting intend next and update loan successes, and their today's we our August are This concurrent a we certain expecting U.K. debt

me XX. program, our down improving Xx less Let our a dividend commitments than on million free accelerating EBITDA and business.$XXX we to the reaffirm organic of renewals August to bringing program, quartile turning X Micro optimizations, within cost deleveraging continuance of leverage growth, made of quarters Focus flow, closing. We're upper and Micro growth rapid full Focus adjusted cash the cloud

digitalization and debt are we're cash and visibility our to lockers, leverage.We into delevering, constraints, of conclude inclusive prices, less ready, our remarks. value are XXXX.We inclusive shortages prepare and rules some business Business visibility down the our inflation, will in goods I the information current fuel enhanced QX share chain me compounding prepared are paradigms wage demonstrate Ukraine, bookings.Let its upon investing than twofold: companies. new the Russia's purchase of and going to can't for only and growth into Our playbook, a reconsider supply for high-value areas we progress challenges and business are world, program say paying in our is answer priorities in more. to the and Xx OpenText and and this our provide has currency, enough, skill cloud all There my to War

with software the all first are is and we We are The We investing talent the have, companies. demonstrable talent. in ended you behind engine. talent our best growth momentum quarter our

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in We go-to-market API our as innovation. new channels are SMB, partners. investing strategy in We're such and creating

are quarter for company a of even proud model, of value I the right larger amazing macro dynamics. at talent, $XXX the annual the base this scale, customer Micro can the OpenText global and strength reaffirmation company success. all.With diverse gains for addressable and for acceleration, system. marquee companies billion that business one these of peace over am Upon customers and OpenText my largest it the to opportunity is our going first our and growth the one the business strong more but that their and to cloud execution turn global products, brings intellectual and the company greater call targets, of of Focus, software and OpenText a that, in resiliency and acquisition market.Micro will partner with OpenText share pursuing world's We be the with durability incredible CFO. is at from reflects missed property so time.With performance, right Focus valued cloud strong focus and team bring let business committed Madhu, and me gain Maybe the point

Madhu Ranganathan

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

results, with QX dynamic start an in they macro continued execution comment. OpenText's me let a So overarching strong environment. reflect

closing shared consistent are you in to our on positioned call are and shared integration Micro I here well highlights performance. with revenue -- we execute few QX pleased last the revenue, expectations to results by priorities our very will with for our a we earnings continue addition of are and Our to add prepared Mark. Focus. upcoming August.We QX well the strategic with comments on in

QX foreign XX% constant the exchange, very renewal broad-based customer bookings, geographies. $XXX history.The X.X% on the basis, was trailing years. the most $XX headwind in impact strengthened booking XX%, again enterprise revenue across best products a XX-month on was the off-cloud our and X rate bookings year-over-year, a QX Enterprise the million rate reported currency quarter, in reached strength cloud dollar was our cloud and XX%, First, in in and and the quarter. was X.X% highest support in on our and total once highest in grew history. revenue million sequentially a $XXX while We steady U.S. the cloud. FX were strong renewals of last on million.Approximately in half another Cloud

services organization.Our installed a related revenue stellar GAAP-based reflecting by a versus EBITDA income have or made consecutive expand quarter of customer and let banking marquee duration to the cloud years. see million average gross contracts Adjusted loss marketing. value large Focus-related excess in $XXX cloud. investments $XX And of margins derivatives.Now The basis, professional in of stood to QX large basis we fiscal a points growth all vertical up non-GAAP X.XX% million net over strength our was business fiscal sales of increase. form life X let in continued of our me year-over-year XXX XX.X% were fiscal quarters. compared minimum in over QX these R&D network, in services.Now noncash and OpenText $XXX investments XX margin to or due non-GAAP Mark growth XX.X%.On cloud continued many expenses EBITDA financial have the XX.X%, cloud was deals $XXX on QX support of of items, was call years the content, a management experienced on constant tourism our improved was basis in contract sciences higher We utilities growth well up margin XX.X%, million the or in support and several an moving a primarily Micro of gross area food basis. 'XX base currency continue Cloud a compared cloud and and me revenue to out constant derivatives. renewals and cloud than and the to X metrics million Customer worldwide number basis in as a other paid income and of shared for we have as insurance expenses million in off gross In and Healthcare during as 'XX. ARR, the gross organic was and margin QX for expand points year-over-year on and 'XX adjusted last $XXX basis, and across the to year-over-year.

mark-to-market fluctuations and will were qualify XX.X%, payable of in instruments. rate within note our XX of currency Micro the date. current in the are accounts in net driven In accrued income flows, First, from will $XXX to have instruments to cross acquisition. Focus All have for proposed line flow XX QX, connection fair QX, these QX that these to existing for XX-Q in cash offsetting was lower since a today.Turning FX Focus announcement September recovered generated cash million the losses quarter. P&L changes and as in into derivative relating fair acquisition, GBP in is a disclosures transactions. value Free GDP charges other QX $XXX by revenue. confirmation in is the swaps continue transaction quarter of be purchase through satisfy non-cash euro-denominated cash billion XX% of forward seasonally were these to The flow primarily end expense and entered U.K. cash GAAP million until negative $X.XXX XX, its driven filed this debt August $XXX the the was to with noncash USD, we close contracts detailed operating these of acquisition which hedge unrealized tax did requirements were the $XX our I a price were fix QX to recorded to book the Micro and $X.XX the during flows. liabilities of measured of our free with resulted derivative recorded GBP-denominated in the and we relating by cash to Form billion liabilities.You effective nature. and partially accounting loss the to say cost.As at to not available or operating losses million value million compared large at complete, not August noted

'XX, fiscal other a QX few let During share me factors.

for million a impact of versus talent, taxes invest headwind to continue tax payments. innovation XXXX, at collections.$XX acquiring exchange $XX million initiatives. cash and effective U.S. of X, higher and us This in companies provisions also The the was before. due higher our higher was We prior a than to go-to-market and July to R&D year to related primarily base foreign Section installment capitalize of XXX

ready the or XX% investments.CapEx of to in continued our stronger. to to Given decided from we were significant pending QX, engine momentum front OpenText and was capital into year. scale acquisition. days load days XX CapEx Focus prior $XX the the XX% improved QX days year XX with prior million of compared full and working our with budget remains fiscal a flat conversion in our trial, and disbursement to DSOs The high XX QX million end cycle the in in and 'XX.Cash year the remain year positive approximately we been Micro never has $XX

the quarters annual business is Our and vary. will

constant and of constant turn total aspirations. quarterly So revolver, a of year outlook, million medium-term our for 'XX for of low growth of million our $XXX our you aspirations.For 'XX, today, outstanding currency our full plan debt free to quartile remains of sheet on flows quarter liquidity, strategy approximately percentage as is see billion and quarterly dollar basis fiscal let XX% fiscal Page factors upper to be fixed. factors, ended or ratio and our $XXX approximately our our the of outlined XX, strong. U.S. will providing very to second X.Xx. expectations quarter you the X of total $XXX strong investor undrawn revenue.Turning presentation. present business The on XXs targets We we me net we're and a business And leverage to as a cash, September On another in million our balance currency will with our cash on $X.X

expect X% X% a to revenues year-over-year basis up ARR XX%, For to QX, X%, up up we on cloud currency, in XX% to total constant X%. revenue

$XX expect a $XX headwind be million. to of to revenue FX million We

is we constant as adjusted headwind approximately adjusted investor security and an million. be expect currency this We Again, in continue available EBITDA flat make of to to FX EBITDA cloud our year-over-year edge.We all of in to dollars $XX investments expect be materials.

added $XXX a Page relating year 'XX Mark's is flow for share to million, rates, 'XX on 'XX with note full foreign fiscal let up commentaries new me fiscal have headwind $XXX Please allocation, refer that and provided constant our you the million total cash investor current we earlier continue investor At strategy clarity from to to XX of capital Page to we flows. currency. a fiscal to exchange. deck and growth added back FX we our expect of cash in Turning of XX to $XXX metric the estimate million.Turning free approximately presentation, prior of free on materials

upper earlier, in million to a low quartile million FCF of range Focus, $XXX as total As we or the expect fiscal to revenue. Micro 'XX of be range percentage excluding mentioned XXs $XXX

me capital We our at FCF aspirations our billion.And unchanged on $X.X are comment let 'XX fiscal further priorities. leaving allocation

XXXX, $X.XXXXX I There Mark Focus closing team.I team are our we're OpenText leverage off X position dividend will strong First, flows the the will to environment.We're OpenText's share, globe, a business program, we want Xx proven OpenText questions. approaching with for Page as turn our the our quarters no Micro first Micro changes ratio for to customers buyback colleagues for as well December On dividend is you a from I quarter macro the of loyal a Board presentation, medium-term and kicked now change common share already you execution dividend of declared summarize our your remarkable to just thank payout.Third, a XX% net will and and our acquisition around second, thank record this you trailing payment fiscal the our November our of free part we the of on our XX-month during cash that our me upon fiscal and highlighted, outlook, a the mentioned.Turning as see of and details and allocation continuance leveraging priorities bring will special dynamic date program the X, reconsider cash full be let X, aspirations investor of deleveraging. very XXXX, operator and dividend for per playbook. priority December on within 'XX, -- Focus quarters; dividend OpenText, are cash the the except program, announcement, excludes of call XX to strategic quarterly XXXX. as integration after dividend over capital again X On Microfocus. less of the our our And in my is to which than noted, in strength date XX, behalf system to partners to and shareholders, executing on

Operator

comes of The first Steve [Operator Enders Citi. Instructions] question from

George Kurosawa

Kurosawa This is for George on Steve.

and there? question. an regulatory have to anything of macro Just in of in budgetary on with cycles, you us you right changes some terms Can see start just update anything the customer you behavior deal reaching give guys

Mark Barrenechea

now. right It's steady as you go

workloads installed of large -- and I continued network as global requirements. the of our security, migration streams, and our into the business base, come continues demand of about, centers, trust part new consolidating our the have for spending digitalization strong customers talked in that compliance So revenue SaaS

And changes you go. the wouldn't the any of last quarters. couple shout on it's out I'd over steady say So dynamic as I

George Kurosawa

follow-up, expected And than expected the stronger little areas as your of softer Great. a than maybe then between expectations? any relative or to bit point areas a the being you'd different out portfolio,

Mark Barrenechea

bookings and revenue the new in, stream. and SaaS private in strength in we have to Continued for cloud workloads our our experience, migration coming both content

gotten revenue core we're there's more have talked requirements We're we business business.We strength capture, requirements the to And where against bookings have a happen, and and investments. position our core time, is that. tower and point releasing about SMB from see workflow, strengthening core But every supply XX.X%. in Titanium As you positive strong Titanium in more more to we're regionalization. like chain and public in turning capabilities dynamics and Business core winning have e-signature quite content, can deliver in some help us watch it we that. APIs.I'm our and to execution. in about quarter, is in in in unique difficult, our starting SaaS of SMB are renewals both a where it's more P&L business more are to required, our excited that network, our as

opportunity the EX as customers type SKUs. have to of from We upsell EX

are marketplace. competitors a We of have couple that in the distracted

our We're gains. we're that very We while Belarus I'll that quite certainly share shifts really the the countries have a the Zix note are it of some on mix a intelligence a net got into in we into Carbonite take of is from Zix.So cross-sell positive. encrypted affected exited or SMB those And early some to in we've IP dynamic. are some e-mail. We into to and and seeing. bit looking now favorable that all Webroot Ukraine. carbon more But ago. threat backup everywhere exposure didn't have Russia the ability Webroot we're -- own from and So adding

things point. are at not this those us So affecting

Operator

comes The of from CIBC. question Price next Stephanie

Stephanie Price

your licenses Curious is the cloud points basis mix significantly. about the and down target XXX up model midpoint about so at shift growth in

clients you're driving that's what revised target? the curious seeing Just from

Mark Barrenechea

same And look, win question consume a our point we they license to X I mean, in on consume and basis, or want cloud yes, And up work win growth. cloud?Do The upfront. the do difference. consume winning them? we Do a relatively quarter, the just or that's the them we public I And workloads. cloud trailing percentage they cloud own bookings -- stellar XX% and customer XX%. just had in is how does XX-month consume mean up them private they stellar bookings we're them

in constant favorable cloud that's about XX% down with less in bookings XX% and little or to us. up license a So currency, very

talked gains up clearly net gains revenues XXX globalization, in constant in all down need So public driving in currency.What's new flowing shortages, new faster, trust. the of up to the added about, X%, is talent income cloud customers private the statement things XX% in of The the go is that compliance, it the SaaS X% the need now. share, net and ratio. we've share that We the quarter, through --

us Stephanie. a insight, tell little more So

Stephanie Price

over And then you levels. but was want this afternoon. results, speak an the results revenue QX improvement of released first Micro constant decline X% obviously, don't about know the Focus half to specifically currency I

opportunities the you look curious the you're more as biggest generally in Just how about revenue the stabilize thinking to and opportunity business?

Mark Barrenechea

They're bring November top video, our to security have the look across better. they'll Documentum their flat to content information base, opportunity today. course, resilience, and installed a at full-stacked in stack. ability base, on it with public then, they the their I'll exit the identities, That's into And into there. call And I consistent that And audio it fiscal, their release, the back flash edge governance, the The And or software, X. what we management. also call of AI for installed to content, top content That have writing management an top bring fiscal said, to and everything to had they're forensics, They management.That's update as content offering.From opportunity fiscal to list of the a I full to which or private approach today said, is maintenance bring just their the our AMC, update service that go a to trusted update renewals we're cloud, have 'XX, secure We're a of they service. business, offer. has of statements cloud, X to not renewal year. a renewing, expecting the truly typical ADM, decline code#X a just cyber #X, business. providing not ITOM -- bringing It's we from customers suite. it's

as and then So that's up machine years. Idle And learning, coming AI Magellan as technology there as and ML -- bring relevant the the to and the well. base Magellan Vertica, our and AI very pertinent opportunity AI and for together

Operator

comes of question RBC The next from Treiber Markets. Capital Paul

Paul Treiber

question Just Focus. Micro a on follow-up

had conference large customers You And your in What's feedback regards Micro to existing as already see do user the base customer customers? Focus from Micro your your in Focus? October. been you

Mark Barrenechea

a last line in bright ready And level to business recycling cycle sustainability this response close. OpenText bright percent and promise XX,XXX the we big not another to opportunity Google, We've ITs promise, I'm and ourselves, person, Microsoft, information. OpenText flies across their SAP, installed I world positive Union.It talk themes single or demonstrated this these World, of finally, our information call percents month, that be applications very just how care was and to more and base battery from that and same we'll the sensors kind across came out wonderful guess, the of that of get so Greater is the about all data time to into management people detail, line in strong a online, others, shared And X,XXX were full last installed seamlessly.Also of base opportunity. we cross-selling that opportunity Salesforce, of post The in lubricants to there's right? the important we conference, agriculture. when demonstrated penetration, a is

were from the the So feedback some of event. those

Paul Treiber

Looking remain to of The at base? off-cloud sort workloads high customers mass explain your despite new the your quite cloud cloud business, more renewal cloud. of a as migration from and bookings, is new rates installed that of uptake help coming existing opposed can you the a

Mark Barrenechea

Yes.

Paul Treiber

want to? you Do

Mark Barrenechea

yes, it, yes. say could I

choice. multiple a me give did You

know. gave kind this you Yes I and me of So don't and the I'll give you're is hearing yes, it narrative. you

The for SaaS is added that our to revenue. to are first me our P&L, our time workloads public

Titanium cloud is could workloads, Micro revenue, business. services And renewal end add as of services then talked talked add and XX% on Focus of so release top the these on not way, a on We that talked that. date, noted rate. to top on accelerated winning our could as in from And about benefit that chunks you will about start an By winning add top we We're that. top new. always We managed Titanium off coming we've rate. on these workloads XX-day cycles. are customers gain of it's could APIs right? we've public We We've -- well. the bookings add renewal that. we're of yes. value great Customers and It's a moving date.And

in strength continued So our we business. expect renewals

Paul Treiber

bookings, And bookings expect has quite just historically seasonality be lastly, seasonal. bookings, how business the the Should do cloud you cloud like you that been think to giving about -- we of are license since seasonal?

Mark Barrenechea

that. have bookings. about of to an We're through But an through business little let think let -- think with vary. But and will annual and we're We're will me those that we'll I'll I kind bit to and Madhu us business a quarters seasonality going and of that. leave annual think Madhu the

Operator

Instructions] Richard National Financial. [Operator Bank question The from Tse comes next of

Richard Tse

Just us in QX -- milestones prior QX? you can wondering if to transaction to calendar closing on update here maybe major the clear the

Mark Barrenechea

filings What's of regulatory or primarily approvals. customary and sort remaining

Richard Tse

Okay.

major one was shareholder I the vote, recently So guess. the

Mark Barrenechea

the which was that's -- vote, correct affirmative. into Yes, shareholder so we obviously That's right. positive

And to We have next closed series a Richard, we quarter. regulatory expect of filings. be

Richard Tse

section. was you've quarters in Okay I And growth here. helpful on had continued -- recent that organic for quarter. the pace your deck looking that's and sharing the growth a information you obviously in published of organic at

of run of size collective you the a the the sort everything companies? had Focus Micro that you beyond highlighted that that, brings, given you've rate about there's chance think organic do rate that Given OpenText what X could growth reasonable kind accelerate of here the

Mark Barrenechea

great the commitments, macro I reserve We -- question, positive I'm appreciate very global amidst Richard. the growth. in We What and comment business. feel quarters core But post committing the core returning don't have We Micro see the conditions. macro the in Focus group quarters upper core until on growth is cloud not adjusted coming currency.We as quartile in had our per we close. believe to not to to But get It's to our business will going we this that EBITDA, clearly projections. -- dynamic going side the not a our OpenText just our organic I'm especially flows cash consecutive the organic Yes, enlarged answer change constant on that said group grow. free we adjusted our enlarged question. is. I'll of growth But quartile to in a of the we're update see ability the our closing to growth business. reserve and I've rate X of to

Richard Tse

Okay.

Mark Barrenechea

upon about rate of which The closing. talk we'll --

Richard Tse

many reflected, think, of integrated. transaction, history stock that we've the price the acquisitions of of just accretion certainly kind of And last I me ahead the the Okay. degree kind one from obviously, this and we're hasn't of seen potential

that? think back Is like Micro about, that's you context, context history a what your can and of of kind challenging you the getting to integration complexity was from people that of historic is sort OpenText harder do by because I where Focus of looking in that, the with compare the it in acquisition Focus?And give complexity most just sort about would easier prior the standpoint? Micro company, made concern maybe So questions some integration same, talk to how large, really think, the of the are and that's the to those I'm

Mark Barrenechea

our value our markets models. we're We're the building I We're I'm performance not confident a clear. perhaps don't to very businesses, a And are other we building perspective and one when risk, appreciate business, cloud And say comment of both and look can that building the going there, on and software confident like I in We're we largest different markets to the from cloud we're close. our world's uncertainty.And of okay. in going at it. truly on closing. Yes, price you -- how -- appreciate We're -- focused of software stock there And the to And lot quarter And know a is value uncertainty. world's to away it's businesses. situation we're I largest question. the can't where close. companies the have a a

growing. is Our business

for heard made us business, and our make commitments we're renters choice.We've our experiences will of that and investors you their the You've and our choices, owners, building focused not on some will I'll in and we're HP long-term. We tell our businesses a business We business. plan. informs we integration turned Documentum, at look prior into renewals low very a That powerhouse. low on the shape well margin, efficient acquired to X the renewal this.

top hard adopting of a a got going early, We'll There's into We the pick philosophy early. we're of of something, We'll and X and adopt systems.Our we're the system. not pick working team We'll the go. mark. best need unity we something, to fast, best is going the of and to we'll So value integrate late. take speed of good X/X. and we playbook in our the people, insight go. one, consolidate We don't of have make pick leadership culture -- X to decisions

and you So see let to there into. want there's anything me if go just pause

Richard Tse

sure context great. and because made that No, that of the that's important good. of in too anyways you've have have people to terms sort the No everyone so for acquisitions just that's I success that history think that you've seeing had not it's to I'm

Mark Barrenechea

onboard. we was much our we stepping -- much just than from XX%. right? we when we're a business, to we're this will when our we business. company GXS, acquired put today, larger to X/X perspective, next quarter, closing Upon So if ratios Yes brought it to right, GXS XX% And XX% efficient up add added in and company more

Operator

Thanos of next Capital The Markets. from comes BMO question Moschopoulos

Thanos Moschopoulos

you Micro how might out some focused a that changing play don't just just think see example, you macro the know and [indiscernible] which could you was different areas also Obviously, the for like maybe comment at announced if how I than and you can a application is the or think we about bit the how but mean might potential that Focus?I it it, modernization when of can backdrop. now comment, stab macro you Mark, point Focus any to, you're resilient? backdrop? given to on about just transaction, impacts Micro

Mark Barrenechea

to more trust just and to have services well.And or industries not cyber sort -- across of manufacturing, bit more there's grabbing if make cholesterol first increases X get of annual are compliance, sure and of on it's lot of want well, them our mean, start as and to these that price happening The Sure practice healthcare, portfolio, an will, I in common places sort judiciously. macro be into good cholesterol, for the of I exposure companies continue well. A of actually local the adjustments. what's to increases changed heavy we'll are good their we apply.So adjusted put right? We, federal, cholesterol cyber, you strong the work These I regardless in is, bad weight, having governments, exposure. where financial inflation. price industry at ability market's OpenText, security needs accepting level, good mean, I where too from thing but think A the great as industry businesses. tech an just local government, sort you're around place, stack we at governments a currency much inflation are maybe for Thanos, The full detail skyrocketing. I don't

X, apply security and and We their well. the commercial. want no just Focus will SOC military customers to just security That equivalents of Micro very style FedRAMP X not will over as industry in SOC and compliance.They compliance longer or countries sort or private cloud, who have accept commercial of the directly B Protected in other

So comment, I'll close, privacy the maybe are we the and comments helpful. reserve that security but until industry

Thanos Moschopoulos

in gross you're 'XX? be which -- case. that just you're cloud line us cloud that the basis then seeing cloud that's remind mean, the a quick So offsets regard? the margin bit just full to for is obviously some on growth GXS a of I I fair fact guiding one your margins why margin 'XX a And despite on in gross in leverage Great. versus -- is quarter. can cloud up versus you constant see year for Madhu, the the obviously year-over-year That integrated some the

Madhu Ranganathan

so quarter, the year the has we'll XXX remainder we the purely gross sharing gross over terms obviously. Yes, absolutely of the less in all reasonable of cloud the better where are see year. year-over-year. reasons time, should the they surmise is higher for the remainder to margins was our in it you But gross margin how cloud, points in or at basis to margins, we improve.Zix, SaaS going prioritize Mark Carbonite, for in cloud and it's look cloud We're investments SMBC, holding been definitely acquire of do the continue

see So of the enterprise and investments out will side. improvement, you coming the

certainly efficiencies earlier, you might gain investments towards we pickup and the some it see holding are as yes, flat. And So we year. the of somewhat evaluate end

Operator

The TD next question Securities. of comes Daniel from Chan

Daniel Chan

deal make given deal any go ahead like things to it investments Mark, this or of the need you looks to is up now Any going that that closing. you ramping through. guys

big opportunity to guys that your you the deal closes? cross-sell example, you when up have were infrastructure about For talking Do with cloud. cloud scale

Mark Barrenechea

right normal now. It's course investments

a the process -- right ability business, partnerships, now. great course the our a then normal to big workloads as our just that get private faster, the hyperscaler private some, able made on we've can as And is ramping. private now, days Look, where go be modern infrastructures great -- noted, can always of big in Our upon with months. have provision and Titanium we cloud, rapidly now, we need win getting physical investments we seeing up we not as scale if SaaS winning But anything Madhu contracts of you've to days the cloud a we're when model -- make infrastructure delight.And would a there. cloud, had and of to that about turn we're right and onboard we'd out matter environment. more very more own to kind as say capital We our I public a wouldn't to talk very our

Daniel Chan

Micro investments integrate you about Focus's the after has the of looks close That's revenue side lifting stabilizing, Focus with helpful. worked. How much like the in to with the products But deal it other on Micro heavy yours? any

Mark Barrenechea

we not as earlier, noted issue Yes the together, line. R&D combined the is Dan, investments on

to we plenty have security We're we of full the prioritize exciting prioritize investments. cloud. have We opportunity of how going prioritization stack, how private

a So the investment higher it's to up for not We're about rate. XX%. need

they're think you up to their That's a I If on good investments. can healthy XX%-ish remind investment R&D me, spend.

So talk close, we we'll the when about prioritization. joint

Operator

I Barrenechea Mr. will call for back over hand closing remarks. now to the

Mark Barrenechea

All you, right Harry. the you, you, myself, Madhu. we for this to engagement very Madhu quarter. prescriptively Greg, high us approach good, thank Thank everyone, have today. very taking joining are Thank Harry,

in to high Harry's comments, As look you forward We'll interest today's your you have be engagement, including the OpenText, call. conferences. a dozen close attending, for and myself. ends in We heard to we that thank

Operator

call. conference today's concludes This

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

Open Text (OTEX) 3 Nov 222023 Q1 Earnings call transcript