OTEX.TO - Earnings call transcript Q4 2024

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Thank you for standing by. This is the conference operator. Welcome to the OpenText Corporation Fourth Quarter Fiscal 2024 Financial Results Conference Call. [Operator Instructions] The conference is being recorded. [Operator Instructions] I would now like to turn the conference over to Harry Blount, Senior Vice President, Investor Relations. ahead. go Please

Harry Blount

J. the and and Deutsche Earnings everyone, investors.opentext.com. are Asia Cione, online. shortly Ranganathan. OpenText's remarks that you pleased August Conference Quarter Customer Development, management press Officer, Fourth Chief NASDAQ Financial President, and Good and Officer accessed Oppenheimer X to is will call Officer. With welcome Todd York. OpenText be Sales; me August XX XXXX Corporate Mark Technology Investor recorded Chief and OpenText Call. our Morgan the Officer a at today and be Paul Virtual on Fiscal Internet will in OpenText's website, available supplement the President, on Executive OpenText live Chief replay afternoon, Madhu and to with Barrenechea, the OpenText's joining The Technology, on XX; Stanley today, Also are Technology Duggan, These website. Earlier and Conference thereafter on and Virtual investor Today's Global Conference following I'm New Technology on being can and our Worldwide XX; conferences: prepared us Citi's Bank's we August Conference President presentations Chief Relations webcast and posted Investor September inform Communications and XX; on release participating Relations on materials call Investor

to And harbor now on our statement. safe

statements and assumptions relating other uncertainties, risks forward-looking today. could based will statements we future are are on call, this the materially During that from results actual subject material statements and the OpenText. expectations, forward-looking differ performance make made to and of factors current to These

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

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

Mark Barrenechea

for to put, the QX company today OpenText joining organization and in Thank 'XX information strong We're you, individual be kick is is clearly with but and a our that world, the be significant of today. off and all priorities. moment, best our our launch us. I'll directly vision information results about speak the Harry. and of belief to Simply outlining best. very our start elevates Reimagined. every Information in Thank our fiscal excited the outlook want management I to you by to We their X.X call in market front opportunities today's top

is advantage next-generation AI autonomous business is on decisions, even cloud stronger foundational and our strengthening with Editions of security AI. next-gen transformations. automation, information or and Competitive today, advantage is in First, This competitive information-based Cloud information cloud, business transformations X fiscal business is and for promising data-driven management by the information our for platform and Titanium everything build business an XX.X led competitive center technology. 'XX. target management cloud, advantage the delivery our

I'll get strategic a Titanium growth X% building key revenue organic fiscal We X% in 'XX. delivered partnerships in a growth. X% to growth our are minute. on laser 'XX. X, 'XX. fiscal revenue and up Second, growth to We're cloud accelerate growth programs, cloud revenue growth organic X% targeting with to to cloud in cloud in And programs we fiscal focus

Third, drive which up F quarters. or we next EBITDA. X adjusted EBITDA. fiscal no we opportunity 'XX And X upper of months delivered to over targets 'XX, not our the pausing margin included quartile AMC XX We're AMC capture to dollars large adjusted XX% adjusted In XX%, EBITDA have ultra-high the $X XX%. and margins with billion at in are

expect while higher a 'XX be innovation, to We range XX% mix. in and of to fiscal revenue with in XX% the cloud investing go-to-market

range targeted is to 'XX F unchanged adjusted at EBITDA Our XX% XX%.

higher places. lower locating by cloud and SaaS, cloud adjusted more in expansion revenues, the great including costs, right AI internally will EBITDA Our be automation, driven leveraging our more talent

goals. our a margin clear for have path We accomplishing

and strong allocation. predictable Fourth, capital

expressed Our strategy additional allocation allocation. and primary as is allocation capital

Our XX-month primary trailing for cash flows and allocation is of to free return dividends buybacks. XX%

allocation is additional or capital dividends, assessed, return which additional cash allocate M&A. areas flow, to continuously debt is to across buybacks, highest our the free of Our reduction

single We the digit, from payment delivered fiscal In excluding gain. our tax is growth. free onetime million fiscal and cash in high to 'XX, our expected AMC flows mid- cash of 'XX year-over-year XX% to grow $XXX divestiture free flow

'XX free at aspirations to cash $X.X $X.X fiscal Our billion remain flow unchanged billion.

capital our or of adjusted fiscal free billion repurchases, or because return. to share returned creation annually, end approximately amount EBITDA, priorities: capital. dividend we fiscal grow, increased last have the the NCIB million advantage of cash free the higher these adjusted share elevated XX% As XX% and increase. this next today flows $X returned share also will shareholders share does we F to we 'XX, and competitive our allocated our EPS, believe expect in $X so This in plus. and flow our in is the repurchases over return cash outcomes per annualized of In goals; return $XXX flow. F F cloud return. In we our combined. in announced with million value rate this over including and plan Stronger and expand, return 'XX, $XXX decade, years, flexibility billion free and we plan, $XXX of of X dividends our fiscal In bar 'XX highest expected cash we're from new a from growth; per support raising We million 'XX, for of to $X shareholders a see to of By flows cash is 'XX $X.XX for X% program 'XX free we and X the and to

leadership that team and exciting company performance. fiscal The our delivering are the to ahead, fiscal focused 'XX, programs on higher and to implementing year future lead

speak cares first, people, strive momentum. about our our succeed always exceptional OpenTexter living on me little relentless performance the a cloud key go growth execution. and for OpenText with a teams An drivers and talent Let focus and about system and help Highest begins ends with business deeper talent, innovates, performance. puts customers of

rates are believe we and a at being essential are talent. here people We're in our company our because Today, to and start The software attracting in a global record We work the outside of published or are XX% of the corporate high our we're Z great that and of to companies. retention great of majority and responsive employee people report. company's plus. generation organization. and XX% We we and is to of ideas responsible annual endeavour-ous citizenship communities the and Canada, inclusion live next diversity a and talent now employees And Y make innovation. environment, retaining of Gen great the

practical impactful Our stakeholders. our and mindset to annual all Corporate Citizen with commitment Report a reflects our

strongest the ever leadership team it's is been. Our

us of Sales. We have Todd Worldwide President Cione joining today,

Doug President, We joining have Chief Paul today, us Customer Officer.

recently highly Ranganathan, Bell Madhu Sandy -- of Marketing expert joining Development, Shannon our today. joined and Chief and Officer; our the President, and of Chief of skilled Head team. CFO Officer; have our Muhi Corporate CDO CIO course, We Ono, Corporate rest and Majzoub, us Product us

to have talent We and powerful information the and the in be world management next-generation the best a future. create to mindset company

delivered XX% including year-over-year revenues growth. or fiscal in In $X.XX growth, positive we billion organic 'XX,

revenues cloud growth. billion, X% with Our year-over-year $X.X were

billion Our $X.X total 'XX cloud to revenue supports X% built the and fiscal revenue between speak growth contracts -- largest history. X% AMC. organic Paul to and billion growth fiscal organic of for this. In is rates $X.X outlook foundation up consumption our cloud about fiscal constant renewal What is or bit cloud in our ex to 'XX, on strong our new revenue bookings signed we expansion, the growth will a are

Our low bookings was in growth. or XX% year-over-year cloud we new and of million $XXX XXs, cloud delivered the renewal rate

higher key drivers the cloud Our to bookings in 'XX, in grow fiscal are target. XX% us expect previous our On here 'XX. as than we continues for momentum growth, revenue fiscal cloud accelerating

cores recent the business and and First to driving beginning security more. operations, workloads. We're content, global chains, many SaaS is reimagining digital invest care, biotech, to compliance value just expansion workers, Customers health industries, attaching security, financial pharma, and services, trust, business industry of across on are led in network knowledge and events. deeper Customers and clouds, alternatives their deeply the existing seek to new after consolidating focused supply from resiliency government are by our services certifications continuing ITOM. global

with Salesforce time-to-value ease. SAP, Our and spending Microsoft, aviator and cost partner Google, and expansion stronger also AI cases, AI and use with in lower ecosystem richer

digital connect and example, unified working a sets said them expanded in Paul, and in renewal and by execution as North their and hear stronger renewals For sales to just growth, services America with with Cloud we're higher aviators new to field Todd Robert use data driven help whole moment. Bosch, rates from ways. I you'll organization, with

California summarize license. X% cash business. delivered 'XX are We shares with of average provide few what for Experience, cancellation Johnson X%. Health. $XX.XX. had in BN long-term extremely me EBITDA million in on flows fiscal of a Intelligence; an remarks billion. We of Sensor centered our operations. proud revenue results, AMC in adjusted content, Madhu AI, Strong QX was for in our of And results million the will $X.XX QX Ex AI, dollars total and Nestlé; of further detail. QX, Cloud grew $XXX $XXX down On up delivered let we ITOM, XXX was in provide Johnson; million me and & success Let our EDD; of revenues strong in at price and ADM, repurchased outlook. XX%. wins customer financial Total SICK significant free team I'm our on in Sutter

dynamics important X highlight me Let QX. in

you transition and quarter. our free in results, and cost see this up that We continues, had great and optimization financial are the in flow license-to-cloud license our with cloud cash QX First, down.

These Second, business programs impact that have corporate quarter significant within planning. the strategic in beyond, but the and will we of positive business QX. AMC divestiture and the impacted fiscal optimization attention: X programs The strategic required had 'XX corporate

a and have company's concluded, the transitioning closing divestiture To was discussing team the that and operationalizing the X with of and separating XXX employees, divestiture, and transaction the out thousands recap large programs AMC well. the a first now incredibly data strategic transition systems service agreement, we executed customers. This our

took planning the healthy the place in was and required X% pipeline. strategic OpenText optimization, X.X business outlook, program of QX fiscal excited our completing all corporate about which the precise planning well. On new affected extremely strategic our we're the launched, and of executed QX about start Second team workforce, year. talent the

Our outlook at X -- QX strategic the annually team revenues growth path go. reiterate, programs $X.XX us, And our has Titanium On and and higher expansion. vary. quarters QX between of new complete ready billion and we will to We're corporate range. to behind manage business a margin to expecting billion, our our to end our outlook leadership $X.X

We are AMC. ex growing year-over-year

are adjusted Our year-over-year our adjusted dollars to ex between expected AMC. range XX%, to EBITDA grow XX% EBITDA

and capital with accomplished organic management 'XX, Titanium competitive dollars; growth; what few of we advantage aviators, growth; total everything. a We're our final $X X, advantage Let up growth, stronger. adjusted With of me shareholders. XX% proud $XXX Information thoughts. grows security, is competitive billion to cloud fiscal EBITDA returned in X% million in wrap

'XX fiscal again, expect emphasize, cash to year. our EBITDA, EPS, expansion, the We in keep will margin to through in adjusted and for years, 'XX, capital position our on we updated delivering on supporting grow our about targets, capital free fiscal are value a in our us cloud to want bar deliver and I annual And the 'XX. fiscal put we X on flow return. adjusted operational primary return throughout history. annually to excited year-over-year, improvements the metrics We'll raise shareholder in next and growth, building the focused corporate strongest you focused The

your We plan my you thank to the input. and OpenText. and and our our listened, customers value continued A you shareholders placing to deliver for and and amazing huge feedback strong we contributions, our We've to stakeholders. for to is in all a colleagues fellow and believe to thank OpenTexters, talents their for this trust

bring the may peace And peace, brings one for all. that

Worldwide Let Cione, President the over me hand call welcome. Todd OpenText's Sales. of Todd,

Unknown Executive

time customers And company, I've And Over a a you, experiences execute am Thank industry being in alongside 'XX years now. OpenText relationships these plan OpenText my contribute at it's with, prioritized few and and others grateful it's our F Mark. I've to learnings launched, our XXX of Oracle, and right from team. and early connect Microsoft, with team. the the technology the directly days and in Apple partners. to immediately and that worked to XX to our I learn my my experiences excited of be X.X. from first executed part to plan And shaped and that team, our actually worldwide sales our bring

me that Let outline plan, priorities different. our in what's including

people. First there's great most a between a I'm results. and that is direct great my people importantly, top believer priority correlation and

the customers worldwide means We've we aligned talent leading worked elevate I've in an and for attract highest attracting worldwide also and force the we backgrounds changes outstanding within information sales. to approach of moved and more a have have with X people. at a the most globally start. We continued with serve flexibility strong new very team performing to company sales sales it's Salesforce. We previously foundation there's several this talent our build we're fast off management have sales sales And locally. the to existing doing made everything now force many who Microsoft still in already in and And the Tricentis, world companies and while Apple, efficient we're We've best ambition like We're proven that that to come. unified coverage. to and global enable to quickly complete, are now technology world. my have

to expect 'XX. and improve these structured With a force. of the capabilities to And we've doubled commercial refine within AI approach broader outcome sales security. in and modern to to win on sales we're the dynamic this fully building contribute team, of people force the in business directly worldwide consistent down cloud sales needed We marketplace efforts our specialization the cloud, productivity

how customers highlighted, our we resources trust right first. right the the Mark OpenTexter includes team is of the put segment marketplace priority. worldwide the we always as a customer time. deploy ensure an the earning exactly Second, to at And our to customers sales right This for

it's and progress in strategic And global making inside very to very a accounts. these is, directors OpenText Our holistic consider the largest and customers, enterprise we account XX,XXX, invested relationship. The manage for business accounts, we've essentially, important focus a served the consumer the through for and heavy the businesses serving and and SMB mid-market digital We're partnerships heavily are with us. on modernized sales force, channels. Global

our the Now it's clear regardless market a intent customers. provide and of proposition mistake segment, value to no compelling our make that to

we having customers. worldwide now, value and via technology will machines We specialized in cloud right priorities. And some increasingly clouds, have as supply work chains, more do workloads we're data in resilient the and knowledge into and technology secure, to scaling automation, customers have moving our translate our our the in AI directly their interested our to ways, new customer with business work, sales business aligned reinventing and this are industry-leading force outstanding being engaging

while Carsten is OpenText example, in on a in how met And Trapp, important play Google Business Europe ZEISS' CIO an of all manufacturer, Group, published we highlighted leading in also, I global to customers. ZEISS Magazine will like value with the an in As just processes. modernize others of the Carsten, relying our he role last this of high-tech Cloud week. Microsoft, our and article SAP, increasingly CIO Partnerships support an recently,

fiscal these 'XX. of will contribute our in accelerated to outcome efforts directly growth The customer-focused

force. priority all to a our processes means Third tools, our commercial to fundamentals to This and our bringing support and lastly, innovation worldwide rigor strategy, worldwide for modern sales sales. is and

be once between ongoing are champions." most is appropriate. commonly U.S. I Olympics in Now might now, Wooden, near overlooked. believe tiny perfection to The with coach be that college and think details and sports championships history the analogy difference a Attention Wooden might men's with basics. They "I and basketball John right the the national in said, the champions of Coach

I agree directly philosophy with this applies Wood, totally Coach and to I believe sales.

sales empower business, sales being value how also manage and customers. AI We're predictability to lineup support refining to support we The committed exciting be deliver already 'XX. our brilliant basics how an we we our propositions to in in leverage how have this responses we've example, motions. as directly And projects we RFP of and and committed F are OpenText our innovating launched force and internal to to year. generation. And our innovations will to internally and this proposal additional an We of boost outcome compelling rigor launched the at productivity to sellers commitment

for of these F the already people, make force rigor excited plan. more this ahead mentioned, our unified to now, executed 'XX I've marketplace. of I our journey the X.X closing, team in is 'XX with priorities be beyond foundation And F couldn't this sales started and accelerate as and fast. in OpenText customers the being Now we've worldwide about plan in and

to going over to colleague, call Paul my to Duggan. you, Over the I'm Paul. hand Now

Paul Duggan

Thrilled call address to OpenText. Todd. and the Focus 'XX. our including in today X at Micro areas, Today, ahead Thank you. joining to an on update year 'XX for -- be key F F'XX renewals the business I'll the provide priorities update,

start F'XX. Let's with

history disruptive no Mark of the there's we exception. which of was OpenText and the build decade. foundation And As performance performance past predictable opening on no over the renewal in sustained growth. world's has his despite remarks, is events question, a noted most long some F'XX

Focus. And to and on X rates XX% for I'd on cloud, Our like briefly Micro for make metrics. comments off-cloud finished excluding renewal at note, XX% that

upsell been On rate. not our or primary which different are those revenue renewal GRR, does rate cloud of recurring on There business, business. in renewal gross renewals. a rates First, any instrument any have include we this publishing or variants a also expansion are

give renewal more aligns a to net 'XX, we these performance. In of view insight stronger. cloud will our are capture and vendors consumption rates large publish dynamics or NRR, that complete intend rates better F highlight and into This with approaches. even which expansion will in Factoring you

been would applied methodology QX, had For cloud rate to XXs. in have in example, high renewal this we mid- the the

instruments Second, past cancellations renewal These we rates, due adjustments, have rates. on-time annual renewal and other beyond rates. include price primary

F our continued Micro our priority profile pleased time, we did together, then about Focus during motion story Taken our new the strength. execution fourth and saw the business, 'XX that green over business. And this well. is in standards each value. very the can a I'm And these F tell renewal unlocking with other, the and our agreement the all that, of quarter. On 'XX if expect and rapid of top they're we and in metrics to say programs, remains in about was one

As the in was high Focus the rate XXs record planned. the renewal year, we high at a we Micro end as

path decision Our standard. for lift the the It's programs we're in and focusing into products is factors. This low set there set it our renewal prioritizing ultimately Then lifting Documentum, moving into a rate from playbook proven our sites us OpenText sales already is with mid-, us renewal renewal Focus. Micro the have a product XXs. influence and XXs that and that rates. the to will XXs, The lifted the high to with We it F the doing laser roadmap, are did of on installed and meaningful plays 'XX. on XXs support below next base

expansion. Mark 'XX F heard our a and from business, continue this for about incremental growth was and in F As record expect to 'XX, bookings all Todd, in year and 'XX. cloud F you we it's

premium in well. year last like added we support off-cloud, expect grow to new year, this we and the For as ahead offerings

segmentation renewal level is X center, new, in brings structure what's areas a top strategic rest reinvest a that energy is of growth X. a mission all off-cloud together and cloud, and and us things: we terms that work First, from automation will model and digital programs at of a formed and and spend focused into on team to spending customers, time unburden the July all the This self-service. product the In new segments. This transactional allow in middle of specific

the in checklists. the access level, digital at to best launched through and managers, option opportunities portal, about premier our We've already launch, These July. a documents deals very we and to levels, run-up tier revenue success new forward. all customers the practice dedicated move new give we're cloud signature, excited service the Then Second, fee-based to tiers cloud tiers management. success our to workshops closed add and customer success this standard and plan success assets program which higher starting technical templates, brings several in

So renewals. was F year summary, 'XX a in for strong

already We the in you saying clear always and This into I bar to 'XX given, the F made over by will trust that, further give 'XX. committed to are us and our confidence your executing. close platform customers. like And and you we day. a to I F we raise are plan we promises the have on to We call even know every will earned is to to the not hand with delivering Madhu. thank

Madhu Ranganathan

Thank you, us Paul, today. you joining and thank for all

efficiencies. Today, for X During and 'XX adjusted and very well QX, fiscal refer insights our -- press of our EBITDA on operational expanding release, to additional we providing Please materials. our into targets IR margin fiscal sets for we're 'XX. providing executed

overview XX-K that results our the and well and filed financial targets; Form second, today. XXXX was First, as business as fiscal

Relations the as read you our and simplified information. have Investor We see materials, through you that will all

X.X% through results on constant walk as revenue me QX. up let otherwise. X.X% QX stated currency. million, an Starting in financial basis cloud as well as-reported with So unless $XXX.X the was

by of services. approximately bookings total down of cloud ARR, and $X.XX represents revenue, license XX.X% of $XXX.X primarily and X.X% was X.X% constant offset divestiture the AMC in X.X% revenue revenue X.X% quarter, revenue to to divestiture. QX year-ago compared XX.X% of annual year-over-year total billion enterprise due Our and growth constant cloud due billion, XX.X% currency, or in the and AMC in million recurring was revenue in growth. to primarily $X.XXX down total currency lower

other was was Our the $XXX.X million operational the cloud as to net And margin income gain services customer gross of from reflect the from year-over-year cloud. $X.XX QX of million inclusive a related to of in XX.X% GAAP amortization GAAP professional divestiture. or and $XXX continued AMC. EPS, AMC moving diluted XX.X% of divestiture improvements and metrics. reduction of up of reflects results the financial well adoption as

was XX.X% $XXX.X compared highest XX.X% of adjusted margin quarter, the quarter Non-GAAP and our fourth Focus gross during of EBITDA cloud cloud EBITDA saw gross upper during by to the XX.X% bringing EPS we efficiencies operational million constant or as cloud at the reflects the efficiency Adjusted XX.X%. Non-GAAP deployments Non-GAAP margin inclusive diluted of to model. investments. driven quartile X.X% X.X% in Micro in was currency. $X.XX, up our

Our overall of from days, working with DSOs XX capital performance X improvement days QX. strong our days remained XX in at an

on fully is Focus generated in in operating cash flows $XXX.X capital working free Micro million model. quarter. the cash flows million $XXX.X and We Now our

a For revenue $X.XX well billion, year-over-year our full in as basis, XXXX year currency. constant up on fiscal was cloud as X.X% X.X%

from up GAAP met prior and of year-over-year. million XX.X% to of AMC annual of was In Cloud annual team XX.X% up share, GAAP on year recurring inclusive was of per gross up for a $X.XX $X.XX turn other from year-over-year improvements XX.X% million, ] $X.XX business. Enterprise reflects $XXX.X Micro revenue from metrics XX.X% in and Focus, professional our XX.X% gain the revenue reduced products on revenue and or and of had constant net margin financial it plan [ sales, the divestiture in billion, in of amortization margin bookings currency year, intangibles of business total XX.X% from up approximately XX.X% our margins. Adjusted income the year. and up XX.X% reflects XXXX. fiscal compared of delivered EBITDA respect excellent a $XXX for $XXX.X services of strong million. ARR, and in XX.X% increase of XX.X% $X.XX currency. and currency. With to billion, Non-GAAP XX.X% of AMC We the in constant was and constant represents execution an divestiture. to XX.X% we dollars billion, Total gross in XX.X% declining around renewals Our was

constant efficiencies in to cash Our adjusted was million for flow as $X.XX, EBITDA up and drive year. Non-GAAP fiscal operating $XXX continue from across XX.X% organization. XX% margin million XX.X%, operational free year-over-year XX.X% was the EPS generated $XXX We the cash up and flows we currency.

XX quarterly Starting of Financial Turning me to speak Slide factors. to presentation, outlook. on let our QX and XXXX Results Targets fiscal

$X.XX ARR of total We $X.XX $X.XX to billion billion expect billion. revenue. $X.XX to billion of

EBITDA margin between expect XX%. XX% and We adjusted

are fiscal Slide XX We and Financial on our model today our presenting XXXX of presentation. Results Targets

reaffirming in are while EBITDA. billion; for $X.X to preliminary $X.XX the billion our revenue We target $X.XX revenue $X.X of May, recurring increasing shared bookings annual Cloud billion targets adjusted and to cloud of enterprise billion.

revenue, license Our $X.X excluding between or billion revenues constant X%. billion. minus plus Total AMC at to 'XX, $X.X fiscal to

Total X%, excluding revenue growth AMC. of constant to

up from EBITDA XX% preliminary Note, preliminary Our to to this margin at XX% a XX%. an from adjusted enterprise cloud XX% of range increase XX%, bookings is growing our our to target of plus. XX%. range increasing We're

business targets to updated $XXX plan. to $XXX flows We free to of a have on million related cash optimization to range preliminary reflect special our our charges million

flows. the be will onetime fiscal divestiture. gain This a As tax payment in relates $X.XXX the of you of may cash outflow. payment recall, we will billion from tax AMC proceeds the cash XXXX approximately our $XXX million to on record QX This AMC

tax payment, expect Excluding we grow the to single high flows fiscal XXXX. cash mid- during digits free to

and let XXXX. EBITDA me growth the now XXXX during on And fiscal of expand adjusted

across now projects and business. announced Early million functional and quarter a services year-over-year in investment 'XX as we fiscal additional where XX% expand operating sales is deploy, business by fiscal made that expenses us ex we all approximately plan adjusted to July, further programs includes progress have XXX $XXX 'XX. Also, areas. to to lower were to new optimization EBITDA our in basis hires and fourth We points allowing AMC, XX% XXX our by into in the incredible

basis higher quarter, fourth gross to points the cloud compared was During non-GAAP XX.X%, XXX margin QX.

we full a modeling the fiscal us are XXs. low constant level hyperscaler costs, gross 'XX, giving year cloud of For non-GAAP in the margins

'XX EBITDA of Lastly, entities simplification integration of which pieces and revenues, in the more Mark XX% during lower also, will key the leveraging cloud great cost, locating places. remarks, the will his Higher to drivers provide complete right build higher rationalization, in as such fiscal savings. AI will talent G&A in automation XX% 'XX, internally, also outlined we upon fiscal legal a the cost

efficiencies. higher Our capital XXXX growth EBITDA to fiscal will XX% progress and made meet billion and flows. cash our adjusted XX% of CapEx set free us $X.X working to cash strides up aspirations flow support fiscal we've $X.X billion XXXX free on The to and will the given XXXX well EBITDA

also to dividend the common XXXX, and of quarterly On approved The August dividend record XXXX. of next is date XX, share. Turning cash dividend quarterly September a program. the payment for $X.XXXX XX, the Directors July Board per is date XX, the

and to open thank As a I heard from to meet our OpenText, shareholders, a delivering members, will our return the you like operator of fiscal for I OpenText margin incredible in Todd efforts great positioned our our call the team Mark, for to growth, now the fiscal expansion we On XXXX strongest on the capital and your are would 'XX your partners well during loyal to request thank questions. here's differentiation, of cloud year targets and today, and and strong through you To aspirations. all competitive history. We focused Operator? and Paul XXXX. customers fiscal support. to behalf continued remain

Operator

Instructions] First comes Lenschow question with Barclays. [Operator from Raimo

Raimo Lenschow

on spend was that I disruption. QX exciting for listened and your comments you to I'm I some to and we try obviously, that? Can Congratulations Because future. -- forward there dissect to outlook guys. could Thank of the looking minute a you from detailed level an just

bit, us that And had, cloud also impacted how what on internal license kind You the numbers. license versus is of you impacting side, was Like the the especially help things follow-up. in related saw kind migration, macro I little understand much we of QX, could which like, like, then have X a of to quarter?

Mark Barrenechea

Yes, it's sounds great. the we We're transition. No, Raimo. our as macro not business Thanks Mark -- as question. an annual in noted related. our well. We license-to-cloud here. continued for it's remarks,

up. vary. will note We is that quarters So our cloud

cash strong have We free flow.

for just But unique very X were strategic operations were the Our in QX. programs us. stellar

that the mainframe I we've the our is first The press divested divestiture. know a sees release world business. And

sales And in lot concluded split had systems, customers strategic, mutual an quarter, was talking customers, impact. transition a that agreements. force there of we PS had XXX service transition the and But had they're we out and employees. but We to because to the force had work to our

business July. our did The managers is also and complete optimization execution very leaders and was We in early detailed and our complete planning. took

But XX% or this we stronger XX% macro. organic is and all on here in towards Madhu cloud year, X% a up a adjusted XX% as into the on 'XX.And stronger constant, the And up license in It's us. 'XX, and It's we EBITDA up look year OpenText X%, this fiscal and business 'XX not as to will minus to in highlighted, to think complete. be plus so up F the 'XX. it's

Raimo Lenschow

of -- is outlined on then And you Perfect. kind that of margin you for on the drive coming like, growing still the controlled driving is can of base that forward? kind years, revenue progression you forward that Yes. that, gains a that kind like, -- if about much those cost think of how just efficiency versus,

Mark Barrenechea

Yes, over small years, So to next, the point. quarters, so… not just a really, right? X It's X X

Raimo Lenschow

yes. Yes,

Mark Barrenechea

Yes, yes. Right.

and we're no fiscal to to EBITDA; to there's looking look, to 'XX, just going adjusted -- recap, up 'XX, XX%. 'XX, in up to doubt in that up we're XX%; So in XX%

So I are help, we're going How doubt we're running balancing. no we revenues design higher location to continued that right the mean, there? resting There's talent do all. through and numbers. not at get

let work We versions deployed to the the about. features humans machines expensive, X, have our and opportunities we first will. if the you some improve do that as and Todd We've incredible talked Titanium AI, have to less going are the of cloud autonomous margin. are machines not

to as down responding support we're most workloads notably, customer which will cost. And adding a are tech force to sales SaaS our well, drive requirements, RFPs, going have be margin. We higher that more

the things higher into mix. in, it's scale So cloud collection rise we've see back larger back historically will clear with getting high which in that and and XXs, we a the even to operated even path a us of to

Operator

question Steve comes from Enders next Citi. The with

George Michael Kurosawa

portfolio This know or under Steve. really that with but stack. you wasn't hood, of macro. there kind the or just you on macro there any weaker the Maybe environment impact, saw down is I within up relatively priority stable, areas kind sub Kurosawa to on were aggregate George maybe moving -- was anything stronger where of if for or your the described start just

Mark Barrenechea

George. A great. Welcome, from sounds comments of couple us. Yes,

has simplifying through materials. materials, team the As job fantastic our you Madhu go the noted, IR as done a

in the You'll also see, materials, we're AMC showing revenues.

when start very about speak to So we clear. ex comparisons, AMC and just it's

the also, of in revenue. show, basis, an business percent annual You'll we by see the on area, materials, our

is believe, standouts ITOM, business mean, great the out network for into around us read all right? path this on the lights talks than become content year, And X% to we strength 'XX. what fiscal and content, growth. Look, to I the this cloud that we that the factor economies content greener, incredibly in our report factored I about more see business and sub-X%. July Our for going look for are advanced for have in got our Europe, outlook reports organic GDP into going a the upward strong. But same the IMF's up in. X%; the extent I You'll be to is year. presenting even we we're all

George Michael Kurosawa

then follow-up how over Okay. kind and of booking strength a Great. -- to And kind translates revenue. just of on that cloud

kind mentioned of of -- did trend phenomenon last quarter? ramping maybe that think that any this how deals there? recognition, you thoughts quarter, kind in this And out with updated I revenue pushing and

Mark Barrenechea

awareness. I of Yes. more sort consistent say it's would quarter-over-quarter,

bookings we into up new candidly. on X% translating think 'XX. We've upped going plus But organic our ended XX% to renewal and year it, our quite growth bookings, in bookings what rates I growth improve the at we're to way. and XX% we're quarter. update that? of coming at QX the X% in XX% along add anything growth in organic. want to the bookings you to target to all out here to up Todd, But We'll gate the cloud pleased

Todd Cione

No, we're just 'XX plan. excited the about F executing

we've We have fast. pipeline, started a healthy and

Operator

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

Thanos Moschopoulos

for we speaking, a into that putting to M&A you'll your Should upcoming given your mean backseat, the on Mark, relatively the plans return take that capital be over comments year. wrong interpretation?

Mark Barrenechea

Well, stock Yes, and highest on ourselves, I'll the into about return return. start now, the differently, F we're with we're or capital. right Thanos, little thanks we buying for highest And all of that's buying look a it's said 'XX as the question. our

part large in into on a heading and strategy. cloud M&A materials, organic remains outlined a But You'll that's into focused buying investor largest part in margin assessed will deploy a the our that our delivering our it growth, our we're we're focus. We'll to the degree, and additional a we capturing see year, that to return assess coming and We've M&A history, opportunity F how of to strategy. XX, our ourselves. shareholders of our capital. capital remain

include I'd in M&A So strategy that as well.

Thanos Moschopoulos

lot you're in Great. subsequent more color I seeing the in at and content just guess the for a of from And management the been seeing happening, of far there's has lot large-scale not now? that you're right what experimentation pilots of Is with terms give stage you what customer Aviator maybe can generally, is consistent feedback industry deployments. a as lot interest AI. that with a us as

Mark Barrenechea

no to approach we're up. is Yes, doubt in AI, it's value. going be literally, of progress. going going us hundreds discussions, it's And we're that and win. discussions around steady, There a be is steady, hundreds helping It's step technology to and then this adding see engaged, of steady to steady,

our strength and revenue seeing reflected single-digit bookings of our high growth. to You're in cloud organic confidence our cloud in this getting our

able the exchange are whole were of The the to to is ways. We now about into the the use first, kind crisper you evolution if is engaging outside of firewalls. being to we've search. it that workers knowledge And with Then content that cloud. gotten time-to-value Then evolution moved that next able then Then to new of in and The you And getting look them digitize things. at coming content down. management, costs we down. folders. of coming cases put are

progress. making Johnson us. their in more more. it America, more embedding Robert customers supply We're Johnson We're their cases. chain; platform. in speaking use Bosch, AI; We costs. Nestlé their engaging down & driving engaged and have we're We're got content with North in content we conversations. And So in

then wave strength network, cases, and going it come there be be the be where will It content. I that see. think from progress, steady where to up. next use But that's we from will to will real. inflection ITOM. come some But steps And and it it's it the point very will come more the from continues business

Operator

question Samad next comes Jefferies. from with Samana The

Samad Samana

ears maybe since it, little Mark, mentioned just So perked up you bit. first, a my

You global outage. talked a about

that it's specific so won't said vendors, to you I You didn't alternatives. leading do people mention But that seek either.

where to meant you just understand are? through business is specific us us that? that alternatives you Or driving you? Help So consequences can you as OpenText, maybe help it's understand? that Is something what in the what by for thinking

Mark Barrenechea

be over, impact may outage the is the mean, not. I Yes. but

was cloud Our unaffected.

practices. Our our won't. affected not names we And I'm to company weren't use and throw own was unaffected by deploy software because here -- and I so we we best

we in their so year us of across side content, what beginning the lack And coming do, the vendor deficiencies. into alternatives lack around and quality, And are conversations on do. to BN security we of driving for everything top stack are of that ITOM product is driving the particular the across their everything process, technology AI

-- drive security AEs to on new beginning it's our yes, portfolio. with on conversations So our

Samad Samana

I versus -- it, you've being bookings that you like if with or versus, X% we to lands? new could guess, that about the flex think introduced of the that this about inside think some building guardrails growth." products call you and cloud around X% again, popping where it? I ask revenue there to gets as And think you blocks. what should When to the, number base somewhere you prime What's -- year. that about the gotten then How the below about And is net biggest retention in already range think factor that give when Interesting. us "up versus, trying the the I'm number the

Mark Barrenechea

Yes.

So by X% up and 'XX. high organic to towards growth single driving digit

and organic." go things what in the, So Paul and X% renewal seeing we'll couple let on to Todd, he's a highlight maybe field. a about of we're in bit not maybe to little the rate "up resting So me the

way. of expansion And business first is The going network our our to driving clouds. business ITOM are and just content lead business, business again, the

the reimagining knowledge Customers reinvention, can workers. see of this

more adding existing portfolio or the -- and We Titanium ecosystem helpful. SaaS off-cloud to is cloud X, SaaS SaaS driver main incredibly workloads just to system Second are our workflows private partner and going Titanium expansion. independent partner is deployments, got or be with

Google, cloud renewal strategic the to Microsoft, working do. with course, end range then against And to new with We're and higher across driving on side? that's of AI Salesforce, relationships that about. going of little lead a talked Paul, the Maybe, just and levels all we at that bit new SAP, us we that security

Paul Duggan

Yes.

Mark Barrenechea

And Todd, the field. your on views

Paul Duggan

for business renewal Yes. me we performance Thanks, let cloud the have. our rate guess, gross first again, that say strength Mark. the I the understates of really

industry a XXs. the moving to through So QX, in that we'd again, for in lens, using to And we're scaled mid- cloud, now this NRR. that we of standard be have that reason, high

you Let about expand on me tell how renewal we the side.

and Our our mentioned. pricing our adding and strategy controls; like I renewals; two, the services and success base really customer three-pronged: raising policies there three, consumption is new for So offerings premium support commitments

pass well in we So to, opportunities addition actually, strategies expansion flow team. rules opportunities as of for do lead on Todd's are those cross-sell large and drive that into numbers significant that

about it's that which build with we'll then that So of my the that on we in growth. And business better Todd, a -- build. foundation here, the performance you Mark partner to going representation talked give

Todd Cione

business cloud Yes. Paul, me sales we're That's big now opportunity across a cross-sell. and by at force. you right specialized had something our executing

cross-sell business So depend and our on that networks, business, accelerate it. on F who able in opportunity ITOM we to and we've now customers a business, have think the programs we to on have to great who cybersecurity I reflects and depend and pipeline content launched our be 'XX great

Operator

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

Paul Treiber

firstly, just question. -- a clarification Just

change that capital to organic. the and the which light revenue case that's implies flexibility, that, allocation revised targets? of in acquisitions is make in aspirations, or you're the no more Is not 'XX strategy there assuming that Just those

Mark Barrenechea

little you broke Paul, a up bit.

So hear fully. I couldn't it

Madhu Ranganathan

'XX. the Madhu this Paul, repeat just you part Could that the you When is -- F here, mentioned question? of

Paul Treiber

Is organic? the that it F'XX acquisitions? you could And confirm is aspirations, purely doesn't include

Mark Barrenechea

Yes.

organic we it's So the revenue 'XX And have next, is F'XX the right, or are many number And of of X% 'XX, return we right? on stated F the again, very many that $XXX years. and in have capital, we very to revenue, But is the there. focused and high clear up and our cloud accelerating free be cash million which -- growth paths flows get driving single returning always XX% year into our the this over Paul, always in clear digit. up I've that 'XX to X strategy, the to highest

is number. number? -- But M&A all, not M&A be some there some the there So focus right? 'XX focus at small in could in It's all. the not 'XX the probably There's some that's at the

our majority 'XX growth, in organic. of driving the is model, vast 'XX be the that cloud focus Our organic fiscal obviously, continuing would And expansion rate.

answer think that's I So it. best to the way

Paul Treiber

Okay.

Second question…

Mark Barrenechea

Is there that clear? clear? play clear? I mean is anything Is that 'XX to Is back?

Paul Treiber

Definitely clear. definitely. Yes,

Mark Barrenechea

so. to make want just I sure, Okay.

Paul Treiber

-- you've the like, question or about should about, the think Would think allocation, that also focus it incorporate management how for but Second metrics? more emphasized we just the we circular, maybe with should on I return wait incentives compensation? capital for metrics need align in how and return to and

Mark Barrenechea

has the disclosures Board committee the making listened advancements Board making we're shareholders. to listened -- plan comp program. and in the actually X made the our The intently talent and see You'll We've X intently. and have disclosures our we're to CD&A. as The committee in -- comp

revenue And NASDAQ. is you'll compensation on and annual stock And it You'll attracting to in see longer-term to to based revenue see so our tied getting standard benchmarked talent senior then the in the approach the margin right? and up compensation. as CD&A. The is margin,

Operator

comes Stephanie from CIBC. question Price The with next

Stephanie Price

AMC bit Micro little and during AMC for the organic here? maybe should growth fiscal divestiture. the was that I we give PowerPoint, had -- more at the just that overall you in organic Focus the year. Can quarter. one's Micro disclosure just And growth how roughly 'XX. think flat you Micro the Madhu, with Thank growth us Focus you currency noticed additional for in organic also, a you. And excluding about mention maybe post did Focus on color this constant

Madhu Ranganathan

Yes.

that, performance Micro let's Focus given year, the met Focus. the in Micro $X.X had organically our recall billion, fiscal say, plan. We entire for vis-à-vis the 'XX And would I So rate we back at set baseline grow did to renewal right? we where

the AMC, months, XX ex what assets we AMC, is for I think including X like the the AMC It's will AMC not had say for had we months. that right? asset I

it's only well the of rates measure AMC, Focus So brought also declining including Micro portfolios, very in product we and growth not business. more June lines actually, with and many we end Micro the XXXX did important as I organic different down AMC holistically think to Focus, at the

our all Micro putting for did organic we that Stephanie, Focus of So yes, together, plan growth. meet

Stephanie Price

hear. Great to

guess, for then actually, And one, I Okay. another you, maybe, Madhu.

coming from few the that along how Just you there? think calculated with think you the just talk on bit slightly the and Can wondering weeks restructuring little so can about are a a the about the I restructuring have well. ago. you a through timing areas where cost higher margin announced as we you if might savings benefit, reinvestment walk the if

Madhu Ranganathan

Yes.

So let I'll a question take couple part the is Mark and of a as One of things. -- well.

of exists and So as of our and talent, the right this as regions, talent think mentioned, from? placing where Mark right, regions where in talent come restructuring lot that the a as well. management, structure, did it all of the differential and continued look certainly, talent from a Again, And at part of right, cost really cost structure meaningful and for is took at us a profitability perspective. layers levels, was efficiencies

we're One comment are we Now the positions area of be investing in in in going sales I'll earlier as which EBITDA to was and going in share, as 'XX, why XXX expansion to in investing Paul's, of XXX in the fiscal be X-K is well benefit the and Form question 'XX Todd's more to going our and that's to not positions, services. into and restructure. year

that we increase XXX on you the the are by and of investment to to, restructuring, did in we basis which any benefit year, all entire again of a to able did EBITDA part thoughts? Mark, July share with So basis, early net points. want

Mark Barrenechea

when kind of of review extremely your than view EBITDA starting the adjusted report, add Yes. a just Stephanie, We would their Micro low report. Focus which you profile point X kind you you at AMC, the is do, piece. take read little and different -- for thank you I look is XXs. and I out

in to you factor So our point need lower. look is at starting that your up target think you XX%. to 'XX, I for when fiscal And

So ex you look to you I starting Micro point, AMC, -- at EBITDA what's have So XXs. their when low also is very think your adjusted right? Focus starting point

is a the step-up little higher. So

XX% the in all in 'XX. to up Madhu investments good plus -- to So so has and things 'XX that in talked about, XX% 'XX, and up XX% up to

Operator

next with Bank The Richard from question Financial. National comes Tse

Richard Tse

don't but a still I line, question Todd's the know I for… on had if

Mark Barrenechea

he is. Yes,

Richard Tse

Okay. Great.

So help organic add OpenText presumably, aspirations. on brought to to growth you're

there been your really you've outsider, what said. Like, days the So point, growth vantage you to been think challenges, XXX you from here? do an organic have as accelerate

Todd Cione

part team. the Thanks Yes. and be of question, for to I'm the excited a

products base. installed a I customers of that think with got We've We've fantastic opportunities. foundation. big got got great we've as just provide really the got upcoming lot are challenges innovation and value well. a really a We've deep

see I upside huge So opportunities.

still the that that There's excited doing specialization the growth deep promoting that force within, with business a you consistently potential. in we're balancing outside, have, kept we're attracting And executing and that place and as well, locally. exciting about lot and we've talent cloud and more things sales unified while we're a we're couple worldwide we some pretty from we're from now that

Richard Tse

a just, question. related And Okay. like,

Mark Barrenechea

on we Todd second our to And consistency Officer reach question, as across give and and billion our teams things certain point. to great $X your board President scale, selling approached your operations and we've our inflection expect it's of you a Sales approach Chief you theaters of promotion development. you Madhu's too. in my as as promotion obviously, get before Richard, perspective, Customer And I'll having drive Companies in Paul's with processes. And and part we Worldwide And inflection as such all well delight President corporate revenues, points. that as our of and partnership.

at and evolution, a point a are stopping your single a in vision means. with point by gotten it leader where a any evolution on leading a reach But our have we're scale you we we've not where single to should organization. sales think need strong of I we in So

Richard Tse

to sort of Okay. a Great. a have follow-up I do question that.

you of for So do buck of plan out the driver bang sort consider plan, the growth? for organic biggest those -- fairly detailed beginning the biggest the get laid you a laid of you would sort at that out, things what where Meaning here? you

Mark Barrenechea

Yes.

follow-up thanks I people. People, think -- that people, for question.

depend that customers focused in OpenText value sure think, and return think focused. as that So having on will technology. make right where And the empowered significant a more with consistently globally, proposition that connecting to a we people as I really well. significant we're the right step we're again, we I demonstrating the great clear and there we a right the consistently That's going get up have And get, roles well. enablement,

Operator

question from comes Capital. with Eight next Adhir Kadve The

Adhir Kadve

potentially Maybe for X for Paul. maybe Todd or

today. about lot a talked You've people

or previous of those kind you that worked the guys sales guys Todd your approach uncertain, versus continually to macro kind the altered Paul, to Given continues cycles be through? scrutinized. have organization have you of that are budgets somewhat how

Mark Barrenechea

mentioned, sure we'll list this as their proposal alterations got big be a and that year teams really we're RFPs know making a what described. at efficiency don't efficient of I for boost basics, like also like technology that would will we're includes and I our allowing more innovations our by excellent significant Yes. internally, the as that that on. other I I long is than innovation other of launch to own generation. focused that We've say, part leveraging And well. AI Rigor internal

parts. you'd those I So Paul, add? anything key are think

Paul Duggan

tack to one adjusted that to to guess, we've of mind areas comes is in bit I on that, that services. professional the a

AI next if unique we of out those differentiator in, and look are that looking and outside kind as So ahead source the up all to conversations. talent are have These talent we're set some to that's that resources skill our gen, to build we in customers internally also in to rapid know can that to we ahead going market way, well, find. that we pulling this a in look a of as tough there

an OpenText, that access a So for as to in table with having us them and partnerships is at skill important within that giving seat the in year our having customers the ahead. priority our that the

Adhir Kadve

maybe Mark. Great. a on quick And just as just AI, follow-up,

AI that's on piloting, the factor really continue and You the pushing of gating to their accelerator researching what's that say customers there kind really of deployments? kind -- from stopping

Mark Barrenechea

is AI-related -- and just there AI So growth there right? unequivocally bookings winning, wins our in also We're wins. Yes.

dynamic active of our It's look I customers think of is big interesting right our thinking hundred games are I'm around on detailed big a they this and conversations I They're small an that going now, around seeing games. They're that projects. work not couple if right, at interactions, interesting and not problems. an AI requires challenges is want. that investment, They're around small but approaching their biggest with solving dynamic problem that customers. set some that our with they're

to and optimizing at supply chains, them. and Looking contracts in optimize billion-dollar at billion chains supply $XX billion-dollar how looking

moment. the States at Looking every in United single a particular at trade

about it's problems. dynamic an data solving it's big So big and that interesting sets

year think have pattern. wouldn't I a ago. And said a But I that's that

the goes down, smaller cost as of see, also we'll ease deployment think down, so cases. maybe, And goes I use the

out when big solve that we So in throw that's customers. premier And we're there. to a we -- to problems for a dynamic get I'll when point, just get that position our

Operator

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

Mark Barrenechea

questions wrap to and back fantastic. go I'd to just Yes, X like up.

both in bars analysis. and set the on the talent when compensation that committee comp CD&A, or it made very have too year We're this margin. a and on you're to our going see discussion fast. we're and One Board growth look point and and doing unique And is On and comp leadership, making at the that, made higher you for disclosures. CD&A I something

the that's takeaway. think key I

And doing -- so we're higher setting to look your higher setting and and a disclosure we're forward the forward feedback. are the bars. We Board and committee

no On the ambiguity and should clear, And to F'XX about completely there growth plan, very it be in it's manifestly that. organic I be our want hands. is

just on a of is everything. because advancing on focused is we're track step We're I'd started. which with In big where competitive up. the advantage advantage Titanium wrap our like competitive end extremely And terms to up, we next X,

growth and We're focused on growth X% to 'XX organic in 'XX. 'XX, in up to delivering cloud revenue growth, in X% X% X%

dividend from We to are history focused our on 'XX of new $XXX Tech our Conference in our August; capital today. Morgan our and buyback this for million look to joining September XX% X%. Thank capturing ends you 'XX, seeing and the up capital at forward return in That 'XX, and Deutsche you up Oppenheimer; excited X. $XXX to up call. Global million York about today's XX% New late August; significant XX% margin opportunity highest return you of in at Citi's Bank, us and front in of upcoming to with in in the we're all. City, disciplined us raise Stanley We year in Thank our late having conferences

Operator

conference concludes today's call. This

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

Open Text (OTEX) 1 Aug 242024 Q4 Earnings call transcript