Open Text (OTEX) 2 May 242024 Q3 Earnings call transcript

Thank you for standing by. This is the conference operator. Welcome to the OpenText Corporation Third Quarter Fiscal 2024 Financial Results Conference Call. [Operator Instructions] The conference is being recorded. [Operator Instructions]

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

on Good available afternoon, call is Today's everyone, Officer, Financial Fiscal recorded Chief XXXX Officer and and Officer being Mark welcome shortly to Call. Executive Relations a website. the Development, OpenText's with me webcast OpenText's J. With and Barrenechea; OpenText live on President, Chief Corporate Investor call the and today thereafter and OpenText's Earnings are replay Technology Third Chief Quarter Ranganathan. Madhu

press Earlier posted and and we the These investors.opentext.com. today, online. accessed materials be supplement our OpenText remarks release prepared investor website, Relations our presentation Investor on will can

and conferences: Conference Tech inform San I'm Jefferies Consumer CIBC you XX in XX New Austin, in on XX & Francisco. in Toronto, that Coast of & May in pleased May Technology following Conference on participating XX Barclays on X in to May May on upcoming Conference Technology, on June Leveraged Needham Conference Finance Bank York, will America Media, management be OpenText Software at Innovation Newport Conference Global the

to on harbor statement. our safe now And

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

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

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

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

pleased to with over call I'm that, And to the hand Mark.

you, Thank and call. today's to Harry, welcome

the with strategic value to never The kick been of a call statement. higher. me has customers Let off our OpenText

build And market. to and cloud contracts see upward of in accelerate clouds, increased this proof cloud momentum future have to bookings the And divestiture flexibility billion business multiyear evidenced business continued our in our expectations. large the continue with growth AI with business AMC now We complete, strength capital our we management cloud addressable as by our technology. with $XXX and points revisions information we

to balanced the M&A growth to X% growth cash X% Long and return XX%-plus enterprise total term, growth, Powerful comprised total of shareholders to and growth and plus to at for framework we X% cloud in expect growth. returned free of XX-month X% flows and organic organic our through revenue M&A. dividends cloud flows of M&A a to new X% comprised a approach mid-single-digit growth, XX% business on of of deliver bookings cash trailing organic cloud-led XX% XX% form buybacks revenues cloud share plus of X% capital

to next to $XXX announcing new 'XX. over million are of $XXX and shareholders capital buyback jump-start we return fiscal of XX $XXX to million to today a in intention share return And program, our the million this capital months

started. get Let's

innovates, Business to exceptional strives cares and today a live focus System of our the people strategy in customers see one OpenText said, relentless to is about investor value. X-point building our continue You'll on puts with Point performance. for execution. strategy always Simply an deck the to OpenTexter shareholder first,

apart. us sets culture Our

Point two, growth. cloud accelerate

and helped or XX% drive working. to enterprise confidently cloud F XX%, in target an revenue. QX. XX% to Our our F bookings This of annualized of to bookings We've 'XX XX%-plus cloud increased from beyond, is cloud R&D our XX%. fiscal increased strategy bookings growth million We've projecting enterprise 'XX growth growth XX% to prior accelerate $XXX and targets QX investment we're 'XX up XX% cloud and in of in both

business We expect revenue and our OpenText and cloud getting X% growth 'XX, our clouds, to expand fiscal reach Cloud technology. our between business journey. part across just started to and is AI The continues in X% the best business opportunity organic AI by we're and security

customer and own in operations. in opportunities AI own securely. companies and cloud cloud networks, we're and We let's And and cyber, customer are in customers knowledge developer security, We're information and workers, workloads unlocking rapidly Gartner AI. for private all platforms spending priorities to helping focused digital the We're winning public large-scale more adding new well aligned data, software and experience so We're today, and and it, their capabilities. capabilities companies. business we're understand IoT to on software do build

huge two see AI. in opportunities We

autonomous offerings. base introduced data a additions; large officially learning operations cloud. ago, our weeks of at as XX.X. with help our Aviator couple function systems First, information Europe can management. X cloud installed button. step second, a through our Aviator we World to customers our knowledge applied Titanium grow the a technology to productivity to models made worker Thrust We We of consolidations to gain their to and prepare Cloud demonstrated We easy business with next-generation pressing made and OpenText AI clear latest our Editions And as

Customer are and while and win extremely Aviator us is piloting, researching And positive. still is helping analyst many feedback customers now.

securely use data accelerate like SAP, into through structured partnerships value enterprises capabilities customer We and Google actionable have Microsoft. and and AI unique to to unstructured business exploit both cases move

quality; National intelligence cloud. SaaS recap of Zurich Content Universal ] World on any Board leading n It DevOps Discovery Aviator for knowledge testing in service worker. plus apparel accelerating AI data and bankable a with automation Search our Aviator Board and Transportation and Aviator; Cloud running watch Pay leveraging Transportation the the XX.X Pick (sic) scaling, Safety and National States archive. OpenText power Content management OpenText Consider Content of invoice opentext.com Airport shows productivity for leveraging demonstrated I Please clear global gains United where the company, providing our with Europe, the [ Security

You Uniper, Zeiss, and hear Frosta ] our directly also event. Carl can Nationwide, at [ [indiscernible] of from the Criteo customers

Point our flow three of X-point free powerful generation. cash strategy,

to of We plus flow or 'XX of an free by 'XX as billion free million billion F of $XXX aspiration $X.X percent flow are targeting cash XX% of cash our fiscal million, to medium-term a and $X.X revenue. $XXX

through automation and a a flow We expect higher AI. our through aspirations series margin technology-enabled adjusted actions, leveraging to data, business achieve cash EBITDA free of expansion these from

over is started a special We It combination interest Completing that getting charges deploying internally. time, charges reduction potentially integration expansion, in cash lower micro-focused are AI margin flow of all more lower a expense burden just enablement, to in rates expense, and free over our technology and the elimination integration is time. lower path of interest aspirations.

Point four, disciplined allocation. capital

the pay that $XXX to down of X introducing to ratio billion, parts we shareholders on net with new X our and expect framework USD is debt of our our M&A operational leverage and May a market by by reentering leveraging million the best now return buyback capital with our oriented, discipline. We Xx, while are future a increasing below

strategy in of comprised You and additional will allocation. see capital X investor elements: our our allocation presentation primary today

trailing months buybacks. primary, cash dividends to of we intend XX% the to For XX free flow our allocate and

have as to returning last strategy. billion the I'm know, return that track a $X.X strong program dividend We now a record, that over you pleased decade. buyback

$XXX fiscal XX of free XX% noted, tend $XXX months in to to our buyback, million between million going million to we're and trailing again with target a is higher return shareholders As $XXX flow we allocation, 'XX. and cash to start

allocate part, in revenues. free to cash about opportunity information Further, value of management technologies we to proven intend the propositions. cloud M&A a for information flows we net higher the are We to other XX% for trailing for with wide additional across management the established the customer cloud-based intend cast excited M&A. recurring For XX-month

operations, seek small- and from business are to foundation in We benefit and benefit growth. cloud benefit always value cloud cloud our distribution our our from from We'll looking will for system, multibillion-dollar that companies organic operations. general medium-sized

coming to M&A the us growing expect while organically. complete multiple can transactions in You year

to our and our financials turn medium-term me aspirations. Let

results million-plus Customers wins durations $X and $XXX strong bookings, execution up up cloud to trust. doubled Average strong their ramps with to are for from than Contract longer. long-term QX, million, commitments reflect On XX our customer more year-over-year, full XX. XX%. For XX% are increasing size our terms year-over-year. value. is deal We cloud

get Our fuel capabilities to IoT. investment that customers AI ramped to also is growth, and new up introduce like to and

just targets to and $X.XXX billion and growth Shell, BAE and revenues of had $XXX million, include ended bookings And $X.X Akamai, billion between X% last cash Monde. We at up an million, billion, total wins flow business. revenues and to free up for to full annual up cloud had XX% Tyson 'XX, fiscal of Recall, flows to XX% cash $X.XXX from XX%, $XXX free $XXX XX%, cash growth, $XXX billion cloud $X.X between We we're total million fantastic between million Foods, X% year. Systems our Nestlé, year-over-year. of

important, $XXX $XXX payment billion preliminary plus, We're a up are tax includes targets divestiture. cash $X.X million, presenting $X.X onetime the billion, 'XX cloud million AMC for million which between subject enterprise includes, XX% without of F between revenues we're total Today, free and bookings revenues and business. which also really preliminary of change. billion, $X.X targets flows These AMC expecting to to $XXX the to

flow do return about million more between our talk would we Excluding our year-over-year. $XXX divestiture, will to growing again, cash tax payment million. this. again free of And capital And from be $XXX a

We're and autonomous business, security, Titanium our Editions, cloud, SaaS X, excited our cloud next-generation Cloud aviators. about

but from Our to and momentum. leading strong our maintaining is Why? them bookings our a 'XX. the than of are cloud medium-term growing market moving indicator We're aspirations cloud faster also and 'XX

and that more larger longer-term to commitments are longer are durations. driven their X-plus is with map multiyear road contracts trending years of more strong capabilities. OpenText sign to This also trends by Customers and positive for ramps. commitments include industry This is increasing Customers our news. of

see Microsoft partners. positive SAP, providers AWS, our and other this as trend You also important Google, from cloud such most

X%; Our strong adjusted of $X.X to growth, growth X% $X.X between aspirations plus; cloud bookings EBITDA $X.X flow growth, total to will of billion organic cloud reflecting F to cash M&A continuous XX%; $X.X total to X%; and and billion XX% enterprise and aspirations. revenues to X% contribute XX% of free billion, 'XX billion; these of organic include:

are have me Well, my to let for our higher. value OpenText where wrap thank you of we increasingly joining confident been reflected The these conclude customers strategic that produce me in and remarks I higher profits today. providing. We're grow And in let increased and about never our cloud that's the up and started. to revenues, business, our visibility our from ability higher today

To and recap, a financial free and growing balance quartile has attractive adjusted a resilient OpenText sheet. strong per and growing revenue highly margins cash flows very up predictable, with a model EBITDA stream,

strategy we're to M&A excited value and shareholder recurring a X-point and deliver and a highly a return profitable stellar designed cloud to to billion, F X% reduce million by revenue a new and of Our 'XX of X% $X growth. model, buyback capital execute to long-term is debt $XXX to and return business to build create our strategy,

responsible President I team and delighted putting performance. of and always to people Cione, entire caring all to Sales, executive for welcome appreciation Todd first, customers want deepest exceptional colleagues to innovating, Worldwide I'm express new their OpenText sales. about for my for the my

leadership the for all Paul ready exceptional clouds, operations chapter professional and growth corporate next and the Ranganathan, technology. congratulate opentext.com President me to one Madhu AI support. our responsible that and peace to responsible development. for CFO, team, Chief renewals, and read all. bring business business May Please Let Customer for Officer, And in services brings Duggan, for business our finance, visit about and President peace

And wish want let I over call me today. I the Madhu. turn Madhu birthday do, But Madhu? before a to to happy very

appreciate today. and all joining Mark, you us Thank Great. we of you,

completed operating for goals while fiscal announced me a will assets. few AMC with we returns cash XXth divesting achieved organic returning mentioned achieving are on QX, to initiatives the our yesterday, successfully to to growth. the successfully growing was quarter as flows This focusing our growth as both let May our capital operating points. that we Focus we Last I cloud business. X, well So cloud key free model, on flexibility. In on Micro of us EBITDA This that. adjusted our of quarter, start have by end organic and that be transaction track XXXX, We

front QX in share of reflect targets me aspirations with outlook, the customers OpenText prepare our Our AI. enterprise comments. as spoke leading some for to results, and fully bookings additional way Mark and the let opportunity cloud our

call, USD All presentation constant as a same $XXX the investor X.X% in X.X% a to in reported in website. I are the and revenue unless QX on IR up as to During references basis, On year compared the fiscal on the will prior posted million, refer currency. our basis, period cloud and year-over-year millions of was stated otherwise. are well

of Our approximately enterprise ARR, revenue. is that with XX% XX.X% quarter, in visibility cloud and revenue up cloud billion, constant annual growth. of well business XX.X% in $X.XXX extremely increasing growth year-over-year recurring doing our represents QX revenue bookings the XX.X% towards currency, total

healthy charges XX%, and relates Micro reflecting driving contribution special our from GAAP customer $XX.X businesses. $X.XX. margin metrics. up margin And expense, increased net now income from license broader reflecting other support to of acquisition relative revenue contribution customer up reflecting a Non-GAAP from million, of XX.X%, and GAAP XX.X%, interest license. a standpoint gross gross revenue increased GAAP and the from EPS support of XX.X%, from of also also to Focus, was amortization moving that financial

an constant in XX% Adjusted currency. XX.X% EBITDA, and $XXX.X increase million, of

solid adjusted EPS Adjusted operating up as progress currency. constant our and margin $X.XX, EBITDA was XX.X% we Micro in was to make Focus was Our XX% to continue same the model. bringing

million $XXX.X DSOs Our with cash strong flows working We with flow cash capital XX consistent remains quarter. million QX overall the and in in $XXX.X was that free the prior days, year. operating performance generated of our at

billion balance to QX the cash. in sheet. Turning $X.XXX We with finished

net on was X.Xx. Our leverage XX ratio March

Term on of loan May as leverage net interest successful the acquisition billion outstanding debt billion as $X million we completion of debt expense With capital annual outcome the the we balance We're our flexibility. our than bring $XXX a Xx. have $X.X program expect to principal the intent million, the that of of to from reduce will ratio positioned provided is X, That million. $XXX $XXX AMC extremely prepay a to billion prepay our and of our repayment B. which in divestiture, make well our will allocation satisfied of reduction less with given notice term $X.XXX $XXX repayment to to Loan total $X.X execute billion this The well from to and million full to on

I'm invest Now expanded regarding model in M&A function. capital development cloud ample M&A, allocation leaves drive corporate strategic to future room In to to our growth. excited our my role as President, lead

Mark we to multiple targeting As cloud deals, do to small- medium-sized noted, expect businesses.

We strategy investor Page our XX outlined our cloud of have on fully M&A deck.

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

statements July view comparisons walk points to of without how XXXX and to your models are OpenText pro forma business XX. we Please announced from business, filed also AMC. refer to the completion Slide ex ensure I'll AMC. provide December looked few AMC after our Yesterday, through financial a of the we accurate. also to divestiture year-over-year historic

fiscal actuals, of X business and approximately revenues XXXX close since acquisition. AMC $XXX For of AMC the primarily million representing months original

of business annualized XXXX, AMC fiscal approximately million revenue. is $XXX For

be our There contribution XX, months $XXX model than target May target revenues the fiscal the we're XXXX. previous May our no XXXX, AMC fiscal and will million, revenue reducing XXXX earlier Given of in of and divestiture AMC approximately on for completion beyond. X, of June expected XXXX June by

XX. factors basis, our outlook, headwind; in Revenue year-over-year to billion a presentation. QX our a our and XX.X%. to billion, XX.X% me expect billion fiscal let now between on Page quarterly of starting FX margin turn $X.XX Starting $X.XX billion; investor 'XX with $X.XX EBITDA adjusted And we on to ARR slight $X.XX

business months QX. from million, assumptions included fiscal following: reduction expenses Our divestiture-related as approximately of 'XX as and in closed a the today QX revenue AMC of include removing May X and now X earlier; mentioned divestiture AMC I AMC QX, in $XXX including of

second growth we revenue second greater projections. the now business, in growth we are longer-term The quarter. and QX cloud our cloud have the bookings now XX%, data quarter are regarding ramps factored commitments our third customer with point And in and of a XX% consecutive strong seeing into than

also have We now security. increased cloud in further investments IoT our SaaS, and in

to Last is which see continued in our benefit and QX, cloud AI are customer investment, we further as increased bookings.

provided model XX. currency 'XX constant on in is Page target fiscal Our

building comments, my reflect target So on of prior months from contribution XX model ranges only 'XX fiscal AMC. the for

of XX%, total divestiture cloud revenue X%; $X.XXX X%; in with up XX%; revenue to to EBITDA expenses between in XX.X%; reflecting investments adjusted sales organic billion; Focus X% higher expenses. growth, Micro of XX.X%, of AMC XX% the Total cloud to related growing again, marketing, revenues enterprise and the XX.X% billion to revenue range bookings margin in growth to and to the $X.XXX X% annual integration growth to range recurring XX.X% AI cloud and

of We expect slight million, million flows reflecting expected. with to have positive would divestiture AMC cash X months cash $XXX divestiture-related flow and of seen earlier 'XX offset we $XX X of excludes months' a closed $XX AMC This $XXX expenses full approximately million of from million fiscal lower free interest. again, than

Page have XXXX fiscal XXXX our XX, On we out preliminary aspirations. laid and fiscal targets

the our XX% expected have plus to Mark moving of now cloud As to medium-term aspirations our acceleration bookings by from We annually. we're fiscal business. cloud 'XX maintaining but mentioned, increased driven our 'XX, in growth

rate interest benefit our in Both watch to that euro or model benefit and models they should yen. on the materialize. long-term will our currency, any noting assume We do or markets interest continue the not positively the rates today closely improvements

$X.X to revenue constant growing in currency in 'XX total to billion be to to billion billion We $X.X billion. $X.X with $X.XX fiscal cloud expect

and to Micro our the relating growth and EBITDA and includes a Focus expenses reflects adjusted cash to on $XXX in will acquisition. onetime programs tax 'XX will AI payment QX range is AMC lower 'XX on tax fiscal Without in in the FCF the divestiture. fiscal from 'XX of in and our in in fiscal of The payment payment, million be be be $XXX Our as will will cloud some year-over-year. million reflected fiscal gain grow QX and expected in to to aspirations our flows the as 'XX million tax be Free billion of $X.X flow of that on to The XX% cash Page fiscal free $XXX is $X.X XX cash to 'XX trailing path XX% fiscal spend free the our 'XX, flows. billion materials. highlighted well made

Our goal is An scale of Project including AI. supported cash technology efficiencies, utilizing automation and to XX% own Athena automate to revenue to flows and free development. improve example by greater our AI

fiscal creates aspirations. path $XX million; completed in coming XXXX charge be growth to The tax charges clear down a free approximately a special fiscal in that we XX%; million expansion our 'XX expense Adjusted future year-over-year this, EBITDA $XXX expect following in will flows. approximately $XXX all interest planning deleveraging reduction post improvements key AMC continuous towards these margin and cash down million; reaching onetime XX% in 'XX. of With of

transactions plus by to we talk profile, to a when Shareholders M&A. cloud complete summary, year. think can software in OpenText the mid-cloud in coming mid-single-digit expect company, investors led the small- growth growing should about So revenue M&A financial about us

cash leveraging I overall revenues to the capital XX% established all enterprise behalf our to program. new a We a our flows our and of XX% XX-month to fiscal XX% complement XX% from raised team customers On bookings flows cash and our path on at XX% like dividends to return cloud 'XX. have framework have shareholders, and of in OpenText, buyback trailing by capital previously on would loyal return share plus thank of free We to members. partners clear growing OpenText to to

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

Daniel from of [Operator question comes Chan Instructions] Cowen. The TD first

fiscal demand, Just on fiscal It a lot of from of want sounds lot like of to a 'XX. a the midterm there's some 'XX here. lot pushout strength, traction of clarification to get the aspirations

to understand of out trying it [ pushes that Just than the pulling ] why aspirations forward. year rather

remarks, Thanks to that obviously road signing in as revenue I'll headline, for noted I question. Dan, we're them, by with full Yes. strong is longer-term here. start via $XXX contracts which we're ramps just the cloud of And multiyear the in divesting larger, ramps value, Mark have million supported divestiture. the my maps.

in who others from SAP, hearing the various and seeing are seeing Microsoft, also trends. like industry We're Google,

Now aka, haven't AI factored those and like that various factored have grow yet can faster get ramps? than accelerants XX% faster can cloud yet we off. aspirations faster are we adoption, in taking We into not we

haven't in M&A. factored We

in factored We customers haven't helping and in the will. euro more rebounding if spend euro, you

for the are as 'XX, F maintaining of F part the reasons aspirations, those 'XX. not but part them So of seeing

back from Okay. XX.X% And 'XX, fiscal about AMC expected EBITDA then for your year, 'XX out is next guide margin margin to targets. I be as on the well if fiscal on year this based looks like it

out additional of of those impact down called AMC some driving from is help investments, an divestment break is you -- what margins. Can coming each much how So on those? you having AI accelerating from come versus AMC from divestment? it causing How is R&D to going of additional EBITDA you flattish margin much more trajectory expenses how for AI much that investments are that's

adjusted as below is sales below a perspective. and as line mind, comes growth, AMC absolutely towards to you'll and R&D in question EBITDA about mentioned Yes. as in also it see 'XX, as fiscal And sales line we and of you investing earlier, the predominantly up marketing. be, The in the fiscal it are from yes, those I the keep expenses 'XX divestiture Thank But When QX. cloud year-over-year would line, your predominantly well bookings growing certainly the investments is categories in some again. investing cost well. is

of question Enders comes Citi. from next Steve The

of on This and congrats birthday, not least which a happy for on, A on is Steve, great George quarter. Madhu. going lot

you. Thank

by versus kind up second the to much Maybe that seeing help just obviously kind start, duration XX%. is bumped strength you what long-term impacted cloud really you're up, target maybe us your growth the impressive underlying number, duration side? and on apart, could how of of just if number, to the tease that bumping bookings Maybe of

Yes. of Security long-term I the information of strength the Board No, question. watch to encourage archive ] George, to road AI or States us management is just helping the win United (sic) thank and the you the Transportation Board [ National of it's demonstration National map. Transportation for portfolio having everyone power definitely and our Safety integrated Aviator business data now.

So it's in the strength of are XX% growth XX% the underlying large QX. business. numbers, These in QX,

like Contract XX. We pipeline to strong QX, mean, more XX%. We a And our see noted, from terms was on duration the than the are to longer. continue year-over-year Average $X wins million longer. bookings. up XX cloud deal in doubled I I is size

reflective strength underlying the product. That's of the it's reason. So of the

sense. And you're makes on about wanted That AI to it. I Got what ask seeing customers budgeting. from

if about could use are you about edge the really preparations think so talk preparing their estates can of Maybe of ultimately as journey median the their early data those and being of customer. about if data think making versus the where spend, of leading best kind past customers framed it I kind the at kind more just they of in out on make you you assets.

Yes.

discussion, and in It's said in it's real. I in discussion. As every every it's remarks, my

some they vision. We are -- are in exploring customers,

contracts cloud other it. some with the piloting customers longer is have we strength get of about We the ramped of larger,

but to be so cloud it buy ramp going we're into a the over bookings, to to there's And going time.

for we're doubt, don't consolidate because systems No well, on want to fragmented preparing spend customers AI seeing as fragmented this and go and all through you data.

our productivity value we some higher some in we to a internally of model. there's need we So have -- some the before as prework systems well do of apply prework language

So conversation. every it's in

helping -- are is Aviator We us now. win

seeing is reflected n Aviator. the on DevOps Pay in live You're it Pick bookings.

now production. So move into it's starting to

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

strategy. the Just question, first just on M&A

bridge two? deployed deploying to you you the oriented, more cloud in how you mean those think we what value be you on and but I at at? mentioned a just would mean versus then how it that consider you typically past buyer. about Can elaborate You what valuations remain also you capital should

going Yes. have We you continue, that think we're as growth. dev Paul, corp announcing and value for heavily sure. influenced organic the oriented. the two company right? is in Madhu about the of all -- right, to I team, it's where But and mean the to future past that Madhu's the are having part we It's seek all learnings future, synergetic, framework

acquiring a But excited We get close now And operating recurring did. so of we leverage We're it's acquisitions these from seeking growth. our license but not past, XX businesses. company. maintenance we're synergies not to we'll And of cloud the you license the billion Yes, revenues, forward. the -- which seeking learnings we're cloud if scale who those and cloud operational our forward, our and able really playing about high a scale general that's all to have $X synergies our get leverage businesses interesting, are revenues. -- of companies about think the cloud can platform, and bringing the are leverage about it of license in we're going

multiples value to Madhu, going anything operational on cloud to general seek very And right, here you'd to leverage I'm and that? scale. to value small- to But we're out, like put oriented discipline, distribution not we're call. oriented. our our large add remain the to operating going that medium-sized a companies, can

Mark, and putting these assets said, to motion. you, And forward completely as in Thank looking I aligned.

transactions months. the next XX multiple to us expect close And over

conversion. like is free longer-term just flow question cash second The on

that near it you that rank on up? them see You terms mentioned it. ones a But -- what help drive couple to executing in of how drivers term do improve the will of most you do like you see in material the

the to get 'XX, to pick I'll can of at certainly fiscal all, to Paul, and going think, the all contribute to cloud in -- adjusted we're first predominantly the we revenue pay 'XX, are in when is Look, in there, I 'XX up, investments returns the you EBITDA growth Yes. think in. get also Mark scale margin chime it the in 'XX. will we making expansion. higher cloud, But making built we also when

cloud ranges EBITDA margin gross to help and then, improve expect between giving now adjusted also without quantitative going margin. to and So that's

we And flow perspective, cash certainly, the delevering then. from free from are savings going getting to interest a sustain is itself

special said, well. rate will side any slightly the improvements and in yet. taking on the I we're as AMC down, The other be As not charges taxes interest

say the But Project in early going we 'XX, 'XX just built all one example. And AI. very will scale get in the our to efficiencies those at Athena the with automation AI at greater plans of we anything we are note of within to is creating a into end And across through in to this, OpenText. I add? are stages respect automation of we Mark, are company make fiscal

to a Look, That We for as new you, Shannon Madhu want support and Sure. excited to renewals. leading on with taking as with our architect. really freeing of of tools that going many efficiency. time is Athena. new our Bell, We Paul technology-led approach and -- sales of on Todd presales. digital AI CIO. going to efficient we're up scaled joined Yes. to a I'm I X highlight see new do opportunities the leading with in entire in see structure up more like a operations. level aspect things, it we in have company who's my business. being to double-click this We're it's is opportunities more what that on CDO focus which just generated of building opportunities company full what code We our force, next renewals, is our -- recently, and and and again see Thank And a up through one after-sales about Madhu. president Paul, support, PS

So it's leveraging day a internally. AI new of

So billion to other to are us get to double-click I with billion aspect $X.X 'XX really to automation, want on aspirations our with just the AI. leading $X.X technology-led and F this data business

comes Samana The question from Samad of next Jefferies.

which both from guide. the Billy about potential strength is some on large Jefferies. talked informed Last but weakness Fitzsimmons This for quarter, SMB, maybe Samad in enterprise, you in

initial obviously, And of assume but macro it's SMB assume Sounds terms when early, what XXXX of market? still together terms what any continued, change quarter-over-quarter the XQ guide like but in did that putting strength And in very the around enterprise fiscal macro? guide? the then did you there

Yes.

take me we're uptick first an expecting on question SMB. Let 'XX. Thanks part. fiscal the for SMB the in But

to to have countries Dynamics us upgrading this new to Copilot. platform, we're We've more because market this primarily SMB Azure, We that's upgraded to across very own our more We're it codenamed later now who's that our Eldorado, largest obviously partner also ecosystem be quickly allow partner going platform important. we [indiscernible] with market a more platform. really pushing and we'll and built go Microsoft, here, U.S.-based bring product year and

ones want call We're coming larger the with higher XX.X also out, don't right of some Editions Eldorado. necessarily some Cloud partner especially engagement I also resellers. seeing now, to seeing in churn. in some we're SMB We're seeing but and churn what's them

things I in So QX with we're you we've actually out excited shouted to headwinds. I about macro? QX on outlined. some know on now an shout SMB. had we But anything we've see the just want last starting out the quarters, uptick back Madhu, modest it few

Yes.

on So two And Asia the affects factored also, this at geopolitical not benefit growth rate environment from in how high, interest the know, continue, from right? perspective, other we macro certainly And a impact, considered we rate as an we've aspects. FX and GDP consider externality really to if some is the that side, pieces, an and European And environment my and commentaries, strong business. a And you any point. the that outlined business. And that expect I we're is decisions, assuming as customer have we the in. have you everywhere, we've very look, inflation of the the global lower and business interest

the that the and improvement respect key the So to there's but are yen, course, which not of assuming of some in drivers for revenue, those there. euro currencies. And with also improvement

in Our feel not regions assuming those buying, would in better we're customers benefits model. about those also but our

of questions the And can opportunity. here. your and around prior and answers Mark, then I Super helpful. second maybe on if some question in investments Aviator sneak building a

and from or seen who or your feedback (sic) the Earn given some tried early Given share program, just have solutions. with you adopted Wings is general could anecdotes you what OpenText highlighted win get customers that that helping ] Aviator now these maybe wings Your you've [

believing. X and content [ Security is applying posted can the with watch Yes. a only Transportation And We look, demonstrations your Search literally across data the and And believing, our to that Very ] rich model ago. to our on Munich, Aviator worker plus Paris because obviously U.S. some happy standing-room Europe Content And everyone life of AI. clips seeing was seeing watch Board had I opentext.com centerpiece (sic) of your Board I just I -- is to you we knowledge demonstration cloud short that and Aviator of weeks of as people language to. a National automation encourage very automation everyone. life encourage of on kind see Safety Transportation is National London, archive. archive. data thousands and to in a And And just applying

down worker, would X what X to we take And of knowledge weeks got a hours.

out the -- and It's And check believing. button. think NTSB was product. just is live. a seeing so the data literally It's I demonstration just was published I video, pressing shipping and the our Go

So saw progress. XX-day every can look, that, everyone see our you and

invoices, Pay what the apparel and Pick and search, metadata, the company content we're just testing that progression a for using folders, Aviator management, to went next bring going the a evolution So do from knowledge large heart knowledge to management no worker. to in that digital like a think of to model. QA, large this And language n of in we the is But now compliance. doing automation different to inspecting contract manufacturer is we win a

and conclusions. the demo is draw your excitement can you watch own my But Go obviously, in seeing So believing. the voice. hear

Adhir Eight The Kadve comes next question from Capital. of

of different of the are How that those them full also what Great. those doing right kind use using in taking? a you AI. But they kind And on of customers long test of see and full-scale customers, scale until journey? you really -- lot to place? conversations take deploy with how your that prework customers that to of Mark, your you continue anecdotes do you've long do And of kind are a prework deployments you in where are kind now. mentioned lot some that given mentioned Obviously, what see cases.

Yes. Great question.

we at of a across Earn close strengths XX,XXX Your our I is have having OpenText the putting to that services program place mean, professional covering X,XXX One every consultants billable market-leading of organization, breadth. in global Wings the major in theater

I first interactions. since think across use we've XXX all our right, over collected our cases, customer And Aviator,

categories. are those to There long are a that lightly continue to take There understand. who going So there's X to probably very are just are those and experiment going view.

the gains see now And Let to productivity data. my there's which can because to then me consolidate, probably very third cases. is they're go specific use going purify the get case, down one, in they

success factoring numbers, updated we're yet. revenue seeing progress. bookings. And not as a in in look, to would even fiscal time, you we've noted. our that So certainly keep reflected There's see preliminary we're I'm though going 'XX, I ramp in next on quarter step-up hope But every that to that contribution in in

plays second plays about Great. Okay. of that around Micro product hear. that cloud cloud into growth be question Focus aspirations. And how the to and course, all and is your all My will suite talk of great

Yes, for sure.

X areas. So large

digital whether of very big ITOM datasets up about excited of whether whether a data, invoices. operations for it is new data. a ITOM data big service ops set couple it at OpenText, digital opens it whole or be And We've their us, be And just and plus big right? service data first contracts, IT or The we're employees, followed be management. always

and part portfolio. like of service having So we really hybrid the digital as management that operations

know full developer. of we up we open I can unless piece And the potential. the developer. data our our I we potential is Next think full don't reach don't reach

look Microsoft, how build became SAP became developer If SAP, they Oracle, robust became Oracle communities. Microsoft you

not developer, an only product the strategy complete Athena, thrust up ADM around strategy around have so but management. we're And line, our to strategy also services, do developer our our around open going we thus our

on Now And auto, financial banking, scale at health care. the software ADM services, developers we're -- business very that's organization winning we're focusing in large-scale on companies. software large biotech,

about. places So we're just shout excited two I'll very we're quite as out -- those

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

couple for the and A happy Madhu way. birthday, by

Thank you.

what remind leverage? are us not M&A? Madhu, after the might again leverage for or how target up can So $X you thoughts your billion, high take future pay you you down on

right? pretty where back come we will small we're under I'll being X around the with on answer M&A, said So I question Yes, absolutely. cloud, targeting respect think do for X-ish. Perhaps we to sizes, the right, medium imminently, what ARR to to

but to saw Our buybacks, when allocation XX% really we and M&A you -- the is the M&A. program, refer the as capital bucket primary, remainder, second is dividend the

I Xx. I flows, around moment, debt, think billion the of to cash at $X.X think around remain the our we So expect to acquisitions own the the the being strategy with small mid,

$X.X And small-to future, the contribute mid-cloud billion billion around also That to those free assets going about growth in target I'd is to the to cash $X.X the our of is to right? the strategy last flow thing say again M&A for contributing is 'XX. fiscal

point again, and So this M&A terms annual we're seeing leverage. in at of that's it how

transition is of a to that neutral agreements clarification. margins? services just And related AMC, The point Great. to

is that point. Yes, neutral to this at mean, Yes. margins, I

then And Mark. maybe Great. for Okay. finally, one

stabilizing of that it's of the outside returning terms How to like done are AMC Micro just that Just in seems how the it organic XX-Q need be Focus, on commentary to disclosure, in much may close but there in of growth? business, work to terms regard? based you

Yes.

acquisition, best the since Thanks, on in right? great. which was Sounds side, Focus Micro Micro this to expect again the is organic return the and the in rate XXs renewal be Yes, XXs question. for high QX, And well to doing and Thanos, this the we also thanks in we're high great year. Focus quarter, news. we'll our growth extremely

operations X the management, digital now security, of focused the And on big service and there of are which businesses, right, mainframe, are focused -- divestiture which ITOM, big course, businesses and X developer the is with there. right, the we're we're the on

Scotiabank. comes question Kevin from of next The Krishnaratne

XX%. a for couple the ones rates cloud I smaller down Just of that inched noticed me. deck renewal XX% in the from

And in does ramp Just there. wondering QX? back what that up happened

does I one. the take impact publish I'm downsells. for just to rate that of include renewal upsells not a thanks going want we of cancellation only. note question. to net gross Kevin, cloud measure the the actually that It Yes. is or

those multibillion-dollar cloud report of companies, the industry, Now upsells scale. the you our which when and a off-cloud, peers are the downsells. look like in includes effect across They larger more

it report cloud, we report QX. XXs way, our that would the in we if this way So in high don't and we in be

to it today. So of us is -- to expect kind don't industry. a it's which kicking just make align can just you F rate, gross the 'XX that is want we off This it cancellation

the effects, downsells. and or need upsells minus, of plus You

does. that like the that So high in We XXs. be report we'd we it the industry that reports industry report way, off-cloud if But way on way.

those So metrics we'll continue we're align to to the new starting going to way. insights and share in 'XX, along

One, of questions. just to related mix know divestiture. AMC for terms the can the of us Okay. Good one that growth they what 'XX. remind on that for helpful. super versus the come couple at is that And down. That's When the in support? Maybe the is growth, some guidance other customer look of I license license you I customer have updated stuff. AMC support you and just a of the is

typically your terms just what falls looking excluding at AMC. ability if changes I'm at any business, you is is your to for your just the higher you're looking in there there of the status bookings the excluding today that at everything number of wondering views the on second, land looking QX? on revenue business QX versus AMC, in business then And of -- license were health quo when of sort the just of the

Yes.

first one AMC the revenue. still this perspective and PS is small, AMC shared license small components before, cloud predominantly We've so is from or an support. customer take I'll it's the So very X and of on

mix, the what's -- support? it Is it. customer though, license between the and Got

in customer license believe. and shared support, I it Between filing, XXX just I'm our sure I'm we've -- is not that. so

look -- can see can you certainly take you that. So a at

We can offline. up follow

Yes. Yes. can offline. And actually we

it's So license small customer and predominantly X very and cloud PS. support given

Yes. presume license. than that larger supports I

as And are the the second second think QX, license on terms larger I business what The than yes. be your in as support question? far we piece would of that assuming your license, is goes,

it. that's Yes, Correct. Yes.

Yes.

Mark, So you...

No. I'm go. sorry,

Yes.

OpenText Micro we've behaving regional as they plan, months cetera, a had of Focus quite actually integration, completely So the year-end, ago the when If of QX look, right? license and at from look sort part XX synergized et about end, a both perspective, compensation similarly, all quarter of you focus, are the different that.

So there. I we are believe

focus and and Micro general So consistent. course, be for expect ex business for our of the now OpenText strength quite AMC to Focus

on are X. year the our our security to end Yes. of to the kickoff developer and mother fiscal units, aligned OpenText, ITOM the mean So they're cadence July I business and ship will right? at be well well aligned

comes question Stephanie of CIBC. The from next Price

Happy birthday, Madhu.

Thank you, Stephanie.

Micro was a I little outlook? the EBITDA talk could think about margin on how should Focus Have the surprises been you Micro process? bit adjusted fiscal the hoping the we quantify in the cost about 'XX And realization. savings there integration any

Yes.

it's gone expected did So well. actually it's, plan. from we diligence we perspective, when a it's the supply gone we when very would say and as formulated And the I

reducing is operating churn Now Focus, from impacted, EBITDA mentioned, returning us organic OpenText I Again, Focus Micro is much the an model growth. Micro on EBITDA on by being perspective. very as track, obviously, and the the to adjusted

we other, design we've expense pretty AI operating that, plan, would much an from or OpenText, I comments our But hit continue to standpoint, facilities just vendors earlier it's or excellence, the beyond very target. their we'll about the been pure Micro it's applying Mark's one Focus internally, optimize, much whether on or to say environment. But whether

Madhu, just here. services about to think cloud on takes. for be And the up of ticking and seems then line. you, should It we how the Wondering cost one another Okay. maybe puts

was -- Yes. to really is driven certainly, environment second quarter XX% cost our the bookings speak as said, can more perspective. cloud from I'll over quarter. the point third an Absolutely. the the Look, growth in platform side XX%. in I And Mark it's and we chime strong and second data Again, by mean,

our healthy this that keep prior X to there point, to quarters, up data the in strong the cloud very X continue upped second ranges invest. are If we that and to partners with is well, primarily to but investments, And we've our you a investments are take hyperscalers. as future with investments do need growth, internal realizing was and infrastructure momentum, and the we

to ramp cloud certifications, cost. compliance to calls happy is of our investments. business is a earlier And a fair in that just require of do a has growing amount amount does that there past, Mark the And we including but for of and about certain so, but in security have do the the outlined there list and

function question Maybe 'XX, investment. we so higher one fiscal look These investments comment. about will add linear optimize are when benefit other was not in There investments, themselves certainly So scale at an have a step 'XX. at right? these are that earlier we they margins I'll

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

good. Well, let for thank me joining Very today. everyone us

today. us. excited of see, you happy joining our can and we're front about call. all As extremely AI And That cloud you path birthday, in ends Madhu, for and today's thank us

concludes call. conference This today's

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