Earnings call transcript Q3 2023

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Operator

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

As a reminder, all participants are in listen-only mode and the conference is being recorded. After the presentation, there will be an opportunity to ask questions. Instructions] [Operator

like President, call ahead. Investor now Blount, to turn Vice Senior Relations. to would over the Harry I Please, go

Harry Blount

a afternoon, and and on Madhu Relations is to available earnings welcome on and Financial Chief replay OpenText’s everyone, Officer, quarter Mark Officer recorded Vice Good XXXX J. being the President Officer, fiscal Chief Barrenechea; Chief OpenText’s Executive call call. Executive thereafter call webcast Ranganathan. Investor the third me with Today’s Technology live today our are shortly With OpenText and and website.

America press Earlier hosted you today, be we and that by be participating OpenText website, Meeting at following Conference online. posted our Conference, Austin; Relations Virtual and on at Investor May on our These Technology supplement materials management in York; XX, Tour Needham Conference Technology conferences: can Innovation Toronto; will prepared investors.opentext.com. New Barclays XX Fancisco; and OpenText Media remarks Virtual the Investor San May X release Bus May will June on on Bank at in on BofA’s I’m inform presentation to upcoming the and Conference May on XX. of Technology accessed & XX; investor pleased Global Leveraged June XX Finance the Barclays CIBC in

that conference OpenText on now of may we call, make this forward-looking during to future statements of performance And our to course Safe that Harbor. information. note the relating the Please contain

conclusion, While made forward-looking or the these could projection statements actual results differ materially forward-looking represent forecast from a judgment, statements our current today. in

applied in were any and statement. factors such material assumptions Certain drawing

conclusion, XX-K performance website. found distributed information, OpenText or OpenText’s which differ could may release our in contained this as that press results Forms earlier XX-Q, be on that recent risk our was as projection are future factors materially factors in well and material as afternoon, from as actual in of cause may the forward-looking about results information project the that well the to forecast a Additional

We required forward-looking update obligation statements by so law. undertake to unless no these to do

discussions Reconciliations call non-GAAP most conference found most on are other non-GAAP our measures measures. current certain filings of financial may our financial GAAP public website. addition, which our comparable and any be In may directly include available materials, within measures to – their of

And call with hand I’ll to the that, Mark. over

Mark J. Barrenechea

Thank Harry, in call. we EBITDA to of me since first total dollars is cash growth acquired results the adjusted currency, let and XX% delivered you, a organic Micro results constant and ARR, Focus and progress record welcome as our revenue. today’s everyone growth, quarter and superb. positive plus XX% billion This free In we $X percent are our flow

have for of we As the billion our the mission as Use said, automation, All expanded our offense, we to win Focus applications XXX Micro strong management speak management, security, a now are fielding defense. in, in both a for results developer AI. are TAM On playing always addressing our include operations a we I’ve enterprise acquisition strong themselves. to and market. information digital offense will postanalogy, by significantly and

APIs. value is focused that organizations the Titanium is digital transformations their and growth and our tech global key complete Project and on well in Project affords offense leverage the are announced XX,XXX segments generation SMBs. On help complete market AI. X marque to new and we savvy our next governments and positioned fast go-to include And of We opportunities Titanium through customer

growth. dividend strategy of million EBITDA quarter. quartile cash free A cash ARR cash we targeting growing quarter. as free defense, million our flow of trailing at quartile upper XX% free Upper the flow or months $XXX flow the achieved our via in $XXX XX% of dollars On organically XX% capital in of revenue XX adjusted in

automation. does So operations our allocation capital efficient via and cost

multi-cloud. is world The

management. an and in is the for a information in it unique position the OpenText information clouds, clouds. as internet fact, leader is the management internet In is of interconnect of

a Our I products for have go-to-market our employees profitability additional and for have like we small and on-ramps positioned continued growth. and momentum and growth

off to from cloud cloud. transition Continued

New large to language a I’ll SaaS models of speak cloud introduction in public which products, moment. in AI, you

innovation is to priority. of Security strategic a continue providers of and around and have consolidate platform to Climate accelerators their the developer remains and software costs. trust. top reduce and need and company company Every a requirements course

enough. reflection our customer reflection and XX,XXX Our a how QX every business results OpenTexter. proud long-term and extremely allows are it is expertise the the enhance a and this to make financial performance. investments of employees. to our a I management information business I emphasize on partner of trade-offs and view reflection trust, right on can’t transforming dedication of We am us annually, because short-term

track our me growth few that With were organic quarterly a million, revenues positive with XX% Cloud growth ninth of growth with cloud quarter currency. X% on said, organic were of constant currency in let cloud positive XXXX fiscal and highlights. growth $XXX bookings XX% XX-month plus. over Total Trailing revenues for up and XX% $X.XX currency. provide $X remain quarterly constant organic billion in consecutive in costing up billion, ARR up bookings of and

adjusted revenue. were was of $XXX I’ll of our cash $XXX EBITDA adjusted generate support our OpenText, accelerated million. of customer dollars at XX% So million flow of $X.XX XX.X%, of confidence Focus being within $XXX or constant that bookings million show about roadmap. contributed note EBITDA million QX and of cloud Micro excitement revenues since Free or Adjusted $XXX for margin. the part cloud reflecting EPS We and closing, strong

In our revenue California faster, the One, infrastructure, We have ARR, wins customer Air Group, a fantastic innovate themes dollars. security Energy QX fantastic and to ranging content record service had record EDD, to at software summary – EBITDA record cloud PacLife, Post, Carrefour, adjusted we from the revenue record Australia we the delivered cloud, MAN and Liquide constraints. transformation resource cloud include experience, and need secure Hydro improve our

operations security, IT continued upwards and their firms and and support. in wins given, we We constant Today, cash curve. [ph] top our ranges. for transportation customers high-tech like Micro our thank targets. we I’d the Trust not mainframe flow management. XXXX the In earned migrations fiscal in revised were is and of Government demand enterprise had following notable have complete currency FXXXX revenue to expect Focus to

XX.X% revenue plus. million total free Total XX% total X% Cloud or XX.X%, to bookings cash EBITDA X% XX% of organic $X.XX growth flow margin $X.XX XX% of billion, to growth. and million. to to billion growth of with $XXX of $XXX to Adjusted company

when our and and strong, fiscal kick Our remain views expect QX you fiscal and XXXX. we off XXXX call unchanged XXXX can on updates fiscal on

is we successfully about as Close Project workflow generation for full on adoption solarisBank. is delivered API products. cloud. including and for archive enterprise speak SaaS content and Cloud at markets and management, major we World SaaS Titanium a our have generation and me ANXe XX.X [ph], Let second our It OpenText such announced strong second Titanium Stericycle us. management. private collaboration, and EMEA, now e-signature, Editions includes case Titanium content are cloud already customer management, Delivering We capture Brothers, seeing companies from milestone public cloud for records

ValueEdge, plus the our cloud support step SaaS Titanium were and aspirations is XX. includes delivered, Debricked, have ECM public another SMAX, we but we Further, Titanium bookings have capability talked XX% to Fortify public just continue expanded for about, We core not and now cloud, private cloud. off-cloud, fortified choice for I Cloud just further This our annual of that API strong Editions growth. X cloud cloud customer announced our

USDX.X billion invest next approximately two strategically we to will years, the Over X. Titanium deliver

gain and are to We growth a it is and company invest share. right the time

XDR-as-a-Service, features clouds We’ll and which idle are It’s large of the as-a-service, aspects major a cloud built developer a XX be Here IQ There’ll Titanium new clouds, full of Focus. models of five across and be X. voltage net integrated and expanded of AI, of trusted delivered massively private information cloudification management include cloud of language days. in. adoption or tens thousands the We introduce and intend integrating new and our top to IoT LLMs. means facets most and secure Micro an every all that with

So the LLMs always I’m models. instead large acronym going of language to use saying

World the LLM and enterprises information to AI EMEA, cost TX is growth. classification, management. paths week help knowledge additional through we we’ve answering an talked and trust dialogue new Titanium generation. LLMs for preview of LLMs, integration for At also information companies two OpenText, OpenText about climate help and text value of trusted other reduce be and has path into find Last things upskill LLM security. ChatGPT. heart cloud, the at including generation, X

models the customers to OpenText on trusted, information. are cloud, to large reliable We secured committed OpenText delivering based language their in

via information unlock the is value gain a position help their OpenText customers information the unique LLMs and advantage. to of

specific LLM on working are with We customers strategic already deployments.

with to risk. We’re contract working large legal organization a reduce

strategies risk firm accessing a working and quality a assess to auto company and their audit with services to We’re of submissions. service biotech and the meantime and processes, clinical acceleration trial financial regulatory company assess to failure

of use believe data, the the the data. wrong experience not and is is new I offering. as learning product data, there be There’s deliver operational experience third cloud standard ULC be a LLM the coming in our cases dozens private over LLMs and quarters there’s will will data. the management This information data, is information water Information absolutely and reservoir. our of data management. pillar analogy. oil. Feeding new Information learning operational enterprise is platform the

pillar we and and our customers applications this on it. making keep top their a are will We’ll their along We you build third priority of help the way. updated strategic

wrap integration integration provide on We of the an and me Focus. update ahead oriented Micro is of approach. Let results it schedule. The promise to

Let me key few provide a highlights.

and let we and On major and a to major the are our me roadmap, organization, an done. On are go-to-market walk company we public you we’re integrated engage through achievements. done. done, go. plan milestones FXXXX on timeline, First ready approach, On and people customer product

it’s over quarters and complete to fantastic quarters energy next our growing business. integrations to the will our to and We just time systems the six four transition

XX we’re and fiscal with remain year, the to and XXXX company. organic growth, into business fiscal days Micro returning and in our we and committed results, QX resource growth revenues growth are Focus business people, on the owning people operating on greatest returning in billion to the XXXX. this of fiscal confident based onboarding $X.X On So to in the

our our growth, great completed reduction. and and growth. And carry now for we speed, the the and customer to it’s with impact, empathy new a innovation, path organized responsibility company to of workforce care; We’re vast on forward privilege majority X% have

a EMEA ago Micro the announced innovation including we Focus products of accelerated at On roadmap World OpenText weeks full cloud roadmap. two

Full and cloud available DevOps, today. For cybersecurity Fortify and private Debricked available cloud security by today public for XX.X. options available

technology, advanced available between available available XX.X, Just options vertical wanted off XX.X, private and I be a and by cloud UCMDB XX.X. for AI ITOM today today. private and private available FinOps All few XX.X. SMAX cloud and other the cloud call to public more AMC of will cloud the

we’ve product So, our Micro for announced full roadmap products. Focus

into the organization provided On L.O.V.E. onboarding. enterprise customer created the L.O.V.E, when the led we on QX, cloud. were We Paul in In expand. organization and we value, support together we off recall for professional by success acquisition, services, cloud brought Duggan, renewal one renewals call organization XX% that who and rates land, close both enhanced OpenText mission new an operate, OpenText delivered a

continuous Our dialog Focus expect know-how XXs and rates and with having Micro the to XXs and customers we and XX the to customers quarters. uplift in Focus making days end value, rates mid the cloud Micro coming from low uplifted the expertise radically the has the in the XXs first changed into renewal renewable innovation, XXXX into and improvement will fiscal XXs

free me allocating provide of a it plan our will under but via $XXX detail, and XX% and net of cost flows Xx. add, more promised dividend Madhu We leverage months wrap and capital oriented cash approach. our to trailing track we’re returning reductions a to on results XX structure let million ratio

this a news closing pipeline There’s rates key Let environment. the demand growth, season on internal earning provide reviewed comments. final metrics and from cancel I’ve me my our lot sizes. of deal

targets FXXXX dashboard free as dashboard, QX and our we it revenue are for cash we are reads QX so steady goes. just highlights QX as as and raise strong and flow. Our annual potential

$XXX a integration We are as approach and schedule cloud we’re cash with with moving our constant revenues. XX% target, $X.X at in while billion first unified a on purpose. ahead pursuing the is free revenues, with to extremely billion to million up in a company and EBITDA, FXXXX near Micro $X TAM $XXX returning of to XX% promising Focus adjusted speed flows preliminary billion

a multi-cloud. unique The in position. We’re world is

it is an for the In information the clouds internet management of fact, of Internet clouds. interconnect and is

with we and and Our for growth have products AI, well models. an and driver go-to-market additional profitability, approach idle and positioned now language continued us have growth large

on while XX,XXX and QX that for delivering next-generation did results who deepest outstanding all. managing peace strategic our one all My in bring May the peace, who job remained amazing to focused stakeholders. our gratitude OpenText many colleagues the value priorities an of for creating brings

the Ranganathan, me let OpenText, to Over call CFO. And to turn over Madhu Madhu.

Madhu Ranganathan

Thank us you, joining all today. you for And thank Mark.

Mark earlier expectations This As Micro above than results across highlighted, from and delivered the we at Focus. by outstanding disciplined was QX driven integration OpenText, contributions agile execution expected board.

we just fact, are days Focus. January of In XX a XX from Micro closing

We are of integration. well our operational and advanced on schedule ahead planned

today finish expecting targets are we QX to and We are reaffirming long-term a and fiscal our strong aspirations. the year

tenured and reflected business longer the bookings, to to in we strength one like that all would our recurring are This of revenues I which is an view our continue than generally growth remind basis. of and year. you cloud on annual annual

with make our long-term decisions As OpenText. customers

We yet they in fronts, our each weave the drive our to nature performance strong on and into of continue will long-term quarterly all annual all quarter business aspirations.

up in total $XXX revenue the currency, results, to currency, $X.XX revenue. fiscal XX% in Micro investor million Focus QX XX quarter. in basis currency. period with compared the USD revenue the of $XXX on slide constant and state are the to up otherwise. constant and and of please the in basis, XX% year-over-year billion, and same XX% year of and prior revenue was billion, XX% XX% On to in presentation. of on XX% refer Page of references up contributing reported a in making $X.XX total Cloud are million, ARR Speaking X% here constant a millions I’m All

enterprise cloud XX% renewals, Strong also so cloud cloud XX%. and year-over-year. million bookings, off Enterprise constant $XXX

revenue a this quarter was of Approximately constant was consecutive QX remainder currency This significant revenue. cloud on and and customer impact both a support growth and half headwind of million. ninth in of exchange having $XX our Foreign for organic cloud the impacted ARR.

GAAP down Focus million and offset Micro financial improved metrics. was XX% operating And gross net tax income an to million and by primarily moving was revenue. the to $XX of versus higher mix related of expenses to other due led from by margin $XX interest of license GAAP benefits. XX% acquisition

versus with EBITDA adjusted Adjusted XX.X%. EBITDA had And $XXX of XX.X%, constant EBITDA million or Focus, $XXX in this OpenText which XX.X% adjusted revenue margin of XX.X% was currency. further, million XX.X% up breaking of XX% Micro and of up an down margin

working Focus cash performance purchase Free of Micro million, Year-over-year, by proceeds billion revolver. Our in $XXX R&D on expense Focus a operating the in expenses XX% cash million million quarter. investments and related growth operating to strong. sales our flows $X.X from billion and revenue $XXX basis, the $XXX cost year-over-year cash were quarter and of cash, higher constant GAAP flows was of up position the revenue, in marketing. capital net We of and $X.X of from and debt and impacted sales generated Micro acquisition of in related remains

in were prior XX-days the DSOs Our year. compared to XX-days

an integration DSO excellent Focus. of reflects continued execution with the Micro paired agile QX OpenText of Our

make reflected made progress two from well. Micro significant in performance and working needless close our And FCF months strides fact in We Focus Micro say, performance. to to capital expected as contributed Focus in

XX% to Turning cloud and cloud We remain were up plan million million fiscal trailing to in-quarter bookings X% deliver bookings, our were plus constant on cloud bookings our for enterprise bookings XX-month $XXX year-over-year. $XXX cloud year-over-year, XXXX. enterprise

in please the Page The investor related to finished debt Focus acquisition. presentation. sheet, see the debt. and billion quarter with closing balance billion approximately of the in March Micro to We $X.X was cash Turning in of the $X.X XX increase

debt lower was and stronger EBITDA, times cash X.X balances. cash Our higher and reflect by higher net for flows, net ratio driven QX leverage

our de-lever debt minimum commitment. plan, million reduce we our we quarter after as the $XXX March, in by for debt during April, closed and As debt further the of repayment part

flows. And charges on looking our leverage based is special investments see ratio slightly net ahead, of quarter-to-quarter impact you cash may fluctuate the and on

We times net and leverage full expect track be to less than on to three or exit at fiscal X.X lower times within eight are XXXX quarters.

the OpenText, situation the were Bank. Credit like At to Suisse, would Valley Signature respect unaffected or share we With Republic, I First to Silicon following. today, banking by

strong GSIB. Our important solid the centered banks footprint sheets. is and It’s with banking on capital systemically globally balance ratios a

are money short-term AAA investments hold that minimal debt market to have rated, funds exposure in U.S. and regional Our government we banks.

share approved XX. June So continuance now a let We and per date a speak a of payment me $XX.XXX the about of dividend intend our our of OpenText The date program. dividend to Board June of grow our as growth. record FCF with dividend cash X

present currency in quarterly Turning XXXX of Total our on business to fiscal constant business QX, quarterly constant and constant investor and our targets in Starting our XX growth medium factors. we aspirations, aspirations. currency Page currency strategy term plan outlook, our presentation. with and for factors in

expect $X.XX ARR being will million. of $X.XX At $XX of OpenText a to $XX to headwind billion foreign forecasted exchange to exchange billion with constant billion revenue be [indiscernible]. currently $X.XX rate We constant $X.XX being OpenText of billion with or million better.

Adjusted EBITDA XXX be FX expect to margin less Micro adjusted percentage points down XXX costs basis, than $XX EBITDA points. to on Again, basis million. an continuing headwind a we year-over-year of basis reflect to Focus the and integration the

in year-to-date business and excellent with an year, a finish mentioned we a basis, solid to and long-term the XXXX our on QX, for an earlier, view we setting for QX fiscal performance our and looking As annual are aspirations. platform our the strong along confidence fiscal visibility

the provided presentation. and growth total on of Our is fiscal constant currency strategy XXXX Page investor XX

XX% XX% approximately rates to to $XXX $XXX XX% Customer and XX%. for see would million XX%. cloud be revenue million revenue target plus. XX%. current XX% at growth full XX% to up exchange FX of headwind revenue year. Cloud at a XX% targets support up all increasing Total we’re the to up bookings You revenues unchanged will ARR price to up

it Our fiscal for Page except to million. a arrange target million decrease of as remains on largely model, $XX XX a investor presentation, million $XXX unchanged XXXX to noted expense $XXX the interest in

medium included XX our Our in aspirations preliminary pages investor targets remain are FXXXX also XX. and notably term financial XX, unchanged. These and FXXXX materials, on X,

And presentation. integration point and charges I on financial savings, a targets. and on slide you timing cost free or the flow our providing framework. and adjusted to of our of details illustrates cash would investor impact today additional Page integration This financial expense slide XX new special we’re EBITDA

update savings. Approximately in comes So on $XXX million the workforce annual you of Mark reduction that million a $XXX commented cost let savings from me on. previously

begin be realized consolidations will XXXX. The balance across fiscal million and XXXX. strategic redundant by fiscal come savings should will fiscal $XXX annualized to of span substantially elimination savings which improvements in from savings from middle into will be the XXXX complete facilities, and in vendor the XXXX. of The of

systems have integration as of alignment integration We million expenses. highlighted span as $XX previously support well to anticipated other

We early fiscal expect into the portion integration to expenses of XXXX. span

$XXX have amount XXXX spanning through footprint end structure our severance and of FCF, in We technology fiscal to highlighted near-term the will initiatives spanning to approximately to charges global simplification, million be million most charges advisory that of this million tax million of other optimization, approximately restructuring, impact and fiscal will related XXXX. And be will primarily special entity to $XXX $XXX $XXX XXXX. for and continue

aspirations. reflected expenses in our are and savings All charges, estimates targets of fully these and investments,

to are million free $XXX $XXX XXXX our XXXX Focus. Turning This of performance continued cash fiscal $XXX our of from upward and Micro raising to range to reflects integration strong prior million $XXX we to fiscal range flow, million. agile revision million FCF

on our fully long-term finished completed QX performance. we fiscal summary, operations we operating ahead initial of to track a Focus meeting Micro are outstanding for of and integration pleased schedule, an near-term In QX to into expect of with momentum remain We the continue OpenText goals. year. very Having our strong

journey behalf customers, the we of shareholders, would members ahead. like OpenText, as on loyal On team thank I embark to and exciting our partners,

open request the your for call questions. now operator to Operator? the will I

Operator

Thank you.

question Our [Operator first We of Lenschow from will go begin the now Instructions] Please question-and-answer ahead. Barclays. session. comes Raimo

Raimo Lenschow

showed experience businesses, really of what the obviously so first like, well what kind first – terms due you you’ve restructuring, Thank what my of life what of working how in comments real far had had the and of now Any like It here the that you has in seeing up. then so that in follow combined terms has here? for one cetera. also seeing and seems been journey asset there Focus kind been and you’re was of you’re comments Like the, asset. integrating And quarter own entity. and you Micro with I et of, the Mark your diligence question congrats a delivered any first long are

Mark J. Barrenechea

thanks thanks Raimo, for you. today. joining for Thank and us the question Sure.

and always you impressed of and you I planned people all are and you and own can then level with you into And previously, been we diligence, products, do products, the had observations with customers. it’s just the insights. noted we’ve As the then But due get impressed people, And very operate, the want. and customers. diligence next the the once extremely the the as research we

with we’re board. the leading innovation And across

enterprise cloud. The highly into IT, Idle, with a the fantastic today ITOM So relevant movement language digital digital just never IT AI, especially into more security, of relevant. with models. combined large product

customers how as platform had the people, receptive of I we broader see with, it’s and of the to the a they practice So just in to theorized innovation. products strength innovation great just are and and would start of Raimo, the and speed

Raimo Lenschow

you follow then started And up, mentioning language it with actually, and is large it the and Idle already models.

OpenText in? language that change kind part like, broadening and it’s with like coming into Thank towards you you’re Idle perfect have think like you cross-sell models a then about content and the even bit side little like, side, of does the now the Can search you have looks also management as a with combination it large little the on the If that, Idle. of you. then It you bit opportunity space, further. you back because how the have that speak fear, and

Mark J. Barrenechea

there. lots kept the Yes, leader of market XX,XXX management. hit and were we’ve lot a helped we’ve two able decade, organizations enterprise decades topics time. customers we’ve very customers do helped organize our And on you the tech that, management, top in a that. records add content We’ve be of to it management. expose We’ve information, customers and And do to of take web. important over archive legal added helped search, absolutely. capabilities We that helped we’ve through on information on helped We’ve customers

we’re third going data, them help Now data just pillar experience a data. to not operational their but from is learning go which their and

We are in such other a GPT sitting a there And great position to I help generative TX. customers transformers. with attention, ChatGPT know many are right? out for large of pre-trained language models. has And there But LLMs lot like

an our platform to platform up transactional be cloud to the door private next going two. set connector customers, a each of between and operational our have So strategy for then is LLM

does And just imaging and metadata. and Idle what turn, take, video, data and turn is some voice, help into it

noted, single will looking the, it’s millions cloud audit of working to already customer. cloud has private deeply services to One LLM a to contracts who of get sit as So then every handful augment I plans. their another be firm is in going customers. legal tech next risk useful. way And data for the internal private we’re financial And to with

thinks they’re company their service very clinical large model. An auto a through actually create looking of to interesting who and a the agreements one, generation transform biotech to going company trials next a language

top moving a the it climate coming could quarters. not be be or to on time It cloud, driver cloud just stack is and growth of just lot to SaaS growth an trust. for this additive. it our or So not I’m us, off of spending could this because is in top driver a,

Raimo Lenschow

Thank exciting. pretty sounds Yes, you.

Madhu Ranganathan

Raimo. you, Thank

Operator

TD Daniel comes ahead. Our Please next of from question Cowen. Chan go

Daniel Chan

the first on Congrats Thanks. Mark. quarter,

in there’s uptick Just and a growth revenue your big expectations. customer support that noticing license

shed some if made early the Micro could wondering Focus whether of it’s that, Just business. changes you some as on you’ve color renewals to from

Mark J. Barrenechea

Yes. the Madhu, want to do you take question?

Madhu Ranganathan

some the take it from the pass and you I And of months two it you, certainly yes, coming when it measures Focus. Micro Mark. we’ve Yes, say taken, growth sure. into on can to it. Dan, reflects yes,

bringing As saw OpenText in renewal Mark an as from their has months, rate support, few about we sides, whether XX% measures certainly side annual been, and a the Paul adjustment, cloud. done and mentioned, has and on job enterprise cloud Duggan’s last as organization amazing it’s price APA the you talked continued on customer both off support, customer

measures, yes, play. definitely So seeing all you’re those into come

Mark J. Barrenechea

Madhu. you, Yes. Thank

raising. right really low innovation, you strong for and week again you in-person partly cloud it’s core the cloud saying XX% customers renewal is given had a the the to building And right well XXs, performing Micro progress we’re OpenText and extremely the integration make options, at off the with with stay on OpenText, Focus, rate. and We steady you’ve we us So Dan, on going can a XXs, just with already look Micro very deep renewals Focus and we’ll confidence continuous – year a chance. new confidence Microsoft see to into stronger this roadmap, finish XXs, in improvement get started from, private meetings quarter, fantastic engagement and in the earned Europe mid over or the and make with we over low we fiscal this we’ll stories to give just until

you’re that’s seeing. So what

Daniel Chan

talked these Micro whether deals getting also quarter, in about were some when wins Focus earlier You you just Focus. in you wondering the the acquired pipeline Micro

entered So cross-out great be XX the the over as Thank whether well. pipeline these update deals would and are any last new the that pipeline on days, you.

Mark J. Barrenechea

more deals in the primarily we are so pipeline. the close Yes,

gave a Of days. the the confidence. of roughly course, for we’ve them XX entity But owned lot company combined only

to business also star sure. the is business inside were new business, workloads be in places moving built off to going can strength that services and added for content us security volumes up. services. network the for see we’ve mainframe But of pipeline our you As the cloud results our And our the QX, a enterprise rising certainly

and and developers their to continued the on a multi-cloud. than We’re to transition needs for own in better Focus the do Micro position growing that

more to we’ll And business on demand see time So drive certainly the coming growth. spend this then strong areas, those very and the expecting constant. in are to we’re quarters. the to back But

Operator

Please Citi. of go Enders Steve from comes ahead. question next Our

Unidentified Analyst

Hi, Steve. this is George for on

really echo journey. Just going start this to a my new to on congratulations strong

question you big Titanium Obviously but number, I number. a $X.X First out billion a think X, as big well. threw opportunity investment on a

Just this if think existing that repurposing understand much, any is incremental help kind us spend? resources of you we any and that? about how how should could Is of kind towards there of just of

Mark J. Barrenechea

Yes, sure. for

So billion business network. own XXXX engineering and own operations, right? own fiscal XXXX at private at and $X.X cloud, if operate we’re looking We we cloud approximately and our look across our

it much looking so And So at those, all a prioritization. that’s investment. a said an combined spend I issue, wasn’t the earlier but company, as

we significantly can in reprioritized enterprise as world the first see have So published. XX days, we’ve and doing we’re what our that roadmaps our from you

mainly a also reprioritization but an it’s increase people. So it’s in

part increasing our Canada, Philippines. people, So restructuring, our also of headcount as India, in we’re our workforce

combined keeping spend dollars. also spend, more those we’re people. we adding more We’ve being Because the we reprioritized were we’re high. more, leveraged So how in

Unidentified Analyst

about it. was I in seeing helpful if to help of, bit color. a quarter-to-quarter, understand metric going forward. of from there fluctuation were in the but in Really think, us bookings one have dig we well a you wanted what Obviously where then could that cloud how just you’re on And to should think came quarter. Got that up, at, and going metrics quite but follow the just most just ahead we

Mark J. Barrenechea

Absolutely.

QX. on we’re constant I holding clearer a So plus for X% year. that’s business. growth than annual say and again, to the a And look, And can’t But And emphasize an the following. of XX% basis. XX-month our as in any we’re I why, forecast noted up Madhu it we’re we’re trailing

better of quarter. long-term of for going work decisions a two under week last make or the and business, to the We’re not to pressure for it’s the a best OpenText,

it’s business the, we part part annually. So the of why view of reasons it’s our

to get boundary, we’re the best annual customers terms, they way with boundary. work and going need the use to a So the an quarterly not

got on target deliver growth, though And plus. constant we’re even So XX% our we the XX% that to bookings confidence are we plus for great cloud QX to in quarter. within

Unidentified Analyst

Great. Thanks again and congratulations.

Mark J. Barrenechea

George. you, Thank Yep.

Operator

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

Thanos Moschopoulos

bit for than Hi, you good Focus quarter. share Micro performed obviously afternoon. had Mark, last better got

there is with conservatism primarily anything that more part specific Just prior under or point to your you clarify that would guidance, to? was

Mark J. Barrenechea

confidence. I’d One Thanos. handful of point to is a things

day. did purchasing features have As in and but And roadmaps we just where in are our and it’s get coming in intentionally the our a onto the for them why one, and you bringing getting and notes, to road in all the present my today, Europe new I We said Customers roadmap. not make decisions, renew that years. it’s accelerated it’s you designed person pre-planning to accelerated. elsewhere

move excitement from employees. right? So two, it’s I’d XX,XXX It’s number our we’re modeling, And months, we confidence only, six cycles right? from to months one cycles. say and two XXX-day just them also Look, our

conservatism. not we’ve we’re So it start to getting I would is XX-day now done. our with which periods, and also, confidence aligned

Thanos Moschopoulos

then... And Great.

Mark J. Barrenechea

maybe I’d Thanos. Thanos, Go ahead, guess add I’m is a which really one third, sorry. Yes. I And executed well.

Thanos Moschopoulos

we is where pipeline? launched how at then And on dynamic talk broader Titanium customer’s instead private, infrastructure not And not Great. adoption given is a losing it about public cloud there may you going should as the cannibalization the of added that that you captured us; Yes. of it public more have if now you’ve and remind public you’re revenue the, cloud? less for think look get cloud public supporting suite, do otherwise any piece? you being Or you hosting revenue you’re you trending that because for can

Mark J. Barrenechea

sure. Yes, for

cloud the SaaS a ECM Titanium really milestone important edition for the is delivered XX.X public company. is full or has option. a now So

clear of off business small big update our SaaS. update a ECM at SaaS part network now very now company, to edge that the April, we cloud, of a for service strong have API completely that developer I think private cloud cloud. So public anywhere we the a or value will public also from we the management SaaS over can available Micro SaaS public on But but cloud, public of SMAX in option portfolio public that’s a outpace SMB did completely April big Focus. technologies management time very end else. a did completely public cloud, a and a Debricked cloud, deliver contributor demand called Fortify portfolio. in as Well, in larger for cloud, it’s We I mean, called features public content cloud, and public

that for or become see adding new transitioning see more do to going We’ve it bookings part in going expanding And contribute new same whether to revenues, It’s is workloads is going not and be going growth of substitution, think SaaS for more interested It stack paying dynamic same capacity never sure. and I is our been been after growth. in hold I revenue a customers We’ve right? plus private. well. and/or a the when narrative. API driver I I cannibalizing increasing cloud see XX% public consumption their public as us. interested So to revenue. to the workloads. us always with our to

Thanos Moschopoulos

pass Thanks, and line. I’ll Mark. the Congrats

Mark J. Barrenechea

Thank you, Thanos.

Operator

comes RBC Markets. from next Please ahead. Capital question go of Treiber Paul Our

Paul Treiber

thanks very and right, much good afternoon. All

a pipeline the up in of that after And and the more announcement the close one acquisition degree, or between close, question sitting a may And acquisition that strength to they that there any announced. so, on of to continuing period deals complete up Just Micro future five-month quarter of you that have needed confidence those catch was the in that a saw that There’s a catch into quarters follow deals the acquisition is closed see and you Focus. the been was it just waiting to deals. phenomenon? do a if, the up were just license

Mark J. Barrenechea

July bit doubt. the no for boundary XX days, was use thanks of to be a a the question. had There’s March, be and up. Paul, – to used execution. of catch We for we’re was no is, it for It our longer the wouldn’t business modeling. It’s it only a terminology little Yes, confidence, end was They Micro used I Focus align boundary. April quarters. to

those distant end memories And those becoming it’s memories June. are Now boundaries combined of even workforce. the for

out. a So hesitation execution workforce. I very of little, in that, there but and a roadmap nothing I’m stronger there, that I if little would significant Confidence energized was sure call would, a bit

Paul Treiber

it very forward-looking dashboard of seeing your upstream, that? of if overall, light the view is building mentioned in in from macro, you point in look that more of see uncertainty having would the you’re here, for broadly do how is how of how terms in particularly say, in you – QX helpful when your so, a maybe That’s terms your strongly, environment, an you macro you is impacting pipeline impact, and it pipeline, what

Mark J. Barrenechea

Yes, is Every of that I single mean, well we’re every we company Salesforce operationally the When global is, dashboard we look we company my instance a we observing that. our doing phraseology at use. here run have and macro. is

which as kind the we the and have dashboard did QX. deal But at analysis. other in Vertica generate customer pump same look history we early and way, now of lots and pipe, we our QX So early of It reads our by into we for correlation that tools in new metrics here dynamics. when it of

it’s it So as steady goes now.

us of is adding be One more to the dynamics going for SaaS.

SaaS Editions ITOM automation with Our just and acceleration portfolio stood some significantly, acceleration Cloud and automation. up within within developer application XX.X

while, real. have is get transformer for has language a are few I becoming other great customers. And large is version. about a new item more language we’ll think as that a engines If instance platform versions, can our up out there a is up So, And customer There’s of in motion and source and be nice feel too that’s pipeline. this to our here and set the you a is experts dynamic pre-trained it, little that’ll pipeline. if captured using a for that that very models. and models that or for truly think real thing. us dynamic TX open a course, building a even talk be ChatGPT us to us for been a I private at SaaS a this for our Generative we’re lean And in imagination. maybe private a well public cloud driver growth all stand a for every private – you’re SaaS, next large in very everybody’s us, I will this going a for and large I for

Paul Treiber

line. Okay, I’ll great hear. the pass to

Mark J. Barrenechea

Thank you, Paul.

Operator

Our next CIBC. of Price question Stephanie Please comes go from ahead.

Stephanie Price

evening. model It’s I to Hi, wanted strong QX. in despite XXXX unchanged on quarter. the the here. zoom on just target good fiscal Congrats the

conservatism in might Just curious a little fiscal some you XXXX where XXXX puts and of are as talk baked have at takes you look what fiscal you bit the target? kind could about and

Madhu Ranganathan

I take even Mark Yes, here. observing be strong prior it’s unchanged to over Stephanie, the macro. Mark. sentiment and leaving – a strong we’ll with QX, shared questions all to Thanks delivering I’ll for the and forward it the our focus and you and remains very asked, and have we look, are And it for on it questions. and that QX hand we’ve QX. the look on to Madhu were We relating factors the

we where And things fiscal XXXX, if we’ll certainly of so, time response. fiscal to merit that point are and XXXX et make keeping And would the news cetera. ads my that today. XXXX XXXX, But and it at is good is be

Mark J. Barrenechea

year usual we Madhu that when the off I and we’ll only complete I’d two XXXX. the fiscal we cadence on you, Yes, next announce mean, year add, kick thank and the have is, QX give thing our update an

we’re on next and in EBITDA give $XXX reconfirming million. Steph, flows a $X targets And our XX% of adjusted XX% Madhu we’ll up update as and near we’re, billion an cash revenues, give free –– noted, to holding So preliminary call. to we’ll quarter’s to

Madhu Ranganathan

you and quarters’ the we targets upped this sharing see as with are continued simply at momentum, color sharing cash to this from free XXXX, Slide will I say the add with XX and as of have components big as you’re returns things the year, Micro and Micro the on have was thank gives Yes, we done cash OpenText apply up how only to fiscal performance main methodology a going and and you, we’re and of more out but how on strong that we one as approach just the confidence to of approach that a sort a is Focus, premise perspective, premise place. us just for flow And a certainly point But portion we’ll that can Look, to we well. step been to come as say questions in our will And close to Focus. the updates see. the is needed. I free operational Mark couple to earlier mentioned strong

Stephanie Price

Great. Thank much. you very

Operator

our next Eight of Once Please again, star a Kadve Capital. question, please question have press comes one, ahead. from if Adhir go you then

Adhir Kadve

where quarter get add know Mark, full quarter, you’re the to six exciting I you what’s trying really – go go-to-market deeper about of into me, I the them, the you’re but stack here. the into promising of you digging where seeing just motions are markets., Focus know me kind those? Hi the that guys, let each to you but congratulations acquisition the core that? after after kind of really let and of XX days seeing here, last strong mentioned you of out those maybe to Micro only talked in most my most into markets of going it’s some

Mark J. Barrenechea

single them, Yes, it’s and loving beautiful children like having of Adhir. one every six

this the So cool platform. highlight And value doubt wants, is including no now all of can again. let me that about services customer proposition we any content and it’s a offer public a SaaS investing few, way in it

standardize the content to way platform. language why consolidate? Now, along a you there are the moment modern is cloud moments models Why seminal to as to want large on seminal you want and, a

the top content for stack absolutely us. is service So of

and vectors Next excuse to me, forms I for the all about reasons lot given we those it each a email talk and we, the the and and attack obvious be vectors of all, about of business. of of it lot cover cyber of have of security optionality identity, attack continues tech on in sort network cybersecurity, endpoints, a applications, we just have enterprise, be whether optionality to tech, lots in just our

in and mindset to in market. going company, very our developer robust platform it’s of X,XXX and company software bringing the a that really every to is Developer, inside automation application developers a thrive is

those highlight three. just I’ll So,

going moving and But stack from moving right we’re those business Of one developer top with network, workloads could just mainframe, benefit now. a cybersecurity workloads the content well. climate off us platforms is of in worst course, be chain for application the on, to our which automation put the the as supply changes AK I’ll of you

Adhir Kadve

Excellent.

and I’ll line. then more one the Just pass

allow Can of for sort talked maybe, you Just us to lot to about OpenText large a sense this really and customers? private the give for what up a your there of take of platform language models. you you’ve all kind just stand it’ll get investments

Mark J. Barrenechea

it open-source We’ve we has a cloud XXX or private TX, I’m XXX, fact to so, open-source to our it the – And operations up. allowed up. people stand – already people be and through benefit this for operations cloud have LLM for going And our business off take XXX in strategic by of stand to our may professional private so services cloud was that operation, any us cloud. stood our and TX scale. up why It’s organization, that today is private our for to cloud are the TX we their And – open connect customers us. it to the

You inside yet see, that organization. we another people organization X,XXX services in reason why our professional own own

platforms and budget, so, first our but connectors we we And our our et have and R&D already will operational cetera, our Adhir. feeders, up build within

Adhir Kadve

Excellent, guys, pass line. the congratulations again. I’ll

Madhu Ranganathan

Thank you.

Operator

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

Richard Tse

confidence understand, I you. your sheet customers like and have and you here, support, get like in call this and on that one confidence a where sort what Mark, just more the before? lot Micro question. the that is confidant confidence I’m talked thank trying not balance like tech maybe on about just as to of Focus’ Hey were specific,

Mark J. Barrenechea

be XX% in hesitate. reduced a to make long going where going that even in private or expense or days if company just enterprise. hands be platform’s it’s customers sure decades, and if of off division’s year, the a And the weren’t XX they going decade Well, uncertain and sold where was people decision to to so go, to equity where

purchased So, the entire we company.

the roadmap a lot of operating we customers, as a groups share company. reputation and We for innovator being our for we have entire of fantastic published a steady and We’re each a the customers.

But a confidence, have we customers still we we, day. where Richard We lot the look, the the where gives got us that’s trust confidence, got So to do. giving that every to

Richard Tse

it, question, reasonable and numbers but of a even fact even out why just, the conservative And up, you’re putting numbers be that Right. let’s know of the that you’re so, you’re call the it was to that it’d of the would related not last guess kind I kind I confidence that that though quarter there, scale. to still? it think to Is that, actually reasonable sort think taking in,

Mark J. Barrenechea

Madhu as we as as like, call our me dashboard. so the won’t. our conservative, our dashboard it it see and has use we QX inconsistent QX word have, to always never taught we just Look, No. I strong is with

the aspirations talk raised So where, it’s we’ve into or that right QX now, as as FXXXX we’re time And we’ll call. you’ve our see when like, FXXXX about get thus it we to for year not we numbers do calling three it and seen. right

of XX% guidance well, delighted just when revenue and $XXX margins cash billion. So, up speak to with And growth, to plus, billion for X% up results cloud we bookings organic $X.XX million. $X.XX bringing up to free Total to growth growth XX%, them. I’m XX.X%, our targets we’ll let to dividend flow to themselves up X% those deliver

Madhu Ranganathan

you as add, called out done and to about Yes. what And I comments called Mark Richard, I all the you would well. just and of Mark heard aspects as thank the integration, out

operational we us were generate, where our could We it. that anticipated, excellent we to methodology. continuing was are Micro the a better we’ve which done we apply with are had performance able at as be keep and delighted gives to the than to company But momentum premise Focus that as we

Richard Tse

Okay. All you. right. Thank

Harry Blount

that’s think the I Operator, question. last

Mark J. Barrenechea

Barclays, today’s you and and our much. very CIBC, were we to you two ChatGPT. call. And not written remarks look Needham, at you very, Harry, Okay. thank And for thank Well, human Madhu, beings by joining everyone forward seeing BofA,

great have day. So a

Operator

conference concludes call. This today’s

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

Open Text (OTEX) 4 May 232023 Q3 Earnings call transcript