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Image source: The Motley Fool. Thursday, Aug. 6, 2026 at 8:00 a.m. ET Head of Investor Relations - Greg Secord Chief Executive Officer - Ayman Antoun Executive Vice President and Chief Financial Officer - Steve Rai Operator: Thank you for standing by. This is the conference operator. Welcome to the Open Text Corporation Fourth Quarter Fiscal 2026 Financial Results Conference Call. [Operator Instructions] And the conference is being recorded. [Operator Instructions] I would now like to turn the conference over to Greg Secord, Head of Investor Relations. Please go ahead. Greg Secord: Thank you, operator, and good morning, everyone. Welcome to Open Text's Fourth Quarter Fiscal 2026 Earnings Call. With me on the call today are Open Text's Chief Executive Officer, Ayman Antoun; and Steve Rai, Executive Vice President and Chief Financial Officer. Today's call is being webcast and recorded with a 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 noncore revenues by product category. Now turning to upcoming investor events. Open Text will be participating in the Oppenheimer Technology Conference on August 12, the Deutsche Bank Technology Conference in Los Angeles on August 26; Citibank Global TMT Conference in New York on September 10; and the Bank of Montreal TMT Conference in Toronto on September 15. We look forward to meeting with you there. And now on to the reading of our safe harbor statement. During this call, we will 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's 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. And with that, I'll hand the call over to Ayman. Ayman Antoun: 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. And 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 is no large language model, no AI agent, no application functions without data. And 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, Open Text is a 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. And 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 Open Text, 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 Open Text colleagues, they want what I want, more speed and simplicity, so we get more done and show up better for our clients. And 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. I covered 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. And 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. This output will define our multiyear 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 the 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. And 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 multiyear 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 client 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 8 quarters ago, the number of deals where Aviator agents are integrated have more than doubled annually. And when Aviator agents are included in our clients' deals, our deal size is 4x larger. The proof is in our client 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, a 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. And Aviator is built into Trading Grid, surfacing the right answers on demand, flagging risks before they become failures and resolving issues in real time. And finally, Application Delivery Management, what we call ADM, the system that helps teams build, test and deliver quality software faster. At a major health care provider, Aviator agents are in their words an easy button. ADM automated testing, cutting mobile test effort by 35% with faster releases and more efficient product development cycles. And we see growing demand across retail, banking, health care, oil and gas and logistics, where clients are coming to us to embed Aviator agents into their workflows. I have never been more confident in where we are headed. I will now hand it over to our CFO, Steve Rai, who will take you through our Q4 and full year 2026 results and our fiscal year 2027 outlook. Thank you. Steve Rai: Thank you, Ayman. Good morning, everyone, and thank you for joining us today. We are pleased to have delivered a solid finish to fiscal '26. The performance of our core business reflects the critical role that we play helping organizations unlock the value of their data as they advance AI initiatives. Our results underscore the strength of our operating model, which continues to perform consistently across market environments. Supported by a large, diversified and highly recurring enterprise client base, we benefit from a foundation that provides both stability and visibility. This strength translates into healthy profit and strong cash flow generation, giving us flexibility to invest in innovation and growth opportunities while maintaining a robust balance sheet. Our balanced approach to capital allocation continues to support sustainable value creation while returning capital to shareholders and positions us well for the future. Now to Q4 and full year fiscal '26 results. Starting with revenues. In Q4, we had a strong performance in the cloud, driven by contribution from AI. Total revenues of $1.35 billion were up 2.9% year-over-year or up 0.9% in constant currency terms. Total revenue for our core portfolio was $1.05 billion, up 5.3% year-over-year or up 3.1% in constant currency. Total cloud revenue was $503 million, up 6.0% or up 4.3% in constant currency. Cloud revenue for our core portfolio was $341 million, up 10.7% or 8.9% in constant currency. Just a reminder that our core business includes Content, Business Network or BN, IT Operations Management or ITOM and cybersecurity enterprise product categories. Q4 represents our 22nd consecutive quarter of organic cloud growth. We closed 64 cloud deals greater than $1 million in the quarter, an increase of 49% year-over-year. The growth was driven by our core content and BN categories, and many of these cloud deals included Aviator. For additional detail on product category performance, including core and noncore breakdowns, please see our Investor Relations material. Customer support revenue in the quarter was $554 million, down 4.6% year-over-year. As a reminder, this includes the impact from our divested eDOCS and Vertica businesses. Annual recurring revenue, or ARR, was $1.06 billion, up 0.2% and representing 78.3% of our total revenue. Turning to bookings. Enterprise cloud bookings were $295 million in Q4, up 24.1% year-over-year and above our fiscal '26 target range of 16% to 20%. Q4 total RPO is up 7% year-over-year. Total CRPO is up 1% year-over-year, of which cloud CRPO is up 10%, partially offset by customer support and other CRPO by 6% year-over-year. The year-over-year increase in cloud CRPO was mainly due to strong bookings in Content and BN, partially offset by cyber, SMB and C. The decline in customer support and other CRPO would include the impact from our divested eDOCS and Vertica businesses. As we look ahead, we are streamlining our bookings-related disclosures. Given our reporting of cloud CRPO and total RPO, both widely recognized indicators of future revenue and demand, we will no longer report enterprise cloud bookings as a stand-alone metric starting in Q1 of fiscal '27. This change reflects our commitment to providing investors with the most relevant information while simplifying our disclosure framework and improving consistency with broader industry practice. On profitability, GAAP gross margin was 75.0%, up 270 basis points year-over-year, and non-GAAP gross margin was 78.3%, up 220 basis points. The increase year-over-year reflects the continued improvement of cloud gross margin, mainly related to lower hyperscaler costs and infrastructure performance improvements. GAAP net income was $156 million, up 439.9% year-over-year. Non-GAAP net income was $299 million, up 19.7% year-over-year. GAAP diluted EPS was $0.64, up 481.8% year-over-year. Non-GAAP diluted EPS was $1.23, up 26.8%. The increase in GAAP net income and diluted EPS was primarily due to higher profit, unrealized derivative gains, FX and gain on sale from divestitures. Operating cash flow for the quarter was $186 million, up 17.5% year-over-year, helped by the strong quarterly performance and ongoing streamlining of the business. Free cash flow was $122 million, down 1.6% and relatively consistent year-over-year. For the full fiscal year '26, total revenues were $5.2 billion, up 1.5% year-over-year or down 1.1% in constant currency terms. Total revenue for our core portfolio was $4.0 billion, up 2.9% year-over-year and consistent in constant currency terms. Cloud revenue growth continues to drive the business with total cloud revenue of $2.0 billion, up 5.5% or up 3.4% in constant currency. Cloud revenue for our core portfolio was $1.3 billion, up 10.3% year-over-year or 7.8% year-over-year in constant currency. On a reported basis, customer support revenue was down 2.0%. License revenue was up 8.4% and professional services and other revenue was down 8.6%. As a reminder, the year-over-year compare for our on-prem business reflects the impact from our divested eDOCS and Vertica businesses. On net renewal rates, our cloud net renewal rate was 94%, down 180 basis points year-over-year and in line with historical levels. Our customer support net renewal rate was 93%, up from 91% year-over-year and also consistent with historical levels. On profitability and cash flow, GAAP operating margin was 20.6%, up 340 basis points. Adjusted EBITDA margin was 36.3%, up 170 basis points. The increase was mainly due to continued streamlining of operations, including the business optimization plan and FX. GAAP diluted EPS was $2.58, up 56.4%. Non-GAAP diluted EPS was $4.42, up 15.7%. Operating cash flow was $1.0 billion, up 21.2% and free cash flow was $808 million, up 17.5% year-over-year. Fiscal '26 free cash flow, while strong, came in approximately $31 million below our fiscal '26 outlook, mainly due to collections timing near the year-end cutoff. As we enter fiscal '27, which is an important foundation year for our next phase of growth, as Ayman laid out, we provide the following outlook ranges. On a reported basis, we expect total revenues to be $5.135 billion to $5.185 billion or negative 2% to negative 1%, inclusive of an approximate $30 million foreign currency headwind at current rates. Total revenue growth is expected to be 0% to 1% in constant currency terms, excluding divestitures. Total core revenue growth is expected to be positive 2% to 3% in constant currency terms. We expect each of our four core businesses to grow in fiscal '27 in constant currency. Again, at current rates, approximately $25 million of the $30 million FX headwind relates to core revenue. Core cloud revenue growth is expected to continue its momentum at 8% to 10% in constant currency terms. We expect an approximate $5 million FX headwind on core cloud revenue. Adjusted EBITDA margin is expected to be in the range of 32% to 33%. As Ayman mentioned earlier, we are taking early actions to drive growth, and this includes increasing sales capacity, investing in our partner ecosystem to expand market reach and shifting more R&D investment into our core portfolio, cloud capabilities and AI offerings. These investments are estimated in the $100 million to $200 million range and are weighted towards our go-to-market initiatives and moderate our adjusted EBITDA margin range for the fiscal year '27. Free cash flow is expected to be in the range of $625 million to $725 million. This factors in our growth investment plan, expectations around CapEx and working capital items, including tax payments and, of course, the natural impact of the divestiture of our profitable eDOCS and Vertica businesses in fiscal '26. Turning to our outlook for Q1 fiscal '27. We expect total revenue to be in the range of $1.22 billion to $1.25 billion and an adjusted EBITDA margin range of 32% to 33%. The targets I've outlined do not reflect the impact of any potential future divestitures and therefore, may be revised accordingly. We continue to see growing cloud adoption as clients prepare their data environments for AI. We view this as a long-term tailwind for cloud growth, supporting expansion in both RPO and adjusted EBITDA over time. Turning to our capital allocation strategy. We prioritize across four key areas: debt reduction, organic growth investments, dividend payout and share repurchases. This balanced approach reflects our commitment to strengthening the balance sheet while continuing to innovate for sustainable long-term growth and returning capital to shareholders. We are confident in our ability to meet upcoming debt maturities, supported by the strength of our cash flow generation previously discussed. We have used net proceeds from our recent divestitures to pay down our debt. In Q4, we reduced debt by $459 million, including a $300 million discretionary debt repayment from available liquidity and $150 million net proceeds from divestitures and delivered total debt reduction of $649 million in fiscal '26. Our net leverage ratio has reduced from 3.02x to 2.75x, now in line with our historical target range of 2.5 to 3x. We expect to access the debt markets over the coming quarters to refinance upcoming maturities and optimize our capital structure. In fiscal '26, we returned $268.4 million via dividends and the Board declared a quarterly dividend of $0.28 per share payable on September 18, 2026, to shareholders of record on September 4, 2026. We also repurchased and canceled approximately 14.8 million shares in fiscal '26 or 6% of our common shares outstanding. We have renewed our NCIB for fiscal '27 to repurchase up to 10% of the company's public float as of July 31, 2026. Our divestiture strategy remains active and disciplined. We are not inclined to divest noncore assets at any cost. These businesses continue to generate positive margins and cash flow, and we will remain opportunistic in pursuing transactions with shareholder value in mind. Overall, we are pleased with our fourth quarter and full year performance. As mentioned, looking ahead to fiscal '27, we expect revenue for our core business to grow 2% to 3% on a constant currency basis. We remain confident in our strategic direction and believe we have built a solid foundation to execute on our growth strategies. With that, we conclude our prepared remarks. Operator, please open the line for questions. Operator: [Operator Instructions] Our first question is from Kevin Krishnaratne with Scotiabank. Kevin Krishnaratne: I wanted to talk about the core growth expectations for '27. You laid out 2% to 3%. Wondering if you could kind of unpack thoughts across the various segments, in particular, your content was up 1% last year. Does that continue to move higher? And then in particular, the strategies that you have in place for the ITOM and the cyber businesses, which were down 3% last year. Just would love your thoughts. Ayman Antoun: Kevin, thank you for the question. It's Ayman. Let me just start and Steve can join. It's very important for us that each category of core growth, and that's the commitment that we have and the outlook that we have as well. We today feel that content as a subset of core will be in a faster growth trajectory than the total of core. And we expect cyber and ITOM to also grow in FY '27. And part of it is the way that you've heard Steve say it, we're redirecting more of our R&D dollars towards the category of core. It's not going to be a peanut butter approach across all four categories, but cyber will be one of the components of core that will get an injection of some of the reallocation. In addition to the way we're going to reallocate is being very precise around infusing more AI capabilities in each of the core categories and accelerating the cloud versions of each one of those categories as well. Kevin Krishnaratne: Okay. Maybe related to that on the growth initiatives, I think, Steve, you talked about the investments and skewing more towards go-to-market. Maybe to make it easier, just in the model, last year, your R&D percentage of revenue is around 12%, sales and marketing, 21%. Can you maybe help us for modeling purposes, understand where those should land for '27? Steve Rai: Yes. Good question. I think the -- as Ayman said and as I said in our prepared remarks, I mean, obviously, the focus is on the go-to-market side, which adding sales capacity. So coming down to the percentages there, obviously, there's some puts and takes with R&D. I mean there is going to be some reallocation between the categories that we've got. But overall, I'd model that consistently with fiscal '26. And sales and marketing, I'd probably pick up a point or 2. Operator: The next question is from Doug Taylor with National Bank. Analyst Doug Taylor: A couple of more questions on your guidance here, the reinvestments you're making into your go-to-market motions, both direct and indirect. I think you talked to 300 new reps. Can you talk about the time horizon you'd expect to complete that investment? And then moving on from that, how much you expect these to mature within this fiscal year? And how much of the benefit from that is factored into your growth guidance? Ayman Antoun: Doug, another very important question. So our expectation and the hiring engine started earlier than the beginning of this quarter is by the end of fiscal quarter FY '27, I expect our sales capacity to be at the levels that we want it to be for the full year. And of course, that will ramp up, and we have very precise programs around sales enablement to accelerate the sellers' ability. We know exactly which clients we would assign them to. So a lot of the groundwork is done so that as soon as everybody is in the seat, they can hit the ground running. We have factored that time line and their capacity into the guidance that we give for core. And of course, part of that is they become part of the baseline as we get into beyond FY '27. Analyst Doug Taylor: Okay. Next question for me you've got some materials in your slide deck about the migration from legacy to cloud. To what degree is that -- is your growth guidance here predicated on migration of some of your existing business to cloud versus net new business? Perhaps you can wrap some numbers or thoughts around that qualitatively or quantitatively. Steve Rai: Maybe I'll start there. We -- so we're in early stages of that. Now obviously, there's some very positive signs and markers that we indicated. Obviously, you start to see this in our build in the Content Cloud CRPO numbers. I mean, up 10% current, 15% long term in terms of the cloud piece of it and the traction in the deals greater than $1 million and all that. So we've got -- we'll try to get more specific on that, but it's a little early in terms of the modeling. But probably look forward to some more specificity early next year with respect to kind of the broader topic of cloud migration and how that's tracking in the longer-term modeling around it. Analyst Doug Taylor: Is it fair to say that you're your growth for cloud is a balance of that migration and net customer growth? I mean I'm just trying to unpack that a bit more. Ayman Antoun: Yes, Doug, it's Ayman. I think what is encouraging for us. So first of all, if you just let me back up for one second, one of the continuous feedback I get from clients, and I had the privilege of meeting with 63 individual clients since I got in the seat is they like the fact that we allow them choice, choice of acquiring on-prem or cloud and choice of what cloud, whether it's public or private. But to give you just statistics of what we have seen happen in FY '26, which I believe will continue in FY '27 is 92% of our cloud bookings were new clients going to the cloud as opposed to base converting to the cloud. That's not to say the existing base doesn't have a desire, but we kind of like the mix that 92% of our cloud bookings are coming from new engagements, if you will. Operator: The next question is from Sagar Karri with BMO Capital Markets. Sagar Karri: This is Sagar on behalf of Thanos. So I just had a question on divestitures. So with respect to divestitures, something that you continue to actively explore with interested parties. Has that discussion continued? Or have those discussions been paused for the time being given current market conditions? Steve Rai: Thanks for the question. That absolutely continues. We've got an active process and engagements related to that. Obviously, given market dynamics, as we've said before, we're not going to fire sale anything. We want to get a fair and reasonable price is the right thing to do as custodians of these assets and for shareholder returns. So -- but in the meantime, just a reminder, I mean, these are good businesses. They're profitable businesses and generating profit and good cash along the way. So we're being methodical about it. Operator: The next question is from Stephanie Price with CIBC. Stephanie Price: Wondering if we could circle back on kind of the investment. So $100 million to $200 million is a pretty large investment for Open Text. Just curious if you can give any further details about how to think about it between R&D and sales capacity and partner. In answer to one of the prior questions, it sounds like R&D is still expected to be at 12% of revenue. So just any additional breakdown you can kind of give there, any color? Ayman Antoun: Stephanie, thank you for the question. The investment in capacity, I would put it in two categories, which is a significant part, at least in the FY '27 modeling, a significant part of the overall investment. It's adding face-to-face sales capacity in front of the clients, over 300 more sellers that carry a quota. In addition to that, reactivating our ecosystem partner channel, which is a significantly important route to market for us to reach segments that we have not reached on our own. And part of that reactivating is investing in enabling those partners, supporting them with sales plays and having a financial model that's attractive for them to be our partners. And when I say partners, I think of the four categories, the hyperscalers, the global and regional system integrators is the second category, the vertical ISVs like the SAP and -- sorry, the regional system integrators, not just the global ones. So everyone has a different requirement, bring us different value and reactivating that is an important part of our growth strategy going forward, and we felt it's prudent to spend that investment in FY '27 so that we can ramp it up and reap the benefits down the road as well. Stephanie Price: Okay. Okay. That's great color. And then maybe on the free cash flow guidance for '27 and the free cash flow conversion that it kind of implies, how should we think about the puts and takes here? I think there was a comment about divestitures kind of impacting free cash flow in the year. How do you kind of think about free cash flow here? Steve Rai: Yes. Obviously, the growth investments are factored into the range that we've provided. I mean it's fairly significant, as you noted. Now obviously, the timing of it in terms of exactly when that lands, there could be a little bit of variability there. So that's why we've got that range. But it's largely that. The divestitures that I was referring to was the ones that we completed last year. So obviously, we'll have a full year effect in terms of -- on the cash flow, they were profitable businesses, and so they're no longer in the mix, but that's also part of it. Operator: The next question is from Paul Treiber with RBC Capital Markets. Paul Treiber: Ayman, you've run very large sales organizations in the past. Open Text has gone through sales capacity investments in prior years. From your point of view, why perhaps did those investments did not have as much of a payoff as perhaps they should have? And how are you taking a different approach this time? Ayman Antoun: Paul, thank you for the question. It's a really important one because sales capacity not spread properly and surgically, doesn't give you the same returns. So if I were to mention three things that we're working to do materially differently than we have done in the past is, one, where we are allocating that capacity. So we have segmented our market, the client segments that we are focused on into three segments. We used to have a lot more than that. So we are more focused on which clients we want to target. And those are the clients we're putting that investment in, in terms of sales capacity because they're the ones that have given us the feedback that if you are spending time with me, more time with me and bringing me an integrated Open Text, not the brand-by-brand version, but the integrated Open Text, where you're stitching all the products that I acquired from you into a holistic story, you will reap the benefits. So surgically putting the coverage, not a peanut butter approach, but in certain places. Second, we have picked the markets where we believe not only there's an opportunity that we have the right to win, a value proposition that resonates. So we have configured ourselves across -- globally across 16 markets with a market leader for each one of those 16 markets, he or she is accountable for the resource model for the performance of their unit and have all the decision rights in the market. That's another key change. The decision rights to speed what we do for our clients is in the hands of the market leaders. You don't need to phone home, you don't come to headquarters, so to speak. And then the final one I would say that is different than in the past is part of the investment that's going into the ecosystem. That is a place that I have really good experience with when you do it right, it is a significant force multiplier. It takes time and the investment eventually pays off. But I did not feel we had enough investment there. The partners told me that in the last three months where I've spoken to our top 22 partners. So we have listened and acted in terms of investments in resources to support them sales enablement and financial incentives as well. Paul Treiber: That's helpful. Second question, just on renewal rates, specifically in the cloud net renewal rate, it was down on a year-over-year basis, but you mentioned that it was in line with historical trends. Can you just sort of elaborate a bit more on that dynamic? And ideally, where would you prefer net renewal rates to trend to over time? Steve Rai: Yes, I'll start there. Maybe Ayman can add on. Obviously, the historical rates are they are, but being in the low to mid-90s there is pretty good. I think maybe we'll -- with what's happening, we likely, given the trends that we're seeing that, that should, I think, improve to some degree over time because the stickiness and the level of investments that companies are making and the AI deployments really ticking up deals getting larger and longer quite significantly, I think, should positively impact that over time. Operator: The next question is from David Kwan with TD Cowen. David Kwan: I want to get back to the question on the asset divestitures. So could you comment on, I guess, what the environment is looking like right now, particularly as it relates to deal financing? I know I think it was on the last call, you talked about just challenges in terms of potential buyers, particularly financial ones struggling to access credit. I'm wondering to what extent that might have changed since the last call. Steve Rai: Yes. My take on it is that while things are starting to potentially loosen up a little bit, it's by and large, similar, right? You're absolutely right. The debt markets remain pretty tight in the space. But on the other hand, there is a lot of capital on the sidelines waiting to be deployed. So it's that kind of dynamic. And there's obviously a lot of market participants out there looking for -- to take advantage of current valuations and market. So I think it's kind of more of the same, but it should improve given a bit more time. David Kwan: I appreciate the color. And then on the capital allocation strategy, it sounds like it's really more focused on investing for strong organic growth and debt reduction. Is that right? And on a related note, despite kind of where the shares are trading right now, should we expect a slower pace of buybacks this year versus last year given maybe a change in priorities? Ayman Antoun: David, it's Ayman. You called it right. On our Page 21, the capital allocation categories were listed. You should read that as listed based on priorities for us, debt reduction and organic growth investments. But as you heard from Steve in his remarks, we did renew the NCIB process, and it is part of our capital allocation, but we're prioritizing the first two. David Kwan: Appreciate. And just last question for me, and I apologize if this maybe was discussed on the call, I was late jumping on. But I'm curious to get your commentary on prompt token consumption and how that's impacting your business from a cost perspective. Is it having a material impact? And is that -- I assume that's reflected in the margins? Ayman Antoun: Another very important question. It's something that I think the whole industry is dealing with and learning about as we speak. I would say this way, when we started to make that available to our development team, at the beginning, we started to see a ramp-up that was going to get dangerous if we don't put the right governance around it. So very quickly, the team did a really nice job monitoring the early stage of token consumption and who's using it and for what reasons and are we getting the ROI. And very quickly, our Chief Development Officer and our Chief Information Officer partners together and put a very tight but with speed and simplicity governance model around it, and we feel pretty good about how we're managing that going forward. Operator: The next question is from Steve Enders with Citigroup. George Michael Kurosawa: This is George on for Steve. I wanted to ask about this ongoing enterprise assessment. It sounds like pretty sweeping. Clearly, there were some signals that were loud enough to enable you to take some fairly decisive actions before completing that. But just when you think about the range of outcomes, what are some of the areas where you feel like there's the most sort of uncertainty in where you could go strategically following that assessment? Ayman Antoun: George, thank you for the question. So first of all, just to your earlier comment, the way you opened the question, absolutely, the reason that we launched it and the components we included in the assessment was 100% informed by the discussions I had with the 63-plus clients, over 28 of our investors, over 2,500 of my colleagues and close to 22 of our top partners. And these were all one-on-one discussions, not one on many. So there was no group thinking in the feedback I received. And we felt based on when we internalized the feedback, we felt that we have a really, really good opportunity, not just increasing the capacity from a sales point of view, but to do what the clients ask for, coming in a more coordinated fashion. That's why those client executives are the ones that represent the holistic Open Text in front of the client, not brand by brand. We felt the clients that wanted to see more of us, but we didn't have the capacity to get there would be best served by an ecosystem. That's why we put some of our efforts there. But as we were going through and listening, the clients also told us, be fast and proactive. Give me use cases, give me innovation with purpose. I want to see more AI infused in your portfolio. And our sellers said to us, I'd like to get more sales enablement, the ability to not just understand our portfolio, but make it fit in a given client environment through an industry lens. And then we kind of looked at how we're spending our R&D money. And to do that, we felt we needed to understand if we're putting it in the right category, and that was part of the work stream that we launched around the portfolio and the development. So all of it informed by the feedback I received and categorized and prioritized in the set of things that the clients, the partners, the investors and the colleagues that would make the most difference. George Michael Kurosawa: Okay. Great. That's helpful. And then I wanted to ask on the -- maybe the deal environment, not universally, but some of your software colleagues in the market have seen some level of deal elongation. It seems like a lot of AI products require additional levels of approvals. When I look at your Q4 results, it seems like bookings is fairly strong. Is that a dynamic that you all have been seeing out there and executed through? Or if not, what do you feel is allowing you to sidestep some of those headwinds? Ayman Antoun: Yes, that's another really important point that you're raising because as we have seen things happen to the industry segment and players in the segment, that's a topic we pay very close attention to. Throughout the fourth quarter, we have not seen any material slowdown from our client engagements or deal delays that caused us not to get to end of job. And candidly, it takes me back to our core value proposition. There's not a single language model. There's not a single agent. There's not a single application that can function and give the client the output and the outcome they want without data and a data foundation. So -- because of the stage we're in and because of how they're all working hard to translate AI ambitions into reality, it did not cause us in the fourth quarter any visible material delay. Operator: I will now hand the call back over to Mr. Antoun for closing remarks. Ayman Antoun: Thank you very much. I just thought to wrap this up and connect some of the points that you heard from Steve and I and also some of the answers to our questions. We are very pleased with how we closed FY '26 with a strong fourth quarter. It gives us the opportunity to start FY '27, a year that we're calling a foundation year for us that will position us for strength for years to come. I am very confident of the road that we have ahead of us. As you heard from us, FY '27, core revenue projected to grow between 2% to 3%. But just as importantly, every single one of the four categories in core, our cloud revenue will grow between 8% to 10%. We expect our cloud bookings to be significant as well, close to 30-plus percent growth. As you heard me say, 92% of our cloud wins are new cloud business as opposed to base conversion. One of the components that I included in my remarks are the examples around how Aviator is being more and more integrated in our capabilities and in the business that the clients acquire from us where when Aviator is included, the deal size is more than 4x when it is not. You heard about the sales capacity, not just face-to-face in front of the client, but also the investment in activating our ecosystem. And we're doing this while enabling everyone that is in front of the client to have more decision rights so they can act with speed. And as we have deployed our capacity, we're very conscious to make sure that it's providing not just additional capability to the client, but continuity of relationships so that we do not disrupt those relationships that we value and treasure very much. The activation of the ecosystem will be a force multiplier for us over the next number of years. And as you stitch all this together with what we started the call with, who Open Text is, the data and context foundational layer in the AI stack for our clients, a secure, trusted mission-critical layer. That will be our value proposition today and going forward, not only just because of the AI buzz, but because, as I said, no language model, no AI agent and no application would be able to produce the outcomes clients want without trusted, secure, well-governed data. And with that, thank you for everyone for joining us on the call this morning. Operator: This concludes today's conference call. You may disconnect your lines. Thank you for participating, and have a pleasant day. Before you buy stock in Open Text, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Open Text wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $400,209!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $1,375,393!* Now, it’s worth noting Stock Advisor’s total average return is 964% — a market-crushing outperformance compared to 215% for the S&P 500. Don't miss the latest top 10 list, available with Stock Advisor, and join an investing community built by individual investors for individual investors. See the 10 stocks » *Stock Advisor returns as of August 13, 2026. This article is a transcript of this conference call produced for The Motley Fool. While we strive for our Foolish Best, there may be errors, omissions, or inaccuracies in this transcript. As with all our articles, The Motley Fool does not assume any responsibility for your use of this content, and we strongly encourage you to do your own research, including listening to the call yourself and reading the company's SEC filings. Please see our Terms and Conditions for additional details, including our Obligatory Capitalized Disclaimers of Liability. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. Open Text (OTEX) Q4 2026 Earnings Call Transcript was originally published by The Motley Fool

Our analysts just identified a stock with the potential to be the next Nvidia. Tell us how you invest and we'll show you why it's our #1 pick. Tap here. Management is initiating a comprehensive enterprise assessment to drive speed and simplicity, responding to stakeholder feedback requesting a more integrated and focused Open Text. The company is shifting R&D investment specifically toward its core portfolio, cloud capabilities, and AI offerings rather than a 'peanut butter' approach across all segments. Performance in Q4 was bolstered by the 'Aviator' AI platform, which management notes results in deal sizes four times larger when integrated into client solutions. A strategic pivot is underway to empower market leaders with clear decision rights, aiming to eliminate the need to 'phone home' to headquarters for deal approvals. Management attributes core growth to the fundamental necessity of trusted data in the AI stack, positioning Open Text as the essential data foundation for large language models. The company is reactivating its ecosystem partner channel, including hyperscalers and system integrators, to reach market segments previously underserved by direct sales. Fiscal 2027 is defined as a 'foundation year' with an outlook of 2% to 3% core revenue growth in constant currency, assuming all four core business categories will grow. Management plans to invest $100 million to $200 million primarily in go-to-market initiatives, including adding over 300 new quota-carrying sales representatives. Cloud revenue for the core portfolio is projected to maintain momentum with growth expectations of 8% to 10% in constant currency. The company expects to share a multiyear strategic plan and updated financial model in early calendar year 2027 following the conclusion of its enterprise assessment. Adjusted EBITDA margin guidance of 32% to 33% reflects the deliberate impact of front-loaded investments in sales capacity and partner enablement. Open Text reduced total debt by $649 million in fiscal 2026, bringing its net leverage ratio to 2.75x, which is within the historical target range. The company will no longer report 'enterprise cloud bookings' as a standalone metric starting in Q1 FY27, shifting focus to cloud CRPO and total RPO for industry consistency. Management remains opportunistic regarding further non-core asset divestitures but emphasized they will not 'fire sale' assets that currently generate positive margins. A new NCIB has been authorized to repurchase up to 10% of the public float, though debt reduction and organic growth remain the top capital allocation priorities. One stock. Nvidia-level potential. 30M+ investors trust Moby to find it first. Get the pick. Tap here. Management expects both Cyber and ITOM to return to growth in FY27, supported by a precise injection of R&D for AI infusion and cloud migration. Content is expected to remain on a faster growth trajectory than the overall core portfolio average. The hiring of 300+ new sellers is expected to be complete by the end of the first fiscal quarter of 2027. Productivity assumptions for these new hires are already factored into the FY27 core growth guidance of 2% to 3%. Management revealed that 92% of cloud bookings in FY26 came from new client engagements rather than existing base conversions. This indicates significant net-new market capture rather than just shifting the legacy on-premise base to the cloud. Management acknowledged early risks of 'dangerous' token cost ramp-ups but stated they have implemented a tight governance model between the CDO and CIO. Current token consumption is being monitored for ROI, and the company has implemented a governance model to manage these costs going forward.

Interested in Open Text Corporation? Here are five stocks we like better. Q4 performance improved: Revenue rose 2.9% year over year to $1.35 billion, led by 10.7% growth in core cloud revenue. Adjusted EPS increased 26.8% to $1.23, while gross margins expanded on lower hyperscaler costs and infrastructure gains. Fiscal 2027 will prioritize investment over margins: OpenText expects reported revenue to decline 2% to 1%, with core cloud growth of 8% to 10% in constant currency. The company plans to invest $100 million to $200 million in sales capacity, partner channels, cloud and AI, reducing its adjusted EBITDA margin outlook to 32%–33%. AI and balance-sheet priorities are strengthening: Aviator AI deals have more than doubled annually and carry average deal sizes four times larger than non-Aviator deals. OpenText reduced debt by $649 million during fiscal 2026, while continuing dividends, share repurchases and selective non-core divestitures. This Tech ETF Is Beating QQQ—and Canada May Be Part of the Reason Open Text (NASDAQ:OTEX) reported fourth-quarter fiscal 2026 revenue growth in constant currency, led by its core cloud portfolio, while outlining a fiscal 2027 investment plan centered on expanding sales capacity, partner channels and artificial intelligence offerings. For the fourth quarter, total revenue was $1.35 billion, up 2.9% year over year, or 0.9% in constant currency. Core portfolio revenue totaled $1.05 billion, rising 5.3% on a reported basis and 3.1% in constant currency. Core portfolio categories include Content, Business Network, IT operations management and cybersecurity enterprise products. → Meta’s Earnings Drop Shows Wall Street Wants More Than Ad Growth Cloud revenue was $503 million, an increase of 6.0% year over year, while core cloud revenue rose 10.7% to $341 million. On a constant-currency basis, core cloud revenue grew 8.9%. Chief Financial Officer Steve Rai said the company closed 64 cloud deals larger than $1 million during the quarter, a 49% increase from a year earlier. Enterprise cloud bookings rose 24.1% to $295 million, exceeding the company’s fiscal 2026 target range. OpenText reported fourth-quarter GAAP net income of $156 million, up 439.9% from the prior year, and GAAP diluted earnings per share of $0.64, up 481.8%. Non-GAAP net income increased 19.7% to $299 million, while non-GAAP diluted EPS rose 26.8% to $1.23. → 4 Oil and Gas ETF Plays as Prices Stay Sky-High GAAP gross margin expanded 270 basis points to 75.0%, and non-GAAP gross margin increased 220 basis points to 78.3%. Rai attributed the improvement primarily to lower hyperscaler costs and infrastructure performance gains in cloud operations. Quarterly operating cash flow rose 17.5% to $186 million, while free cash flow was $122 million, down 1.6% year over year. → Ulta's Growth Is Real, But So Are the Risks For the full fiscal year, OpenText generated $5.2 billion in total revenue, up 1.5% on a reported basis but down 1.1% in constant currency. Core portfolio revenue was $4.0 billion, up 2.9% as reported and flat in constant currency. Full-year core cloud revenue rose 10.3% to $1.3 billion, or 7.8% in constant currency. Full-year adjusted EBITDA margin was 36.3%, up 170 basis points, while operating cash flow increased 21.2% to $1.0 billion. Free cash flow rose 17.5% to $808 million, though Rai said it finished approximately $31 million below the company’s outlook due mainly to collections timing near the fiscal year-end cutoff. Management described fiscal 2027 as a “foundation year” intended to support more consistent growth in subsequent years. The company expects reported fiscal 2027 revenue of $5.135 billion to $5.185 billion, representing a decline of 2% to 1%, including an estimated $30 million foreign-exchange headwind at current rates. Excluding divestitures, OpenText expects total revenue growth of 0% to 1% in constant currency. Core revenue is projected to grow 2% to 3% in constant currency, with each of its four core businesses expected to grow. Core cloud revenue is expected to increase 8% to 10% in constant currency. Adjusted EBITDA margin is expected to be 32% to 33%. Free cash flow is expected to be $625 million to $725 million. First-quarter fiscal 2027 revenue is projected at $1.22 billion to $1.25 billion, with adjusted EBITDA margin of 32% to 33%. Rai said the lower margin outlook reflects an estimated $100 million to $200 million in growth investments, weighted toward go-to-market initiatives. Chief Executive Officer Ayman Antoun said OpenText is adding more than 300 quota-carrying sales employees globally and assigning clients dedicated client executives intended to represent the company’s broader portfolio. The company also plans to expand work with hyperscalers, global and regional systems integrators, and vertical software partners. Antoun said OpenText is shifting more research-and-development investment toward its core portfolio, cloud capabilities and AI offerings. Rai told analysts that research and development spending should remain broadly consistent as a percentage of revenue with fiscal 2026, while sales and marketing could increase by one to two percentage points. Antoun emphasized that OpenText’s strategy is focused on providing secure, governed and contextualized enterprise data for customers deploying AI. He said the company’s Aviator AI platform is being deployed across its product portfolio and that the number of deals incorporating Aviator agents has more than doubled annually since their introduction eight quarters ago. According to Antoun, deals including Aviator agents have average deal sizes four times larger than deals without the technology. He cited examples across human resources, telecommunications network operations, banking transaction networks and healthcare software testing. Management said 92% of fiscal 2026 cloud bookings came from new customers adopting cloud products rather than existing customers converting to cloud offerings. Rai said cloud current remaining performance obligations increased 10% year over year, supported primarily by Content and Business Network bookings. OpenText will stop reporting enterprise cloud bookings as a standalone metric beginning in the first quarter of fiscal 2027, instead focusing on cloud current remaining performance obligations and total remaining performance obligations. The company reduced debt by $459 million in the fourth quarter, including a $300 million discretionary repayment and $150 million of net divestiture proceeds. Total debt reduction for fiscal 2026 was $649 million, lowering net leverage to 2.75 times from 3.02 times. OpenText returned $268.4 million to shareholders through dividends during fiscal 2026 and repurchased and canceled approximately 14.8 million shares, or 6% of shares outstanding. Its board declared a quarterly dividend of $0.28 per share, payable Sept. 18 to shareholders of record on Sept. 4. Management said it renewed its normal course issuer bid, allowing it to repurchase up to 10% of its public float, but identified debt reduction and organic growth investments as its leading capital-allocation priorities. Rai also said the company remains active in evaluating non-core divestitures, though it does not intend to sell assets at unfavorable prices. Open Text Corporation is a Canadian enterprise information management (EIM) software company that develops solutions for organizations seeking to manage, protect and extract insight from their unstructured and structured data. The company's platform encompasses document management, records management, digital asset management and archiving, enabling companies to govern information across its lifecycle. Open Text's product suite includes content services, business process management, customer experience management, analytics and security products. This instant news alert was generated by narrative science technology and financial data from MarketBeat in order to provide readers with the fastest reporting and unbiased coverage. Please send any questions or comments about this story to [email protected]. The article "Open Text Q4 Earnings Call Highlights" was originally published by MarketBeat. View MarketBeat's top stocks for August 2026.

$1.96B of Cloud Revenues, growth of 5.5% Y/Y Core Revenue* growth of 3% Y/Y Fiscal 2026 Fourth Quarter Highlights (in millions)(1) WATERLOO, ON, Aug. 6, 2026  /PRNewswire/ -- Open Text Corporation (NASDAQ: OTEX), (TSX: OTEX), today announced its financial results for the fourth quarter and year ended June 30, 2026. Fourth Quarter Financial Highlights Y/Y Total revenues: $1.349 billion, +2.9% Y/Y Annual recurring revenues (ARR): $1.057 billion, +0.2% Y/Y Cloud revenues: $503 million, +6.0% Y/Y, 22 consecutive quarters of cloud organic growth Enterprise cloud bookings(2): $295 million, +24.1% Y/Y Operating cash flows: $186 million and free cash flow(3) was $122 million Net income: GAAP $156 million, +439.9% Y/Y, Non-GAAP(3) $299 million, +19.7% Y/Y Adjusted EBITDA(3) of $507 million, margin of 37.6% Diluted earnings per share (EPS): GAAP $0.64, Non-GAAP(3) $1.23 Repurchased $12 million of common shares for cancellation Fiscal 2026 Annual Highlights Y/Y (in millions)(1) Fiscal Year Financial Highlights Y/Y Total revenues: $5.246 billion, +1.5% Y/Y Annual Recurring Revenues (ARR): $4.246 billion, +1.3% Y/Y Cloud revenues: $1.959 billion, +5.5% Y/Y Enterprise cloud bookings(2): $947 million, +22.5% Y/Y Operating cash flows: $1.007 billion and free cash flow(3) was $808 million GAAP-based net income: $643 million, +47.5% Y/Y, margin of 12.3% Adjusted EBITDA(3) of $1.903 billion, margin of 36.3% while making key investments in cloud, security and AI Record capital returns of $677 million including $268 million via dividends and $409 million of share repurchases Diluted earnings per share (EPS): GAAP $2.58, Non-GAAP(3) of $4.42 5% increase of dividend per share in Fiscal 2026 Financial Highlights for Q4 and Fiscal 2026 with Year Over Year Comparisons Dividend As part of the quarterly, non-cumulative cash dividend program, the Board declared on August 5, 2026, a cash dividend of $0.28 per common share. The record date for this dividend is September 4, 2026 and the payment date is September 18, 2026. OpenText believes strongly in returning value to its shareholders. Any future declarations of dividends and the establishment of future record and payment dates are all subject to the final determination and discretion of the Board of Directors. Quarterly Business Highlights OpenText Appoints Jill Larsen to Board of Directors OpenText Completes US$150 Million Divestiture of Non-Core Vertica to Rocket Software OpenText to Create 400 Jobs with €105 Million Investment in Cork and Galway to Expand Agentic AI and Sovereign Cloud in Europe OpenText Among First Canadian Companies to Join OECD Global Safe AI Reporting Framework OpenText had a number of key client wins in the quarter representing a diverse set of industries across the globe. Share Repurchase Plan/Normal Course Issuer Bid OpenText also announced today the renewal of its share repurchase plan pursuant to which it is authorized to purchase for cancellation in open market transactions, from time to time over the next 12 months, if considered advisable, up to 23,846,439 of its common shares (Common Shares), representing 10% of the Company's public float (calculated in accordance with the rules of the Toronto Stock Exchange (the "TSX")), on the TSX, the NASDAQ Global Select Market and/or other exchanges and alternative trading systems in Canada and/or the United States, if eligible, subject to applicable law and stock exchange rules (the "Repurchase Plan"). The price that OpenText will pay for Common Shares in open market transactions will be the market price at the time of purchase or such other price as may be permitted by applicable law or stock exchange rules. The Company's determination to renew its share repurchase plan reflects its confidence in its operational execution and expanding cash flows, with the Repurchase Plan being additive to the Company's overall strategic capital allocation, complementing its ongoing M&A activity and dividend program. The Repurchase Plan will be effected in accordance with Rule 10b-18 under the U.S. Securities Exchange Act of 1934, as amended. Purchases made under the Repurchase Plan may commence on August 12, 2026 and will expire on August 11, 2027 (subject to earlier termination where the maximum purchase limits have been reached). All Common Shares purchased by OpenText pursuant to the Repurchase Plan will be cancelled. Normal Course Issuer Bid The Company has renewed its normal course issuer bid (the "NCIB") in order to provide it with a means to execute purchases over the TSX as part of the overall Repurchase Plan. The TSX has approved the Company's notice of intention to commence the NCIB pursuant to which the Company may purchase Common Shares over the TSX for the period commencing August 12, 2026 until August 11, 2027 (subject to earlier termination where the maximum purchase limits have been reached) in accordance with the TSX's normal course issuer bid rules, including that such purchases are to be made at prevailing market prices or as otherwise permitted. Under the rules of the TSX, the maximum number of Common Shares that may be purchased in this period is 23,846,439, representing 10% of the Company's public float (calculated in accordance with TSX rules based on the 242,126,739 Common Shares issued and outstanding as of July 31, 2026), and the maximum number of Common Shares that may be purchased on a single day is 447,218 Common Shares, which is 25% of 1,788,872 (calculated in accordance with TSX rules based on the average daily trading volume for the Common Shares on the TSX for the six months ended July 31, 2026), subject to certain exceptions for block purchases, subject in any case to the volume and other limitations under Rule 10b-18. Further, as part of the NCIB renewal, the Company has entered into an automatic share purchase plan (ASPP) with its broker to facilitate repurchases of the Common Shares. Under the terms of the ASPP, the Company's broker will be permitted to make purchases at its sole discretion based on parameters set by the Company in accordance with TSX rules, applicable law and the terms of the ASPP, during periods when the Company would ordinarily not be permitted to make purchases, whether due to regulatory restriction or customary self-imposed blackout periods. Outside of such periods, Common Shares can be purchased based on management's discretion, in compliance with TSX rules and applicable law. All purchases of Common Shares made under the ASPP will be included in determining the number of Common Shares purchased under the NCIB. The ASPP has been pre-cleared by the TSX and will be effective on August 12, 2026. The ASPP will terminate on the earliest of: (a) the date on which the maximum purchase limits under the NCIB are reached; (b) August 11, 2027; or (c) the date on which the Company terminates the ASPP in accordance with its terms. Under its previous normal course issuer bid which began on August 12, 2025, and which will expire on August 11, 2026, the Company was authorized to repurchase up to 24,906,456 Common Shares, subject to a maximum aggregate value of US$500 million. From August 12, 2025 to July 31, 2026, the Company purchased for cancellation 14,273,800 Common Shares, through the facilities of the TSX or by such other permitted means, for a total of approximately US$392 million at a volume weighted average purchase price of US$27.49 per Common Share. Separately, in connection with the settlement of awards under the long-term incentive plans, during Fiscal 2026, the Company repurchased 2,166,500 Common Shares on the open market at a total cost of approximately US$50 million at a volume weighted average price of US$23.08 per Common Share. As part of its previous normal course issuer bid, the Company entered into an ASPP with its broker, which was effective on August 12, 2025 and expired on August 11, 2026. Conference Call Information OpenText posted an investor presentation on its Investor Relations website and invites the public to listen to the earnings conference call webcast on Thursday, August 6, 2026 at 8:00 a.m. ET (5:00 a.m. PT) from the Investor Relations section of the Company's website at investors.opentext.com. To join the webcast instantly, use this webcast link. A webcast replay will be available shortly following completion of the live call. Please see Note 2 "Use of Non-GAAP Financial Measures" to the consolidated financial statements below for a reconciliation of U.S. GAAP-based financial measures used in this press release to Non-GAAP-based financial measures. Copyright © 2026 OpenText. All Rights Reserved. Trademarks owned by OpenText. One or more patents may cover this product(s). For more information, please visit www.opentext.com/about/patents. About OpenText OpenText™ is a global leader in data management for enterprise AI, helping organizations protect, govern, and activate their data with confidence. Our technologies turn data into information with context to form the knowledge base for enterprise AI. Learn more at www.opentext.com. Cautionary Statement Regarding Forward-Looking Statements Certain statements in this press release, including statements about Open Text Corporation ("OpenText" or "the Company") on: focus of Fiscal 2027, including expanding sales capacity, deepening reach through ecosystem partners, and increasing organic investment in our core portfolio; growth in constant currency of our core business; timing for enterprise assessment and results therefrom; expected future performance, including competitive position of and innovation to certain products, cash generation therefrom and ability to build long-term shareholder value; client benefits from products; executing the Company's capital allocation strategy, including debt reduction, dividends, share repurchases and targeted organic investment ; execution of Business Optimization Plan and other savings initiatives, including timing, costs, savings, associated benefits thereof and potential adjustments of amounts thereto; projected outlook and estimates; portfolio shaping opportunities and divestiture of non-core assets, including benefits from and timing of such transactions and use of proceeds therefrom; future total and cloud revenues, operating expenses, margins, RPO, cRPO, free cash flows, earnings, interest expense and capital expenditures; net leverage and savings estimates and timing thereof; innovation road map; estimated annualized dividend; expected size and timing of the share repurchase program, including execution thereof; future tax rates; renewal rates; potential investments and associated job creation; internal automation and AI leverage, including our AI strategy, vision and growth; and other matters, which may contain words such as "anticipates", "expects", "intends", "plans", "believes", "seeks", "estimates", "may", "could", "would", "might", "will" and variations of these words or similar expressions are intended to identify forward-looking statements or information under applicable securities laws (forward-looking statements). In addition, any statements or information that refer to expectations, beliefs, plans, projections, objectives, performance or other characterizations of future events or circumstances, including any underlying assumptions, are forward-looking statements, and are based on our current expectations, forecasts and projections about the operating environment, economies and markets in which we operate. Forward-looking statements reflect our current estimates, beliefs and assumptions, which are based on management's perception of historic trends, current conditions and expected future developments, as well as other factors it believes are appropriate in the circumstances, such as certain assumptions about the economy, as well as market, financial and operational assumptions. Management's estimates, beliefs and assumptions, including statements regarding future outlook, estimates and business models, are inherently subject to significant business, economic, competitive and other uncertainties and contingencies regarding future events and, as such, are subject to change and are not considered guidance. We can give no assurance that such estimates, beliefs and assumptions will prove to be correct. Future declarations of dividends are also subject to the final determination and discretion of the Board of Directors, and an annualized dividend has not been approved or declared by the Board. Forward-looking statements involve known and unknown risks and uncertainties such as those relating to: all statements regarding the expected future financial position, results of operations, revenues, expenses, margins, cash flows, dividends, share buybacks, financing plans, business strategy, budgets, capital expenditures, competitive positions, growth opportunities, plans and objectives of management, including any anticipated synergy benefits; incurring unanticipated costs, delays or difficulties; and our ability to develop, protect and maintain our intellectual property and proprietary technology and to operate without infringing on the proprietary rights of others. We rely on a combination of copyright, patent, trademark and trade secret laws, non-disclosure agreements and other contractual provisions to establish and maintain our proprietary rights, which are important to our success. From time to time, we may also enforce our intellectual property rights through litigation in line with our strategic and business objectives. The actual results that OpenText achieves may differ materially from any forward-looking statements. For additional information with respect to risks and other factors which could occur, see the Company's Annual Report on Form 10-K, Quarterly Reports on Form 10-Q and other securities filings with the Securities and Exchange Commission (SEC) and other securities regulators. Readers are cautioned not to place undue reliance upon any such forward-looking statements, which speak only as of the date made. Unless otherwise required by applicable securities laws, the Company disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. Further, readers should note that we may announce information using our website, press releases, securities law filings, public conference calls, webcasts and the social media channels identified on the Investors section of our website (https://investors.opentext.com). Such social media channels may include the Company's or our executive's blog, X, formerly known as Twitter, account or LinkedIn account. The information posted through such channels may be material. Accordingly, readers should monitor such channels in addition to our other forms of communication. Notes (1) All dollar amounts in this press release are in U.S. Dollars unless otherwise indicated. (2) Use of Non-GAAP Financial Measures: In addition to reporting financial results in accordance with U.S. GAAP, the Company provides certain financial measures that are not in accordance with U.S. GAAP (Non-GAAP). These Non-GAAP financial measures have certain limitations in that they do not have a standardized meaning and thus the Company's definition may be different from similar Non-GAAP financial measures used by other companies and/or analysts and may differ from period to period. Thus it may be more difficult to compare the Company's financial performance to that of other companies. However, the Company's management compensates for these limitations by providing the relevant disclosure of the items excluded in the calculation of these Non-GAAP financial measures both in its reconciliation to the U.S. GAAP financial measures and its consolidated financial statements, all of which should be considered when evaluating the Company's results. The Company uses these Non-GAAP financial measures to supplement the information provided in its consolidated financial statements, which are presented in accordance with U.S. GAAP. The presentation of Non-GAAP financial measures is not meant to be a substitute for financial measures presented in accordance with U.S. GAAP, but rather should be evaluated in conjunction with and as a supplement to such U.S. GAAP measures. OpenText strongly encourages investors to review its financial information in its entirety and not to rely on a single financial measure. The Company therefore believes that despite these limitations, it is appropriate to supplement the disclosure of the U.S. GAAP measures with certain Non-GAAP measures defined below. Non-GAAP-based net income and Non-GAAP-based EPS, attributable to OpenText, are consistently calculated as GAAP-based net income (loss) or earnings (loss) per share, attributable to OpenText, on a diluted basis, excluding the effects of the amortization of acquired intangible assets, other income (expense), share-based compensation, and special charges (recoveries), all net of tax and any tax benefits/expense items unrelated to current period income, as further described in the tables below. Non-GAAP-based gross profit is the arithmetical sum of GAAP-based gross profit and the amortization of acquired technology-based intangible assets and share-based compensation within cost of sales. Non-GAAP-based gross margin is calculated as Non-GAAP-based gross profit expressed as a percentage of total revenue. Non-GAAP-based income from operations is calculated as GAAP-based income from operations, excluding the amortization of acquired intangible assets, special charges (recoveries), and share-based compensation expense. Adjusted EBITDA is defined and calculated as GAAP-based net income (loss), attributable to OpenText, excluding interest income (expense), provision for (recovery of) income taxes, depreciation and amortization of acquired intangible assets, other income (expense), share-based compensation and special charges (recoveries). Adjusted EBITDA margin is calculated as adjusted EBITDA expressed as a percentage of total revenue. Free cash flow is defined and calculated as GAAP-based cash flows provided by operating activities less capital expenditures. The Company's management believes that the presentation of the above defined Non-GAAP financial measures provides useful information to investors because they portray the financial results of the Company before the impact of certain non-operational charges. The use of the term "non-operational charge" is defined for this purpose as an expense that does not impact the ongoing operating decisions taken by the Company's management. These items are excluded based upon the way the Company's management evaluates the performance of the Company's business for use in the Company's internal reports and are not excluded in the sense that they may be used under U.S. GAAP. The Company does not acquire businesses on a predictable cycle, and therefore believes that the presentation of Non-GAAP measures, which in certain cases adjust for the impact of amortization of intangible assets and the related tax effects that are primarily related to acquisitions, will provide readers of financial statements with a more consistent basis for comparison across accounting periods and be more useful in helping readers understand the Company's operating results and underlying operational trends. Additionally, the Company has engaged in various restructuring activities over the past several years, primarily due to acquisitions and most recently in response to our return to office planning, that have resulted in costs associated with reductions in headcount, consolidation of leased facilities and related costs, all which are recorded under the Company's "Special charges (recoveries)" caption on the Consolidated Statements of Income. Each restructuring activity is a discrete event based on a unique set of business objectives or circumstances, and each differs in terms of its operational implementation, business impact and scope, and the size of each restructuring plan can vary significantly from period to period. Therefore, the Company believes that the exclusion of these special charges (recoveries) will also better aid readers of financial statements in the understanding and comparability of the Company's operating results and underlying operational trends. In summary, the Company believes the provision of supplemental Non-GAAP measures allow investors to evaluate the operational and financial performance of the Company's core business using the same evaluation measures that management uses, and is therefore a useful indication of OpenText's performance or expected performance of future operations and facilitates period-to-period comparison of operating performance (although prior performance is not necessarily indicative of future performance). As a result, the Company considers it appropriate and reasonable to provide, in addition to U.S. GAAP measures, supplementary Non-GAAP financial measures that exclude certain items from the presentation of its financial results. Information reconciling certain forward-looking GAAP measures to non-GAAP measures related to outlook, estimates or business models, including A-EBITDA is not available without unreasonable effort due to high variability, complexity and uncertainty with respect to forecasting and quantifying certain amounts that are necessary for such reconciliations. The following charts provide unaudited reconciliations of U.S. GAAP-based financial measures to Non-GAAP-based financial measures for the following periods presented. View original content to download multimedia:https://www.prnewswire.com/news-releases/opentext-reports-fourth-quarter-and-fiscal-year-2026-financial-results-302844432.html View original content to download multimedia: http://www.newswire.ca/en/releases/archive/August2026/06/c6735.html

This article first appeared on GuruFocus. Total Revenue: $1.35 billion in Q4 fiscal 2026, up 2.9% year-over-year (up 0.9% in constant currency). Core Portfolio Revenue: $1.05 billion in Q4, up 5.3% year-over-year (up 3.1% in constant currency). Cloud Revenue (Core Portfolio): $341 million in Q4, up 10.7% year-over-year (up 8.9% in constant currency). Adjusted EBITDA Margin: 37.1% in Q4 fiscal 2026. GAAP Net Income: $156 million in Q4, up 439.9% year-over-year. Non-GAAP Net Income: $299 million in Q4, up 19.7% year-over-year. GAAP Diluted EPS: $0.64 in Q4, up 481.8% year-over-year. Non-GAAP Diluted EPS: $1.23 in Q4, up 26.8% year-over-year. Operating Cash Flow: $186 million in Q4, up 17.5% year-over-year. Free Cash Flow: $122 million in Q4, down 1.6% year-over-year. Full Year Total Revenue: $5.2 billion for fiscal 2026, up 1.5% year-over-year (down 1.1% in constant currency). Full Year Core Portfolio Revenue: $4.0 billion, up 2.9% year-over-year (consistent in constant currency). Full Year Cloud Revenue (Core Portfolio): $1.3 billion, up 10.3% year-over-year (up 7.8% in constant currency). Full Year Adjusted EBITDA Margin: 36.3%, up 170 basis points. Full Year GAAP Diluted EPS: $2.58, up 56.4%. Full Year Non-GAAP Diluted EPS: $4.42, up 15.7%. Full Year Operating Cash Flow: $1.0 billion, up 21.2%. Full Year Free Cash Flow: $808 million, up 17.5% year-over-year. Debt Reduction: $649 million total debt paid in fiscal 2026, including a $300 million discretionary payment in Q4. Net Leverage Ratio: Reduced from 3.02 times to 2.75 times. Warning! GuruFocus has detected 4 Warning Signs with OTEX. Is OTEX fairly valued? Test your thesis with our free DCF calculator. Release Date: August 06, 2026 For the complete transcript of the earnings call, please refer to the full earnings call transcript. Open Text Corp (NASDAQ:OTEX) delivered solid Q4 fiscal 2026 results with total revenue up 2.9% year-over-year and core portfolio revenue up 5.3%, exceeding expectations. Cloud revenue in the core portfolio grew 8.9% in constant currency, marking the 22nd consecutive quarter of organic cloud growth, with 64 cloud deals over $1 million closed, a 49% increase year-over-year. The company is making strategic investments in growth, including adding over 300 new quota-carrying sales representatives and expanding its partner ecosystem, which is expected to drive core revenue growth of 2% to 3% in fiscal 2027. Aviator, the company's AI platform, is gaining strong traction, with deals including Aviator agents being four times larger, and the number of such deals more than doubling annually. Open Text Corp (NASDAQ:OTEX) reduced its net leverage ratio from 3.02 times to 2.75 times, aligning with its historical target range, and paid down $649 million in debt during fiscal 2026. The company reported strong profitability improvements, with non-GAAP diluted EPS up 26.8% in Q4 and adjusted EBITDA margin expanding 170 basis points for the full year. Open Text Corp (NASDAQ:OTEX) is committed to capital discipline, prioritizing debt reduction and organic growth investments while maintaining its dividend and renewing its share repurchase program. Open Text Corp (NASDAQ:OTEX) provided a cautious fiscal 2027 outlook, expecting total revenue to decline 1% to 2% on a reported basis due to divestitures and a $30 million foreign currency headwind. The company's adjusted EBITDA margin is expected to moderate to 32% to 33% in fiscal 2027, down from 36.3% in fiscal 2026, due to planned investments of $100 million to $200 million in sales capacity and R&D. Free cash flow guidance for fiscal 2027 is significantly lower at $625 million to $725 million, compared to $808 million in fiscal 2026, impacted by growth investments and the divestiture of profitable businesses. The Cloud net renewal rate declined 180 basis points year-over-year to 94%, indicating some customer churn or contraction in the cloud business. Customer support revenue continued to decline, down 4.6% year-over-year in Q4, reflecting the impact of divested businesses and ongoing pressure in the legacy on-premise segment. The company's divestiture strategy remains challenged by tight debt markets, limiting the ability to complete transactions at desired valuations, which could delay portfolio optimization. Open Text Corp (NASDAQ:OTEX) is discontinuing its Enterprise Cloud bookings metric, which may reduce transparency for investors tracking the company's sales momentum. Q: Can you unpack the core growth expectations for fiscal 2027 across the various segments, particularly Content, ITOM, and Cyber?A: Ayman Antoun (CEO) stated that each of the four core categories is expected to grow in fiscal 2027. Content is projected to grow at a faster rate than the core total. The company is redirecting R&D dollars toward the core portfolio, with Cybersecurity receiving a specific injection of reallocated funds. The strategy focuses on infusing more AI capabilities into each core category and accelerating their Cloud versions. Q: Regarding the $100 million to $200 million reinvestment, can you provide more detail on the breakdown between R&D, sales capacity, and partner investments?A: Ayman Antoun (CEO) clarified that a significant portion of the investment is dedicated to adding over 300 new quota-carrying sales representatives. The other major component is reactivating the ecosystem partner channel, which includes investing in partner enablement, sales plays, and financial incentives. This is aimed at reaching new market segments through hyperscalers, global and regional system integrators, and vertical ISVs like SAP. Q: You have run large sales organizations in the past. Why did those investments not pay off as expected, and how is this approach different?A: Ayman Antoun (CEO) highlighted three key differences: 1) Surgical allocation of capacity to specific client segments rather than a "peanut-butter" approach, focusing on clients who want an integrated Open Text. 2) Empowering 16 market leaders with full decision rights to act with speed and simplicity without needing to "phone home." 3) A significant investment in the ecosystem partner channel, which was previously underfunded and is now being reactivated with resources, enablement, and financial incentives. Q: Can you comment on the current environment for asset divestitures, particularly regarding deal financing?A: Steve Rai (CFO) stated that while things are starting to loosen up slightly, the debt markets remain tight. However, there is a lot of capital on the sidelines waiting to be deployed. The company remains methodical and will not "fire sale" assets, as these businesses continue to generate positive margins and cash flow. Q: Is it fair to say your capital allocation strategy is now more focused on organic growth and debt reduction, and should we expect a slower pace of buybacks?A: Ayman Antoun (CEO) confirmed that debt reduction and organic growth investments are the top priorities, as listed on page 21 of the presentation. While the NCIB has been renewed, the company is prioritizing the first two categories over share repurchases. Q: Can you provide commentary on token consumption and its impact on your business from a cost perspective?A: Ayman Antoun (CEO) explained that after an initial ramp-up, the company quickly implemented a tight governance model to monitor token usage and ensure ROI. The Chief Development Officer and Chief Information Officer partnered to create a governance framework that balances speed and simplicity with cost control, and management feels good about managing this going forward. Q: Regarding the enterprise assessment, what are the areas of most uncertainty in potential strategic outcomes?A: Ayman Antoun (CEO) stated the assessment was informed by over 63 client meetings, 28 investor meetings, 2,500 colleague discussions, and 22 partner meetings. The feedback led to early actions like increasing sales capacity and creating a more coordinated client approach. The assessment is also evaluating R&D spending to ensure it is allocated to the right categories, with a focus on infusing AI and providing industry-specific sales enablement. Q: Some software peers are seeing deal elongation due to AI approvals. Are you seeing this, and what allows you to sidestep these headwinds?A: Ayman Antoun (CEO) stated that Open Text did not see any material slowdown or deal delays in Q4. He attributes this to the company's core value proposition: no language model, agent, or application can function without a trusted data foundation. Because clients are working to translate AI ambitions into reality, the demand for Open Text's data management solutions remains strong. Q: Can you elaborate on the Cloud net renewal rate, which was down year-over-year, and where you would prefer it to trend?A: Steve Rai (CFO) noted that the low-to-mid 90s rate is historically good. He expects the rate to improve over time due to increasing stickiness from larger, longer AI-related deals and the level of investment companies are making in AI deployments. Q: How should we think about the puts and takes for the fiscal 2027 free cash flow guidance?A: Steve Rai (CFO) explained that the growth investments are factored into the range, with timing variability accounted for. The guidance also reflects the full-year impact of the divested eDocs and Vertica businesses, which were profitable and are no longer contributing to cash flow. For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Open Text Corporation's (NASDAQ:OTEX) stock was strong despite it releasing a soft earnings report last week. We think that investors might be looking at some positive factors beyond the earnings numbers. We've found 21 US stocks that are forecast to pay a dividend yield of over 6% next year. See the full list for free. To properly understand Open Text's profit results, we need to consider the US$135m expense attributed to unusual items. It's never great to see unusual items costing the company profits, but on the upside, things might improve sooner rather than later. When we analysed the vast majority of listed companies worldwide, we found that significant unusual items are often not repeated. And, after all, that's exactly what the accounting terminology implies. If Open Text doesn't see those unusual expenses repeat, then all else being equal we'd expect its profit to increase over the coming year. That might leave you wondering what analysts are forecasting in terms of future profitability. Luckily, you can click here to see an interactive graph depicting future profitability, based on their estimates. Unusual items (expenses) detracted from Open Text's earnings over the last year, but we might see an improvement next year. Because of this, we think Open Text's earnings potential is at least as good as it seems, and maybe even better! Better yet, its EPS are growing strongly, which is nice to see. At the end of the day, it's essential to consider more than just the factors above, if you want to understand the company properly. If you'd like to know more about Open Text as a business, it's important to be aware of any risks it's facing. Case in point: We've spotted 1 warning sign for Open Text you should be aware of. This note has only looked at a single factor that sheds light on the nature of Open Text's profit. But there is always more to discover if you are capable of focussing your mind on minutiae. Some people consider a high return on equity to be a good sign of a quality business. So you may wish to see this free collection of companies boasting high return on equity, or this list of stocks with high insider ownership. Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com. This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

Our analysts just identified a stock with the potential to be the next Nvidia. Tell us how you invest and we'll show you why it's our #1 pick. Tap here. Management attributes current momentum to the foundational role of data in AI, asserting that reliable, curated data is essential for credible AI outcomes. The Content Cloud business is the primary growth engine, with cloud revenue for this segment growing 22% year-on-year in Q3. New CEO Ayman Antoun identified four immediate priorities: listening to stakeholders, learning the core portfolio, assessing operational outcomes, and building a sustainable organic growth plan. Operational focus is shifting toward sharpening go-to-market deployment and deepening strategic relationships with ecosystem partners to scale success. The company is positioning its ability to manage human-generated, machine-generated, and transactional data as a unique competitive advantage in the AI market. Management emphasizes 'client zero' status, using its own AI agents to improve internal incident restoration times by 50% and reduce total incidents by 20%. Strategic optionality in deployment—offering on-prem, private, public, and sovereign cloud—is cited as a key differentiator that meets clients where they are in their journey. Fiscal 2026 revenue growth targets are maintained at 1% to 2% after adjusting for approximately $30 million in revenue lost through divestitures. Cloud revenue growth expectations were raised to a range of 4% to 5%, driven by higher conversion rates in enterprise cloud bookings. Enterprise cloud bookings growth guidance was increased to 16% to 20%, reflecting heightened client interest in cloud-based content management. Free cash flow growth outlook was upgraded to 22% to 25% for the full year, supported by business optimization and cost management actions. Management expects the migration of clients to the cloud to be a multi-year process that will drive long-term growth in RPO and adjusted EBITDA. The Vertica divestiture is expected to close shortly as part of a broader strategy to reshape the portfolio and focus on core assets. Management explicitly stated they will avoid 'fire sales' of non-core assets, citing a more selective buyer environment due to geopolitical and macro uncertainty. The business optimization plan remains on track, with the company expecting to realize approximately one-third of the estimated $490 million to $550 million in total savings this year. A share buyback program was increased from $300 million to $500 million for fiscal 2026, with 9.7 million shares already repurchased in Q3. CEO Ayman Antoun highlighted the need to strengthen the 'muscle of disciplined execution' across sales, development, and capital allocation. He noted significant opportunities to scale and accelerate engagements with ecosystem partners, which he began addressing on his first day. One stock. Nvidia-level potential. 30M+ investors trust Moby to find it first. Get the pick. Tap here. Management reported an increase in both the volume and size of deals, including a 7-figure deal that featured the Aviator AI solution as a major component. While specific attach rates were not disclosed, the pipeline shows a growing trend of larger deals incorporating AI capabilities. Management observed lingering impacts from the U.S. government shutdown on contract timing, while Europe showed double-digit strength. Despite geopolitical uncertainty, the company has not seen a material slowdown in client decision-making regarding AI investments. The CEO emphasized that providing choice (on-prem vs. cloud) is a strategic advantage, as many regulated clients have specific reasons for maintaining on-premise workloads. Management believes forcing cloud migration would be counterproductive, preferring to meet clients at their specific stage of the journey. Priorities include debt reduction, dividend maintenance, share repurchases, and organic growth investments in both portfolio and go-to-market strategies. The CEO is currently reviewing the debt structure to provide specific recommendations to the board on future capital prioritization.