Open Text Corp 2026 Q4 Earnings Call

Please go ahead. Thank you operator, good morning, everyone.

Welcome to Open Text fourth quarter fiscal 2026 earnings call. With me on the call today are Open Text Chief Executive Officer, Ayman Antoun, and Steve Rai, Executive Vice President and Chief Financial Officer. Today's call is being webcast and recorded with replay available shortly thereafter on the Open Text Investor Relations website. That's investors.opentext.com. Earlier today, we posted our press release and investor presentation online. These materials will supplement our prepared remarks and can be accessed on the Open Text Investor Relations website. Please see our investor presentation for further details of our core and non-core revenues by product category. Turning to upcoming investor events.

Open Text will be participating in the Oppenheimer Technology Conference on August 12th, the Deutsche Bank Technology Conference in Los Angeles on August 26th, Citibank Global TMT Conference in New York on September 10th, and the Bank of Montreal TMT Conference in Toronto on September 15th. We look forward to meeting with you there. On to the reading of our safe harbor statement. During this call, we'll be making forward-looking statements related to the future performance of Open Text. These statements are based on current expectations, assumptions, and other material factors that are subject to risks and uncertainties, and actual results could differ materially from the forward-looking statements made today.

Additional information about the material factors that could cause actual results to differ materially from such forward-looking statements, as well as the risk factors that may impact future performance results of Open Text are contained in Open Text recent forms 10-K and 10-Q, as well as in our press release that was distributed earlier today, all of which may be found on our website. We undertake no obligation to update these forward-looking statements unless required to do so by law. In addition, our conference call may include discussions of certain non-GAAP financial measures. Reconciliations of any non-GAAP financial measures to their most directly comparable GAAP measures may be found within our public filings and other materials which are available on our website. With that, I'll hand the call over to Ayman.

Good morning, everyone, and thank you for being here today. For Q4 fiscal year 2026, we delivered balanced year-over-year growth in constant currency. Our top line revenue grew 1%, our core portfolio grew 3%, cloud revenue in our core portfolio grew 9%, and our adjusted EBITDA margin was 37.1%. Our CFO, Steve Rai, will take you through our Q4 and full year 2026 results and our fiscal 2027 outlook shortly. Fiscal 2027 is a foundation year for us, centered on ruthless prioritization and focus, disciplined execution, core growth in constant currency, and putting in place the foundation for enhanced performance for years to come. When I joined you last quarter, I was just days into my role as CEO of this iconic Canadian technology company. On day one, I set out clear priorities around listen, learn, assess, and act. Today, I have three updates I'd like to share with you.

First, the feedback I heard from our stakeholders. Second, the enterprise assessment work we launched as a result of stakeholder feedback. Third, the early actions and disciplined capital allocation we're executing to drive consistent, sustained performance now and for the future. Finally, before I close, I will highlight examples of the value we are delivering with AI for our clients. Before I cover these updates, I want to pause on an important theme that stands out. Every client, partner, and shareholder meeting I had over the last few weeks came back to AI and the promise AI holds for every enterprise in every industry. What clients told me was clear: governed, secured, and integrated data is fundamental to their AI ambitions because there's no large language model, no AI agent, no application functions without data.

That data needs to be trusted and in context to produce AI outcomes that bring value to an organization. Canadian in our roots, global in our reach, OpenText is the secure data foundation in the AI stack. Simply put, our portfolio of data management solutions is the difference between AI that is trusted and AI that is not. Enterprise-grade data is our differentiator. We're built for this moment in AI and for the future. Now let me start with feedback from our stakeholders. I will start with our North Star, our clients. They value our team, our solutions, and our partnership with them. In many cases, these partnerships span 15, 20, 25 years. They want a more integrated OpenText, one that moves with speed and brings them innovation with purpose. Our ecosystem partners, they want more joint engagements.

They see our differentiated value and want to scale with us. They want to pair our trusted data foundation for AI with their technology and services to capture more of the estimated $300 billion addressable market opportunity. Our OpenText colleagues, they want what I want: more speed and simplicity so we get more done and show up better for our clients. Our investors, they want us to be more focused, play to our strengths, and deliver consistent revenue growth with a consistent set of KPIs to measure our progress. This invaluable feedback is already shaping how we operate. Now let me show you how. With the direct feedback from our clients, investors, partners, and colleagues, we launched an end-to-end enterprise assessment that assesses the end-to-end part of everything that we do.

In particular, that enterprise assessment is to focus on two things: identify early actions to drive growth now and to lay the foundation for enhanced and consistent growth for years to come. The assessment work is focused on the following areas: go-to-market, how we show up in front of our clients, and I will share with you more on this shortly. It covers our portfolio composition, differentiation, and our development process. Marketing and demand generation engine. It's looking at our execution model, decision rights to ensure that we are operating with discipline, accountability, simplicity, and speed. It also covers our talent and culture, which brings all of this to life. This work is being led as we speak by our senior leadership team. Its output will define our multi-year growth plan and the financial model that creates and sustains shareholder value.

As the assessment continues, we are not waiting to make changes that drive growth now. Next, I will walk you through the actions we are taking. First, we're investing in sales capacity. We are adding more than 300 new quota-carrying sales colleagues worldwide, with clients backed by one dedicated client executive who owns the relationship and makes it easier to do business across our portfolio. Second, we're investing in our ecosystem partners to expand our market reach. We're privileged to partner with the world's leading global and regional system integrators, hyperscalers, and vertical ISVs like SAP. Together, we're now focused on effective cross-selling and enablement to bring clients enhanced offerings. We are injecting our winning partner ecosystem directly into our go-to-market model this year, partner-led market segments.

Third, we are empowering the team closest to the clients with clear decision rights so they can move with speed and simplicity to cross-sell our portfolio. Next, to continue the momentum of growth, we will be shifting more of our R&D investment into our core portfolio, cloud capabilities, and AI offerings. Finally, as I said on our first call together, capital discipline is a commitment we hold ourselves to. In Q4, we made an additional debt payment of $300 million from our net cash for a total of $649 million total debt paid in fiscal 2026. These early actions, with more to come this year, will make fiscal 2027 a foundation year for us to deliver growth in constant currency. The enterprise assessment concludes in a few months, and I look forward to sharing its outcome with you, our multi-year strategic plan in early calendar year 2027.

This brings me to my final update, how we empower our clients with enterprise-grade data for AI. In the end, this is all about our clients' success. They're moving from experimenting with AI to implementing AI at scale. Aviator is our Open Text AI platform available across our portfolio. Aviator agents turn secure, trusted data into AI outcomes you can trust. Since Aviator agents were introduced only eight quarters ago, the number of deals where Aviator agents are integrated have more than doubled annually. When Aviator agents are included in our clients' deals, our deal size is four times larger. The proof is in our clients' success stories. Let me share a few. Let's start with Content Cloud, the system where a company's knowledge lives and gets put to work.

At one of the world's largest technology firms, Aviator agents turn millions of HR records into instant conversational self-service while keeping every record governed, compliant, and trusted. Next, cybersecurity, the system that protects a company's data and keeps it running. At one of the world's leading telecom companies, where connectivity and security are the lifeblood of the business, Aviator agents work inside network and data operations, helping teams find and fix vulnerabilities, cutting mean time to repair during an outage from one day to one hour. Next, Business Network, which moves transactions and data between companies. A third of Fortune 500 banks globally use Open Text Business Network. Overall, we process over $11 trillion in network commerce each year. When their corporate clients need to pay vendors and run payroll, our Business Network, Trading Grid, sits in the middle and makes it work, so payments flow reliably whatever the source.