Open Text Corp Q3 2025 Earnings Call Transcript

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

Question: Raimo Lenschow - Barclays - Analyst : Mark, I have two questions, one for Mark, one for Chadwick. Mark, first one, if you look at the performance this quarter, obviously, you pointed out some of the uncertainty, but we also have seen other guys in the space report numbers and kind of -- it kind of, in relative terms, slightly better than you guys. Can you talk a little bit about -- maybe there were some geographic or vertical split that is different for you than for other guys to try to understand that a little bit better. Thank you on that one. And then Chadwick, now with you having joined, can you talk a little bit about your priorities now that you're in the seat and thinking about capital structure, portfolio, or the different products, et cetera?

Question: Stephanie Price - CIBC Capital Markets - Analyst : Good morning. Maybe start off one with you, Chadwick. Just on the restructuring and the expanded scope. Press release noted annualized savings of about $400 million starting in fiscal '26, just trying to understand if you expect these to be additive to current margins? Or should we think about a portion of the savings being reinvested back into the business? And maybe just a little bit more in terms of where the restructuring will be done. It sounds like there's some technology work being done on the AI side.

Question: Stephanie Price - CIBC Capital Markets - Analyst : Thanks for that. And maybe one more for me, just on the Customer Support side of the business. We calculated, I think, a 6.4% organic decline in that business in the quarter. And I know the DXC contract maybe impacted that a little bit. Could you just dig into what's going on in that Customer Support line? Thanks.

Question: Thanos Moschopoulos - BMO Capital Markets - Analyst : Good morning. Mark, could you perhaps expand on what you're doing within ITOM and ADM to work towards further stabilizing those businesses?

Question: Thanos Moschopoulos - BMO Capital Markets - Analyst : I appreciate the color. And then just secondly, you have a meaningful government business. I'm just curious whether you're seeing any impact from the DOGE cuts?

Question: Samad Samana - Jefferies - Analyst : Hi, good morning. Thanks for taking my questions. And Chadwick, congrats on the new role. Maybe Mark, I'll kick off with you. If we think about last year, we've seen deals getting longer going to maybe two to four years in terms of duration. And now you're calling out some (inaudible) what happened there. I would characterize if there had not been for tariff, would you say that the demand environment was better this year than last? And maybe how are customers chatting before then to get a sense of what it could look like if this all goes away or if we had a pause, and then I have one follow-up.

Question: Samad Samana - Jefferies - Analyst : Great. I appreciate that color. And then Chadwick, maybe just appreciate all (inaudible) days, and you're still early in executing the game plan. But if you think about the different components of capital management, what would you say are the higher RPU, (inaudible) where your folks purchase right? Is it on being more aggressive with the buyback? Is it on some of the divestitures that you mentioned maybe tactically? How are (inaudible) where your early focus will be?

Question: Richard Tse - National Bank Financial - Analyst : Yes, thank you. So obviously, a big push here on AI. Just wondering if you may be able to provide some metrics just really to help us understand how that's being adopted by your base, like I don't know if you sort of have numbers on Aviator that you could share just kind of any growth metrics so we can kind of get a sense of that trajectory.

Question: Richard Tse - National Bank Financial - Analyst : Okay. Great. So my second question, I don't know if this is for Chadwick or yourself. But as you make that shift, are you considering shifting the revenue model to more sort of usage or value-based pricing, similar to some of your competitors? And how should we expect if you do that, the relative impact would be to the current model? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. MAY 01, 2025 / 12:30PM, OTEX.TO - Q3 2025 Open Text Corp Earnings Call

Question: Paul Treiber - RBC Capital Markets - Analyst : Thanks very much and good morning. Question on AI and then also the magnitude of the reductions that you're doing. So it does sound like you're seeing good usage and traction of AI internally, but how do you arrive at the magnitude of these headcount reductions? And did you contemplate a slower move and sort of dip your toe in the water as you make the transition more towards AI internally?

Question: Paul Treiber - RBC Capital Markets - Analyst : Second question, just for Chadwick, one of the metrics that you're considering giving guidance on is going forward is EPS. The -- which is a metric that the company hasn't guided for in the past. Can you just elaborate on the philosophy around EPS as a metric that you guide for?

Question: Kevin Krishnaratne - Scotiabank GBM - Analyst : I do have a question on guidance. I know we're going to get more detail in August. But on one of your slides, and I think you talked about in the script, an expectation of a return to organic growth in '26. Can you just -- what gives you the sort of the confidence there? I know you've got the RPO, maybe some of the drivers to get there? And then the second thing you point out is striving for a milestone of $1 billion in free cash flow. So is the expectation that you'll do the $1 billion plus in '26. I'm just trying to think about some of the puts and takes there with restructurings and just a shift in the business.

Question: Kevin Krishnaratne - Scotiabank GBM - Analyst : Got it. Appreciate that. One final one then. We talked about the enterprise booking softness, but about 10% of revenue basis SMB. So I'm wondering what the trends are looking like there? That's a sensitive part of the business when there's uncertainty. So just curious what happened there.