Open Text Corporation Q1 FY2026 earnings call

• Upcoming investor events: Open Text World 2025 Investor Track, Needham Tech Conference, TD Technology, Media & Telecom Conference, etc.
• Q1 results momentum: Continued growth from cloud revenues, led by Content product category and margin expansion.
• Cloud performance: Q1 cloud revenue $485 million, up 6% YOY; Cloud cRPO up 6% YOY, long-term cloud RPO up 16% YOY, total cloud RPO up 11% YOY; enterprise cloud bookings up 20% YOY in Q1.
• Content business: Largest business at ~40% of total revenue, grew 21% YOY in Cloud; driven by financial services, energy, utilities, telecom, retail, automotive, and manufacturing verticals.
• Cybersecurity business: Grew this quarter due to sizable wins; product offerings recognized by industry experts.
• Upcoming event: Open Text World event in Nashville from November 17 to 20, showcasing latest product innovations including Aviator and agentic AI solutions.
• Fiscal '26 outlook: Not changing annual outlook; Q2 total revenue expected between $1.275 billion and $1.295 billion, adjusted EBITDA margin between 35.5% and 36%; strength in Content business going forward with Q4 expected to be strong.
• Strategic focus: Returning to historical roots as a content management company with additional products in business networks and machine management, wrapped in an enterprise-class security layer; focus on agentic AI with access to data behind firewalls.

Total revenues for the quarter were $1.3 billion, up 1.5% year-over-year. Cloud revenues were $485 million, up 6% year-over-year, led by the Content product category which makes up approximately 40% of the overall business and grew 21% year-over-year in Cloud. Customer support revenues were $587 million, down 1.5% year-over-year. ARR was $1.1 billion, up 1.8% year-over-year, and 83.2% of total revenues.

• Not changing fiscal '26 annual outlook.
• Q2 total revenue expected to be between $1.275 billion and $1.295 billion, adjusted EBITDA margin between 35.5% and 36%.
• Strength in Content business going forward; Q4 expected to be strong; momentum from new product cycle expected in latter part of fiscal '26 and beyond.
• ARR expected to return to growth in fiscal '26 with Cloud growth outpacing maintenance declines, customer support revenue on track to meet fiscal '26 annual outlook.

Q: Richard Tse asked about Open Text's competitive edge and Content business growth.

A: Paul Jenkins said competitive edge built over 35 years with hundreds of data connectors; Content business growth due to customers curating content for AI readiness.

Q: Kevin Krishnaratne asked about relevance of data from different time periods for agentic AI training.

A: Paul Jenkins said you can't go far enough back as looking for patterns includes anomalies, so more data is better.

Q: Kevin Krishnaratne asked about Q2 revenue guide drivers.

A: Steve Rai said focus on content growth and business optimization initiatives; Richard Tse added mix of revenue affected by cloud adoption pace.

Q: Stephanie Price asked about EBITDA growth in H2.

A: Steve Rai said driven by portfolio reshaping and business optimization initiatives with $0.5 billion run rate improvement.

Q: Stephanie Price asked about divestitures cadence.

A: Paul Jenkins said will do one per quarter methodically, done within next year.

Q: George Kurosawa asked about Steve Rai's approach to divestitures.

A: Steve Rai said core business is largest and fastest-growing, good position to capitalize on AI market.

Q: Billy Fitzsimmons asked about Content Cloud growth breakdown.

A: Christopher McGourlay said joint effort with customers, no short-term tailwinds incentivizing cloud move.

Q: Steve Rai asked about initial priorities as CFO.

A: Steve Rai said focusing on understanding customer priorities, products, and strategic initiatives.

Q: Stephen Machielsen asked about ITOM revenue stabilization and Q2 license decline.

A: Christopher McGourlay said ITOM stabilization TBD but progressing; Paul Jenkins said revenue mix reflects customer cloud adoption choice.

Q: Seth Gilbert asked about Q2 revenue guidance modeling and revenue mix impact on margins.

A: Steve Rai said watch RPO for long-term impact; Paul Jenkins said will maintain margins regardless of revenue mix