Open Text Q4 2026 Earnings Call Transcript

On Thursday, Open Text (TSX: OTEX ) discussed fourth-quarter financial results during its earnings call. The full transcript is provided below. This content is powered APIs. For comprehensive financial data and transcripts, visit Access the full call at Summary Open Text Corporation reported 1% year-over-year revenue growth in constant currency for Q4 FY 2026, with a 3% increase in their core portfolio and a 9% rise in cloud revenue within the core segment.

The company outlined strategic initiatives for FY 2027, focusing on sales capacity expansion, ecosystem partner investments, and increased R&D in core portfolio, cloud capabilities, and AI offerings. Open Text aims for a 2-3% growth in core revenue and 8-10% growth in core cloud revenue for FY 2027, with a continued focus on integrating AI solutions, such as their Aviator platform, to enhance client outcomes. 75, and plans to maintain capital discipline with a focus on debt reduction and organic growth investments.

Management emphasized the importance of a secure data foundation for AI, with significant client demand for integrated, trusted data solutions, and highlighted early positive feedback from stakeholders on their strategic direction. Full Transcript 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.

As a reminder, all participants are in listen-only mode and the conference is being recorded. After the presentation there will be an analyst Q&A session. To join the question queue, simply press star then one on your touchtone phone. Should anyone need assistance during the conference call, they may reach an operator by pressing star then zero.

I would now like to turn the conference over to Greg Secord, Head of Investor Relations. Please go ahead. Greg Secord, Head of Investor Relations Thank you, operator, and good morning, everyone. Welcome to Open Text Fourth Quarter Fiscal 2026 earnings call.

With me on the call today are Open Text Chief Executive Officer Ayman Antoun and Steve Rai, Executive Vice President and Chief Financial Officer. com. Earlier today we posted our press release and investor presentation online. These materials will supplement our prepared remarks and can be accessed on the Open Text investor relations website.

Please see our investor presentation for further details of our core and non-core revenues by product category. 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, Citi 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 onto 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 — Chief Executive Officer Good morning, everyone, and thank you for being here today. 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's 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 the secure data foundation in the AI stack.

Simply put, our portfolio of data management solutions is the difference between AI that is trusted and AI that is not enterprise-grade. Data is our differentiator. We're built for this moment in AI and for the future. 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: 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: go-to-market — how we show up in front of our clients, and I will share with you more on this shortly.

It covers our portfolio composition, differentiation and our development process, marketing and demand generation engine. It's looking at our execution model, decision rights to ensure that we are operating with discipline, accountability, people, 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.

Its output will define our multi-year growth plan and the financial model that creates and sustains shareholder value. As the assessment continues, we are not waiting to make changes that drive growth now. Next, I will walk you through the actions we are taking. First, we're investing in sales capacity.

We are adding more than 300 new quota-carrying sales colleagues worldwide, with clients backed by one dedicated client executive who owns the relationship and makes it easier to do business across our portfolio. Second, we're investing in our ecosystem partners to expand our market reach. We're privileged to partner with the world's leading global and regional system integrators, hyperscalers and vertical ISVs like SAP. Together we're now focused on effective co-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 client with clear decision rights so they can move with speed and simplicity to cross-sell our portfolio. Next, to continue the momentum of growth, we will be shifting more of our R&D investment into our core portfolio, cloud capabilities and AI offerings. 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 multi-year strategic plan — in early calendar year 2027. This brings me to my final update: how we empower our clients with enterprise-grade data for AI.

In the end, this is all about our 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 eight 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 four times 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 — the system that protects a company's data and keeps it running. At one of the world's leading telecom companies, where connectivity and security are the lifeblood of the business, Aviator Agents work inside network and data operations, helping teams find and fix vulnerabilities, cutting mean time to repair during an outage from one day to one hour.

Next, Business Network, which moves transactions and data between companies. A third of Fortune 500 banks globally use Open Text Business Network. Overall, we process over $11 trillion in network commerce each year. When our 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 healthcare provider, Aviator Agents are in their wards and 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, healthcare, 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, thank you. Steve Rai — Executive Vice President, Chief Financial Officer 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.

9% in constant currency terms. 1% in constant currency. 3% in constant currency. 9% in constant currency.

Just a reminder that our core business includes Content, Business Network (BN), IT Operations Management (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 VM categories, and many of these cloud deals included Aviator.

For additional detail on product category performance, including core and non-core breakdowns, please see our Investor Relations material. 6% year over year. As a reminder, this includes the impact from our divested eDOCS and Vertica businesses. 3% of our total revenue.

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.

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 standalone 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.

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. 9% year over year. 7% year over year.

8% year over year. 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. 5% year over year, helped by the strong quarterly performance and ongoing streamlining of the business.

6% and relatively consistent year over year. 1% in constant currency terms. 9% year over year and consistent in constant currency terms. 4% in constant currency.

8% year over year in constant currency. 6%.