Open Text Corp Q1 2025 Earnings Call Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Steven Enders - Citigroup Inc - Analyst : Okay, great. Thanks for taking the questions here. I guess I just want to start a little bit on kind of maybe the demand environment and the macro and what you're seeing out there. I guess, was there maybe any shift in deals? Are you seeing anything kind of get pushed off and maybe gives a little bit more confidence in that -- in the second half that maybe is impacting things in the first half would be great to get a little bit more detail on what it is that's maybe going on out there in the deal environment?

Question: Steven Enders - Citigroup Inc - Analyst : Okay. That's helpful context there. I guess just a quick clarification. Just the -- can you remind us what the IP right impact is for 2Q that would be embedded in that comp? And then I guess secondarily, just think about the second half and the execution that needs to go into that, I guess, are there certain things that you're seeing on either the deal environment or go-to-market investments that you are making that gives you that confidence in the line of sight to the pipeline, the ability to kind of close on that for the second half?

Question: Steven Enders - Citigroup Inc - Analyst : Thanks. All right. Well, I appreciate the context there and thanks again for taking the questions this morning.

Question: Billy Fitzsimmons - Jefferies Group LLC - Analyst : Hey, everyone. This is Billy Fitzsimmons, on for Samad. Maybe first for you, Mark. You may have talked about it in the prepared remarks, I may have missed it, but it's been a couple of quarters now since Project [Athena] was announced, would be curious if you have any updates on progress thus far? And maybe going a step further, is there any anecdotes around early efficiency gains or early internal feedback from employees as you can implement these changes?

Question: Billy Fitzsimmons - Jefferies Group LLC - Analyst : And then -- that's super helpful, Mark. And then if I could sneak in another. I know a couple of quarters back, (multiple speakers) that's from two -- sorry, three to four years. Is that continuing to roughly track at four years now, one quarter into 2025? And then just help us think about kind of the pace of on-prem decline conversions you're seeing in your business in 2025 relative to what you saw in late fiscal 2024?

Question: Billy Fitzsimmons - Jefferies Group LLC - Analyst : Yeah. The first part was just -- I know a couple of quarters ago, cloud contract duration stretched from three years to four years. Is that continuing to track at roughly four years?

Question: Raimo Lenschow - Barclays plc - Analyst : Okay. Thank you. Mark, since we are in this new AI world, like how do you think about adoption patterns between like your Aviator offerings, et cetera, and kind of the more kind of initial steps with the Microsoft Copilot, et cetera, like how do you think that will play out in terms of (inaudible) and then when you're talking to customers in terms of like adoption -- cycle adoption patterns? Is that like first, you kind of do the standard kind of Microsoft type Copilot stuff, then you come to you? Is it going straight to you because the value add is so high. Can you speak to that of what you're seeing there in the market, please?

Question: Raimo Lenschow - Barclays plc - Analyst : Okay. Perfect. Thank you. And then one for Madhu, like if I look at the margin performance this quarter was very strong, guidance is really healthy here. Is there anything that we should be aware of in terms of timing that some of the costs got pushed out in the second half? Or is this just all kind of you're doing your job and controlling what you can control? Thank you.

Question: Raimo Lenschow - Barclays plc - Analyst : Okay. Perfect. Thank. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. OCTOBER 31, 2024 / 1:00PM, OTEX.TO - Q1 2025 Open Text Corp Earnings Call

Question: Erin Kyle - CIBC Capital Markets - Analyst : Hi, good morning. It's Erin Kyle on for Stephanie Price. I wanted to ask a question just on the revenue growth, excluding AMC, which was negative 1.8% this quarter. So assuming this is all organic now. How do you think about organic growth at Micro Focus post the AMC divestiture? And what are the key lines of business that you expect that will drive you towards achieving organic growth?

Question: Erin Kyle - CIBC Capital Markets - Analyst : Okay. Thank you. That's helpful. Quick color there. And maybe if I could just ask one more question just on capital allocation. So you did $85 million in buybacks this quarter. And I noticed targets are unchanged for the year. So I just wanted to clarify the strategy is still to focus primarily on that organic growth and return of capital to shareholders and whether M&A fits into the picture at all?

Question: Erin Kyle - CIBC Capital Markets - Analyst : Okay. Thank you very much.

Question: Mike Stevens - National Bank Financial - Analyst : Hi, good morning. This is Mike Stevens on for Rich. Just more broadly, you touched on M&A there. But are there any further opportunities to streamline the company for growth, a la the AMC divestiture?

Question: Mike Stevens - National Bank Financial - Analyst : Okay. That's helpful. Additionally, with the Aviator, you mentioned the number of wins in the quarter. How much approximately would that represent of bookings? And where do you see that kind of going forward?

Question: Mike Stevens - National Bank Financial - Analyst : Okay. I appreciate the insights, and I'll pass the line. Thank you. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. OCTOBER 31, 2024 / 1:00PM, OTEX.TO - Q1 2025 Open Text Corp Earnings Call

Question: Thanos Moschopoulos - BMO Capital Markets - Analyst : Hi, good morning. The cloud revenue growth was subdued this quarter. And I understand you're looking for that to accelerate for all the reasons cited. But just in terms of the quarter in particular, -- is that a function of the delayed deal ramp dynamic that you called out? Is there any just in SMB? Or what are some contributing factors?

Question: Thanos Moschopoulos - BMO Capital Markets - Analyst : Great. And then Mark, can you comment on SMB. So another business implies there if you go back a few months. How has that been looking? And you alluded to a new platform you're launching for SMB, you can stand on that?

Question: Thanos Moschopoulos - BMO Capital Markets - Analyst : Great. I'll pass the line. Thanks.

Question: Kiran Sritharan - Eight Capital - Analyst : Good morning, all. This is (Kiran Sritharan) on for Adhir. My first, I just want to touch on the cloud growth range again between 2% to 5%, following this quarter, what factors you'd call out that contribute to the bottom and the top end of that range?

Question: Kiran Sritharan - Eight Capital - Analyst : Thanks, Mark. And then on -- I'd like to zoom in on the investment in the sales and go-to-market. Where are you in the hiring cycle of these days? And maybe you can also comment on the experience levels and the pace at which this cohort would contribute just given the refresh your

Question: Kiran Sritharan - Eight Capital - Analyst : Thanks for the color, guys.