Open Text Corp. Q4 FY2025 earnings call

Key Points - Completed a material divestiture of the mainframe business. - Titanium X had its first full quarter in the market. - Fiscal '25 ended with strong performance: total revenues $1.31 billion, organic growth excluding certain impacts. - Cloud bookings surged to $238 million in Q4 with 32% YOY growth. - Had amazing cloud wins across various industries in Q4. - Priorities include expanding competitive advantage through business AI, cloud, and security; delivering total revenue growth; and upper-quartile operating excellence. - Business optimization has accelerated margin opportunity. - MyAviator to bring business AI to every end user. - New partnerships with SAP, Microsoft, HPE, etc., to drive growth.

For fiscal '25, total revenues were $5.17 billion. Cloud revenues were $1.86 billion, up 2%. Cloud bookings in Q4 were $238 million, a 32% year-over-year growth. By business area within cloud revenues: cybersecurity was 30%, BN was 30%, content was 25%, OSM and DevOps was 10%, and others made up 5%. Content, OSM, and DevOps each grew faster than 10% year-over-year. BN remained constant, and cybersecurity had negative 4% growth in cloud revenues.

Fiscal '26 Outlook - Total revenue growth of 1% to 2% and growth in constant currency. - Total cloud revenue growth of 3% to 4%. - New cloud bookings growth of 12% to 16%. - Adjusted EBITDA margin growth of 50 to 100 bps. - Free cash flow growth of 17% to 20%. - Plan to grow annual dividend by 5% and purchase and retire $300 million of stock. - ARR to return to growth in '26. - Maintenance decline expected to be 2% in '26, with ARR expected to return to growth in '27. - AI, SaaS, and security well positioned to contribute more to revenues, with security expected to be a positive contributor this year.

Risks - Geopolitical forces and trade and tariff turmoil in the markets. - Macro unpredictability which could impact actual results differing from forward-looking statements.

Q: Thanks for all the clarity in the presentation. What are you seeing from end demand, customer behavior, etc., given uncertainties and break it down by region?

A: We are seeing a strong trend towards sovereign cloud, engaged in multiple regions for sovereign deployments. Customers also looking to take more control to deploy on-premise. Some supply chain customers on BN taking longer to decide, but overall net positive.

Q: With respect to the fiscal '26 growth numbers, how much of that is already visible in your RPO?

A: Cloud current RPO in fiscal '26 is roughly 60% of revenues, with strong visibility from pipeline up 30% and expansion capabilities.

Q: Just the comments on the pipeline growth both for cloud and license. What's changed now that that's fundamentally driving the improvement?

A: Titanium X had its first full quarter in the market, driving surge in bookings and pipeline expansion. Sales force, partners adept at converting Titanium X into value through business cases in the macroeconomic climate.