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Thank you for standing by. This is the conference operator. Welcome to the OpenText 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.

Thank you, operator, and good morning, everyone. Welcome to OpenText's Fourth Quarter Fiscal 2026 Earnings Call. With me on the call today are OpenText'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 OpenText 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 OpenText 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. OpenText 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 OpenText. 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 OpenText are contained in OpenText'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.

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 1, 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 and our roots, global in our reach, OpenText 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 OpenText, one that moves with speed and brings them innovation with purpose. Our ecosystem partners, they want more joint engagements. They see our differentiated value and want to scale with us. They want to pair our trusted data foundation for AI with their technology and services to capture more of the estimated $300 billion addressable market opportunity.

Our OpenText colleagues, they want what I want, more speed and simplicity, so we get more done and show up better for our clients. 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 lights 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 OpenText 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 1 day to 1 hour.

Next, business network, which moves transactions and data between companies. 1/3 of Fortune 500 banks globally use OpenText 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 EDM, 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. EDM 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.

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 VN 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 Instructions] Our first question is from Kevin Krishnaratne with Scotiabank.

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.

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.

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?

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.

The next question is from Doug Taylor with National Bank.

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?

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.

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.

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.

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.

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.

The next question is from Sagar Karri with BMO Capital Markets.

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?

No, 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.

The next question is from Stephanie Price with CIBC.

Wondering if we could circle back on kind of the investment. So $100 million to $200 million is a pretty large investment for OpenText. 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?

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.

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?

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.

The next question is from Paul Treiber with RBC Capital Markets.

Ayman, you've run very large sales organizations in the past. OpenText 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?

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 OpenText, not the brand-by-brand version, but the integrated OpenText, 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 3 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.

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?

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.

The next question is from David Kwan with TD Cowen.

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.

Yes. My take on it is that while 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.

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?

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.

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 potent 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?

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.

The next question is from Steve Enders with Citigroup.

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?

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, company in a more coordinated fashion. That's why those client executives are the ones that represent the holistic OpenText 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.

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?

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 states 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.

I will now hand the call back over to Mr. Antoun for closing remarks.

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 OpenText 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.

This concludes today's conference call. You may disconnect your lines. Thank you for participating, and have a pleasant day.

Thank you for standing by. This is the conference operator. Welcome to the OpenText Corporation third quarter fiscal 2026 financial results conference call. [Operator Instructions] The conference is being recorded.

I would now like to turn the conference over to Greg Secord, Head of Investor Relations. Please go ahead.

Thank you, operator, and good afternoon, everyone. Welcome to OpenText's third quarter fiscal 2026 earnings call. With me on the call today are OpenText Chief Executive Officer, Ayman Antoun; together with James McGourlay, our President and Chief Client Officer; Steve Rai, our Executive Vice President and Chief Financial Officer; and Tom Jenkins, our Executive Chair. Today's call is being webcast and recorded with a replay available shortly thereafter on the OpenText 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 OpenText Investor Relations website. Please see our investor presentation for further details of our core and non-core revenues by product categories. Turning to upcoming investor events.

OpenText will be participating in the Needham Technology, Media, & Consumer Conference on May 14; the Barclays Leveraged Finance Conference in Austin, Texas on May 19; the CIBC Technology & Innovation Conference in Toronto on May 21; the TD Cowen TMT Conference in New York, N.Y. on May 27, and the Jefferies Software, Internet & AI Conference in Newport Beach, California on May 28. We look forward to meeting with you there. Now onto the reading of our safe harbor statement. During this call, we'll be making forward-looking statements relating to the future performance of OpenText. 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 OpenText, are contained in OpenText recent forms 10-K and 10-Q, as well as in our press release that was distributed earlier today. These may all be found on our website. We undertake no obligation to update these forward-looking statements unless required to do so by law. In addition, our conference call may include discussions of certain non-GAAP financial measures. Reconciliations of any non-GAAP financial measures to their most directly comparable GAAP measures may be found within our public filings and other materials, which are available on our website.

With that, I'll hand the call over to Ayman.

Good afternoon, everyone. Thank you for joining us today. I'm excited to be here as CEO of this iconic Canadian technology company with global reach. To get started, I wanted to begin by sharing why I joined OpenText. We're living in the world of AI. Reliable, quality, curated, governed, integrated, and secure data is critical for credible AI outcomes that are traceable, explainable, and most importantly, deliver value. Simply put, data is not a feature, data is the foundation. Data is foundational across every organization, every industry, and every economy. Nowhere is that more true than in financial services, healthcare, and regulated sectors, where the cost of getting it wrong is simply too great. OpenText is a global leader in data management. This company is built for this moment. That's why I'm here. Today marks my 14th working day as CEO.

I'd like to share where my focus has been and where it will continue to be in the period ahead. Four clear priorities are guiding me right now. First, listen. Listening to our clients, partners, colleagues, investors, and shareholders. On the morning of day 1 as CEO, I reached out to over 100 clients and 20 business partners to arrange one-on-one conversations with each of them. Those meetings are underway. I'm also meeting with colleagues and individually with investors. There's no substitute for first-hand feedback and data to strengthen our go-forward strategy. My second priority is to learn. I'm spending dedicated time understanding every aspect of our business and the full depth of our portfolio, specifically our core portfolio, where we have a genuinely differentiated value proposition. Our core portfolio is where we will continue to invest, enhance, and build on. My third priority is to assess.

I have started a detailed review of every part of the business, understanding the areas that are working well and need to continue, and the places where we can get better outcomes. In particular, I'm focused on where we can sharpen our go-to-market deployment and execution, deepen our strategic relationships with ecosystem partners, and strengthen our core portfolio value proposition. My fourth priority is to build. Using everything I learned from listening, learning, and assessing, we will build a sustainable organic growth plan with a clear set of KPIs to guide our disciplined execution with milestones so that we can measure our progress, hold ourselves accountable along the way. Our intense focus on our clients is the foundation for these priorities. Our methodical approach to execution, our disciplined focus, our data-driven strategy will be anchored in serving our clients.

When we consistently partner with clients to solve their most pressing challenges and realize the full value of their AI investment, they reward us with growth, loyalty, and value creation for our shareholders. As we move through these 4 priorities, I will share progress with you. You should expect transparency and consistency from me going forward on what is working, where we are making changes, and how we're tracking against the clear plan we set out. Before I hand it over to James, let me leave you with this. I am deeply excited about the opportunity and equally confident in where we are headed. I look forward to meeting with many of you in the coming weeks. Thank you.

Thank you, Ayman, and welcome everyone to our Q3 fiscal '26 earnings call. I want to take the opportunity to welcome Ayman to OpenText, and I'm really looking forward to working together with Ayman in my new role as President and Chief Client Officer. Since August, our goal has been to ensure that our clients receive strategic support from OpenText as they progress through their cloud journey while rapidly advancing their AI readiness. The secure information management capabilities that we have provided to our clients for 30 years delivers and protects the same data that AI requires to gain additional value and insight from their content, and most importantly, the metadata wrapped around that content. Turning to Q3, we ended off the quarter with solid performance in total revenues, beating our own expectations for free cash flow and adjusted EPS.

Our results for the quarter and year-to-date of fiscal '26 continue to demonstrate a strengthening business and momentum in the cloud, especially in our flagship business of content management in the cloud. Steve Rai will go through our quarterly results in more detail. However, I would like to highlight that in Q3, we generated total revenues of approximately $1.28 billion, led by overall cloud growth of 6.6% year-on-year. We introduced disclosure on the revenue performance of our product categories in September of last year, and you can see that our total content business, which consists of 44% of our total revenues, grew 6% year-on-year in Q3. If you look specifically at cloud revenue for content, it grew 22% year-on-year. Content, which is our largest and fastest growing business, continues to demonstrate strength, and it also leads our cloud growth.

As I mentioned last quarter, the revenues for our core business continue to grow at approximately twice the pace of total revenues. We see opportunity for our core product groups to continue growing in the cloud as our clients make fundamental decisions on their cloud and AI needs. Some notable Q3 and year-to-date metrics include Q3 cloud revenue of $493 million is the highest in the company history. Q3 core cloud business up 12% year-on-year. Q3 adjusted EPS of $1.01 is the highest in Q3 company history. Year-to-date adjusted EPS of $3.19 is tied with our highest Q3 year-to-date figure ever in Q3 F '24. Year-to-date, we have $651 million in enterprise cloud bookings, also the highest in Q3 year-to-date in company history.

We saw 41 cloud deals greater than $1 million in Q3, an increase of 28% year-on-year. Q3 year-to-date cash flow of $686 million is the highest Q3 in company history. Turning to some of our client wins this quarter that highlight the growth trajectory of our core business. Michelin in our business network. Michelin navigated an increase of market consumption for e-invoices that required integration with Microsoft and our business network as part of the company's innovation program. Through their expanded relationship with OpenText, Michelin can capitalize on the implementation of our business network for self-service, apply AI to those B2B workflows, and supply chain use cases supporting their business needs. HARGASSNER in content. HARGASSNER aimed to establish a single source of truth for enterprise content across all business applications, including their current deployment of SAP public cloud.

By implementing a unified content platform, HARGASSNER expects to contextualize their content effectively and ensure every stakeholder has access to the right information, enhancing productivity and decision-making. Third, HPE Aruba Networking in our cyber enterprise. HPE Aruba Networking requires best-in-class threat intelligence to enrich their controllers, access points, and switching products with cyber protection. OpenText provides dynamic real-time threat intelligence for URLs, IPs, and cloud services intelligence for cloud applications. Aydem Energy in our ITOM business. Aydem has a strong focus on renewable energy and operates complex multi-regional systems that demand consistent governance and robust processes. Aydem expanded use of our ITOM platform delivers end-to-end test monitoring powered by GenAI, designed to provide a competitive, efficient, and scalable test environment. Turning to our product news.

A few weeks ago, we announced that select enterprise data and AI solutions will be available on the AWS Sovereign Cloud, extending its hybrid cloud deployment options in Europe. The offering is aimed at regulated EU clients requiring strict data residency and sovereignty while leveraging Amazon Web Services infrastructure. Strategically, this extends OpenText's addressable market in Europe and reinforces its positioning in secure content management for AI, though near-term financial impact is likely limited. As a reminder, OpenText data AI platform is shipping this quarter, as well as a host of new tools for orchestration of data integration and agentic AI. Our AI data platform can facilitate any major LLM model and provide over 1,500 connectors to various ERP, CRM, ITOM systems such as Oracle, Salesforce, SAP, et cetera.

We are seeing our clients accelerate their moves to the cloud, but on their terms, whether that is on-prem, private cloud, public cloud, sovereign cloud, or a hybrid approach. This optionality is a strategic advantage and a differentiator for OpenText. Turning to our outlook, there is no change to our F '26 revenue target of 1% to 2% growth year-on-year once you adjust for $30 million of anticipated revenue that went away with our divestitures. Steve will talk more about this and some of our other metrics in our outlook. I took on the role as interim CEO with the objective to maintain a steady ship for OpenText. This is an exciting time at the company, and we've made the right choices to set us up for the AI opportunity in front of us.

We have had some great achievements over the last three quarters, especially in our Content Cloud business. In my new role as Chief Client Officer, I'm even closer to our clients, driving a culture at OpenText where client success is at our core.

With that, I would like to hand the call over to Steve.

Thanks, James. Good afternoon, everyone, and thank you all for joining the call today. Also, an official warm welcome to Ayman as CEO. We've been working very closely together the past few weeks at the Waterloo headquarters and are very excited to have you on board to help shape the next chapter at OpenText. OpenText had a strong Q3. This momentum positions us well for the final quarter of fiscal '26. Our Q3 and year-to-date performance demonstrates how our cloud and AI offerings are resonating with our clients as they prepare their data for AI. While James talked about our strong cloud performance, I'd also like to highlight how OpenText continues to build on a solid foundation of margin and cash flow, which affords us the flexibility to allocate capital to investments that generate the highest return and adjust our priorities quickly in a rapidly changing environment.

Let me get to some key financial highlights for the quarter. We generated total revenues of $1.28 billion. Cloud revenue was $493 million, up 6.6%, mainly driven by Content Cloud. Please see our investor relations presentation for further details of our core and non-core revenues by product category. Q3 represents our 21st consecutive quarter of organic cloud growth. Our cloud net renewal rate was 95%, down slightly by 1% year-over-year and consistent with our annual model. Customer support revenue in the quarter was $565 million, down slightly by 0.4%. Our customer support net renewal rate was 93%, up 3% year-over-year.

Annual recurring revenue or ARR was $1.06 billion, up 2.7% year-over-year, and representing 82% of our total revenue and consistent year-over-year. Turning to profitability, GAAP gross margin was 73.1%, and non-GAAP gross margin was 76.7%, both up by 150 basis points and 100 basis points respectively year-over-year. This was mainly driven by the increase in cloud, customer support, and license gross margins, partially offset by the decline in gross margins for professional services. Adjusted EBITDA was $438 million or a 34.1% margin. This was up 10.8% and 260 basis points respectively year-over-year. The increase was driven primarily by cost management actions and the business optimization plan.

The plan itself remains on track, we still expect to realize this year an additional approximately 1/3 of the total estimated savings of between $490 million to $550 million. Please see our investor relations presentation for further details. GAAP net income was $173 million, up 86% year-over-year. The increase was largely due to the sale of eDOCS and unrealized derivative gains. Non-GAAP net income was $250 million, up 15.9% year-over-year. Q3 GAAP diluted EPS was $0.70, up 100%. Non-GAAP diluted EPS was $1.01, up 23.2%. Free cash flow was $305 million, down 18.4%. On a year-to-date basis, total revenue was up 1%. Cloud revenue grew 5.3%.

License revenue was also up 2.4%, partially offset by a decline of 1.1% in customer support and 9.3% in professional services. Year-to-date adjusted EBITDA margin was 35.8%, up 110 basis points. Non-GAAP diluted EPS of $3.19 was up 11.9%, and our free cash flow was $686 million, up from $563 million for the same period last year. Turning to our full year fiscal '26 outlook. Our expectations remain unchanged at 1% to 2% for total revenue growth year-over-year. With the strong cloud performance this year, and based on higher conversion rates in enterprise cloud bookings, we are increasing our cloud revenue growth range for fiscal '26 from 3% to 4% to 4% to 5% year-over-year.

We are also increasing our enterprise cloud bookings growth range, which was 12% to 16%, now moving to 16% to 20% year-over-year, as we are experiencing greater interest from our clients in deploying our cloud offerings, especially for content. In addition, we are also increasing our outlook range for free cash flow growth from 17% to 20% to 22% to 25% year-over-year. In the longer term, OpenText will benefit from clients migrating to the cloud, and as a result, RPO and adjusted EBITDA dollars will grow over time. We are already seeing the early signs of cloud RPO growth over the past couple of quarters and in fiscal Q3. Cloud current RPO is up 5% year-over-year, and cloud long-term RPO is up 19% year-over-year.

The strength of our margins, cash flow, and balance sheet gives us a strong platform to run the business. Our board regularly reviews the company's capital allocation strategy, and we are being disciplined with our approach under the current macro and geopolitical environment. Earlier this year, we increased our share buyback program from $300 million to $500 million for fiscal '26. We repurchased and canceled 9.7 million shares in Q3 and reduced our share count by 6.7% year-over-year to 242.2 million shares outstanding. We are maintaining our dividend policy and are being prudent in our portfolio reshaping activities in the current environment. In Q3, we delivered a strong quarter of cloud growth, margin, earnings, and free cash flow. This momentum sets us up well for the final quarter of fiscal '26.

I look forward to partnering with Ayman and the rest of the ELT to deliver on our strategy for growth and help our clients migrate faster to the cloud and support their AI journeys.

With that, I will hand the call over to Tom.

Thank you, Steve, and thanks everyone for joining the call. My warmest welcome to Ayman, who officially joined in April. Ayman has been deeply engaged with our board, executive leadership, OpenText colleagues, partners, clients, and he'll be meeting with many of our analysts and investors in the coming months. Now that Ayman officially joined us two weeks ago, I'm stepping away from my role as Chief Strategy Officer and continuing my position as Chair of the Board. In less than a year, we've already achieved most of the important milestones that we set out last August. Our core businesses of content, business networks, ITOM, and cybersecurity are essentially components to train agentic AI. Well-managed governed data is the foundation of enterprise AI, OpenText is uniquely positioned because we manage and secure those three distinct data types at scale: human-generated, machine-generated, and transactional data.

From a strategy perspective, we made the right choices for OpenText in both product categorization and leadership, while positioning the company to be at the heart of enterprise AI. Turning to our divestiture strategy, we expect the Vertica divestiture to close shortly, and we remain in the process of continuing to reshape our portfolio. Obviously, there is currently geopolitical and macro uncertainty, and this created a more selective buyer environment. We're disciplined sellers, though, and being disciplined means we do not sell assets at the wrong moment to the wrong buyer. There's still plenty of interest in our assets, but we will not be doing any so-called fire sales. As we wait for improved market stability, our non-core businesses continue to contribute to our overall margin and cash flow.

Before I turn the call to Q&A, I'd like to say that I'm proud of what we've accomplished in less than a year, and all the hard work has resulted in putting OpenText in a solid position for the next phase of growth. I'd like to thank all the OpenText staff and you, our investors, for your patience during this transition. Cloud and AI remain at the forefront of our future and will fuel future years' growth.

With that, this concludes our prepared remarks. Operator, would you please open the line for questions?

[Operator Instructions] The first question is from Richard Tse with National Bank Capital Markets. Please go ahead.

Ayman, I'm not sure this is an entirely fair question. I'll sort of try, and if you can if you could sort of give us a good color, that would be helpful. You've been there for less than three weeks. What would you say are your initial observations on where you see the most opportunity to drive growth here at OpenText, either strategically or operationally?

Hey, Richard. Good afternoon, and thank you for the question. My experience is nothing is called an unfair question, so I appreciate the question very much. As you heard me say in the opening, even though I'm at the beginning of the journey of listening and learning, to your point, I had a number of client interactions, and they are very direct. That's one of the many things I love about our clients, is they tell you what you do well, and they give you the opportunity to improve. My early observations, if I were to package them into things that we would build on and continue, and this is informed by what clients and partners and colleagues have said to me so far in the last 14 days, is the culture that is client-focused.

You have everybody at OpenText that wakes up in the morning looking for ways to solve client problems and to do them in the most efficient and creative way. The second observation that clients have been vocal about as well is the strength of our core portfolio. They see where we play. They understand the value proposition we bring them. Areas of opportunities to work on and strengthen, and this is just in complete transparency because that's what you should expect from me every time going forward, is enhancing our engagements with our ecosystem partners. There's some good pockets of success, we need to scale that and accelerate it. That's one of the reasons why I've reached out to 20 partners on day 1.

I was incredibly encouraged by the response I got from every single one of them. Looking forward to strengthening that relationship. The other point I would tell you is strengthening the muscle of disciplined execution across the entire operating model. Disciplined execution from a sales point of view, from how we prioritize development efforts, capital allocation. Those would be my as early informed 14-day view, but more to come, Richard, as I continue that journey of interacting with more clients, partners, investors, and colleagues.

Okay, thanks. Really appreciate that. I just have one other one, and I'm not sure who this is for, but with respect to AI monetization it's been a, I think a pretty compelling story in terms of what OpenText has to offer. I'm curious as to the bookings, if you can maybe share what component or percentage of the bookings is sort of tied to AI, whether it serves an OpenText product or a use case for that?

Maybe I'll start. It's Steve Rai. Obviously, in terms of that level of granularity, we don't typically provide that. Now, in terms of sort of general demand and approach and kind of attach rates to it, I'll let James comment on that further.

Thanks, Steve. I think as Steve points out, we don't comment specifically on the attach rates or numbers, but we are seeing an increase in both the deals and the size of deals that are closing. We're seeing larger deals being closed with our Aviator. The deal size is larger. We're seeing larger deals. We closed a deal this quarter. It was a 7-figure deal with Aviator included. That was a major component there. We are starting to see a continuing build of this. Looking forward into the pipeline, we can see similar trends in our pipeline and growing deals, larger deals, and a higher number of deals with Aviators included.

The next question is from Kevin Krishnaratne with Scotiabank. Please go ahead.

Ayman, looking forward to working with you. I'd like to ask you a question on your view on OpenText's competitive positioning and specifically from your experience competing with them on FileNet and Sterling. What would you say are maybe some of the underappreciated aspects investors may not know about the OTEX assets that you saw when you were coming up against them on deals on the other side?

Hey, Kevin, good afternoon, and thank you for the question. Maybe I would point to a couple of things as my early observations, again, based on interaction with clients, because that's one of the questions that I asked. I asked clients, "Could you tell me when you when we earn your business, could you articulate why you made those decisions? In the cases where we did not earn your business, could you articulate?" Again, I just give you that backdrop because I'm a huge fan of just being grounded on client views because they're the ones that pay our paychecks. As you know. My early feedback and observation is what would probably be underestimated is the length of time that OpenText had around this notion of data and data management.

This is not a competency that they have acquired overnight. This is not something that is in pilot phase. This is tried and true. The diversification of the portfolio of clients across industries, across geographies, and across client size in terms of enterprise size tells you that this is not for the largest or the smallest. It's not for certain industries. It's very pervasive in terms of the strength. I honestly believe, with 14 days under my belt, that that's an area that we probably take for granted, and we have work to do to amplify that brand capability in the marketplace.

The second thing I would say is this notion of, and you've heard it in Tom's remarks, and I'm sure you heard from the team before, data is not data is not data. There's the data that you and I generate. We refer to that as the human data. There's the data that systems generate, alerts, cybersecurity incidents, outputs from systems as they communicate with each other. Then there's the data that is produced when organizations interact with each other, be it e-commerce or something else. OpenText broader context of data through those three dimensions is probably another area that we need to amplify and remind ourselves that it's a strategic advantage for us and ensure we continue to monetize it as we interact with the clients.

Those would be the two early feedback I would give you, Kevin, with kind of over the last 14 days as I engage with clients.

Got you. Appreciate that color. Maybe second question maybe for Steve. I know that on the revenue guide, I see that you haven't you've maintained the 1% to 2% and that you call out that the core is expected to grow. In your previous slide deck, you it had the commentary that the core expected to grow in CC. I just want to confirm if you are seeing any change on core performance when excluding FX.

From a, that's correct in terms of what you noted. You know, just given FX on a constant currency basis, it will likely not be growing. However, just a reminder, on the 1% to 2% that we're maintaining, that's after taking into account the divestitures and the revenue associated with that, approximately $30 million. Just just to kind of complete the picture, I mean, obviously we've increased our guide on bookings, which is largely on the back of the Content business. You know, obviously that continues to go well. Great pipeline and conversion rates that we've got there.

You know, from a, the revenue associated with that, we did not update that because obviously there's a few things at play that we've kind of talked about broadly before as clients convert to cloud. There's mix that comes into play. Of course, as you've heard the others talk about just caution with respect to the macro environment.

Yes, that's a good point. The previously had $60 million, I think for eDOCS that was baked in your guidance. The $30 million has got a portion of Vertica, assumed in that, deductions to get to that $30 million. Is that, is that correct?

That's right.

The next question is from Stephanie Price with CIBC. Please go ahead.

Welcome, Ayman. I was wondering if you could talk a little bit about cloud bookings conversion. I think you mentioned in the commentary that that was stronger at this point. What are you seeing in terms of the timeline for cloud bookings converting into revenue and how should we kind of think about that conversion process?

Yes. Talking about the, sorry, clients converting over to cloud we are continuing to see the progress there. As you can see by our cloud bookings growth in the quarter, that we are continuing to progress along there. Regarding the conversion into revenue, I mean, as we deploy with the clients, you'll see that starting to roll in. You can see our CRPO is continuing to expand. You know, we will expect that to continue. You know, I think as we've talked about previously, we expect this to be a multi-year process as we convert our clients into the cloud going along over a number of years.

I think we'll be able to provide more details on that as we continue to go along in that process.

Okay, that makes sense. Congratulations on free cash flow conversion in the quarter. You know, it seems like it's back kind of more in line with historical this quarter. Can you talk a bit about the measures you put in place that have led to the stronger free cash flow conversion and how to think about this quarter relative to the rest of the year?

Yes, I mean, there's a few things at play there. I mean, obviously quarter-to-quarter, there's some difficult changes just from a working capital standpoint. There's a few things throughout the year that can be a little bit lumpy, such as the tax installment payments and those kinds of things. Basically good continued execution. I mean, we've continued to do a lot of work on the cost savings and business optimizations that we've got at play, and we're starting to see the benefits come through from that, both in terms of our OpEx profile, as well as naturally, into cash flow.

The next question is from Thanos Moschopoulos with BMO Capital Markets. Please go ahead.

Congrats, Ayman, on your new role at OpenText. In terms of the spending environment, I mean, clearly it doesn't seem to have been an issue for the quarter or in the guide, more broadly, what are you seeing? I mean, on the one hand, I would imagine strong interest in AI, on the other hand, all the geopolitical uncertainty. Any change in sales cycles or buyer behavior to call out in that regard?

Good afternoon. That's an important question because I asked the clients I spoke to about how they're thinking through the period ahead and any changes that they have made. I've asked my team because I walked into this in April, and I wanted to know if they've seen anything throughout the quarter. Based on the feedback I got from clients, and what the team has shared with me, we have not seen any material slowdown in clients making decisions, in particular, as you pointed out, around AI opportunities. That brings us to where OpenText lives. It lives in the data management, the input into all those AI engines, all the AI agents. I certainly did not get any feedback.

Not that it's it's a month's worth of data, it's just 14 days worth of engagements with clients. So far, I have not heard anything from them that would suggest that. In some cases, they actually talked about accelerating to catch up because they believe that they were just a bit coming a bit from behind regarding deploying their AI models.

Great. In terms of converting existing clients to a cloud model, I presume that there might be more carrots and sticks you could use to move that process along. That's, even, I don't know if you have any real thoughts in terms of whether the current approach that OpenText is introducing is the correct one or whether it might be warranted to make that move kind of more aggressively and foster clients to incentivize them to move to cloud sooner.

I'll give you my perspective and Steve and James can comment in addition. First of all the approach we're taking where the client data/AI agents workloads reside and allowing the clients to have that choice, I believe deep in my heart and given my experience, that is a really strategic advantage for OpenText. Our view is we're going to meet the clients where they are in that journey. If they're behind in the journey and on-prem or even if they're not behind, there are strategic reasons for their on-prem decisions, we're there. If they decide it is a public cloud, we're there. If it's a private cloud, we're there.

If it's a sovereign cloud, given a lot of the discussions in the marketplace on that topic, we're there as well. The fact that we offer that choice and stand behind the client versus force their hand is a huge advantage for us. That being said, again, I come in here with 35 years of experience. In the last number of years we're on the topic, many of the clients are well down that path, and many of them are accelerating. They don't need any convincing. We have lined up our plans, our product portfolio, our go-to-market coverage, our incentives, our operating model, taking into account the fact that that journey has already begun. It's being accelerated, and I don't think we're going backwards. That would be my view.

Steve or James, anything you would add?

I think you've covered it completely, Ayman. You know, the flexibility that we offer our clients, deciding how they're going to run, where they're going to run, really does give them that benefit. I the benefit of choice and think that's the main things to cover.

The next question is from Paul Treiber with RBC Capital Markets. Please go ahead.

The question for Ayman. The in your perspective regarding capital allocation, when you look at the history of OpenText where it is right now, where the stock is leveraged et cetera, what would be your top priorities for incremental capital allocation here?

Hey, Paul, good afternoon. Thank you for the question. Let me just zoom out first. Then I'll address your question head-on. When you heard me reference earlier, disciplined execution, I kind of mentioned disciplined execution is about multiple dimensions. It's how you allocate capital and having that discipline is part of that. Capital allocation options and discussions are things that the management team discusses a lot with the board of directors every single board meeting. Just we concluded one a couple of days ago. That was in the heart of the agenda. It's no magic. There are 4 or 5, depending how you would package them, categories.

Debt reduction, considering dividend payout, share repurchase, which you've seen us do, and even increased in the last quarter, organic growth investments. I think of organic growth investments into the portfolio, into the go-to-market, into ecosystems. It's not just about products growth investments, but across the board as well. I started with debt reduction. I'm not necessarily giving you this in any priority order, but you see the numbers, you know where our debt is, and that's one of the things that I'm spending time on to understand so I can help, at least from a recommendation to the board, prioritize how we want to spend our future capital from an allocation point of view.

Thanks for that background on the framework. The next question, just on internal productivity and internal product development, can you speak to the benefit that you've seen from AI internally, and then if you're taking that productivity gain and using it either to save costs or to accelerate product innovation?

That's another really important question because one of the things that the team is spending thoughtful time on is to ensure because that's how you get credibility with the client. To ensure OpenText is client zero. When we talk about AI and the value that we can help our clients gain from AI, we're using OpenText as an excellent example where today, we've decided our entire operation is running on OpenText products. 70 of our offerings are actually deployed. The entire enterprise is infused with a large number of AI agents. We've committed to over the next 10 years to save $1 billion as a result of that. We're seeing the benefit also on the way we support our clients.

The first thing I would share with you is we're being fixated on it's not AI for the sake of AI. What I'm guiding the team to think through for us as client zero is the value of AI is to accomplish three things. Number one is to serve our clients better, the way we support them, the way we deal with challenges, outages, incidents, and what have you. Number two is to make our products and offerings better by infusing them with AI capabilities from the ground up, not as a bolt-on at the end, from the core. The third is to make our colleagues', work experience, easier and more productive. Those are the three lenses that we're fixated on for ourselves so that we can be a credible, client zero.

Early indication as we're deploying that aggressively internally, when we look at time to restore with incidents, it's up 50% on the back of agentic AI capabilities. When we look at the number of incidents that we're dealing with, they're down almost 20% because if you infuse agents to predict before you have an incident, you can save the incident from happening. We're seeing the early fruit of that labor. I would say, Paul, that that is a journey, it's not a destination. Hopefully framing how we're thinking of AI for our use and to help our clients answers your question.

The next question is from George Kurosawa with Citi. Please go ahead.

I'm on for Steve Enders. Thanks for taking the questions and welcome, Ayman. I want to echo that as well. I want to touch on the Content Cloud business. Further acceleration on the cloud side. Maybe you guys could just double-click on what is working so well in that product portfolio. Then not to get you to commit to segment-level outlooks, but just when you look at your pipeline is there scope for this business to continue acceleration, or does this feel like a maintaining this current growth pace is a success? How are you guys thinking about this business going forward?

Sure. Thanks for the question. It's James. Looking at our content business, we're very excited at the opportunity that's before us. Our customers are continuing to engage actively with us as we go through this process. In many cases, leading the way, as Ayman talked about earlier. They're already down, made the decision that they're moving to the cloud, we're working along with them. You know, content curation is a main focus as people prepare to move towards AI. We're seeing a pickup in that velocity or in the velocity because of that as well. We're also looking at platform upgrades and new functionalities that are coming out in the products that's helping to drive.

As we're going along here, I do expect to see us pick up the speed on our content, or our content migration to the cloud. Quite excited about the business.

Okay, great. Maybe just a bigger picture AI strategy question. You know, there's a lot of discussion around capacity constraints of LLM providers in the ecosystem at large. You know, just given the significant increase in usage, token costs are ballooning. You know, a lot of organizations are bumping up against token budgets within the first quarter of the year. You know, you guys have emphasized your value proposition on the governance and training components of leveraging AI. You know, is there now or maybe in the future some element of it seems like you guys might have a position to help customers improve the efficiency of their token usage. Maybe you can talk about if that's a component of the strategy.

Hi, George, it's Ayman. That's an important question, you're giving me a couple things to think about and take away. First, thank you for that. What I do want to mention, though, I will take that away because I think that's an interesting point to go double-click on for us as a leadership team. My experience in this space so far, my early client conversations, no one is unwilling to spend what they need to spend as long as they believe they will get the ROI investment. Most of them are starting to think about transitioning from use case kind of discussions where here are the use case for back office or front office or somewhere in between, to more of a platform discussion.

More of the clients I spoke to also are starting to kind of prioritize by saying as opposed to, be fixated on reporting how many use cases they have in production. You know, there was a phase where they were trying to outpace their competitors in the space by how many use cases they have produced. They're now trying to focus more on the 5 or 6 or 7, half a dozen big rocks of areas where they can make pervasive change to their business model, to the output, to their competitiveness in the marketplace. They're making bigger bets, I should say.

Those bets are assuming that they're going to have the right data in an organized fashion, in a traceable way with the right lineage, history, because in a regulated environment you have to show that. That's a bit of the transition that I'm picking up from my early client conversations, and I'm just sharing. We'll take that suggestion you gave us away.

[Operator Instructions] The next question is from David Kwan with TD Cowen. Please go ahead.

Welcome, Ayman. I was wondering if you could comment on just some of the regional impacts as it relates to your business. I know last quarter we saw the softness in the Americas, and it was really driven by the U.S. government shutdown. It was just still down again this quarter, but not quite so bad. I was wondering if there was some lingering impact in there from the shutdown. By contrast in EMEA, it was also strong again this quarter of double digits. Wondering if there was just a continuation of the strength there. I think the government was one particular vertical that you flagged last quarter.

Yes. James, I think you hit it off, right? We have seen some lingering impact on the government. There's been a few contracts that are still there. They're just haven't closed yet. We've seen that impact in the U.S. We've had a great strong quarter in Europe. Some strong deals closed. A lot of activity there. As you know, I talked earlier about some large deals involving Aviator. We saw some of those come through in Europe. That talks a bit to the regionality. Overall we're seeing our balance still. You know, we've got some strong opportunities going up in the current quarter.

That's great. Thanks. As it relates to the 4 core businesses and trying to get those back to all the growth, I guess, next quarter, is that still the expectation? You know, cyber security and ITOM were down a bit this quarter. Do you think that it's something kind of looking out beyond this year that if they're on a kind of path of sustainable growth?

Hi, David, it's Ayman. Let me just address that and then Steve and James can jump in. Again, I'm just going to zoom out because I'm a huge fan of context. When you heard me talk about disciplined execution early, let me give you two flavors of that umbrella. I've already mentioned to your colleagues a few, but part of disciplined execution means balanced execution across the geographies. You heard from James, as you pointed out, Europe was strong. Part of our homework going forward is to make sure we have that balance. That's the first point I would make. The second dimension of balance is across the portfolio. When you look at our cyber business, we have a really strong portfolio there.

That's a space where clients are spending money, and it is on us to make sure that we are very articulate with our value proposition. We have sharp sales execution motion in place to return the business to growth and keep it growing because the clients are spending money. You summed it well. That is our job as a management team, and that is a clear example of what I mean by disciplined execution earlier.

No, that's great. I appreciate that, Ayman. I guess last question, Tom, in your pre-prepared remarks, you talked about, kind of macro headwinds being disciplined sellers, kind of waiting for improved market stability as it relates to the asset sales. Are you still looking or committed to sell or announce the sale of non-core assets one per quarter? Could we see that maybe get stretched out just because the market's not quite there?

Yes. The one per quarter comment was about our limit to be able to implement them. Because at the time, we had lots of interest across all the different business units, but we just couldn't sell them all at the same time. The comment about the buying market is simply that the SaaSpocalypse thing didn't really affect serious buyers because they were doing this on a discounted cash flow basis. You can't do that when you also have an active war going on. It's that combination of the two that has caused us to pause because quite frankly, buyers are having difficulty getting financing. We just wanted to alert the Street that as soon as the war is over, you'll see us, I think, get right back into a normal market.

At that point, you'll start to see us start again and again, with the proviso that we'll still implement once per quarter, just simply because the logistics of divestiture. Having said all that, we are nine months into this now, and Steve Rai and the team have gotten very good at this. We'll revisit that again. It all depends on how management feels about it. Yes, it'll be steady as she goes. We've got to have the capital markets return to normal.

Tom summed it up beautifully. The only thing I just want to add, you should expect from us that we will be very responsible with our shareholder money, and we owe it to them that we get the right return for the assets. That's what's behind Tom's comment about market conditions and fire sale. We have an obligation to our shareholders, and that is what's guiding our timing as well.

I'll now hand the call back over to Mr. Antoun for any closing remarks.

Thank you, operator. Let me just wrap up on a couple points. First, just a sincere thank you for your kind welcome and warm welcome and for being with us and for all of your thoughtful questions. You've given us a couple of ideas that we're going to go double click on. I'd like to just close the way I started with the opening remarks. I am incredibly excited and equally confident about the road that we have ahead of us, and I'm very much looking forward to speaking with each of you one-on-one in the coming weeks. Have a great afternoon.

This concludes today's conference call. You may disconnect your lines. Thank you for participating and have a pleasant day.

Thanks, everyone, for joining. Really pleased to have OpenText with us today. Tom Jenkins, Executive Chair and Chief Strategy Officer, been in the role for 9 months -- back in the role of 9 months now. Yes, welcome. Thanks, everyone.

Tom, you made some interesting comments on the last earnings call. Obviously, AI disruption is a huge theme. Can you talk about why OpenText may be immune to some of that disruption, sort of talk about the secret sauce and maybe why you're not an application software more you feed content into application software.

So on a broader level, what maybe the first thing to say is we're not an application software company. Yes, we're a software company. We're not an application software company. But also just application software itself, especially in the area of enterprise software, this is very difficult. You don't just switch technologies like this.

We took a decade to go to the cloud. We took a decade to go to client server. I'm old enough to remember all of those. This takes a long time. This has been a rather dramatic response to AI. The other really interesting thing about this overall is that market participants are not stupid. They will -- if indeed AI is going to react and people are going to adopt it, market participants will simply acquire one of the other large language models that are falling by the wayside. I watched all these market participants do that for the last 35 years.

So it's been -- and a macro thing, the last 3 or 4 years has been rather interesting. Specifically to OpenText, though, and on our call, we're not an application software company. We provide all the content that goes into applications. And in fact, if you could put the slide up, I brought a slide just as an engineer, it's always easier for me to see an image.

If you think -- if you look at the slide, I'll just break it down for you very quickly. You take the content, I guess you can see it over here. You take the content. What's the content? It's contracts, it's e-mails, it's spreadsheets, whatever, all the content that goes into running an organization. You put that into an application.

What's an application? That could be Microsoft Office. It could be SAP, it could be Oracle, it could be Salesforce. It doesn't matter. It all goes into those applications run by human being. And what do you get out the other side? You get operational efficiency, you get faster time to value, whatever. That's been the enterprise software business since IBM invented it 50 years ago in mainframe. So we've done that evolutionary step.

What's happening now is we're replacing the humans or we're augmenting the humans with the bottom part with an Agentic AI or some form of very specific AI to either help the worker or to replace the worker. It depends on the situation. But the point is you have to train it. And to train it, you have to use the same content that you're giving the human. So OpenText does all the stuff on the left side of that graph.

We don't do the applications. We provide the content that goes into the applications. And so what are we busy doing now? We're providing the content that goes into Agentic AI. So that -- and then, of course, they'll drive the same. So when you hear things like Anthropic and what have you, they're starting to talk about, well, maybe we can make the application software and replace the human and the application software that the human uses. Quite frankly, we're in variant to that.

And by the way, as I said at the beginning, it's not going to happen anytime soon. But if it does, we're simply feeding the content to either the human or the robot. For us, we don't care.

And then can you -- on that content that you're feeding in, can you talk about any secret sauce, the metadata sort of business context that you bring in and sort of like why your decades of experience and data that you've been collecting?

Yes. Okay. So that's why I brought this along because if you want to understand that question, read this book. That's why I wrote the book because we are getting that question all the time. So this book is very similar. It's a modern version of the book I wrote about 25 years ago, which created the term enterprise content management.

So this book is called Enterprise Artificial Intelligence, and it will become the Bible of how you build the Agentic bots. And just like the book that we wrote 25 years ago, defined enterprise content management. Okay. So let's unpack what all that means. So okay.

Maybe the simplest way, and I'll back off, but I'll give you an overly simple answer. If you're feeding into an AI and you have a data lake, so let's say that's Snowflake or Databricks or something like that, that is like a big storm sewer going into a lake. It's just throwing a ton of data that then trains a very sophisticated large language model.

Great. And so we've seen lots of applications come with that. What you're talking about is when you get into Pfizer or you get into General Motors or you get into Coca-Cola or you get into Nestle. And I can go on and on and on, regulated industries, industries that have responsibility around the data, industries that have all of your data, you don't want that going into a data lake and you don't want that going into Gemini or ChatGPT, et cetera, because through prompt engineering, we can basically get all your data eventually.

I mean there's all kinds of guardrails and what have you. But the bottom line is you don't want it. And if you're a corporation and you have the Cadbury secret sauce or whatever, you don't want that in a data lake or in an AI. What do you do?

Well, we have laws. We created laws 25 years ago when this first started to happen with data going into those applications. And the laws are called GDPR, general data protection regulation, PIPEDA in Canada, U.S. PDR in America and so on. So we have rules and it's fines, go to jail, like they -- all the country set out rules to protect your privacy so that you can't lose all your bank accounts so that people don't know what your latest medical report was, et cetera. It's your privacy.

Okay. So we have a body of law. In fact, there's more than 10,000 regulations that relate to the handling of content. When you feed that content into a large language model and AI, it consumes all that information. It now has the same information as if you had it on a folder that you have to protect. So the law that has the responsibility for that corporation around your information, that same law applies to the AI. So you've got to be very, very careful.

So the way I like to say it because the way we solved this 25 years ago is we created permissions. You would have permission to know that a document existed, but you couldn't see it. You could have permission to know the document existed and you could see it, but you couldn't modify it. You could have the permission to see the document, modify the document and create a new document and so on. There's actually 11 steps in the latter. And we created all that 25 years ago so that organizations could move away from paper and actually do this all digitally.

So if you think of a data lake being a storm sewer, a content management system going into AI is like all the pipes that are in your house. And every pipe goes to the laundry, the washer dryer, it goes to the kitchen, it goes outside to the lawn, sprinkler, et cetera. And what does every pipe have? It has a valve. And that valve is the permission. So it's the same thing.

So what we're doing is when you train an AI, you're training it with very specific pipes, not a big storm sewer. You have to do it that way or your company could go out of business because you'll be in violation of some regulation. So this is grown-up adult serious stuff. This is not stuff that you just put up on the Internet. And remember, and if you read the book, you'll see in Chapter 1, 90% of all the world's information is behind the firewall, and it has spigots and valves on it. So you can't get at it.

The vast majority -- a lot of people always think that Google or ChatGPT has all the information. No, they have a fraction, a very tiny fraction of all the information out there. So that's a bit of a longer answer, but it's an important thing to understand.

Bringing it back to the business today on content management is what we're mainly talking about today. Overall, your cloud growth in the last quarter was a little bit over 3%, the cloud growth, but the content cloud growth was something like 15% or 16% growth, and it seems like it's been that growth rate last year. I don't know how long...

It's been solid on that about 8 quarters now, and that's cumulatively building because that growth rate is getting on a bigger and bigger number every quarter. And you know what's happening is CIOs are getting ready. They're getting ready because everything that I just mentioned to you, you have to have all your content ready to go before you start training those bots.

So they call that curating the content. They've got to make sure they've got all the content in the cloud. You see, you can't train a bot if the content that you're managing is on a file server on a mag tape or something like that on some archival storage. It has to be live. It has to be accessible to train whatever Agentic you're building. So what you're seeing is you're seeing not even the first inning of the ball game, you're seeing the first batter.

What they're doing is they're just basically getting everything digital. You'd be surprised, but -- the vast majority of organizations, even after COVID, COVID forced them to do all their customer-facing as digital, all the back end, which is all the stuff we manage, it all stayed on-prem, et cetera. They're now moving it into the cloud because they have to. It's the only way they can take advantage of AI.

Can you tie that into comments that you've made recently about how OpenText might be shifting over the coming quarters and years as you move more to the cloud away from the maintenance and support line. And you've talked about maybe how you've learned from other software firms in their transition and you're doing something a bit different this time around. What have you learned? And how do we see the trajectory moving over the coming year?

So the simplest way to think of it is what the ERP firms did. SAP going from R/4 to R/4HANA, we share most of our customers with SAP or Oracle. They both did this over the past decade. What's happened with our customer base is this move to the cloud to train AI is causing them to talk to us about moving from the classic on-prem maintenance model to move to the cloud.

So what we've been doing is we now have feature equivalents between everything that's on-prem and can be offered in the cloud. And so what we're doing is we're starting to do migrations the same way that you saw SAP and Oracle and others do. So you're going to see the cloud revenue part of OpenText expand. And you'll see overall growth being driven by that because -- and we don't know yet what the -- Steve did an analysis at Analyst Day to give everybody an idea of what it would look like.

You'll start to see our maintenance number go down. You'll see our RPO number go up. It's like sort of deferred revenue in the old days. So you'll see an RPO number. And he's staying consistent with what Salesforce does and SAP and what have you. But the real thing that you'll see is cloud ARR go larger by a multiple of the maintenance. And the thing we don't know yet is what is that multiple. We know it's multiples.

And so therefore, there will be substantial growth coming from it. We just don't know yet. So is it -- SAP, they started where they were 2x the maintenance. They got most recently the last couple of years at 5x the maintenance. We have to crawl before we run. But I think you'll see us do the same kind of trajectory. Now that's pretty dramatic.

If we take an installed base of our core business, once we've gotten rid of the noncore business, it will be around $4 billion. Of that, there's about $2 billion in maintenance. We'll start rolling that off probably around 10% a year because it takes a lot of work to do the conversion. So if we roll off 10% a year, it's about $200 million a year. And if we get a 2, 3 or 4x multiple, so say we get a 3x multiple. We will be taking $200 million of maintenance down, $600 million of cloud ARR. That $400 million on a $4 billion base is a built-in 10% growth. And that's what SAP did and why they were so successful over the last 5 years in particular.

So we're going to start that journey. That journey will be a consistent journey over probably the next decade as we roll off what is 35 years of built-up maintenance and convert it to cloud because they all want to train their Agentic AI. So that's one of the journeys that OpenText will be on.

And how do you think about the -- any margin implications of that move...

Yes. So we studied that a lot. And originally, when we first started communicating to the Street, I think, Steve, you were into the role maybe 1 month, I was in 3 months. And we started cautioning everybody, the margins might go down. Well, we've actually done more work now. We believe margins go up actually.

Now when we say margins go up, dollar amounts go up because we're replacing $1 of revenue, let's say, 90% margin and taking $3 of revenue at, call it, 70% or 75%, it will be lower, but the dollar amount will be triple, right? So you'll -- when all the smoke clears, say, 2 years from now, you'll see our EBITDA go down, but our top line growth go up by much more. That sort of -- I'll leave it to Steve as he does more of the modeling and communicates it to the Street.

I think with the new fiscal year and with Ayman joining as our new CEO, I think by then, they'll be able to tell the Street what they think the model is going to look like. But it's a journey we're on. It's a wonderful journey, but the way -- just like when everyone in the industry asked us, would we break out core and noncore so they could track our progress. Steve and Ayman will do the same thing. They'll break it out so you can track their progress.

And you mentioned like a sort of a 10-year dynamic that -- like what are some of the catalysts? I mean, obviously, customers coming up for contract, that will be a time you can go visit customers and ask them about an upsell...

Yes. The main catalyst will be AI. They -- like if you're a CIO today and your CEO does not see you getting ready to do Agentic across the whole organization, you probably won't be CIO very long. This is a massive wave that's just taking us along.

You may ask, why do you guys estimate 10%? Why wouldn't you do 20% or 30%? This is a lot of work. This is what I was trying to say before about the Street thinking this will happen overnight. Think of any of your organizations. We have to go into the very bowels of your basement and literally take decades of software, of content. And by the way, some of this content, we have 1,500 connectors to word perfect, VisiCalc, like you name it, Db2, you name it, we got to connect all that stuff that some of you weren't even born when it was out. But those are in the corporate memory that is part of the training. You have to do that.

So this is a highly complex move. We think we can do 10% a year. It's one of the reasons why -- and you know we cautioned everyone, we'll probably do some tuck-under acquisitions of professional services companies that have very specific knowledge around pharma, automotive, food, ag, that kind of thing because as you go into it, you need to be something of a subject matter expert.

And we find that customers -- we would prefer to do partners. We find customers sometimes if they're doing lift and shift of something that they could get fired, they're going to want to know that person is from our company. And so I think you'll see us do some tuck-unders to be able to give us the capacity to be able to do it. But this is a big lift. This is a big decade-long thing. It's a high-class problem, but it's a journey we're going to be on.

Yes. Thinking about our conversation that I had with you when I first met you in September, you outlined a bunch of objectives, hire a new CEO, check divestitures, check.

Did them all.

Did them all, right? On the divestiture side, though, they've been on the smaller side, I think you've got some really big chunk there...

Yes. The small ones were easy to do because as we put them to bid, it was a single product line or a couple of product lines. The ones that you're going to see now that are in auction right now are very complex. They have 60 products in them. So that's why it takes longer. But yes, we're making very good progress there. And we made a commitment by the end of this year, we're getting out of all the noncore, and we will stick to that commitment.

Just to clarify, end of your fiscal year or...

We will announce -- okay. So nothing is perfect, right? But we will announce all of them by the end of our fiscal -- our fiscal is midyear. So we've got another 3, 4 months that we're just running the process. But sometimes after you announce it, you still have to transfer, and that will take 3 or 4 months. So I think you'll see us out of everything by the end of the calendar year, but you'll see what we got for it, when we're transitioning it, what the transfer agreements are. You should be able to see that by the end of our fiscal.

Now nothing is perfect. We don't control the whole process, but we're well underway. We've got a very robust auction going on.

And there's been -- how have things maybe change in the past month with sort of all the software derisking?

Yes. So we got a lot of questions, not at all because what's going on in the market has been a reassessment of the value of future growth, et cetera. We're selling very good businesses that are not core to what we want to do, but they're being sold on a discounted cash flow basis. What's going on in the Street over the past month does not change their DCFs or anything. So -- and we reconfirm that as well. But remember, it's an auction.

So we made a commitment to the Street that we would divest, and we will divest in the context of the market. But it's always been discounted cash flow. So that hasn't changed.

Got you. We talked a lot about what you're doing for enterprises on their AI journeys. What about OpenText? Maybe talk about how you're deploying agents how you're leveraging AI in your cost base and maybe tie that into your margin profile and the strength that you've got there.

So it's stunning. It's stunning. We are now seeing -- that's why -- how the Street reacted over the last month, it's because there's a kernel truth in all of this. It is stunning what is going on. I've never seen anything like it. I've been at this for 40 years, never seen anything like it.

So what we've done now, we're starting -- and we'll make more announcements as our new CEO comes on. But you're going to see us, as they say, drink your own champagne, eat your own dog food, et cetera. This move from on-prem to cloud, we did it to ourselves first. And in doing so, we are making unbelievable savings. It's really quite dramatic.

We're seeing in some job categories, 5 become 1, 5 to 1. It's just unbelievable. Now as that shakes out, I'll leave that for Ayman and Steve to talk about. But last call, Steve did talk about the cost savings program and that profile that the company had worked out. We're very much on course to deliver all of that and maybe more. But for sure, we're going to be able to deliver it. It's been amazing.

Yes. And as you think about the profile, you generate great free cash flow. You've talked about divestitures. You've got a little bit of debt. Maybe just talk broadly about capital allocation and again, guidance where the stock is trading today.

Well, we made a commitment in August that all the stuff that we did with the noncore, we would retire debt. because we wanted our debt down to the traditional multiples that we've always had. And so as we retire noncore, we're also retiring EBITDA. So we've got to make sure our debt stays commensurate with that. So we're managing that down.

And by the way, the EBITDA of all these businesses are roughly the same. So there isn't like some high EBITDA business that we're selling or whatever. It's all basically the same. And they all sort of come in around 33%, 35% EBITDA across the board, whether they're core or noncore.

So you'll see us as we take a ballpark, if we take down 20% of our EBITDA over this next year because that's sort of what we were guesstimating, we'll take down 20% of our debt to go with it, but we probably will take more than that because our traditional debt-to-EBITDA is around 2.5. I think you'll see us try and get ourselves to that. And we've got a couple of debt towers coming up, and we'll take advantage to remove those.

And Steve is the expert. He'll be doing the refi and all that stuff. But on one level with the capital, we made a commitment to the Street last year that that's what we're doing. And so far, that's what we've done is we've sold something, we've taken debt down.

The second area of capital allocation is acquisitions. We're only doing tuck-unders right now. The organic growth opportunity before this company demands that we spend all the time on that. So we will not distract ourselves with acquiring something large. We won't do that. What you will see us do is those tuck-unders to help the organic growth. Dividend, we'll keep our dividend.

I think the fourth pillar of all this helps the dividend because I'll explain why. We announced a couple of weeks ago that we expanded our buyback program. With all that's going on in the market, you can imagine our response if we are able to do -- we announced $500 million, I believe, Steve? If we do $500 million at a stock price of $25, that's 20 million shares. That's about an 8% accretion.

Buying ourselves is way better for all of you than us going off and buying something that we got to take a risk on and integrate and all that stuff. It's just easier to convey shareholder value. So I think you'll see us be, especially at these prices, very aggressive over that time. What that then does is for the same dollar amount, dividend. And we've always said roughly, we like to keep the dividend around 20% of our overall cash flow generally. That will make it really easy to provide growth in the dividend over the next few years.

Final few minutes here. Maybe we can talk about your new CEO that's coming in, Ayman. What -- first off, maybe why was he the right individual for the role? And what do you think -- we'll ask him the questions later, but what do you think he saw in OpenText that got him excited to come?

Well, what was great about Ayman is that he grew up about, I don't know, 5 blocks from our headquarters and yet has had a spectacular career internationally. And so he's coming home. He went to University of Waterloo, and we're on the campus of the University of Waterloo. So it's wonderful to have Ayman come.

Ayman, one of maybe a handful of executives in Canadian history that have operated a company of the size that he's operated because he ran IBM Americas. It's about $60 billion. So that's about 10x the size of OpenText. So we were thrilled to have him. But what made Ayman even more interesting was that we've been competing against Ayman for 25 years. He knows our entire product line. I would argue maybe better than we do because he competed against it. So all these product lines that we have, he's managed all of them.

And so -- and then the last thing that we really liked about Ayman, Ayman because IBM, it stands for I've been moved, right? So IBM runs all over the world. And as we see the world geopolitically change, having regional country organizations matters again. The master of doing this is IBM. I remember as a young engineer going to Japan and arguing with Japanese engineers that IBM was really an American company, not a Japanese company.

IBM is outstanding at integrating into cultures and Ayman is. Ayman set up a lot of Asia for IBM as it started to open up. And I think you'll see a level of sophistication in our go-to-market. Because remember, when we talked about this before, the Board really wanted someone not from the engineering side, even though Ayman is an engineer knows all this stuff, but someone that really cut their teeth and lived in marketing and go-to-market and customer-facing.

That's what we get with Ayman. We've never had an exact with that level of experience at that scale in the company ever. So it will be really exciting for us.

Yes. Looking forward to that. Final minutes, just on the changes. There's been some changes to the Board as well, a bit of a refresh. Just talk to the audience about that a little bit.

Yes. Our Board, we had COVID and then we bought the Hewlett Packard software through Micro Focus. And so we had the Board stay a little bit longer than their past before date kind of thing. We did that on purpose because of all the changes. The Board refresh now, I believe there's only 2 of us left that have more than 5 years on the Board. And we've changed so many.

We're sort of slowing down a little bit now, but the whole Board has changed over. And we've had some wonderful people join the Board, the CIO of Cisco, HR VP from Hewlett Packard. George Schindler, of course, who you know, just retired as CEO of CGI last year. So yes, like some really -- I've now missed a couple of really good board members that have joined, but some really good Board members.

Margaret Stuart, of course, long-time sales executive. But yes, it's -- we've had a couple of Board meetings now, a lot of different perspectives. They are coming in as all multinational operators. And I can see the difference in the Board meetings a way. The previous Board was a great Board, brought the company to a $5 billion size. This Board knows exactly what it takes to get to $20 billion.

Got it. Awesome. Tom. We'll leave it there. Thanks, everyone. Awesome. Thanks, Tom.

Thank you for standing by. This is the conference operator. Welcome to the OpenText Corporation Second Quarter Fiscal 2026 Financial Results Conference Call. [Operator Instructions] The conference is being recorded.

I would now like to turn the conference over to Mr. Greg Secord, Head of Investor Relations. Please go ahead.

Thank you, operator, and good afternoon, everyone. Welcome to OpenText's Second Quarter Fiscal 2026 Earnings Call. With me on the call today are OpenText's Executive Chair and Chief Strategy Officer, Tom Jenkins; together with James McGourlay, our Interim Chief Executive Officer; and Steve Rai, our Executive Vice President and Chief Financial Officer.

Today's call is being webcast live and recorded with a replay available shortly thereafter. Just look on the OpenText Investor Relations website at investors.opentext.com. Earlier today, we posted our press release and investor presentation online. These materials will supplement our prepared remarks and can also be accessed on the OpenText Investor Relations website.

Now turning to some upcoming investor events. OpenText will be participating in the Scotiabank Technology Media Telecommunications Conference in Toronto. It's on March 4. We look forward to meeting with you there.

And now on to reading our safe harbor statement. During this call, we will be making forward-looking statements relating to the future performance of OpenText. 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 OpenText are contained in OpenText's recent Forms 10-K and 10-Q as well as in the press release that was distributed earlier today, all of which can 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 the other materials that are available on our website.

And with that, I'll hand the call over to James.

Thank you, Greg, and welcome, everyone, to our Q2 fiscal 2026 earnings call. Last week, we announced Ayman Antoun as our new CEO. Tom will talk more about Ayman later in this call, but I wanted to take an opportunity to welcome Ayman to OpenText, and I look forward to working with him when I return to an executive role on the leadership team.

In this past week, we announced that we had entered into an agreement to divest Vertica to Rocket Software for $150 million. I would like to recognize the dedication of our teams and thank our customers and partners for their continued trust during this process. The transaction places the Vertica solution with a strong, committed steward, and I look forward to working with Rocket to support customers and to ensure a smooth and thoughtful transition.

We ended off the quarter with a solid performance, beating our own expectations on total revenues, adjusted EBITDA margin and adjusted EPS. Our results for this quarter and the first half of '26 demonstrates our commitment to deliver on our objectives and maintain a steady ship as we continue to implement our strategy of reshaping our business to focus our faster-growing core businesses.

Since August, our goal has been to ensure that our clients receive strategic support from OpenText as they progress through their cloud journey while rapidly advancing their AI readiness. Our clients are using our AI Aviator tools to gain additional value and insights from their content. The secure information management capabilities that we have provided to our clients for the last 30 years delivers the same data that AI requires. Therefore, we are well positioned whether our customers use AI or applications to meet their business needs.

Steve Rai will go through our quarterly results in more detail. However, I would like to highlight that in Q2, we generated total revenues of approximately $1.33 billion, led by overall cloud growth of 3.4% year-on-year. We continue to see strong enterprise cloud bookings of $295 million or growth of 18% year-on-year. Total cloud RPO is up 13.7% year-on-year, and we closed 53 cloud deals larger than $1 million.

We introduced disclosure on the revenue performance of our product categories in September of last year. And you can see that our total content business, which consists of 43% of our total revenues, grew 4.5% year-on-year in Q2. And if you look specifically at cloud revenue for content, it grew 18% year-on-year. I would like to call out that our revenues for our core business continue to grow at approximately twice the pace of total revenues. Content, which is our largest and fastest-growing business, continues to demonstrate strength, and it also leads to our cloud growth. There is no change to our F26 revenue target of 1% to 2% growth year-on-year.

I would like to turn to some of our customer wins in the quarter that highlight the growth trajectory of our core business. We secured a win from US Bank, where it completed a full migration of its on-premise license to hosted architecture and cybersecurity. Solenis faced complex document management needs across their global operations, and they opted to integrate OpenText's extended ECM with SAP for more streamlined and unified processes.

We had another cybersecurity win with BNP Paribas. They needed a single integrated application security stack to help avoid production vulnerabilities and reduce remediation costs. They chose OpenText software since it delivered the best results after testing all major vendors.

At OpenText World Conference last November, we received very positive feedback from our clients and partners on our new product cycle release. We had customers such as IBM and Honda join us on the main stage to speak about using OpenText AI solutions. IBM spoke about using our content management and content Aviator to support their 280,000-plus employees worldwide. United Airlines discussed why they chose our ITOM platform and ITOM Aviator to reduce critical incident resolution time. And Honda chose our business network trading grid and business network Aviator for autonomous supply chain issue resolution.

At the conference, we also introduced the OpenText AI Data Platform, which we will be shipping next quarter as well as a host of new tools for orchestration of data, integration and agentic AI. Our AI data platform can facilitate any major LLM model and provide over 1,500 connectors to various ERP, CRM, ITOM systems such as Oracle, Salesforce, SAP, et cetera.

Turning to our F26 outlook. As I mentioned, we are reaffirming our total revenue growth of 1% to 2% year-on-year. Our expectation for FY '26 year-on-year customer support and ARR growth as well as enterprise cloud bookings also remain unchanged. As we look forward to the next quarter, we expect Q3 total revenues to be between $1.26 billion and $1.28 billion. To summarize, we are really excited about our cloud growth in our core product groups, especially in Content, our largest and fastest-growing business. Overall, we see opportunity for our core products to continue growing in the cloud as our clients make fundamental decisions on their AI -- sorry, their cloud and AI needs.

And with that, I would like to hand the call over to Steve.

Thanks, James. Good afternoon, and thank you all for joining the call today. I will also take this opportunity to congratulate Ayman on his CEO appointment and look forward to working together in a couple of months on this exciting journey.

After my first full quarter with OpenText, I have gained excellent insight into the business. OpenText maintains a strong financial position, and I am very optimistic about the strategy we're executing to pivot the company to higher growth with a solid margin and free cash flow profile. We remain operationally focused and are making good progress on the major strategic initiatives that we've outlined in the last couple of quarters, including on our portfolio reshaping and business optimization plan.

In Q2, our Content Cloud business continued to lead our growth, and we also performed well on margins and cash flow. As James mentioned, we generated total revenues of $1.33 billion. Cloud revenue was $478 million, up 3.4%, mainly driven by Content Cloud. As a reminder, please see our Investor Relations presentation for further details of our core and noncore revenues by product category.

Q2 represents the 20th consecutive quarter of organic cloud growth, and our Cloud net renewal rate remained consistent at 95%.

Customer support revenue in the quarter was $582 million, down 1.5% and on track with our fiscal '26 outlook. Our customer support net renewal rate also remained consistent at 92%. Annual recurring revenue, or ARR, was $1.06 billion, up 0.7% year-over-year. And ARR as a percentage of total revenues was 80%, which increased by 1 percentage point.

Regarding profitability, GAAP gross margin was 74.0% and non-GAAP gross margin was 77.6%, both up 70 basis points and 40 basis points, respectively. This was mainly driven by the increase in cloud and customer support gross margins, partially offset by the decline in gross margins for license and professional services.

Adjusted EBITDA was $491 million or 37.0% margin. This was down 2.1% and 60 basis points, respectively. The decline was driven primarily by investment in the sales team, including commissions, partially offset by savings from our business optimization plan, which remains on track. Regarding that, we still expect to realize this year approximately 1/3 of the total estimated savings of between $490 million and $550 million. Please see Slide 34 in our Investor Relations presentation for more details.

GAAP net income was $168 million, down 26.9% year-over-year. The decline was largely due to FX on acquisition-related derivatives. Non-GAAP net income was $286 million, down 2.4% Q2 GAAP diluted EPS was $0.66, down 24.1% and non-GAAP diluted EPS was $1.13, up 1.8%. And free cash flow was $279 million, down 8.9%. On a year-to-date basis, total revenue was up 0.4% and cloud revenue grew 4.7%.

License was also up 1.3%, partially offset by a decline of 1.5% in customer support and 10.2% in professional services. First half fiscal '26 adjusted EBITDA margin was 36.7%, up 40 basis points. Non-GAAP diluted EPS of $2.18 was up 7.4%, and our free cash flow was $381 million, up from $190 million for the same period last year.

We announced the divestiture of Vertica for $150 million, 1-5-0, in cash before taxes, fees and other adjustments. Vertica is part of OpenText's on-prem analytics product group, and it contributed approximately $80 million annual revenue in fiscal '25. OpenText intends to use the proceeds from the sale to reduce outstanding debt. Under the terms of the agreement, the software, customer contracts and associated services and employees will be transferred to Rocket Software. The transaction is expected to close during fiscal '26, subject to customary approvals and closing conditions.

Turning to our full year fiscal '26 outlook that James touched on earlier. Our expectations remain unchanged at 1% to 2% for total revenue growth. While not impactful to the overall percentage range, we are reminding investors and analysts to reduce their revenue models for the remainder of the fiscal year by approximately $15 million, 1-5 to reflect our divestiture of eDOCS, which was completed in January. All other previously announced outlook remains unchanged. We continue to watch global currencies and are being slightly more specific that in fiscal '26, we expect our core business total revenue to grow in constant currency terms.

Turning to Q3. We expect total revenue between $1.26 billion and $1.28 billion. This number reflects a $7 million reduction for the eDOCS divestiture. Q3 adjusted EBITDA margin is expected to be between 33.0% and 33.5%, which, as in prior years, is a seasonally lower margin quarter. We continue to expect total revenue in the second half of fiscal '26 to skew higher from Q3 to Q4.

Last November, at our OpenText World Investor Briefing, I provided an illustrative example of how we anticipate our total revenue mix could change and grow in the coming years as our customers move faster to the cloud. For reference, we included this on Slide 8 in our Investor Relations presentation. In the longer term, OpenText will benefit as we expect to see cloud revenue, ARR and RPO increase significantly. This is a classic strategy utilizing the same modeling as for all other software companies experienced as they experienced through their cloud transitions.

We closed the divestiture of eDOCS in January and used the proceeds to pay down our debt. We continue to execute on our previously announced $300 million share buyback program, and we have repurchased for cancellation half of this on a year-to-date basis so far in fiscal '26. Subject to customary regulatory approvals, we intend to further increase the amount of our existing buyback program, particularly given recent valuation levels. We are also looking to do small tuck-in M&A as opportunities arise. Our robust cash flow engine provides us with the scale and flexibility to continue investing for growth within our core enterprise information management for AI market.

With that, I will hand it over to Tom.

Thanks, Steve, and good afternoon, everyone. It's been a busy 6 months, but I'm happy to see solid results for the second quarter and first half of the year, thanks to the leadership of James and Steve and the rest of the executive leadership team. The company has been operating smoothly while we continue to move forward with our strategy to pivot OpenText to higher growth while maintaining a solid margin and free cash flow profile.

Last August, we made some promises, and I'm happy to say we've met all of them. We've completed our hiring and performance targets. We're moving forward with some solid milestones in our portfolio shaping activities. Let's review what we've done so far. As Steve and James have highlighted, we've had strong Q2, had a strong Q1 before. First half of the year is going well. We're on track to meet all of our F26 outlook targets as we promised. We appointed Steve Rai, who's now fully immersed and focused deeply on strategy, operations and financial reporting.

On the portfolio shaping, we've announced the sale of Vertica as well as the closing of the eDOCS divestiture, but we're not done. We've set a cadence of divestiture per quarter, and we're working towards streamlining our portfolio to get to our core business. We've elected 2 new Board members at our AGM in December, and that brings to a total of 5 new Board members in the past year alone. We provided additional transparency with quarterly reporting of our product category revenue so everyone can track our progress every 90 days as we move to our core business.

And lastly, we appointed our new CEO, Ayman Antoun, a software industry veteran. I'd like to echo James and Steve's warmest welcome to Ayman. He won't be on this call since we just announced his appointment last week, but Ayman will be ready to participate in next quarter's earnings call. The Board is very pleased to welcome Ayman to OpenText.

And as we look ahead to the company's future, the Board believes that he's the best leader to drive shareholder value by growing organic revenue in our core enterprise information management business to train agentic AI. Ayman brings more than 3 decades of global technology, operating discipline, transformation leadership to OpenText, built over a seasoned career in the information technology industry, most recently as President of IBM Americas.

He led the company's largest and most complex business unit across U.S., Canada and Latin America, about $30 billion in revenues all told. During his tenure at IBM, he drove major advancements in cloud, infrastructure, cybersecurity, cognitive solutions, digital modernization as well as divestitures such as Kyndryl. We're also welcoming Ayman back home as he went to high school and university a few blocks from our headquarters office in Waterloo.

James continues to serve as Interim CEO until Ayman officially joins us in a couple of months. Upon that transition, James will move into a role within the executive leadership team. I'd like to thank James for his steadfast leadership as interim CEO and for the strong results we're realizing by his continued commitment to our clients.

Part of our portfolio shaping strategy, we recently agreed to divest Vertica to Rocket Software for approximately $150 million, and this comes shortly after we announced the closing of the eDOCS divestiture for $163 million. We're executing to our strategic plan, focusing on our core product offerings, our expertise in secure data for enterprise AI that provides strategic choice where you can choose LLMs and flexibility for our customers.

We're moving quickly but methodically to ensure that we obtain the best market value for our assets and do it in a way that will not disrupt our sales and operations. By rationalizing these noncore assets, we're strengthening the portfolio, reinforcing our capital allocation framework and positioning OpenText to invest more deeply in our cloud businesses. That will drive sustainable long-term growth and shareholder value. The rise of AI has confirmed our thesis that providing data to train AI is the best choice for our core business.

I'd like to turn our attention to some changes we made at the Board level. We held our AGM last December, and we welcome 2 new Board members, John Hastings and Margaret Stuart. And of course, Ayman will be joining the Board as well in April. As I mentioned before, that brings a total of 5 new members joining the Board just in the past year.

We announced back in August that the company will be focusing on our core markets anchored by our largest and fastest-growing Content Cloud business. This requires us to reshape the current product portfolio. And with the announcements that we've made so far of Vertica and eDOCS, we're pushing forward at a methodical pace to sell one business unit or product category per quarter. This timing is approximate and can vary depending on the size of the transaction that we're working on.

As OpenText moves towards a leaner content cloud and AI-focused software company, it's important to be reminded of why we are doing this. OpenText is positioned as a leader in the information management space, particularly for training Agentic AI. Our product strategy remains focused on the need of our customers to organize and curate their data to use with Agentic AI. And our core businesses and especially content couldn't be better positioned in this market. We're managing, organizing and securing data are critical steps in training and deploying Agentic AI tools.

As you all know, OpenText for 30 years have been making this information management for applications that our customer used in regulatory industries. because they needed permissions to access sensitive information. And it just so happened that when AI was invented, it needed the same kind of information management to train the enterprise AI, also known as Agentic AI. So we're very fortunate that we were ahead of the curve and that all of our technology that we developed over the last 30 years is immediately usable to an AI through our Aviator connector.

The focus of our development has been on making Aviator connector to as many popular large language models as possible that are being used to train as agents within organizations using sensitive data. So we're doing what we said we would do. There are more milestones to come, and we're operationally ready to support further portfolio reshaping, and I'm confident in our leadership team and the existing operating model. The core of OpenText is growing while management remains disciplined on margin and focused on growing adjusted EBITDA dollars. We appreciate the patience given to us by our shareholders while we evolve into a higher-growth content cloud and AI-focused software company, and we're excited by what lies ahead.

With that, this concludes our prepared remarks. And could the operator please open the line for questions.

[Operator Instructions] Our first question is from Richard Tse with National Bank.

Tom, you sort of touched on this a little bit, but in light of the events over the past few weeks in software around all of philanthropic news, given where you sit and sort of your background, can you maybe elaborate a little bit in terms of why AI cannot disrupt OpenText and content management? We're getting sort of a lot of inbound questions from investors to sort of articulate this a bit better from a technical perspective.

Yes. Thanks for the question, Richard. Well, the simple answer is OpenText doesn't make applications. We feed content into applications. So we feed content into training agentic AI, which then can go and replace certain application software. But you still need the content, whether you're providing the content to a human being using an application on a console or you're providing the content into a robot that's being trained to do the same thing. It's the same thing. You still need to train it and use the content. So we're in one of those fortunate positions where all the content that we've created and managed and curated over the years is the same thing.

Okay. And my other question has to deal with the divestitures. It looks like you've got some pretty good pricing on the recent announcements. Are you still confident that you could do one per quarter? And are the valuations kind of falling here relative to your initial expectations going into this?

So the short answer is yes and yes. And why are we saying yes and yes? Well, first of all, we see the pipeline of the various auctions going on, and there's lots of interest. So there's no shortage of people interested. It's because they're very high-quality assets. The only reason we're getting rid of them is because we got something better to do. It's not a problem with any of these product lines. The second reason is that the buyers are generally financial buyers. And so these are really driven valuations by discounted cash flows. And so all of these factors that go into the market really come out as a DCF analysis. And so all of our forecasting is based on the same approach that they would make. So yes, we're pretty confident that the answer is yes and yes.

The next question is from Raimo Lenschow with Barclays.

Congrats from me as well. One for you, like with Ayman joining -- well, first of all, thank you for giving us the extra disclosure on the different -- on the revenue breakdown for the different divisions. What we can see is that the core business is doing well compared to the other parts of the business. If you think about Ayman starting now, like how broad is this mandate in terms of being able to do more here in terms of divestment, focusing on the core business? Can you speak to that, please? And I have one follow-up.

Yes. The recruiting of Ayman came with a full discussion about what the strategy was of the company, and we had pretty strong congruence between the Board and Ayman. I think we see the situation the same way. So I don't think you'll see any difference. Now of course, Ayman coming in as CEO, once he gets into the chair, he's going to look at it and work with his ELT and then come back to the Board. So things change all the time in tech, as you know. But no, we've got good congruence. We're blessed with Ayman's wonderful background in all of the product categories. So he's got a very, very good inside view of all of the both core and noncore. So we're blessed with someone that understands all the different pieces. So yes, we're pretty satisfied with the congruence.

Okay. Perfect. And then I know revenue is backwards looking for some of that. But like if I look at the quarter, like some of the numbers decelerated a little bit from a growth perspective. On a constant currency basis, could you speak a little bit how the quarter played out for you guys more on the bookings side, what you saw in the field?

Yes. So we actually -- we had a good quarter. As we were going through the quarter, the deal shift sometimes from quarter-to-quarter. But as we're coming through, we saw some strong bookings in our license towards the end of the quarter. We had a number of deals that were in different parts of the year that came into Q2 for us. You got to keep in mind that we run an annual business. And as we run that annual business, deals can move around. So we've got a strong pipeline going forward, and we're very excited about the year coming up.

The next question is from Kevin Krishnaratne with Scotiabank.

Tom, maybe just to follow up on some of your comments on agentic AI and customers training agents. Is there anything you can share for us in terms of maybe usage or customer penetration or adoption of Aviator across different business units, maybe if not quantitatively, just sort of like what you've been seeing over the past couple of quarters? Just trying to get a sense of where you're at and how rapidly consumers are, in fact, training using the data on the platform?

Yes. Thanks for the question. Again, we are so early. You can't even say we're in early innings. We're really at the first batter. This is so early. Most of our customers are anticipating the need so they -- what they're doing is they're actually getting their content in order. They've run some prototypes, but this is a long way to go. This is the reengineering of decades of industrial software.

So I think everyone should realize that if you were a CIO in a large organization, you're running a pilot with an agent. But in background, what you're really doing is getting ready with your content, making sure that you've got it curated and assembled into a way that you can train the agents with permissions because you have to remember that if you're subject to something like GDPR or you're subject to any kind of restriction on your customers' information or the corporation's information, that AI that you create is also restricted.

So it's not like you can train something and then just put it up on the web. You have to be very careful how you do the deployments. So most of the activity because we're training and so the content is being prepared to then train each of the LLMs. So this is a nontrivial exercise. And I think you'll see this unfold over many, many years. But where we see a lot of the activity right now is people getting ready.

Got you. Okay. Maybe one for Steve. Just on the bookings and the cloud bookings, so you did, cRPO grew 6% Q1, 9% Q2, the cloud revenue growth guide, 3% to 4%. I'm wondering if you could just talk about sort of the dynamics there, a little bit of the disconnect. I don't know if there are elements of the business network or transactional piece that are offsetting. But maybe just talk about sort of the strong bookings to start the year, but then the revenue guide, maybe what you're seeing from customers.

Yes. So on the -- James touched a little bit on the bookings topic. I mean we've got -- I mean, cloud bookings, which obviously kind of flows into the RPO have been kind of nice double-digit growth there. And there's obviously, that flows into the bookings number is going to have both current and longer-term components to it. So from a revenue profile, I mean, obviously, in terms of the overall mix, there's other things at play, right? So when you look at the breakdown of the product categories that we've got -- that we now disclosed, you can kind of see that interplay there.

And there's -- from a second half standpoint, I mean, there's a bit of seasonality here that's typically at play. So in terms of the outlook and the 3% to 4% guide, I think that you referenced, we're holding to that. But Q4, as I said, the results and the activity is somewhat skewed to Q4, and it will kind of depend on the mix that comes through there. So -- but it's tracking on a -- continuing to track on a healthy trend.

The next question is from Stephanie Price with CIBC.

Last quarter, you talked about accelerated cloud migrations. Just curious if you can talk a little bit about what you're seeing in terms of the demand environment and client moves to the cloud here.

Yes. Thanks for the question. I'll turn this over to James, but I have to say, as we started with our user conference, we're getting a lot of positive feedback. We're quite pleased with how customers are reacting. And I think you're going to see that there's 2 parts to our go to Cloud. One is the installed base and one is first-time sales. And I think as we mentioned last time, we're very aware of how other software companies have done this, and we're simply going to follow in their tracks. And that's what we were trying to say last quarter is that you'll see a much more vigorous cloud campaign from us, which started within a few weeks of the call last time.

James, over to you.

No, I agree with you, Tom. I think the thing I'll add is about the response from our customers. We are seeing our customers actively engaging with us and building out plans to migrate their installations into the cloud. The deals do take time, as you know, our deals have a longer cycle time. So these deals are forming up, and we do expect to see them really kicking in over the next few quarters. We have had some great success in Q2 with some large cloud deals coming in as we talked about the number of deals that were over $1 million.

I think the other important thing that's part of our modeling going forward, we do not anticipate a dip in revenue. This is a very encouraging development for us. As we've talked about the value that we're bringing in the cloud transition, it turns out that we're able to benefit from the more mature models that other enterprise software companies went through the learning curve. I guess in a simple way, we're not going to follow the pattern that others did about 5, 6 years ago because we get the benefit from that learning curve that they went through. So we're anticipating just pure growth from it.

Great. And then maybe a bit on capital allocation, just given what's going on in the market the last few weeks. I think Steve mentioned potential increased buyback program. How do you think about buybacks versus dividends versus M&A here?

The Board always reviews. In fact, just recently, the Board met and reviewed all of that as a basket. And as you say, it's very market specific and also strategy specific. So as Steve mentioned, the company is now seeking approval from the authorities to expand its buyback program. And once we receive that authority, we'll communicate that further to the Street.

Clearly, we are quite robust in our dividend program. Steve also mentioned that you should be anticipating that we'll continue to do tuck-under acquisitions. And also as we do the divestitures, we're paying down debt. So we hope that we're meeting all of our shareholder needs that we are doing a blended approach to capital allocation, very thoughtful. Board meets on it, has fulsome discussions about the right balance. We are blessed with a substantial cash flow. And so we have lots of capital to be able to execute right across all 4 dimensions. And I think you'll see us continue to do that in a thoughtful manner.

The next question is from Thanos Moschopoulos with BMO Capital Markets.

Just to clarify, with respect to the cloud migrations you're seeing from the installed base, are those more weighted towards being hosted on OpenText infrastructure? Or is more of that going towards public cloud infrastructure that you're managing?

No. We're going to hyperscalers, in general.

And that's despite the, I guess, the growing interest in sovereign cloud, which might skew a bit the other way?

Sure. Yes. So we're working with the hyperscalers really across the world as the majority of our customers are looking at where they want to go to the cloud. Many of those hyperscalers have installations, all the hyperscalers have installations in geographically distributed areas. At the same time, we are looking at options as we continue to work out our sovereign cloud strategy.

And I think if you recall from the user conference, we published a book on how to deploy enterprise AI. And in Chapter 7 of that book, we outlined a hybrid strategy because we think clients that are concerned about sovereign data would be best served to do the majority of their workloads that do not require sovereign data on hyperscalers because it's the most efficient, most effective way of deploying what they're trying to do.

And then where they do have to have a sovereign data stack, we can also deliver that and do that in an alternative way, either through our own data network system or a third party as the case may be. It's an evolving area. But I think if you read Chapter 7 of the book we put out, you'll understand what we're doing. And at the end of the day, like everything we do, we give the customers the choice.

And looking at the product segments, good to see the sustained growth in the content business. I guess one thing that stuck out as a bit of a delta from last quarter was cybersecurity enterprise being more challenged this quarter. Is it just lumpiness or anything particular to call out there?

Yes. I think you got it right on the head. As I mentioned earlier, we run an annual business. When you look at Q2, it looks a little lumpy. But keep in mind, last Q2 '25, we had a strong cyber quarter, which makes it a tough compare. We had a strong quarter in Q1 of this year. So we're kind of just below flat there. But we do expect to improve as we go forward. We've got a strong pipeline in coming deals in the next 2 quarters with some large deals out there. So we do expect it to continue to progress towards growth.

The next question is from Paul Treiber with RBC.

Just a follow-up question, Tom. You mentioned earlier that customers are very early in getting their content in order. How is that impacting software budgets? Are you seeing that drive an increase in software budgets at the moment? Because on the other hand, there's a lot of budget going to LLM. So is that -- are you competing against the budget going to LLMs? Or is it are they continuing on an independent path?

No, I think what you're going to find it's an evolutionary path. I think -- and again, I can't speak to the entire industry, only the things that we're seeing. As you deploy an LLM, you're going to start first with public models. It's the easiest. They're the most mature. You can get your fast bang for the buck, if you will. What we're going to be playing in and are playing in now is where you start to get into that sovereign data, the permissions. Once you train that AI, you have to now start to stay within a regulated environment. That's a whole different kettle of fish. And so that's what I'm referring to.

The public models, that's a very limited area for OpenText. Think of it as if you had a public search engine versus a search engine, which is scanning private financial information or private health care information. If you recall, OpenText began in both the public and the private markets. But as we matured and enterprise content became a thing, we used to refer to it -- it's a bit of a trite way to refer to it. We refer to it as behind the firewall. So as you start building AI behind the firewall, oh, yes, you've got to have a lot of curation of that content and then you got to control the AI. Because remember, an LLM cannot forget. If you expose an LLM to data that has to be secure, that LLM is now also under the same regulatory restrictions.

So it's that part of the industry that I think you'll see evolve. The first part is clearly around the publicly available information with publicly trained LLMs. If you're a CIO, that's where you're going to go to first. It's as you get into the more nuanced things, which involve proprietary data, that takes a lot more thought and a lot more time and quite frankly, a lot of enterprise information management.

That's helpful to understand. Just a question about -- Steve mentioned potential tuck-in M&A. Are you taking into account AI risk in your M&A strategy? Is that something that you're factoring in at this point?

Well, actually, as we've related in the last couple of quarters, the tuck-ins we're referring to is capacity to deliver training to AI. We're actually not focusing on, let's say, software application products and things like that. We're actually focusing on subject matter experts. That's what we need to be able to deploy faster. And so that's what you'll see. And generally, that's why we refer to them as tuck-under. They're not going to be very big. They might be a couple of hundred experts in automotive or in pharmaceutical, et cetera.

They're really subject matter experts that can help us deal with some of the things we've been talking about on this call, which is as you get closer to the cold face and you're starting to train agentic AI, you need to have people that are subject matter experts in that particular area of industry, that particular application because you really do have to test the AI to make sure that what you've trained is really effective. So you need quite a bit of subject matter expertise to be able to go through that process.

The next question is from Steve Enders with Citi.

This is George Kurosawa on for Steve. I wanted to touch on the product segmentation side. The license revenue came in nicely ahead of what we had modeled. I think, Steve, you alluded to maybe some deal timing. If you could just double-click on where you saw the strength and with your more aggressive move into the cloud here, how we should think about that line going forward?

This is James. So as I said, we had some large deals that came in. They came in specifically, call it, government sector, but it was across the board. Really, we had a couple of good ones that had been in the pipeline for a quarter or 2, and they came in, in this quarter. So I think as we're going forward, we'll continue to see those deals move around in the quarters, but we do expect that we do expect to be in line with what we're forecasting here and along the lines what we have in the last 2 quarters.

Okay. Great. And then I just wanted to clarify the commentary on guidance as it relates to eDOCS. You maintained the full year guidance. So is it right to think about this as the headline number is maintained, including eDOCS. So this is sort of an effective raise on an organic basis or more of an organic number maintained. And so therefore, the headline number is coming down by the eDOCS number, if that makes sense?

Yes. We're not -- from an accounting point of view, we can't declare eDOCS as a discontinued business. So there's not a simple way for us to do it when we're mid-fiscal this way. So it's just a simple recognition that the eDOCS business is no longer in OpenText. So we're maintaining the same fiscal year. And it's not just eDOCS, it will be anything else we divest.

In the quarter that we divest, it will no longer be there for the future. We're not guiding down the business, but we are highlighting the logical fact that it's a divested business. We're just not allowed to do it from an accounting point of view. So when you compare year-over-year, it will look like it's going down, but it's not -- the business is not going down. It's just that we divested it. And it's just -- it will be like that for the next 3 or 4 quarters. Steve, is that fair?

Yes, that's exactly it.

The next question is from David Kwan with TD Cowen.

Just looking at the guidance for the year, just obviously implies a pickup in growth, particularly in Q4. So I assume that content is going to be a key driver for that expected strengthening of the growth in the coming quarters here. I was wondering to what extent, though, do you expect Business Network, ITOM and cybersecurity on the enterprise side to contribute as well? Like do you expect these other core products to get to a sustainable positive year-over-year growth in Q4?

Yes, we do. We do expect the other product groupings to contribute to positive growth as we go through this year.

That's great. And then just on the enterprise cloud bookings, pretty strong quarter, up 18% year-over-year. Again, I see most of that is kind of driven by content, but were there any other products in particular that you want to flag is also seeing stronger demand?

No. The content is leading the charge at the moment. And as I said, we're continuing to invest and continue to build pipeline in the other product areas. But at the moment, it is content that is leading the charge. And we do expect -- even though we will see growth in the other products, we do expect that it will continue to be content as we go through the remainder of this year and into next.

If you go back and look at the slides from Analyst Day, you'll note that the other product lines that are in core, we believe they will be dragged along with content over time. Because if you go back and look at the slides, you'll see that they represent other kinds of content, machine content, transactional content. As agentic AI matures, it's going to start dragging along a lot of these other content components. That's why we define it as core. It's just that they will drag along later.

Think of sovereign data. Sovereign data is based on our content, but as more attention is made to the proprietary nature of that data, more attention will also go to cybersecurity. So there is a logic to it all. It's just got to play out over time. And if you look at the slides from Analyst Day, it will sort of give you a bit of the architecture. And if you read the book that we published at the Analyst Day, it goes through all these component pieces and why they're part of a logical set for training Agent AI.

The next question is from Seth Gilbert with UBS.

Maybe just a follow-up on enterprise cloud bookings grew 20% in 1Q, 18% in 2Q against guidance of 12% to 15% for the year. It looks like maybe a tough comp in 4Q, but anything else in the second half that you're anticipating would slow the momentum down here?

No. We continue to have a strong pipeline across the board on content really. So we're looking to continue to see that rate of growth continue. Our customers are continuing to invest in the cloud and ask us for solutions and work with us on building out those solutions as we're going forward. And I'll leave it at that.

I think you'll also see the benefits of this company starting to focus on a single theme. Every quarter that goes by, it gets more efficient, more effective, and you'll see the results of that into the next fiscal year.

Operator, we're coming up on the hour. Perhaps we can take another question, and then we'll close it up.

That is the end of the question queue. So I'll hand it back over to Mr. Jenkins for closing remarks.

Well, thanks, everyone, for joining us. We had the full hour there. So hopefully, it was helpful for everyone. We look forward to reviewing Q4 and our fiscal year and also welcoming Ayman to our next call and look forward to seeing you at the various investor events through the quarter. Thank you.

This concludes today's conference call. You may disconnect your lines. Thank you for participating, and have a pleasant day.

Hello, and welcome to the Annual Meeting of Shareholders of Open Text Corporation. Please note that today's meeting is being recorded. If you participate in today's meeting and disclose personal information, you will be deemed to consent to the recording, transfer and use of same. If you disclose personal information of another person in today's meeting, you will be deemed to represent and warrant to Computershare and the corporation, that you first obtained all required consents for their disclosure, recording, transfer and use of such personal information from all appropriate persons before your disclosure.

[Operator Instructions]

It is now my pleasure to turn today's meeting over to Mr. Tom Jenkins, Executive Chair of Open Text. Mr. Jenkins, the meeting is yours.

Thank you. Hello, everyone, and welcome to the Annual Meeting of Open Text shareholders. I'm Tom Jenkins, Executive Chair of Open Text. We have members of our Board of Directors, our management and our external auditors in attendance today, and we look forward to meeting with you and answering questions about your company.

The meeting is being conducted virtually, enabling greater participation by our shareholders by allowing shareholders that might not otherwise be able to travel to a physical meeting to attend online. Holding our meetings virtually means that I may pause from time to time to allow coordination from the speakers who are in different locations. I'll also pause at certain points during the meeting to provide an opportunity for you to vote or ask questions online.

As in past years, we expect that the vast majority of all the votes will have been cast in advance of the meeting by proxy. That said, registered shareholders and duly appointed proxy holders will be allowed to vote online at the meeting in accordance with the instructions to be provided. Given the virtual format of the meeting in order for us to expediently undertake discussion on any matter proposed for a vote, we would encourage shareholders who have specific questions on a formal item of business to submit such questions now, clearly identifying the applicable item of formal business as well as your name and contact information. Shareholders can submit these questions by clicking on the Q&A tab, typing in and submitting your question.

During the course of this meeting, at the appropriate time, such questions will be addressed prior to voting on the applicable motion.

We will be following the agenda for the meeting displayed on your screens. First, we'll call the meeting to order, and go through the procedural matters. Then we have five matters of business to conduct today: the first, the presentation of financial statements, then the election of directors, then the reappointment of the company's independent auditors, then the approval of the continuance, amendment and restatement of the shareholder rights plan and finally, the nonbinding say-on-pay advisory resolution on the company's approach to executive comp.

Following the formal meeting, we'll have a question-and-answer session. If you have any questions on the business of the company not specifically related to any of these item of business to be discussed at today's meeting, please feel free to submit those questions at any time, and they'll be considered at the conclusion of the meeting. Questions that are similar in nature or repetitive will be grouped together and addressed in a single response. When asking a question, please indicate your name and contact information. If we are unable to answer your question during this meeting, a member of our team will follow up with you after the meeting.

I'll now call the meeting to order. The meeting has been convened pursuant to resolutions of the Board of Directors in accordance with the company's bylaws. I'll act as Chair of the meeting, Michael Acedo, our EVP, President and Chief Legal Officer and our Corporate Secretary, will act as Secretary of the meeting, and I appoint Computershare Investor Services, through its representatives, as scrutineer to compute the votes of the ballots taken at this meeting and report the results to me, which I will disclose after the close of the polls.

Now before commencing with the procedural matters, I would like to call upon the secretary to make a statement concerning today's remarks.

Thank you, Mr. Chairman. Please note that in the course of today's meeting, officers or directors of Open Text may, in their remarks or in response to questions during the question period, make statements which are forward-looking under the United States Private Securities Litigation Reform Act of 1995 and under Canadian Securities legislation.

Certain material factors and assumptions are applied in making these statements, and there are a number of other factors that could cause actual results to differ materially from those expressed in any forward-looking statements made by or on behalf of Open Text.

Additional information concerning these factors and assumptions is contained in Open Text's filings with the United States Securities and Exchange Commission and the Canadian securities regulators, including Open Text's annual report on Form 10-K.

The secretary has confirmed that notice of this meeting was duly given in compliance with the applicable requirements. A copy of the notice of the meeting is available on our website and under our profile on SEDAR. .

I'll dispense with the reading of the notice of the meeting. There has been filed with me proof of service of such mailing provided by the company's transfer agent, and I direct that a copy of such proof of service be annexed to the minutes of this meeting as a schedule.

I've been advised that there are at least 2 persons present each being a shareholder entitled to vote at the meeting or a duly appointed shareholder or representative of a shareholder so entitled, together holding or representing shares having not less than 33 1/3% of the outstanding votes entitled to be cast at this meeting. Therefore, a quorum of shareholders of the company is present, and the meeting is properly called and duly constituted for the transaction of business. I've received the preliminary scrutineers' report, and I direct that their formal report following today's voting be annexed to the minutes of this meeting as a schedule.

To facilitate the meeting, I've requested that certain persons make and second formal motions, and I will call on these persons at the appropriate time. The voting at today's meeting will be conducted by online ballot. If you're a registered shareholder or a duly appointed proxy holder, that has already been voted by proxy, there will be no need for you to vote online since your vote will be recorded in accordance with your proxy instructions. However, if you wish to change your previously submitted vote, you can simply vote when prompted. The polls will be open for all items of business to be voted on at the same time. This will allow you to vote on each item immediately or if you prefer, you can wait until the conclusion of the discussion on each item prior to casting your vote.

Once the polls have been opened, the items of business to be voted on and your available voting options will be visible on the voting panel accessible at the top of your screen.

To submit a vote, please click on the voting choice displayed on your screen. You will see a vote received message confirming your vote has been taken. Once discussion is concluded on all items, you'll have a moment to enter your votes. I'll then declare voting closed on all matters of business. The summary results of the voting will be announced prior to the close of the meeting. I now declare the polls open on all items of business.

The first item of business is the presentation of the company's audited consolidated financial statements and the auditor's report thereon. The 2025 annual report to shareholders, including the company's 2025 audited consolidated financial statements and the auditor's report were delivered to shareholders in advance of the meeting. Additional copies are available on our website and under our profile on SEDAR. If any shareholder or proxy holder has questions relating to the 2025 audited consolidated financial statements, these questions can be submitted at any time and will be addressed after the formal business of the meeting concludes.

The next item of business is the election of directors. The number of directors to be elected at the meeting is 12. The proxy circular for the meeting contains the names and the backgrounds of the individuals who will be nominated by the company for election as directors. I'll ask Julie Millard to read the names of the nominees.

My name is Julie Millard, and I nominate the following individuals for election as directors of the company: Thomas Jenkins, Randy Fowlie, David Fraser, John Hastings, Robert Hau, Goldy Hyder, Kristen Ludgate, Fletcher Previn, Annette Rippert, George Schindler, Margaret Stewart and Deborah Weinstein.

Thank you. 12 directors are duly nominated. In accordance with the company's bylaws, I declare the nominations closed. May I have a motion to elect the nominees as directors of the company?

My name is Greg Secord, and I move that each of the individuals nominated for election at this meeting be elected as a director to hold office until the close of the next Annual Meeting of Shareholders or until their successors are duly elected or appointed in accordance with the articles and bylaws of the company.

May I have this motion seconded?

My name is Jennifer Kerr, and I second the motion.

At this time, I would ask the secretary to please advise if there are any questions received on this item of business.

Thank you, Mr. Chairman. I will pause for a moment to allow for questions to be submitted.

Mr. Chairman, I confirm that we have not received any further questions specifically on this item of business that we have not already addressed.

Thank you. As previously noted, we will conduct a vote on this motion by way of online ballot. Registered shareholders or their duly appointed proxy holders can vote throughout the meeting by online ballot by selecting the applicable voting options on the voting panel displayed on their screens. If you have previously submitted a completed proxy, you will have already voted in respect of the 12 nominated candidates and it is not necessary to do so again.

You may vote up to 12 nominees. Only those individuals that have been nominated are eligible for election. At least 25% of the directors elected must be resident Canadians according with the Canadian Business Corporations Act and the company's majority voting policy for director elections. Each nominee must be elected by receiving a greater number of votes for their election than the votes against their election at this meeting.

We'll now move on to the next item of business, and that's the appointment of the independent auditors of the company. May I have a motion that KPMG LLP, Chartered Accountants, be reappointed as independent auditors.

My name is Julie Millard, and I move that KPMG LLP Chartered Accountants be appointed the independent auditors of the company to hold office until the close of business at the next Annual Meeting of Shareholders.

Thank you. May I have this motion seconded?

My name is Greg Secord, and I second the motion.

Thank you. In order to be carried, this motion must be passed by a majority of the votes cast at this meeting. At this time, I would ask secretary to please advise of any questions received on this item of business.

Thank you, Mr. Chairman. I will again pause for a moment to allow for questions to be submitted. Mr. Chairman, I confirm that we have not received any further questions specifically on this item of business that we have not already addressed.

Thank you. As previously noted, we'll conduct a vote on this motion by way of online ballot. Registered shareholders or their duly appointed proxy holders can now vote throughout this meeting by online ballot by selecting the applicable voting option on the voting panel displayed on their screens.

If you have previously submitted a completed proxy, you will have voted in respect of the appointment of the auditor, and it's not necessary to vote again on this ballot.

The next item of business is the approval of the continuance, amendment and restatement of the company's shareholder rights plan. The terms and conditions of the shareholder rights plan, including the proposed amendments are described in the proxy circular. The shareholder right plan requires reapproval every 3 years and was previously approved by the shareholders of the company's Annual Meeting of Shareholders on September 15, 2022.

The Board of Directors believes that the continuation, amendment and restatement of the company's shareholder rights plan is in the best interest of the company. In order for the continuation, amendment and restatement of the company's shareholder rights plan to be approved, a resolution must be passed by, one, a simple majority of votes cast by all shareholders in the meeting or two, a simple majority of votes cast by the independent shareholders at the meeting as defined in the current shareholder rights plan. An independent shareholders generally any shareholder other than an acquiring person as defined in the shareholder rights plan and its associates and affiliates.

The company is not aware of any shareholder that would not be considered as an independent shareholder and therefore, all shareholders are eligible to vote their common shares on this resolution. May I have a motion for the resolution approving the continuance, amendment and restatement of the Shareholder Rights Plan in the form attached as Schedule D in the proxy circular to be passed as a resolution of the company?

My name is Greg Secord, and I move that the resolution approving the continuation, amendment and restatement of the shareholder rights plan be approved.

May I have this motion seconded?

My name is Jennifer Kerr, and I second the motion.

At this time, I would ask the secretary to please advise of any questions received on this item of business.

Thank you, Mr. Chairman. I will again pause for a moment to allow for questions to be submitted. Mr. Chairman, I confirm that we have not received any questions specifically on this item of business.

As previously noted, we will conduct a vote on this motion by way of online ballot. Registered shareholders or their duly appointed proxy holders can vote throughout this meeting by online ballot by selecting the applicable voting option on the voting panel displayed on their screens.

If you have previously submitted a completed proxy, you will have voted in respect of the continuation amendment and restatement of the shareholders' rights plan, and it is not necessary to vote again on this ballot. We'll now move on to the next item of business, and that's the nonbinding say-on-pay advisory resolution on the company's approach to executive compensation. The proxy circular for the meeting contains the description of the say-on-pay advisory vote, along with the full text of the say-on-pay advisory resolution. This vote is advisory only and nonbinding on the company and the Board of Directors.

In order to be approved, the say-on-pay advisory resolution must be passed by a majority of the votes cast at this meeting. May I have a motion that the say-on-pay advisory resolution in the form set out on Page 31 to the proxy circular be passed as a resolution of the company?

My name is Greg Secord, and I move that say-on-pay advisory resolution on the company's approach to executive compensation be approved.

May I have the motion seconded?

My name is Julie Millard, and I second the motion.

At this time, I would ask the secretary to please advise of any questions received on this item of business.

Thank you, Mr. Chairman. I will once again pause for a moment to allow for questions to be submitted. Mr. Chairman, I confirm that we have not received any further questions specifically on this item of business that have not already been addressed.

Thank you. As previously noted, we'll conduct a vote on this motion by way of online ballot. Registered shareholders or their duly appointed proxy holders can vote throughout this meeting by online ballot by selecting the applicable voting options on the voting panel displayed on their screens. If you've previously submitted a completed proxy, you will have voted in respect of this motion, and it is not necessary to vote again on this ballot.

We'll now proceed with the process for completing the voting on the items of business of the meeting. For those of you who have not voted on all the items of business, please do so now. If you previously submitted a completed proxy, you will have already voted in respect of the formal business of the meeting, and it's not necessary to vote again via online ballot.

We'll now take a short break to allow shareholders to complete the voting on all items of the business of the meeting and to allow the results to be tabulated by the scrutineer.

[Voting]

Mr. Chairman, the voting is now complete, and the polls are closed.

Thank you. That concludes voting at today's meeting. The scrutineer has now reported on all matters put to a ballot at this meeting. I declare that each of the 12 directors nominated is hereby elected to serve as Director of the company to hold office until the next Annual Meeting of Shareholders of the company or until his or her successor is duly elected or appointed in accordance with the articles and bylaws of the company.

I declare the motion on the reappointment of the company's auditors to a pass. I declare the motion on the continuance, amendment and restatement of the company's shareholder rights plan to have passed. I declare the motion on the say-on-pay advisory resolution on the company's approach to executive compensation to have passed.

A report disclosing the voting results in respect of each applicable item of business will be filed on SEDAR promptly following the meeting and a report of the voting results for the election of each director will be disclosed in a press release to be issued following the meeting. That concludes the formal business brought before the meeting, and I therefore declare the meeting to be terminated.

Now that the formal part of the meeting has been concluded, we would be pleased to answer any questions that you may have. I ask all attendees who would like to ask a question to use the Q&A feature of the virtual interface to do so. We will answer as many questions as time permits. [Operator Instructions] Please limit your questions to the topics related to today's subject matters and please keep your questions short and to the point. We'll now give attendees a moment to type in their questions.

For each question we answer, we'll summarize the question, read it out loud name of the person who asked such question and if applicable, the company they represent.

We would like to remind you that questions which we already have answered or that are redundant or repetitive will not be answered. And now I'll ask the secretary to please advise if there are any questions.

Thank you, Mr. Chairman. I confirm that we have not received any further questions that have not already been addressed.

Thank you. That's all for today. I'd like to thank you very much for participating in the business of the meeting and for your interest in the company. Operator, back over to you to conclude the call. Thank you.

Thank you. Ladies and gentlemen, this does conclude the meeting. Thank you for your participation, and you may now disconnect.

Okay. Thanks for joining us, Tom.

Great to be here.

My name is Seth Gilbert. I'm one of the SMID software analyst here at UBS. And today, we have the honor and the privilege of chatting with Tom Jenkins. Tom -- Tom was the CEO of OpenText from 1994 to 2005. Now he is the Chief Strategy Officer and also the Executive Chair of the Board since 1998.

So there might be no better person to take us through the discussion that we're about to have, Tom. Maybe first, we'll jump into it with the CEO search. I'd be curious to know, I know we're going to have the announcement by the end of this calendar year. But as you've gone through the search, has it evolved? Have you changed kind of the type of person that you're looking for? Or has it been kind of meeting your expectations of what you were searching for?

Well, a couple of things. One, I'm not doing the search. The search committee is doing it. We thought that all of our new board members because we've changed over our Board quite substantially. So we left it to the new group of board members. We've got the just retired chief CHRO of Hewlett-Packard and et cetera.

So we've got an outstanding new board CIO of Cisco, et cetera. So we've got a wonderful search committee. So they're off doing that. I would say their thesis has been the same right from the very start. They're looking for someone that has a solutions background. We've -- we're a heavy, heavy technology company, and we need to emphasize more about solutions and things that are more compelling for customers.

Got it. That makes sense. Tom, you said nothing was off the table. So let's just jump right into with divestitures. Companies going through chains, you've announced that you're going to divest a pretty large chunk of the business up to $1 billion of your revenue. I'd be curious, you listed core businesses as content, ITOM business networks and cyber. So I'd like to dive into maybe a little bit of each, maybe we can start with content. Why do these businesses make up the core?

Well, first off, one of the reasons why we had made the Board changes and the management changes was OpenText found itself really trying to manage too many business units. At the same time, it has 6 of them. And for a company its size, it just proved to be too many for too small of a company. It had about $6 billion in revenue. And so we sold off the mainframe business, AMC last year.

And we wanted to move more quickly to sell off some of the other units. None of these business units, there's nothing wrong with them. It's just there's too many of them. And so we decided -- and it wasn't a very hard decision for the Board. We decided that we would jump all over content that trains agentic AI. Like we were blessed to have the content division, as well as some of the other units we can talk about.

And we started to say to ourselves, well, if we're calling on the CIO at General Motors, we probably shouldn't be selling to mom and dad at Best Buy. So consumer divisions or developer divisions that really didn't fit with that core thesis were the ones that we declared surplus and put them up for sale. And so we're in the middle. We've sold 1 unit so far. We're trying to sell one a quarter, because that's the reasonable number to sell. We think we'll do that over the next 3 quarters.

And you have to do that because as you divest the business, it takes a lot of accounting work and a lot of separation work and we didn't want to harm the core business while we are doing it. Now the core content business, well, that was a no-brainer as someone said to us earlier today, usually, when you hear the story about somebody cutting their company down to the core, it's usually the core is slow growing, and it's highly profitable.

We're actually cutting down to a core, which is our fastest-growing and our most profitable. So it was a pretty easy thing. We hope when all this is done, that we will have reduced about 15% to 20% of the company. So we'll go from what is now $5 and change billion to $4 and change billion. And at that point, the core of the core, as they like to say, the Content Cloud business, which is about 1/3 of the overall content business, it's growing at last quarter, 20-plus percent growth. So it's good, solid double-digit growth, makes all kinds of sense. So you get a better sense of us when we're down to the core, we're really a cloud company growing at double digit. That's our plan. We'll see how we do in the next year.

Yes. That makes sense. Maybe just one follow-up on divestitures. The question we get from investors sometimes is we appreciate all the color and the clarity that you and the company have been providing. But why aren't you able to move faster? Does it create too much of a distraction to do, say, 2 a quarter or maybe it just takes a little bit too much?

They're selling and then there's divesting. And let's separate the two. There is enough buyers to sell all the units this quarter. But the problem is, you can't divest them all because you have to -- it's like unscrambling an egg. You've got to be careful that you have service level agreements with each other. So it's actually not a market demand issue. It's really an operational issue. So you should be very careful.

Over the years, I've sat on various boards, and you have to be very careful when you're discontinuing a business that has been together for so long. So it's more of an operational caution to do it over time like that.

Got it. That makes sense. During the most recent 1Q September earnings, you provided a new revenue breakout, which was very helpful. by business unit. And it was great for investors to see because it's something we've been asking, I think, for a while now. You have content business networks, enterprise cyber, these are all growing above the company average. But when we take a look at ITOM's growth, right now, it doesn't appear to be growing above the company average. So I guess the question is, are there parts of ITOM that maybe are growing faster than other parts? Or why -- I guess what I'm hinting at is why is ITOM part of the core?

Well, so I brought a prop along with me to understand ITOM, go grab this book. This is old school. It's in paper. We provided this at our user conference 2 weeks ago in Nashville. But you can go online and download this. This answers that question. ITOM, IT Operations Management in case you don't know, and other things like business networks, the content that we talked about is enterprise content management. These are all acronyms from a previous era of enterprise software.

In all very important areas where we were solving in the enterprise, very specific problems. So IT operations management was generally led in the early days by BMC and then later ServiceNow, computer associates. I watch the whole thing. I said on the Board of BMC, so I know it well.

These are sort of now artifacts of a previous era. What matters, and if you read this book and others like it, it's all about the data. It's all about the content that trains an agentic AI. Because as you may know, MIT came out with their study on the performance of early chatbots. And it's been colossally disappointing. Only 5% of the agentic bots that have been created inside the enterprise have succeeded their project goals. The two reasons why MIT cited, number one, they didn't have the right content.

Remember, most of the public chatbots are trained on Reddit, Wiki, public Information. If you have to go inside the firewall and you're making a bid in your hotel responding to an RFP and you want a bot to do that, you need to know things like occupancy and rack rates and what you did for that convention 2 years ago in Vegas. Those are all things that are not in Reddit or in a public domain.

You have to train with the information inside the firewall. So that brings us back to ITOM. ITOM is a critical component of three kinds of content. Human content is generally regarded as ECM, enterprise content, which is the origin of OpenText.

The second content is actually transactional content. And that's generally content that originally came from EDI. And so that was electronic data interchange. So all of that is what's in business networks. And the third kind of content is machine generated.

And machine generated is part of ITOM. You have to have all three types of content if you're going to train agentic AI whether you're in an automotive company or a pharmaceutical company. That's why those are core. Now in ITOM, what we've done is the business that we inherited from Micro Focus was an on-prem offering up against ServiceNow, et cetera. We've now introduced full cloud.

So all of the things that we just talked about, business networks, the old names because I think we will soon not use those old names. We will talk about machine-generated content, human generated content and transactional. All of those at OpenText are now in the cloud.

Got it. We can stay on cloud. A bright spot of the most recent earnings was cloud growth accelerating from 2% to 6%. Some of the rationale was that customers were, I guess, pulling OpenText as opposed to OpenText pushing customers to go to the cloud. You guys were being pulled along and customers are saying we'd rather go to the cloud and stay on on-prem. The question that we've been getting from investors is why now has AI been in the market, maybe a little bit longer. And so a lot of your customers are seeing some of the benefits hearing, reading about it and wanting to go to the cloud? Or maybe there's a different reason that in 1Q, customers decided more than in the past, pay OpenText like to move to the cloud.

Well, if you think about what we've just talked about with the MIT study, there's no question that customers want to have all that content surface so that they can train in LLM. So that's no question, that's a forcing function.

Prior to that, customer -- our customers, SAP, Oracle, Microsoft, et cetera, all the enterprise customers, they're all moving to the cloud, but that was generally motivated to save money. And so there was a very good ROI rationale for doing that.

We tended to leave it to customers to come to us and decide. That resulted in virtually very little of our maintenance base actually switching over to cloud. And that the cloud revenue growth that you're referring to were really new name account growth and it really wasn't part of a program. Now Steve Rai, our CFO, signaled at the most recent quarter that we're going to probably start changing our revenue mix.

Now that confused people a little bit. They said, "Well, what does that mean? Are you off your plan and what have you? Our plan is fine. But what we're doing and at our Analyst Day, people can go and see the slides that Steve created, you'll start to see maintenance start to come down and be replaced by RPO.

And he was starting to run everybody through the accounting. It's the accounting, the sales force and SAP and others do. So there's nothing magic there. But people have never really seen it at scale from OpenText. And what Steve was trying to indicate to people start to prepare, you're going to see even more cloud growth. And I think the objective will be, you will see us have majority of revenues from cloud, and you will also see our maintenance convert.

And quite frankly, we're going to follow the playbook that other enterprise software vendors have used SAP, et cetera, where you'll see $1 of maintenance replaced by multiple dollars of cloud, and you'll see a lot of installed base marketing from OpenText. So there's a lot of growth there, and it will be a very intentional strategy.

And there'll be more from Steve in the quarters to come as he starts to get a better idea about margins and how all that works out.

It's something that investors are asking us about now, and it sounds like you're still formulating how to communicate to TheStreet, but maybe one more question about that would be total revenue in 1Q was a bright spot, came in above our estimates, above TheStreet estimates, but the guide was a little bit light. Does this transition that we're going through right now on the license to cloud side? Does this have anything to do with maybe the 2Q coming in a bit light or maybe the Street was just modeling a little bit too heavy to begin with?

Well, I think this revenue mix because what happens is when you swap $1 of license, it actually is only $0.40 in that year. But you see the rest of it. So I'll do basic math. I know Steve will kill me if I go into too much detail. But say you had $1 of license and you swapped it out for $2 of cloud.

Well, the way it works out is it works out over many years. Your minimum contract value is 3 or 4 years. So you do get a bit of a J-curve effect. You end up with way more money and way more profit. But in that short term of 90 days or 180 days, you'll see your revenue mix change. He was trying to signal that. In the maintenance example, you don't have a J-curve because the dollar of maintenance draws down and is immediately replaced by what's called CRPO, which is your current remaining payment obligation, which will be even more.

So license will shift down lower, but RPO will go up much larger than the shift down. So it does become a timing issue. And I think that probably either caught people by surprise or confuse them, but that's why he did the charts on Analyst Day so that everybody can -- and as you said before, we're trying to be as transparent as we can be so that you can track all of it and see, okay, I had a $1 come down here, but now I see $2 up on a different part of the balance sheet. So there is a bit of let's say, educational communications we have to do. But make no mistake, we are going to the cloud, and we're going to go with much faster growth because that's what all our peers have done.

Right. Maybe you could talk a little bit about some of the deal sizes when customers move to the cloud, we could start with current customers. So are you finding that I understand there's a difference between the revenue recognition. I think the audience and investors is probably well understood as well seeing other models. But are the deal sizes starting to increase? Maybe they're adding on AI, maybe they're buying more products from you. It's a chance for your sales folks to be able to educate the customers on what else OpenText has to offer?

So this is an excellent question that we are late to the party. So we can, and in fact, have learned from many of our SAP's installed base and our installed base are almost identical. And SAP has been a great customer of OpenText and partner and vice versa for a decade. So we're learning from them and from other partners at Microsoft and Oracle, of course, I would say we have to crawl before we run. So we will model, I think, safely that we will do $2 for every dollar.

I think we're quite comfortable that we can do that Shannon Bell, our CIO, showed quite frankly, more than $2 of value off the dollar maintenance in her key note at the user conference. But for now, I think what you'll see us say is that the dollar maintenance comes off, that we will earn our way to $2. Other vendors in our peer group that have been at this longer than us are now doing $4 and $5 because they've done additional applications, et cetera.

I think we have to crawl first before we can run. But as we move into that cloud platform, we have Aviator, we can start to add on those applications, specific agentic bots, et cetera. But we're early days. So I think we're comfortable to say 2:1. But obviously, our peer group is doing much higher than that. So we hope to -- it's a process. It's a journey that we're on. So we'll have to learn how to do that. The good news is, it's that all the installed base, so it's not going anywhere.

I think that's helpful. That's a helpful fact. Maybe the last one on cloud. As -- you've always had a cloud offering, as you have current customers who are moving from on-prem to the cloud, does that open you up for new customers coming in and the ability for them to recognize that maybe your cloud is a little bit more advanced than it was yesterday or maybe that's a little bit too much of a stretch?

Well, I would say that it took with the Micro Focus acquisition, it took 2 years to bring what was a large library. I mean, it is Hewlett Packard's original software library. It's an enormous wonderful library, but it took 2 years to bring that to the cloud.

And today, at our user conference 2 weeks ago, we now have all our major products on the cloud. So everyone has a choice. The question then becomes features what is a true feature parity. So in some regards, we still have to achieve future parity. So -- but as of today, to all the main product lines and the Aviator data platform that we announced at the conference, and they're all sitting there in the cloud now. So customers have that full choice.

We already have 10,000 of the Fortune 10,000. So it's not like we're going to get new name accounts. But I think people will certainly look at this, especially from the following point of view, when you have a unified data platform, you can start to take all those things we were talking about before, whether it's ERP, ITOM, CRM, et cetera, and start to have a unified view of the content so that you can train an genetic AI does not care that the data you're educating it with came from an old ERP system or CRM system, et cetera.

What the challenge for all enterprise software companies is that, that's the old world. And we have to present data that an LLM can digest. But it's even more complicated than that. And that's why I wrote the book because you can't just do that in the public domain. One of the reasons why OpenText exists today in enterprise content management and enterprise information management is that most of the stuff is behind the firewall. And you can't just make that available.

And if you educate an AI and you allow the public to query that AI, you've just provided them all the information that was inside your firewall. You have to have an architecture where you can govern the data and govern the AI because an AI cannot learn something.

If you're going to unlearn in AI, you have to start all over again and go through all the power consumption, go through all the training and literally start from four walls and a telephone as they would say, you have to start all over again. So a key thing here is the ability to handle public content, private content and then partner content.

And the hardest one of all is the partner content. Because it's sort of in a demilitarized zone, a DMZ. And it took us a decade to figure out the permissions governance model, say, you're a General Motors and you've got to work with your dealer network. Well, you have to share proprietary information, but it can't go to the public or say your Tier 1, Tier 2 supplier to Pfizer.

Well, all that information, those clinical trials, all that stuff, that's got to stay private. And even though you have to work together to do an FDA submission. So this is a very complicated world. You've got to be very careful about how you go about and orchestrate and handle all that. But the reality is for corporations, it's an enormous productivity gain. But you still have to work with those different types of information.

Got it. There's something I wanted to follow up on too. You talked about a little bit about security or you're hinting out security. In the past, about a year ago at OpenText World in 2024, I believe, I guess, Mark had mentioned, CEO, had mentioned how security is a layer to wrap around everything and about how every customer could be a security customer. The journey hasn't exactly in the past 12 months. I don't think it's exactly played out to be a security customer, but with sort of the reinvigoration that's here right now for OpenText. Maybe you could talk a little bit about cybersecurity and why cybersecurity is an important element of the core?

Well, he was absolutely right. And I learned something actually because having sat many years as a CEO and on boards and what have you and chairs the different committees. I was perplexed by this because I thought, while everyone already has security products, what I learned from CIOs is you can't have enough security products.

In fact, what was happening, I thought that when we would put the security wrapper around content or around business networks, et cetera, that it meant that somewhere else that there would be security removed. No. What happens with security, you do layers of security.

And if someone tells you, you've given them another layer, another wrapper of security around a particular content or application, they're actually quite happy to have multiple layers of security. That's actually what's happening. And so now there's a difference in OpenText. We have a business unit that does security for PCs at Best Buy in consumer division and then there's security at the enterprise level. And so I'm speaking now at the enterprise level.

Got it. You made some comments, some interesting comments about OpenText being the most open data platform. I think it got some airtime, but maybe not enough. I'd love to turn it to you to tell investors why that's important? And is that a competitive advantage for you?

So in OpenText's history, we've always been known as Switzerland. And we did that on purpose because many years ago when we were building search engines, people wanted to leave their content in its native form.

So back then, if you were in Lotus 1-2-3 or if you're in Word perfect or you're in Word and then later, it became Google Docs, you wanted it to stay in your native format. So what we did is we said, look, we will crawl all of this data. We'll go into your native format. So today, OpenText has over 1,500 connectors to everything you could possibly think of that we've built up over the last 35 years.

And so you can go into Lotus 1-2-3 and you have a viewer come up and show you a VisiCalc or whatever it is. That was so important to building an enterprise content management system because you cannot go to a corporation, which has been doing FAA filings or FDA submissions, et cetera and say, "Oh, good news. We've come up with a new software program, and we'd like you to get rid of everything that works just fine."

And of course, the organization is going to say, no, we're not doing that. And so it's important that you have this sort of Swiss Army knife approach where you allow all those pieces. Now fast forward now to training an Agentic AI. That's why Aviator is so important as a data platform because we've taken that philosophy and said the same thing except not just the content, but also the large language models because we're not presuming that you're going to just use Anthropic or you're just going to use Microsoft or just use Gemini or whatever.

We're assuming that organizations will pick, and they will pick different models. So we've made aviators so it's multi-model. And we've also made it so it's multi-application. If you look at the MIT study, the other thing they remarked on beside the -- behind the firewall, content was the bot would make the right decision, but it wasn't connected to anything.

So here, it was making the decision based on the information, but it didn't have the workflow that allowed it to go into the ERP system or in the CRM system and actually cause an effect. So it was doing all the work to make the right decision, but nothing would come out the other end.

So making all those connectors is another part of being a Swiss Army knife. So Aviator was made so that it could work with any large language model. Keep in mind, there's 400 of them viable LOMs right now. This is crazy. A year from now, we're not going to have 400 LLMs. But we will have LLMs that are tuned for an industry for nomenclature for a particular analytics engine problem. And as the customers choose that, we will interface to those, just like we did with customers choosing content. So the idea there was to build a Swiss Army knife, which really left the decisions to the customer.

Another one from OpenText World. Last month, it was packed with announcements. You had the AI data platform, Databricks partnership, Aviator studio, Aviator AI services, probably a few others that I didn't mention. This might be asking you to pick a favorite child. But can you tell us maybe one or two or a few that you're most excited about?

Studio, I would say. So the book that I mentioned here, this is really an architecture book. So as an engineer, it was a lot of fun to work with some of the execs at OpenText to write this, which was to sort of explain why some of the myths about training AI and how you would go about it. Studio, Aviator Studio led us to a whole bunch of other concepts that people are just starting to grapple with.

And you're going to see a companion book come from us because we started talking to CIOs about who's training the bots. Are we doing it? Are you doing it? Or is the system integrator doing it? No one knew.

So we started a project with many of our customers to say, okay, if you're an accounts payable clerk, do you really need to design that? Do we really need a systems integrator? Or does that just come as part of studio? And so we've started to have those discussions. So if you're a pharmaceutical company or a health care provider, when you get deep down into claims processing, which goes to the heart of their business, they want to train that pot.

If you get to something at an industrial level within an automotive manufacturer, then someone like a PwC or a CGI, et cetera, they could train that bot because it's an industry subject matter expertise. So you're going to see, just as we talked just now about content and the architecture, you're going to see us seized with the genome of a corporation in terms of its bots. And how many agents. My betting right now from 2 weeks ago, I think you're going to see us come out with a book that describes 1,000 agents in a genome, and it will be for a 100,000-person corporation because the cut down will be by role. It will probably be something like 100 people to 1 agent, something like that. And you're also going to see probably somewhere between 50 and 100 orchestrators that connect all those agents together. So that's a preview on the next book we're working on. So Studio is my favorite.

Got it. I think it's a perfect time to close. We're out of time. Thank you so much for joining us, Tom.

Okay. Thank you.

Thank you for standing by. This is the conference operator. Welcome to the Open Text Corporation First Quarter Fiscal 2026 Financial Results Conference Call. [Operator Instructions] 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.

Thank you, 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 Executive Chair and Chief Strategy Officer, Tom Jenkins, together with James McGourlay, Interim Chief Executive Officer; Steve Rai, Executive Vice President and Chief Financial Officer; and Cosmin Balota, our Senior Vice President and Chief Accounting Officer. Today's call is being webcast live and recorded with a replay available shortly thereafter on the Open Text Investor Relations website at investors.opentext.com.

Earlier yesterday, we posted our press release and investor presentation online. These materials will supplement our prepared remarks and can also be accessed on the Open Text Investor Relations website.

Now turning to the upcoming investor events. I'd like to take the opportunity to invite institutional investors and financial analysts to join us at Open Text World 2025 Investor Track on Tuesday, November 18 in Nashville. The Open Text World Conference is a unique opportunity for investors and financial analysts to learn about our latest product innovations and with full conference access, allow open dialogue with our customers and partners on site. The conference keynotes and investor track will also be available by webcast virtually.

Open Text will also be participating in the following investor conferences. On November 21, we'll attend the Needham Tech Conference virtually. And on November 24, we'll be at the TD Technology, Media & Telecom Conference in Toronto. On December 2, we'll be at the Bank of America Leveraged Finance Credit Conference in Boca Raton and on the same day, we'll also be at the UBS Global Technology and AI Conference in Scottsdale, Arizona.

On December 8, we'll be at the Raymond James TMT and Consumer Conference in New York. And then finally, on December 10, we'll be heading to the Barclays Global Technology Conference in San Francisco. We look forward to meeting with you at one of those events.

And now on with the reading of our safe harbor statement. During this call, we'll be making forward-looking statements relating 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 risk factors that may impact the future performance results of Open Text are contained in Open Text recent Forms 10-K and 10-Q as well as in our press release that was distributed earlier yesterday, 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 James.

Thanks very much, Greg. I would like to welcome everyone on the call today. Joining us today is Tom Jenkins, Executive Chair and Chief Strategy Officer. I also want to give a warm welcome to Steve Rai, who joined Open Text as Executive VP and CFO in October. Steve brings a wealth of experience from technology and software. He is based in our Waterloo, Ontario headquarters. Also joining on the call is Cosmin Balota. I want to thank Cosmin for his leadership as Interim Chief Financial Officer, and Cosmin has now resumed his role as Chief Accounting Officer.

The entire Open Text team is committed to delivering secure information management products that let our customers curate and enable agentic AI with their content. We have a tremendously strong and deep customer relationships. It is because of this that we have such incredible and loyal installed base.

Now let's get into our Q1 fiscal '26 results. Q1 total revenues, ARR, adjusted EBITDA margin, adjusted EPS are all above Street expectations. As you saw with the Q1 performance, we are continuing our momentum from last quarter, especially in our core content business. We remain focused on sales execution, having just completed a major product cycle. We believe we are in the market with the right products at the right time.

Turning to our cloud performance this quarter. Q1 cloud revenue was $485 million, up 6% year-over-year, which is well on track towards our F '26 outlook range of 3% to 4% growth. Cloud bookings continue to remain strong as we saw Cloud cRPO up 6% year-over-year. More importantly, our long-term cloud RPO is up 16% year-over-year, and total cloud RPO is up 11% year-on-year. Our other measure of cloud performance is enterprise cloud bookings, which were up 20% year-on-year in Q1. This puts us in a good position towards achieving our F '26 outlook range of 12% to 16%.

We closed 33 deals greater than $1 million in Q1, which is up 43% year-on-year. We had key wins in the quarter with ALTEN, Australia Department of Health, Core42, Optiv Security and mh Services. In September, we provided additional disclosure on our main business -- businesses, which we break into product categories. This disclosure is in our IR presentation on the website and allows you to better track the performance. Tom will speak more about the tremendous opportunities in our core information management for AI business.

For Q1, you can see that Content being our largest business continues to lead our growth in Cloud. Content Cloud grew 21% year-on-year in Q1. This was driven mostly by bookings won in financial services, energy and utilities as well as telecom verticals. We saw strength in retail, automotive and manufacturing verticals which also contributed to our business network positive growth in Q1.

We are pleased with our Enterprise cybersecurity business growth this quarter and mainly driven by a few sizable wins. Our product offerings continue to be recognized by industry experts such as Gartner, and we are establishing key partnerships that are important for content management and agentic AI. We're excited about our upcoming Open Text World event being held in Nashville from November 17 to 20. Thousands of our customers and partners and other stakeholders will join in person to see our latest product offerings and innovations, especially our Aviator and agentic AI solutions in action.

We will also showcase our sovereign cloud, keeping our customers data local and secure. We are very excited to see how our customers unlock the power of their own data using Open Text products to foster innovation and spur growth.

As we look ahead to the rest of fiscal year, we are not changing our fiscal '26 annual outlook. Please remember that we are an annual business and that results can fluctuate quarter-over-quarter. With that said, we expect Q2 total revenue to be between $1.275 billion and $1.295 billion and the adjusted EBITDA margin to be between 35.5% and 36%. We continue to see strength in our Content business going forward.

For the second half of fiscal '26, we expect revenue to skew higher towards a strong Q4. There is typical seasonality that we see in Q3, but the momentum from our new product cycle is expected to come mostly in the latter part of fiscal '26 and beyond. We continue to expect ARR to return to growth in fiscal '26 with Cloud growth outpacing maintenance declines, while customer support revenue is on track to meet our fiscal '26 annual outlook.

We are seeing some of our customers making faster decisions to shift their workloads from on-premise into the cloud. We have always given our customers the choice of where they want to deploy and note that the on-premise deployment is still being sought after in heavily regulated industries and governments.

To conclude my remarks, I want to take a moment to thank our Open Text team across the company for their professionalism, dedication and hard work during this period of change as well as our partners, customers and shareholders. Finally, I would like to thank Tom Jenkins and all of the members of the Open Text Board of Directors. Their support to both myself and all of our employees has been tremendous. This is an exciting time for Open Text. We're in a great position financially and operationally. We are in the right markets of secure content and data that trans-agentic AI. When I stepped in as Interim CEO, my main priority was to take care of our customers and carry forward our initiatives and deliver our fiscal '26 annual outlook. We had a great start to Q1, which sets us up nicely for the rest of the year and beyond.

With that, I will hand the call over to Steve Rai, our EVP and CFO.

Thank you for the kind introduction, James. It's great to be here. Good morning, everyone, and thanks for joining the call. I'm 1 month in at Open Text and very excited to contribute to the tremendous opportunity ahead. Over the past few weeks, I've spent a lot of time with James and Tom and the extended team, and I'm in full support of the company's vision and direction. I look forward to working together with them to deliver on this. Cosmin Balota, our Chief Accounting Officer, who was the Interim CFO before I joined, is on the call today, and he will discuss the highlights of our Q1 financial results.

I would like to thank Cosmin personally for his unwavering support, insights and maintaining a steady ship through the transition. For those of you who may not know me, my last role was as CFO at BlackBerry, where I was deeply involved in the company's corporate technology and organizational changes. I'm truly energized to join Open Text at this stage in its journey and will be based in our global headquarters in Waterloo, Canada.

Since joining, I've been very impressed with the professionalism and passion from everyone that have met across the organization. I see a company with solid financial fundamentals with expanding margin and free cash flow and excellent foundational technology. Open Text supports an impressive global enterprise customer base and is poised to capture a broad-based step change in the market for training and adoption of agentic AI. I look forward to putting my deep experience in technology and transformation to work with such a dedicated team.

With that, I'll hand the call to Cosmin to discuss our Q1 highlights.

Thank you, Steve, and good morning, everyone. Let me start by saying that in Q1, we continued our momentum from last quarter, particularly from growth in cloud revenues, led by our Content product category and through overall margin expansion. Total revenues for the quarter were $1.3 billion, which was an increase of 1.5% year-over-year. This growth exceeded our expectations for Q1 and was mainly driven by Cloud and License revenues.

In the quarter, our Cloud revenues of $485 million were up 6% year-over-year. This growth was mainly attributed to strong demand in our Content product category, which makes up approximately 40% of our overall business and grew 21% year-over-year in Cloud and 3% in total revenues, as outlined on Slide 6 of our investor presentation.

Customer support revenues of $587 million were down 1.5% year-over-year, while our ARR or annual recurring revenue was $1.1 billion, which was an increase -- sorry, an increase of 1.8% year-over-year. ARR was 83.2% of total revenues, which was a slight increase compared to the 82.9% in the same quarter last year.

Moving to profitability. Q1 GAAP-based gross margins was 72.8% or 76.5% on a non-GAAP basis, which were up 100 basis points and 60 basis points year-over-year, respectively. These increases were mainly due to Cloud gross margins growing 280 basis points year-over-year and 270 basis points on a non-GAAP basis. Adjusted EBITDA for the quarter was $467 million, which is a 36.3% margin and was up 130 basis points year-over-year. This improvement was mainly driven by higher revenues, which, as I mentioned, was primarily from continued growth in Cloud and our Content category with additional benefits realized from the expanded business optimization plan and improved gross margins.

The costs and benefits associated with the business optimization plans and other savings initiatives, as outlined on Slide 19 of our investor presentation, and they have not changed since the prior quarter. The strong margin performance in Q1 resulted in an adjusted EPS of $1.05, which was up 12.9% year-over-year. Q1 free cash flow was $101 million, which was a significant increase of $218 million year-over-year.

As you may recall, in Q1 of last year, we made a onetime tax payment, driven by the gain on sale from the AMC divestiture. This concludes my summary of the Q1 fiscal '26 financial highlights.

And with that, I'd like to hand the call back to Steve.

Thank you, Cosmin. The results in Q1 demonstrate the resilience of Open Text's business supported by the strong financial position of the company. Along with our portfolio-shaping initiatives and announcing the recent sale of our eDOCS business. This solid foundation supports our capital allocation strategy of consistently paying a growing dividend, buying back shares, reducing debt and reinvesting in growth. I'm a month in and looking forward to continuing my engagement with the Open Text team and meeting our investors and analysts. I'm excited to work with James and Tom and the rest of the executive team and Board to carry out our strategic objectives.

With that, I'll hand it over to Tom.

Thanks, Steve. Good morning, everyone. Before I get started, I'd like to thank Mark Barrenechea for his 13 years of dedicated service to our company. His leadership scaled and developed our company as a leader in enterprise information management. And Steve, a very warm welcome to you, and welcome to Open Text. You've only been here for a month, but I appreciate having you here on the call today. Since we made our announcement on August 11, we've met with hundreds of shareholders and analysts and investors. And it's been great for me to renew all the acquaintances. And I thank all of you who said that I haven't aged a day since the last time you saw me, I wish that was true.

This has allowed us an opportunity to communicate to you a simpler strategy for the company to unlock the value that Open Text has. We're going to concentrate on our core business units and enterprise information management and specifically those that provide the training for the new area around enterprise artificial intelligence. You'll hear us use the term at agentic AI as well and more on that in a minute.

After all, it makes sense for us because Open Text is one of the biggest -- we think it's the biggest, but it's certainly one of the biggest corporate data and metadata vendors in the world with hundreds of connectors to legacy and current data sets. That's a powerful asset inside Open Text for AI, and we plan to unlock it. We'll do this first, though, by selling off all our noncore business units and using those proceeds to further create shareholder value. And that's really our end goal. And so in a way, what is old is new again, we're going back to our historical roots of being a content management company, except this time, we have additional products in business networks and machine management, wrapped in an enterprise-class security layer. That will be our core business.

We already have the global scale, the go-to-market sales force, the product line in these businesses and the core of our core, which is the Content Management business, is also our largest business unit at about 40% of our total revenue. And it also happens to be the fastest growing with, on average, more than 20%. Cloud growth over the past few years. So it was a pretty obvious strategic decision by the Board to take these actions. We now have the entire company from the Board, the exec management team to our 20,000-plus strong global workforce aligned and locked into achieving our FY '26 objectives and beyond. We're going to stick to our plan. There are early signs that we may be even going faster towards the cloud as the year goes on.

And as we shed the noncore units, our Cloud Content business will be soon the dominant share of all of our revenue sources. That's our goal. We'll keep reporting our business unit breakout as we go through this journey so that you can track right along with us our progress towards that goal. So speaking of progress, if you take our August 11 release and some of the short-term priorities that we said we would address. I'm pleased to report we've addressed almost all of them. We've had a very busy 90 days and the next 90 days will be just as busy. As I mentioned, we started by providing additional transparency with all of the revenue breakout performance for our business units. We did this in early September so that you could track along with us on our progress. That's where you saw the strength of the Cloud growth.

In fact, last year, Content Cloud grew 17%. And this quarter, it grew 21% year-over-year, and that's the acceleration I was referring to. So clearly, our Content Management customers are moving even faster to the cloud, and this will start to change our revenue mix slightly in our plan, but it's an indication that we're moving faster to becoming a fully cloud-centric company.

Now of course, we appointed Steve Rai as our permanent CFO. And he, of course, has a solid background in financial and operational reporting. And even more so, with his background at BlackBerry, he has a lot of experience in portfolio shaping. So we welcome that wisdom to the management team. This was followed by our first announcement of a noncore business unit sale within the analytics business, as has already been mentioned. It's an on-premise piece of software. So that will help the pivot towards cloud even further as we shed the noncore units.

We also talked about the refreshment of the Board. And recently, we appointed a new Board member, George Schindler. He's the former CEO of global IT consulting giant, CGI. He's a fantastic addition to the Board, brings valuable perspective and now includes other members that we've announced in the past year, such as the senior partner in technology and telecom from Accenture, the Chief Human Resources Officer of Hewlett Packard, the CIO of Cisco, among just the new members that we've announced in the past year.

So we're quickly retooling everything at Open Text. Yesterday, we published our Q1 fiscal '26 results that demonstrates the resilience of the business and the continued demand for Content Cloud and AI. We're focused on the right market at the right time. It leaves us with one major priority remaining, which is to find a permanent CEO. Their search is ongoing, both internal and external candidates, and I'm pleased to note that we have had many world-class candidates step up and put the hat in the ring for consideration by our search committee. Our goal is to find a leader whose solutions focused and to help us elevate to the next phase of Open Text's journey.

In the meantime, I'd like to thank James for stepping in as Interim CEO. He's been a steady hand leading the operations of the company and to Cosmin for leading the financial group. As you can see from the results, they've both done a great job stepping up on short notice.

Open Text is on a solid financial and operational foundation of growing long-term margin and free cash flow. And we're committed to unlocking shareholder value through our capital allocation strategy, which will include reducing debt, paying a dividend, share buybacks and tuck-in M&A. And with all of this, we're committed to providing investors with clear, simple, transparent metrics so you can better understand our business and performance and follow along with us on this journey.

Let's turn to our strategy now and how Open Text plays an important role for our customers in agentic AI. We provided some slides. And obviously, we're also going to speak at our user conference and Analyst Day next week, as James had mentioned. So a lot more detail to come, but we thought we'd give you an overview of what you'll be seeing next week. And it really falls around a recent MIT study on agentic AI, which indicated that the importance to productivity that AI must be trained by specific content that can only be found inside the firewall of organizations.

Keep in mind that many of the world's first most amazing GenAI products like ChatGPT and Perplexity and [ Claude ] were all primarily trained on public information.

Now public information only represents about 10% of the world's information. About 90% of that information is behind the firewall. In fact, many years ago, Open Text wrote a book called Behind the Firewall that described where all this information is and how you find it and how you use it. Now of course, most of that was built as records management and archive for regulated industries, and Open Text was the leader in all of that. So that positions us with an enormous access to all the data.

And so as you know, we have hundreds of thousands of organizations all throughout the world that we've built these systems for over the past 35 years. That's really the gold mine for customers that are seeking to build productivity-related agentic AI. So we'll provide a lot more information on that. But where does that apply to Open Text? Well, Open Text in enterprise information management, it's got data stored in 3 major business units that we've broken out for you today in Content, our ITOM and our business networks. These products, our users are able to use their own data to train agentic AI that's way more powerful for anything that's available in the public domain. So that's why we call this enterprise artificial intelligence in the same way that we used to call it enterprise information management and before that, enterprise content management.

So what is old is new again, and we're returning to our roots. And we think that there's an enormous demand for this as we go forward.

Now we're also seeing an interesting change around proprietary clouds. And in the case of governments, they call it a sovereign cloud. Users don't want to lose the keys to their castle. AI is very different than just storing data. And our users are starting to find that they want to be very careful how they construct clouds that use AI. They want to make sure that they're inside the firewall. So we're noticing that the domestic telecoms throughout the world are starting to take a more substantial role in the supply chain for these proprietary clouds.

And I think you'll see in the future, Open Text get more involved with those telecoms throughout the world as those channel opportunities present themselves. It's interesting because we're finding that major corporations that went to the cloud actually don't have an IT capacity internal to their companies anymore. And that's why they're seeking alternatives where they can maintain a proprietary AI, but do it on a managed service basis through ourselves, other vendors and the telecoms, as I have mentioned.

Now these trends, they're going to be a major topic of our upcoming user conference. James has mentioned that we'll be having later this month in Nashville as well as the Analyst Day. Now we're also going to have a new book called enterprise artificial intelligence available that explains all these concepts in much more detail, both to yourselves as well as our users.

So in closing, what lies ahead for Open Text is perhaps the greatest opportunity in the history of the company. We hope that you'll follow us on that journey as we take our core businesses and focus on them. We're going to train agentic AI with all that content. Our Board committee continues to make the divestitures of the noncore business, and our Board identifies and on boards our new CEO. So with that, could the operator please open the line to have questions.

[Operator Instructions] The first question comes from Richard Tse with National Bank Financial.

So Tom, you're embarking on a pretty ambitious strategy here. I just kind of want to get your thoughts in terms of what you think Open Text's competitive edge is and content as you make this pivot to leveraging your data for AI because there are a number of companies in the marketplace.

Yes, the competitive edge, you don't create competitive edges overnight, as you know. That competitive edge was built over 35 years. We're the only company that has the hundreds and hundreds of data connectors. You had to be around back in 1995 to be able to have a connector into word perfect and into the Lotus Notes and then the Lotus 1, 2, 3 and all that stuff.

And the reality is that legacy data is critical to training agentic AI. And we have all of those connectors, whether it's in business networks, whether it's in IT operations management or in human content. And that stuff gets built up over decades. You had to have been there at the time. And so all that source code, all of that plumbing is buried inside our products, whether it's SAP archives that are written directly in ABAP, that kind of stuff, you just can't make up later. You had to have been there at the time. So that's the part that really gives us a huge competitive advantage.

I think the other part that we're going to find play out in the market is that we offer a hybrid mix. We offer on-prem through license as well as in the cloud and managed services. So there's a mix that users can pick because as you go to build these AI systems, that information is located throughout corporations in many, many different attics, so to speak, throughout. And we're equipped to be able to do that.

And my second question has to do with the Content business. Thank you for that segmented disclosure. It obviously is growing at a pretty rapid rate, certainly on the cloud side. Can you maybe give us a bit of color in terms of the mix of where that growth is coming from? Is it sort of AI readiness? Or is it something else because for mature markets, granted its sort of off a small base on the cloud piece, but still curious to see how that's playing out.

Yes. I'll defer this to James. But I will say one thing when a CIO approaches this problem, the first thing that they have to do is they have to curate their content in general. That's why I think you're seeing a lag in some of the adoption of AI because even though we had COVID and even though we created a lot of digital pieces inside our organization, the reality is we were doing that in a hurry during COVID. Getting this in an organized fashion, that takes a lot of content management. It takes a lot of archival, a lot of records management.

So a lot of organizations were simply getting digitally ready. They had never been asked to do this before. They were keeping all that data for regulatory reasons. Now they're starting to present that data in real time and ready so that they can do training. So I'll leave it to James to talk about the very specific parts.

I think you covered it pretty well, Tom. We're seeing our customers looking at moving into the cloud for a number of reasons, including the managed capability that we offer, curating their data for AI readiness and just overall simplification of the management of the system for them. So customers are moving quickly. We're seeing new customers coming in, coming on board, jumping directly into our cloud offering, as you would expect in this day and age. But it's across the board, we're seeing a shift to cloud in the customer base.

The next question comes from Kevin Krishnaratne with Scotiabank.

Maybe, Tom, just on that last point on the data readiness and can appreciate the sort of decades worth of content that you're managing for your customers. Is that -- like can you just talk about maybe -- is there a sweet spot in terms of how far back customers need to go? You talked about all the data that you've got to train agentic. But I'm wondering like how relevant is data from 30 years ago versus, say, 5 years ago? Is there -- again, just sort of a sweet spot that you're seeing in terms of how far back -- how much data customers are bringing in to think about their agentic AI training purposes?

Yes, that's a great question. And even to go further, we could say that there were early attempts to create synthetic data where you would take 5 years of data and just simply replicate it to try and fake out some form of agentic AI training. The reality is, I think the person who did this analysis the best was Larry Summers, who is, of course, now on the Board at OpenAI and former Harvard President when he was doing the analysis of how the Fed had made such an error during COVID. And when he went to look at the Fed models, he discovered that they had gone back 20 years.

And you can go on YouTube and watch this. It's a fascinating presentation and analysis by Larry Summers. And basically, he looked at them and he said, you didn't go far enough back. You had to go to where the black swan was, which was in the '70s. And that's why you missed it. And it's an interesting point because what you're doing when you're training GenAI, you're going back looking for patterns. And so if you have the data, you go back as far as you can because you're looking to get the pattern of the black swan. That's what a corporation wants to be able to see. Where are those anomalies.

And so quite frankly, you can't go far enough back. If you've got the ability to go back 35, 40 years, you're absolutely going to do that because your AI will be more accurate and quite frankly, wise. And that's the race. There is no such thing as data that is not useful. The more you have, the better off you are.

That's super fascinating. Maybe switching over to Steve, welcome to the team. If you think about the Q2 guide on revenue, it's a range. It does imply a scenario that could see quarter-over-quarter decline. So I'm just wondering if you can maybe talk about the drivers that would get you on the one hand down to the bottom of the range and on the other hand, the top end of the range. Can you just talk about expectations for the coming quarter?

Well, I think it's the most critical item for the quarter and the rest of the year and beyond is this theme that we -- that Tom has been talking about and James commented on. I mean, focus -- I'm new on the scene, right? But what's so compelling to me as -- from what I look at is you look at content and those -- and the core pieces that kind of feed into that and -- and that -- and then take a look at the cRPO, right? That current remaining performance obligation, that is just really kind of going to -- that's what's carrying everything here. That is the biggest component of the business.

And from a -- what -- where Q2 is versus the second half, we haven't changed our annual outlook. So there is going to be some degree of shift from the other elements of the business, but that trajectory is the key trend to watch.

Yes. And don't forget that the thing that we don't know is what's the mix of revenue caused by how fast people are going to the cloud. As you know, the revenue reporting for cloud gets distributed when we make a contract 3, 4, even 5 years as opposed to license, which gets recognized right away in that quarter. So that's part of the issue that we don't know what the mix of that revenue will be. We sure do have the customers, though, it's just that what buckets of revenue will that go into quarter-by-quarter. That's the thing that we think we're seeing an even faster move to the cloud.

The next question comes from Stephanie Price with CIBC.

Maybe just a follow up on Kevin's question around the Q2 guide, and I appreciate the color on the go-forward strategy. In terms of EBITDA growth in the second half, the reiterated guide implies a pretty significant step-up in H2. Just curious about what's driving that growth? Is it primarily transformation initiatives? Or any color on that, Steve, and welcome would be great.

Yes. I'll let the others jump in. But certainly, there's a lot of the portfolio reshaping, the very significant business optimization initiatives that have been underway for some time and continue to be -- I mean, that's a $0.5 billion run rate improvement since the program was what was announced that we're working on. So a significant portion of that, call it, 1/3, I understand was realized last fiscal year. There's another 1/3 approximately that's built into the plan for the current year, and then we continue to work beyond that. So all of those things really drive that improvement.

Great. And then, Tom, maybe just an update on the divestitures initiatives. Congratulations on eDOCS. How should we kind of think about the cadence of divestitures over the next several quarters here as you look to divest 15% to 20% of the overall revenue?

Yes, that's a great question. We've been grappling with that and talking to Steve about the right way to do it. Clearly, there are multiple business units here that are noncore. And I think what you'll see is we'll establish a pace of doing one per quarter because it does take a lot of effort. If you think about what Steve just said, as we divest a unit, there's parts that do not go with the unit sale that we then have to restructure. So it's a nontrivial exercise. We're going to do it methodically.

And I think you'll see us generally be done within the next year. That's sort of what our overall goal is. But yes, you'll see a drumbeat of this. It will not be all at once. that would be irresponsible. We want to stay very disciplined on our EBITDA and keep -- as you know, the company is very disciplined when it comes to EBITDA. We'll make sure that we do this in a methodical fashion so that we don't get big changes in EBITDA. So that will guide us. We'll have to ask everyone's patience while we do it, but we don't want drama. We just want to have it in a real constant drumbeat as we go through the year.

The next question comes from Steve Enders with Citi.

This is George Kurosawa on for Steve. Maybe one follow-up on the divestiture point. Steve, I think one of the things that jumped out to us on your resume, your time at BlackBerry was your involvement in divestitures with that organization. Maybe any thoughts on your approach or playbook? What do you feel like is similar or different coming into the situation?

Well, the primary difference that we've got here is the core represents the largest and fastest-growing piece of the business. So that is a great position to be in. And then beyond that, just given the kind of the landscape that Tom painted, everybody realizes we're on the cusp of a major step change in terms of AI and agentic AI, in particular, developing. And we've got -- this company has got AI of its own. But in addition to that, that access to all the information to training it. I mean that training ground and providing that access to it is, I mean, what a phenomenal time to kind of -- again, this is 35 years in the making, a great position to be in to kind of capitalize on that market picture.

Got it. Okay. Great. I appreciate that color. And then I also appreciate the additional disclosure on the business unit side. I think the Content Cloud side really jumps off the page, it's been well discussed. I think the other thing that caught our attention maybe on the flip side was the cybersecurity enterprise piece, particularly that cloud component declining. I know it's small, but I think we were kind of interested in the cross-sell opportunity there. So surprised to see that moving in the wrong direction. Just any color or commentary on what's happening in that business and your outlook there going forward.

Look, I think it's fair to -- it's James speaking. I think it's fair to say that we're working extensively on that business. And we've made several investments in the product development since we acquired the product lines. We are seeing great success as we're moving forward. And we will start to see those cloud numbers coming up with investments in specific regions.

But I can look at various deals that we've done with large strategic banks where we've sold content and cloud and security together. So we are seeing success in our cross-selling efforts. We're expanding those efforts, and you'll see us continue to expand those efforts as we go through this year and beyond.

The next question comes from Samad Samana with Jefferies.

This is actually Billy Fitzsimmons on for Samad. I want to double-click on Content Cloud because it's important. And when we think about the 21% Content Cloud growth in the quarter, how would you break down that growth between, call it, net new customer wins, seat expansions, ARPU expansion for selling additional modules in the base? And then cloud conversions in your existing base.

And what I'm kind of getting at here is when we think about cloud versus non-cloud, Open Text has always made a point to support customers where they are. And so just so we're all clear, were there any, call it, shorter-term tailwinds to the Content Cloud growth rate from you guys using either carrot or sticks to incentivize your existing on-prem customers to move to the cloud? Or would you more categorize this as customer-driven and that they're choosing to transition because of their AI readiness?

So first of all, I would character this as -- characterize this as a joint effort between Open Text and customers. As you said, we're selling to our customers where they want to be. We allow our customers to make that choice, and that's where we go. We don't have a program in place that incentivizes customers to move into the cloud. We're not pushing people to the cloud. This is really a joint effort and a joint decision as we go forward. There's nothing exceptional that I can -- that comes to mind in the quarter that would drive that growth other than the concerted effort of our sales team selling.

I think there's also a really big point buried inside that question. We, as a company, are focused on shareholder value. How do we make the most profit and the installed base has a tremendous amount of ARR, what we would classically call maintenance. It's very lucrative for the company. We're not in a hurry to see that leave. And quite frankly, neither are our customers. Our customers are very -- if they didn't broke, don't fix it. And so we're not in a hurry. I know other vendors because they want to categorize everything into the cloud or converting, we don't see the wisdom of that, not for our customers and not for ourselves. They're happy to actually pay us more under the old way, and we're happy to take it.

So I think you'll see that this, as James says, is a partnership ongoing between our users and ourselves. But we're not dogmatic on this. We're just driven by how do we make the most amount of money and the most amount of money is by doing what customers want.

Makes perfect sense and crystal clear on that. And maybe if I can ask one to you, Steve. I'll leave this pretty open ended, but it's only been a month or so since you joined, and this is your first earnings call. Can you just talk through kind of what are your initial priorities as CFO?

Well, obviously, understanding the priorities on the part of our customers, understanding the products. Obviously, there's been some very significant strategic initiatives recently announced, and the Board obviously has been very involved in that. But the big things are the primary trend that we've been talking about with content leading the growth and wrapped with all the business optimization initiatives, and that's really the top line, but bottom line, I mean, those are the most significant and most impactful items. So that's where I'm focusing and just obviously getting to know the team and how we do things.

Steve is certainly not bored. There's a lot of balls in the air, and he's just in a perfect position. We had a meeting early in and I said, Steve, what do you think? He said, go faster. And I think that characterizes Steve for us. He's a veteran, been around, he sees what we're doing, just go faster.

The next question comes from Stephen Machielsen with BMO Capital Markets.

So with respect to the ITOM business, you clearly had some strong cloud growth, albeit off of a small base. What would your expectations be for stabilizing total ITOM revenue? Like is this something you hope to accomplish as you exit this year? Or is it still TBD?

I think we're -- I think we'll say at this point, it's still TBD. I mean we are working on stabilizing as we go along. And obviously, you can see the growth coming in on the cloud. There's some great product features, benefits that are coming out in our upcoming releases. We're seeing stronger demand from our customers. So yes, we're working towards stabilizing. I'm not willing to put a date on it at this point in time, but we are progressing well towards that end. And we're winning some great deals against some strong competition. So we've got really positive plans for ITOM and a key part of the portfolio.

I think what you'll see at Analyst Day and also at the user conference, although we break out these units as ITOM and enterprise security and content, you're quickly seeing us evolve into a go-to-market strategy where we're training all content for agentic AI. You'll see us go to market where the ITOM, which is really machine-generated content for agentic AI, you'll see business networks, which is really transactional content for agentic AI and then the original content server business, which is human-generated content, all of those components are going to come together in an offering from us because our users, when they go to train agentic AI, they don't think of it as ITOM or the way we as vendors would break it up in the historical way of creating content. They just think of it as content, a big data pool.

And so you'll see us go to market where we would in the past call that cross-selling. We're coming to the market now to give our users what they need, which is really all of the data, not select data that previous vendors had but rather all of the data. I think this is a very important thing you'll see us go-to-market with starting with next week with Analyst Day.

All right. We'll look forward to it. My second question is the Q2 revenue guide seems to imply a double-digit decline in license. Can you provide some color on that dynamic? Is it reflective of clients transitioning from license to cloud? Or is there some other dynamic or factor to point to?

So this is what I was referencing before. We're really driven by the selection that our customers are making. As James has said, we don't have a definitive target. We simply show up and say, here's the menu. Would you like this on-prem? Would you like this as a managed service. So in many ways, that mix is really a reflection of how quickly customers are going to the cloud.

And quite frankly, last quarter, they chose cloud more than they did license. That could change next quarter because there is that other dynamic going on where the need for a proprietary cloud or a sovereign cloud that will have an element of on-prem, and it will have an element of wanting license revenue. So it's not something that we can predict with absolute precision. We think overall, though, that the trend line will continue just like what you saw this quarter into the following quarters. But that variability quarter-to-quarter is really hard to really nail down. James, what's your...

I think you covered it great, Tom.

What we're seeing ...

That's what we're seeing. We're seeing our customers move to cloud. There's some large deals out there, some variability in when those deals will happen on the license side. But the main driver is that customers are moving to the cloud. Those are bigger deals, but they're spread over time, and that's the impact on the quarter.

The next question comes from Seth Gilbert with UBS.

Maybe another one on the 2Q revenue guidance that you outlined. 2Q usually seasonally stronger than 1Q with the December year-end -- calendar year-end. Maybe can you help us out a little bit, is cloud services, is that line going to be less than the 6% because there's a fine mix if you kind of play with license in the previous question and if you play with cloud. And maybe trying to help us understand for modeling purposes where those 2 will kind of be in 2Q, I think, could help squash a lot of investor fears.

I would kind of start with -- we haven't revised the outlook for the full year. So there is some element of larger deal timing, particularly on the license front because the rev rec is more upfront on that. But this is why at the outset, and I think we've covered in some of our IR presentation as well, that if that's a trade-off and the customer chooses to go to the cloud rather than signing up for a license deal with more upfront rev rec, keep an eye on the RPO because that's where that trade-off and that customer choice ends up and particularly the current RPO, which is the next 12 months. So it's that -- it is a positive shift for the long term to see it. But obviously, there's that near-term accounting rev rec impact. So that's how I guide you to kind of view that.

Got it. And maybe as a follow-up, recognizing you have not changed your full year guidance, which was good to see. So maybe this is a question about a little bit further out. But can you talk about how you're thinking about the changing revenue mix to impact margins maybe at a high level?

Yes. No matter what the revenue mix, we are committed to the margin. We've always been a very disciplined operator. So there will be no change to the margin regardless of the revenue mix. We will adjust as we go along. And it's like Steve said, some of this from a rev rec point of view, all the so-called dump truck still has the same amount. It's just that we're letting some of it out slower in one of the scenarios with cloud. But the dump truck still has the same amount of dirt in it. So it's just -- as we meter it out, we will make sure we maintain our margins. We've got a long history of being a very disciplined operator.

I will now hand the call back over to management for closing remarks. Please go ahead.

Thanks, everyone, for joining us today. We're excited about our fiscal '26 and all the opportunities in front of us. We hope you'll join us at Open Text World in Nashville on November 18 for our Analyst Day. We'll go into more detail on some of the things that we talked about. As Greg noted, we'll be out in the field quite a bit at many investor conferences through the fall spending time with you and looking forward to you hearing your feedback. Thanks again for joining us today.

This concludes today's conference call. You may disconnect your lines. Thank you for participating and have a pleasant day.

All right. Thank you all for joining us for the tech portion of the day. I'm Thanos Moschopoulos, I'm the Canadian Technology Analyst at BMO. And happy to kick things off with Tom Jenkins, Executive Chairman and Chief Strategy Officer of Open Text. Tom is the architect of Open Text's strategy having been CEO from '94 to 2005. I know this personally because I met Tom shortly after the company went public in '96.

And Tom outlined how the company went public as the search engine powering Yahoo! -- but he didn't view that as a sustainable business model. And so he articulated a strategy to go become the leader in content management. And here you're all this time later with $5 billion revenue and leader in content management.

So Tom to kick things off. Where are we talking to you as sort of a CEO today -- what would be the change? Was it a question of different skill set required for the next stage of growth. Was it a question of you want a better execution? -- maybe provide the rationale.

There was no difference of opinion with management and the Board on the strategy. In fact, the company is following exactly the plan that was approved by the Board. No, it was more on pace on how quick to move on divesting some of the noncore assets. That's really what it was.

Okay. And in terms of who the Board is looking for the next CEO, what are some of the characteristics are you casting a very wide net .

Well, the search committee, I'm not on the search committee. The search committee is made up of brand-new Board members because we want to take a fresh approach. And so the head of Search Committee is the former VP of HR or CHRO of Hewlett Packard, Kristen Ludgate. She just retired from HP and Cupertino a couple of months ago and also Bob Hau, who's the CFO of Fiserv; and Goldy Hyder, who's the CEO of business council in Canada.

So really well-connected group. They'll run off and do that. I think their bias -- just like any other CEO changes, you tend to move your pendulum. After me, I'm an architectural engineer, we got John Shackleton, who is a solutions engineer, Mark another architectural engineer, I think you'll see their bias to go to someone that's a solutions engineering background simply because of product life cycles. Mark just refreshed with Aviator the entire product line of Open Text. So I think they'll probably look for someone to go sell it.

Great. So yesterday, you provided some new segmented disclosure outlining the revenue breakdown and cloud breakdown fruits of remain product pillars. So let's talk about that. So one of my key takeaways was the content business, which 40% of revenue, growing at 4% last year, 17% cloud growth. Let's drill into that? What's driving that 17% cloud growth? And how sustainable is that? .

Well, first off, we did the segment analysis, Chadwick, our CFO that had go back to EQ Bank after what happened with Andrew Moore. We had promised that we would do the segment analysis so that you could have a road map to see where we were going and how we're going to shape the portfolio.

So -- you now have the data that we have. So at the Board, this is our data reviewed by the auditors, et cetera. And we try to get it to you as quickly as possible so that you can follow along as we go to remove some of the noncore assets.

Now content, as you're asking, and the growth of it, it's really part of how we see going forward with the company. In a word, content is a very important part of training Agentic AI. That's really when we started on this journey many years ago, it wasn't called Agentic AI. It was more like predictive analytics and [ basic ] mathematics and things like that, and you needed content to be able to train -- and so you'll see content server, and that whole business unit play a core role.

But that's not the core of the company in and of itself. There's actually 3 kinds of content that you use to train on AI. There's human-generated content, which is content server. But in the last decade, machine-generated content is enormous and quite frankly, dominates the content that we're creating in the world today. And that's something called ITOM, which is IT Operations Management. One aspect of ITOM is actually machine -- think of a nanosecond trader. That creates log files. Those log files become really important for training predictive analytics.

The third group that's really important in all this data is business networks. And that's because it's the information traded between organizations. So that Business Networks division is very important to training Agentic AI. So you basically have 3. You have content. You have ITOM and you have business networks. And then you need to wrap it in security because all of that data has to be secure.

It has to be secure at the edge, and it's got to be secure at the server. And that was the reason why we bought Micro Focus and the HP software catalog because they had all those -- the problem with something like an HP, it had not only all the pieces we wanted, but things that you would sell to Best Buy or to Mom & Dad, that kind of thing. And so those are the pieces in the retail part that didn't make sense to fit. There's nothing wrong with those business units. They're just not core to what we want to do going forward.

So really, when you think of it, it's not just content server, it's those other units. I think maybe the way to think about content server and the growth is it grew that much despite the fact that the management team was distracted by 6 different business units. They have one thing to do then perhaps that will grow faster. But that's hard to say we'll wait for the new management team to talk about what they believe.

But certainly, double-digit growth in the cloud, which is the core part of this thesis going forward speaks for itself. And that's why we wanted to do the segment analysis. So you could all see what we're aiming towards and follow us as we do it as we judge us by how we create those business unit divestiture and track us. The strategy committee that got announced at the same time as all this other stuff is made up of, again, veteran members of the Board, no management because we don't -- management's provide the information, but this is a capital asset allocation.

And so the Board is going to do it. And we're lucky enough to have folks like Annette Rippert, who is the Managing Director just retired of Accenture out of Washington in Telco and Tech, folks like Fletcher Previn, who's the CIO of Cisco and prior to that was CIO of IBM. So we've got lots of real veteran people to do this. So measure our progress. And we've estimated -- it's somewhere between $0.75 and $1 billion out of the $5.25. So you'll see us take 15% or 20% -- and that's consumer products, things like developer toolkits and what have you.

There's actually about 30 or 40 different product lines within those business units, but that's what you'll watch us to over this next -- it will probably be on a quarter because when you divest things, it takes a bit of time to be able to separate out. So that's what you'll see over the next 3, 4 quarters.

So in terms of the segmented disclosure you provided yesterday, should we think of it as being the SMB cybersecurity and the DevOps businesses going away in their entirety? Or might the pieces of it that you end...

Yes. The double is in the details on that because some of the edge security, we want for the corporations that we sell to. So -- there is a bit of double in the details with that. But I'm trying to just generally give you an idea of where this will end up. But you're right. You're right, what you're saying.

And going back to the strong growth in content cloud, is that early signs of AI traction? Were there other factors like the SAP upgrade cycle kind of pulling you along? Or anything specific that you would point to? .

Well, you have to think of it, all of you, I'm sure, like I follow this in the media and all that stuff, you have to think of AI as 3 different buckets. So follow me, if you will, for a second. -- the AI that burst onto the scene is really generative AI, and it's the stuff that takes about 1 billion parameters and it's called a large language model -- and it captured everybody's imagination because it could do natural language.

I can tell you back in the day when we were talking about search engines, we tried so hard to let people ask a question. But we didn't have the mathematics in the compute power to do what is called a complex bullion. So that's why all of you, as you use Open Text or Google or AltaVista, you could only put one word in -- so the great thing about what you saw with Chat GPT and perplexity is that you could talk to it in human language.

That was the amazing thing about that. But if you think of the other pieces of AI, the media talks a lot about something called frontier models. That's about 1 trillion parameters. And that's what's coming and that's sort of the science fiction thing, where it's both utopian and dystopian.

We're not involved in that. That's going to be something that nation states do. On the opposite end, with only, let's call it, 1 million parameters, so way less than what you're seeing in the public space is Agentic AI, where you're creating agents. That's where all the productivity gains are going to be for corporations like General Motors or Coca-Cola, Abema, et cetera. That's the sweet spot that we're focusing on.

So now if you segment AI into those 3 pieces, we're trying to do the stuff that you're training, Oh, say, your Marriott hotels and you want a Chatbot to refer to a convention that wants a quote on rooms in a city sometime next year. Well, they need all the information internal to their organization about rack rate, occupancy and things like that. To do that, maybe the best way to think of this and why content server matters so much, you as a CIO and as a practitioner to train that bot, think of your host -- you have to go up to the attic and pull out a photo album before digital.

And you've got a photo album of photos and what have you, and you've got to scan them in and you have to put that as part of your overall training content or you have hand-written letters that you've got to do Opto character recognition with or God forbid, you go to your basement and you got your old PC, and it's got word perfect in it or VisiCalc -- and if you're under 40 years old, you have no idea what that is. And yet if you're Pfizer, or your Boeing, those are the documents that have some of the critical information about a Boeing 787.

And so if you're a CIO, you've got to go get all this stuff. And then you have to put it into a modern server and you've got to make that server so that it can be made available to dozens of large language models that you're going to be using. So what I'm trying to give you a peek under the covers of all this, there's a lot of stuff that's going to happen.

And all these large language models -- they didn't exist in their current form 3 years ago or 5 years ago. So everything I've just described to you is what Open Text built in the last 2 years is called Aviator, and it does multi-cloud, so you may want it inside your firewall or you may want it up on a hyperscaler or you may want us to manage it as a private cloud.

We have to be ready for all of that. And you may want [ Entropic ] as your model or you may want [ Coherus ] as your model. It depends on which model you believe is best for your industry. And then finally, you may want it for an ERP application or a CRM application. So if I'm giving you a headache, that's the headache that we've had facing us over the last 2 years, and that's why you saw our R&D budget go up so much. We're done. We've built it all. It's multimodal, it's multi-cloud and it's multi-app and it's called Aviator, and that's where we're going to go sell. So we've built it all. And that's what content server is sort of the the first indicator of.

So, let's talk about the go-to-market. So I hear you that you have the technology ready to go. But when you're trying to get the attention of the CIO and there are a bunch of other vendors who are also making the case that they are the ones to go to for AI. How do you get that mind share? How do you feel about the go-to-market motion today and how it can be improved?

It's the reverse right now. We don't have enough people to service the demand that we have. I think you'll see us start making tuck-under acquisitions for some of the verticals so that we can service the demand. Quite frankly, this is the kind of thing where it's not just Open Text, the whole industry. We don't have enough people that are articulate in all those things that I've just said to you. So actually, it's can we keep up to the demand. That's the reverse problem. Now how long will that last? Who knows? But the reality is right at this moment, every organization in the world is paying attention to this because if they don't, they'll be out of business.

So this whole idea of AI first. You've seen the tech companies do it primarily first Open Text has got its margins up quite nicely by doing this. So I think you'll see all the CIOs of all the organizations have to do this, and our challenge is to keep up to it.

Another takeaway from the disclosure yesterday was that the analytics and ITOM businesses had double-digit decline last year. what would be your outlook for those and the plan to stabilize them?

Yes. On top of all the other things going on with OpenText, whether it's the extra R&D bump that we had to do. With Micro Focus the Board, the management, we all thought it would take a year to integrate it because we've been doing it for 30 years, and we've done well over 350 different acquisitions and mergers. Well, guess what? When you buy Hewlett Packard and it's $3 billion, and it's got 6 different business units, it doesn't take 1 year, it takes 2 years. And we didn't know that at the time. I think we obviously know it now. And what you saw in that second year was 2-year maintenance contracts.

Sometimes they're firing us, sometimes we're firing them because we wanted to get rid of poor margin business. So it's a little bit of a mix of that still. You'll have a much clearer view this year, where you'll see them, you won't see big declines like that, but you'll see single-digit growth and single-digit decline. And the other thing people have asked me, by the way, is generally, the margins are all the same.

When we sold the AMC unit, that was unique because it was a mainframe unit. But actually, most of the business units that we disclosed yesterday, we're trying to get the margin information to you as well, but that's harder, because you have to do allocations and the auditors and the audit committee have to go through it. It causes here, and he was saying to me earlier this morning, they'll try and do it by the end of the quarter, but -- that's a hard one for them because they have to unpick. It's like putting Humpty Dumpty back together. They have to unpick a lot of things to be able to attribute margins to each -- but generally speaking, the way you might think of the margins is we're about 35% and plus or minus 5% depending on the unit.

Some of the units and Cos has this in a lot of his analysis where we do a lot of managed services, they're lower. And some of the ones that are SaaS, which are very high margin, they're higher from the 35% and -- but generally, if you were to think about 90% of the business, it's within a ripple of 35%. And what we will do like we did with the divestiture with AMC, we will always return to norm. We'll always manage the business.

And the reason why you might see a quarter or 2 of deviation is that, say you sell a business and you've got 6,000 developers and 2,000 developers are going to the divestiture, you still have the building. And so you have to manage through either moving people or cutting the building down. So there's a little bit of of variation there. But I think, generally, you might think of it as a 35% business and should be about mid-single digit once we get down to the core, which is what you're seeing with content server. Content Server is sort of a good proxy of what is our North Star.

I'll pause any questions from the audience? I'm sorry. .

What are the TAM of aviators?

That's interesting. We were talking earlier. The TAM of the Aviator is actually going to be quite modest. -- because it's not where we'll make the money. And the same thing happened to us with search engines. We used to think that we would sell search engine. Search engine became an enabler.

Aviator is really an enabler that connects a large language model to our content server. And so what happens is what we're experiencing is there's 2 ways we make money. When you're up in your attic and you're bringing down word perfect off of a hard drive or a [ mag tape ] or whatever, first, you have to convert it. So we're getting a lot of conversion sales. And then you got to reload it onto a content server because usually, when you have an archive, you don't pay anything for it because you just put it on a brick or a [indiscernible] and you leave it.

So actually Aviator is selling -- and I think you'll see from Aviator tens of millions of dollars, but it will unlock hundreds of millions of dollars with content server business networks, et cetera. So it's a bit counterintuitive. You have to have it, though. You have to -- it's like an API, but you have to have it.

Tom, on the divestitures, so I know that the process is being spearheaded by the Board, but divesting the business obviously messy process. And so how do you ensure that doesn't become a distraction for the management team just operationally over the next year as you carve out those assets?

Well, actually, the -- the management team is actually a management team that's really oriented to selling to the CIO of General Motors. They're not a management team oriented to doing dealer networks within Best Buy and attach onto a laptop. So it's actually -- those units are good units. They're just being ignored, because it's not where the management team really has its expertise.

So I think you'll find that those units won't grow, they won't decline, they'll just stay as they are. And our initial indication is a lot of interest because there's nothing wrong with these business units. They just don't fit with what we're trying to do. So there's actually quite a lot of interest for them since we made the announcement.

But I mean, just all the G&A heavy lifting that needs to be done to kind of split them off. I mean, are there ever teams matching that?

I was talking to Cos about that, so you can ask Cos about that he gets all the hard questions. Don't ask me the hard question. But Cos just went through this with AMC when they sold a mainframe unit, they know how to do it. But one of the reasons why you'll see us do this over many quarters, we could sell all those units in one quarter. the dilemma is as you're getting at, you have to do that facilities rationalization and it's better to do one business unit a quarter over the next 2, 3 quarters. it comes out to be roughly, we think, 2 or 3 business units.

And so you should think of us as doing this every quarter you should expect a drumbeat from us of every quarter doing another unit. .

Any other questions from the audience? So Tom, going back to margins. Why is 35% of the rate margin? If you have this big opportunity, you can be doing 30% margins, which is still be amazing. Maybe drive some incremental growth. .

It's an interesting question for the industry, not just for Open Text. I think many of you in the investment community with AI first should be demanding that all the tech companies do more. I think Rule of 40 should be replaced with -- I mean the management team at Open Text won't be happy. But I think all of you should be demanding that with AI and the increased efficiency you should see something better than the Rule of 40.

What will it end up being in terms of the growth in the EBITDA? I can tell you with AI, we're reducing everyone from developers to RFP responses to legal. A lot of this is -- and you're going to see that filter its way through society, whether you're Marriott hotels or your Bank of Montreal, you're going to see that. Where it ends, I don't know, but it will be more. I just -- I don't have a good enough feel yet. Do we -- Rule of 40 has been around for a long time. And will we go to a Rule of 50, probably. But how soon will we get there? I don't know.

Almost out of time, maybe one last 1 I'll squeeze in is, does it still make sense for you to own your own data centers, just CapEx intensive. -- a lot of other opacities.

That's a great question. Do you know if you had asked me that 3 years ago, I would have said, no, we're [ mothballing ] or reducing our data center footprint. But all you have to do is look at what New York Times is suing OpenAI and Microsoft and they're suing them because I suppose they're worried that tomorrow morning's New York Times could be written by the bot better than their editorial team.

And that's not a slide on the New York Times. That's the reality of what's going on with the Agentic AI. These bots that we're deploying for customer support are better than our 30-year best employee like this is why this will be adopted at such a fast rate. So if you then think about that and you think about Marriott, et cetera, if you're a CIO and you're talking to your CEO, do you necessarily want to have the crown jewels that go to the rack rate or the occupancy, do you want that up in a hyperscaler.

I think we're starting to hear -- and one of the reasons why you're seeing our license revenue which we thought was going to go to 0, may not. I think we may be moving into a world of hybrid. And that's why I had said before Aviator was going to be a multi-cloud where it's on-prem, all the way to hyperscaler because stuff like your website, which is public, you don't really care if it's in a hyperscaler.

But some of these things that are proprietary that are inside your firewall you may want in a managed data center. So we're sort of watching this unfold and we have to be driven by the customer. But right now, Aviator is built on a hybrid approach where if you want to stay on-prem, if you want us to manage it in our data center or if you want to take it to a hyperscaler, we give you the choice. So we're trying to be led by the customer.

We're on time. Any parting words Tom.

No, thanks for your interest, and I hope we make this an easier story to follow. .

Thanks, Tom. .

Thank you for joining us this afternoon. I'm Steve Enders, part of the software research team here at Citi. With us for our next session, we have the team from OpenText. We have Tom Jenkins. I think you're Chairman of the Board. I have that right?

Executive Chair and Chief Strategy Officer.

All right. [ There we go ].

[ Just to be clear now ] I got all those other titles.

Yes, I know you get the extra stuff with it. Well...

I actually used to be that about 10 years ago. And before that, I was the CEO.

Okay. Well, there we go. Well, we're glad to have you here, and welcome back to that role.

Maybe just to start, I think it has been a bit of a transition time for the company for OpenText. Maybe we can talk a little bit about what's led to some of the leadership changes and now how you're thinking about that moving forward and what you're looking for in a new leadership team?

Yes. So uniquely, right at this moment, the company is actually in a search for a CEO and a CFO. That's why I came back full time. And how that happened was that at the end of our fiscal year, we had planned for a CEO change, but what caught us by surprise was the CFO change. And that's because our former CFO, Chadwick Westlake, his old boss had a heart attack and died a week before the end of the fiscal year. And he obviously went back to his old company to take over as CEO.

So that created the unique moment for us where both executives were gone at the same time. So we have an interim CEO, long-time exec at OpenText, James McGourlay. I've been working with him for more than 30 years. So he's a steady hand. And Cos Balota, he's long-time VP of Accounting. So we've got 2 steady hands while we do the search. So the Board kicked off 2 searches. And so we'll hope to do that in the next few months.

Okay. And as you're looking out in the marketplace for both those roles, what is it that you're looking for? What's kind of the right profile, the right personality type to lead OpenText forward in the future?

Well, on the CFO side, we're looking for someone that can obviously handle at scale, handle the complexity of multiple units, that kind of thing. So a steady hand there. But not anything exotic, if you will, in terms of M&A or capital allocation. So not any particular unique skills. On the CEO, however, I think you'll see the Board -- and by the way, I'm not on the search committee. So the search committee will do that. But I think the Board will lean towards the pendulum going the other way towards more solutions and sales. Our previous CEO, Mark Barrenechea, was like me an architectural engineer. But in between Mark and I was John Shackleton, who is a solutions engineer.

And if I had to bet that there will be an emphasis to go back to solutions.

Okay. All right. That makes sense. The pendulum swings the other way...

Yes, it makes sense, yes.

Yes. Maybe again, from a high level, as you think about the opportunity that's in front of OpenText and what would you, I guess, pitch an investor on? What would you say is kind of the core opportunity and strategy for the business today moving forward?

Training Agentic AI. That's the #1, #2 and #3 priority. Part of the reason why we made the move and the change was to go back to basics. So I think investors will see us become a single concept and not a multi-business unit because it became too complex to understand. I think with the opportunity going on with training of Agentic AI and the need for content and curated content, that's right down the middle of the lane for us. So I think you'll see us pair off some of the business units that don't make sense to that vision, and you'll see us execute from that. And it's a great market to be in. So it doesn't take a lot of thinking to come to that conclusion.

Sure. Sure. Maybe we can dig in there a little bit just on the future of the OpenText portfolio because I think to your point, there's a lot of business lines, a lot of business units that are within the OpenText arena. So I guess, what do you consider as kind of the core business for OpenText moving forward? And I guess, what do you think of the areas where maybe it makes sense to rationalize and look for opportunities to divest?

Yes. First of all, the issue of the business units within OpenText got exacerbated by buying all the HP software catalog when we bought Micro Focus. So that we were already creeping into multiple business units that accelerated that. And at the time, when all this is going on 4 or 5 years ago, Agentic AI, ChatGPT, it wasn't a thing yet. The business was expanding into multiple places within enterprise software. Clearly, now, everything is about AI. It's about the productivity gains of Agentic AI, et cetera. So in retrospect, what the company was doing 5, 7 years ago made a lot of sense for that environment. But going forward, training bots for very specific tasks within enterprise, that's consuming the world, not just enterprise software, but the whole world.

So it was easy to come to that conclusion. So if you look at our business units, effectively, when you're doing something like training bots, you're talking to the CIO of General Motors or Coca-Cola or whatever. At the same time, it's probably not a good idea to also be selling software to mom and dad at Best Buy, right? Because that's what some of the consumer products do. Because remember, the Hewlett Packard portfolio was the portfolio of a massively scaled organization that did everything from developer ops to consumer security and things like that.

So it's actually not that difficult to shape the portfolio to go back to basics because management has estimated that, that's about 15%, 20% of the total revenue. It's not like a huge amount, but it's enough to distract management, distract investors and to cause overall growth rates to go down. So by pairing that part, I think it gives the company an opportunity to reduce debt, gives the company an opportunity to focus on a single story. And besides, it's obvious to anybody if you have the opportunity where you have one of the largest archives of content in the world and the world needs that content to train their chatbots, it's pretty obvious what you should do.

Right. Right. That makes sense. So I guess as you think about this next stage for OpenText and the -- I guess, the pairing of the portfolio, how long do you kind of expect that to kind of take to play out? And I guess, what is kind of the I guess, what do you do with those proceeds kind of after the fact?

So with the announcement of all the changes, which is 3 years ago, we also announced that there would be a committee of the Board dedicated to doing this because we didn't want management doing it. We wanted the Board to do it because sometimes when you look at different business units, you fall in love with them a little bit and you think you can fix them all. And you probably can, but that's not the point. The point is to be focused on one. So the Board took over that responsibility to just do the capital asset allocation. So I think you'll see them move very quickly. I'm not on that committee either.

But I think you'll see them go at a pace of one a quarter. They shouldn't go faster than that. That would be unwise. So I think that's what everyone can expect. And I think they'll probably do 2 or 3 business units over the next year.

Okay. And I guess as we think about that, is there like an approximation for how many units will kind of be...

No, I don't know that they've identified that yet. I think one looking at our portfolio, though, just as we've said, it's pretty obvious, there's probably about 15. It's probably somewhere between $0.75 billion and $1 billion out of the [ $5 billion ] and change that we do today. I haven't seen the detail yet, but it will probably be something like that. One of the things we are doing, though, so that investors can follow along with us, we're going to provide more detail on all the segments and their growth rates and what have you.

So everybody can say, yes, that makes sense. That doesn't fit with the other pieces. So we're going to try and get that out in the coming weeks.

Okay. No, I'm sure that would be very welcomed by the investor community. So that's helpful for sure. As you go through this process, maybe this then kind of dovetails into the other part of capital allocation. What do you do with the proceeds? What do you do with the kind of go-forward capital allocation strategy?

Well, I think there's 2 parts to that. I think the onetime use of the capital, as we've done in the past when we did sell another business unit 1.5 years ago, we'll pay down debt because we have 2 tranches of debt. One layer of our debt, our original debt is long-term paper, 4% fixed. We're quite happy with that cost of capital. There's another layer, which is around -- we have about $6.5 billion of total debt.

There's about $2.5 billion that we'd like to reduce from the proceeds of the sales because that's higher variable. And I think if we do that, investors will be happy because we'll see cash conversion rates come back up to what they historically were. We got caught just like everyone else when the dot plot went 200 basis points higher than all of us were expecting. So I think you'll see that at the sort of asset trading level on time. I think on an ongoing basis, investors can expect us to keep our historical EBITDA percentages somewhere around 35%. And I think they'll see us allocate that capital into 3 places like we have been doing.

We'll keep our dividend and grow our dividend. We will keep buying back our stock. We're at the current course and speed, we're probably close to buying back 10% of our stock in the past year. So we'll just keep doing it. There's a lot of cash flow, so we'll keep doing that. And the third thing, investors will see us do tuck-under acquisitions, small. We won't do large ones. There isn't really any more compelling products or installed base out there. But you'll see us speed delivery, just as we were talking about in solutions. But I think investors can expect that. There's about $1 billion in free cash flow roughly, and I think we'll see a division between those 3 things.

And in other words, expect us to continue what we've been doing.

Sure. I guess does it maybe change the mix of how we should think about those buckets between dividends, buybacks and the reinvestment back into the business? Or I guess, primarily want to dig into the last part about investing back into the business and what that looks like moving forward. Is that a continued area? Or is that...

Well, we've invested a lot back into the business because of AI. So the production of the Aviator product line to be able to -- see what happened is that we've had content in enterprise for -- since the beginning, 40, 50 years ago. But we didn't have the specific connectors to large language models because they didn't exist.

We didn't know how they were going to be trained because that entire technology had not been existed. So we previously have had predictive analytics, decision support and APIs and what have you. So we spent the better part of the last 2 years while we were integrating Micro Focus also building out the entire product line to be able to interface. You don't interface with one LLM, you have to interface with dozens of them because in the enterprise, people are going to pick different large language models to build inside their firewall. So that took a lot of work. That work is done. So that is -- and so that's like an entire refresh product cycle that we've just gone through. So that's why the emphasis on selling now. Let's go sell what we built over the last 2 years.

Okay. Maybe I'll ask a little bit on -- I guess, to that point, now that you've made this investment, what does that mean for kind of go-forward R&D? And I guess, on the other side, since it's now time to go sell, does that mean the mix of sales and marketing should tick up from here? And is it kind of reallocating buckets? Just how do you think about that?

Yes, absolutely. It just makes sense. We're through it. In many ways, enterprise software companies go through these cycles all the time. And so the pendulum swings, and you'll see us spend more in sales and marketing and less in R&D. And it's normal. That's a normal cycle.

Sure. Okay. You mentioned M&A before. I do want to ask around kind of what that will look like. But before going into that, just as we think about Micro Focus, maybe we do a little bit of a postmortem on that acquisition. Just what were kind of the learnings from it? What is there maybe that you can apply moving forward as you think about the OpenText strategy from here?

Well, I'd say, first off, would we do it again? Absolutely. If you were to go on Perplexity or ChatGPT or any LLM out there and say, who has the most data connectors to train Agentic AI in the world, OpenText. And then you ask why? It's because they bought the HP software catalog and archive. That was a massive archive. There were only 5 players. There was Oracle, SAP, IBM, Microsoft and Hewlett Packard. The other 4 are not available. So that was a huge jewel in the enterprise software universe. In retrospect, I would say that all of us, both on the Board and the management team wish that we had gone faster to concentrate on the core.

But hindsight is 2020. We should have worked on some of this stuff faster. But from an execution point of view, the EBITDA of the overall company is at 35%. So it was executed well. We just needed to do it faster.

Sure. Okay. All right. Maybe then dovetails into the other side. Just as you think about the go-forward M&A strategy, it seems like there's some tuck-ins that you would kind of think about. Just how -- what kind of opportunities are you looking for? Maybe what are the areas where it would make sense to kind of lean into that a little bit more versus what are areas maybe you'd be a little bit more kind of cautious about kind of entering?

Well, I think the days of us so-called buying content archives for $0.10 on the dollar are over. Everyone has figured out the massive value that they are. We just saw recently the sale of Informatica, which is a kissing cousin company to OpenText to Salesforce. And that went at, I don't know, 5.5, 6x revenue and 25, 30x EBITDA. So our ability to pick up assets in the content and data space are quite limited now.

But besides, we're at a cycle now where our emphasis is really picking up go-to-market solutions companies, resellers and especially in the era of nomenclature, because when you're dealing with oil and gas or you're dealing with automotive or pharma, as you train the bots, it's actually the nomenclature, the knowledge of the supply chain, the knowledge of the word transmission in automotive has a very different context than pharma. So you really need to have teams that can accelerate your ability to convert. And so I think you'll see that, that will be the emphasis going forward.

That's really about finding the context that helps you train those models?

Yes, absolutely.

Okay. are there certain, I guess, maybe like technology areas or market expertise or customer footprint that you would be kind of targeting for those tuck-ins or...

Regulated industries. Absolutely. Because those are the industries that we have built our biggest content archives with and have the greatest industrial knowledge, greatest customer relationships where we can compete and win. So that will be our focus.

Okay. That makes sense. Maybe wrapping a little bit of a bow on some of the M&A or portfolio side of it. But I guess, once you kind of go through this bigger transition over the next kind of couple of years, what does the new OpenText look like once you're kind of through the portfolio rationalization? And how do you kind of think about -- is it just kind of a content-focused business? Or are there kind of other areas where maybe it makes sense to...

Content-focused business because everyone may be getting tired of talking about AI and Agentic AI, but the reality is we're going to be spending the better part of the next decade rewiring the world. And that rewiring will require training with content, curating the content. And remember, when we speak about content, a lot of times, we as human beings, we think of the content in the public web, let's say, TikTok and Meta and what have you. That's actually only 5% of the world's content, 95% of the world's content is behind the firewall.

I wrote a book called behind the firewall to explain the fact that in the early days of the Internet, Boeing, for example, had an intranet and internal Internet that was many times the size of the public Internet. This will take us the better part of a decade to convert all that content, and the content is in 3 types.

The content is human-generated content, machine-generated content and content between organizations or business networks is what it's called at OpenText. Those 3 types of content are all critical if you're going to train a bot to remap a supply chain for General Motors. You need all 3. So you'll find that those 3 business units within OpenText with a cybersecurity wrapper will be the core of the business.

Okay. That makes sense. We're about halfway through this. If there's any questions in the audience, we want to make sure to get to those. Yes. We have a mic coming.

So with the strategic changes, what changes in terms of your financial policy with regard to financial leverage? [ Might there be ]...

That's a great question. I'll repeat the question. Would there be any changes to financial policies approach, et cetera? Actually, no. The current plan for the fiscal year was approved by the Board. We had no issue with that. So I think the margins, the growth rates, we hope to shrink to grow. So we hope to take some of those business units that are growing slowly simply because they weren't perhaps getting as much attention as they should have gotten. But in terms of margin, all these units are generally plus or minus 5%, all about the same kind of margin. So it's not going to have any shaping from that point of view, not that we can see.

We did sell a mainframe unit several years ago that had like 85% margin. That had a big impact. But we don't see a big impact going forward. It should be about the same.

And was there a comment about leverage in there?

I'm sorry. So on the balance sheet -- yes.

So just wondering if there's anything magical to the 3x leverage target or might that be -- might that above...

Yes. I think you'll see us come down below 3. Historically, for 30 years, we always kept our leverage story around 2, 2.5. I think that's what you'll see us come back to. I think leverage is obviously a very investor-friendly thing as long as it's in the right ratio. And so that's what you'll see us do.

Okay. Perfect. Thanks for that question. I want to dig into the product side a little bit more here. Just on -- I think you talked about we're in a content age. Generative AI is going to be the next -- is the decade for the next -- or the story for the next decade. Maybe we can talk about Aviator. Just where is it at today? How are customers thinking about or adopting that solution set? And what is kind of the future of the generative AI strategy look like for OpenText?

I would say that this is an evolving area. I don't think anyone can say that this will be the dominant LLM. I think that there are many layers to your question. I think CIOs are debating where do they go from here? Because we've had a massive move from where we had the so-called IT white tower on-prem inside the firewall to the use of whether it was private cloud or with hyperscalers. And I think with AI, it's a bit of a different game. And they have to decide what parts of their business they're okay to keep data at a hyperscaler level and what parts of their business do they want to keep data in a private cloud or on-prem.

And then CIOs I've talked to, once you start that discussion, then they start to say, okay, then what does that mean? Am I a hybrid company now because they were all moving to the cloud and to the scalers. So it's a real dilemma for them. And I don't have a crystal ball to tell you which way they'll go. We, just by history, have both because we began in on-prem, so we can support on-prem. But then over the past decade, we've moved to cloud services, private cloud as well as to a SaaS model on hyperscalers. So it's sort of -- it's really up to each individual company to decide how they're going to do that.

So now with Aviator, we built our product line so that it would satisfy all those 3 areas. Now obviously, that's more complicated to build. It took us longer than, say, some of the pure-play content players, but it gives our customers maximum flexibility. The other layer, so you could call that a multi-cloud architectural approach, but you also have a multimodal architecture approach in the sense that which models will exhibit themselves as being preferred in particular industries, et cetera, because part of the dilemma that we have is that most of the models everyone knows in the audience were trained effectively on public information. So there's so much training you can get from Reddit and Wiki and what have you.

But then as you go deep inside the automotive industry or you go deep inside the pharmaceutical industry, where the -- will there be models that emerge that are preferred by that industry. We don't know that yet. We're architected to be both multi-cloud and multimodal because we can't predict that we'll leave our customers to decide because one day, they may want Anthropic or maybe they want Llama. We don't want to decide that. We've certainly made strategic partnerships with various LLMs just to give our customers sort of a predesigned choice, but we have to stay in an open architecture. We've always been that. We have been the Switzerland, if you will, of content for more than 30 years. And I think our clients will expect us to keep doing that.

So that's what made Aviator a 2-year development process because it had to be multi-cloud and it had to be multimodal. So that took a lot of thinking. The team did a great job on it.

Okay. No, that's great to hear. And I guess as you think about what the future of the portfolio looks like on the generative AI side, just what does the road map look like? How do you think about the use cases that it makes sense for OpenText to address and own for customers?

Okay. So that takes you to another level. So architecturally, the big debate, a 30-year-old uses an LLM as an operating system. A 50-year-old uses it as basically a search engine. And so we have different user cases and the dilemma is we believe we have to satisfy both. You can't tell the 50-year-olds, we're expecting you to have a conversational experience with your LLM app, et cetera. And you can't tell the 30-year-olds, well, we're constraining you that you can't use an LLM as an operating system. So there is a real diversity in the installed base. There are cases -- I don't want to call out specific customers, but there's cases where we have to satisfy both uses. And so even though these applications could, in fact, be GUI free because they really are, we actually are still building GUIs to interface because that is what a large part of the population expects.

I think what we'll find is as we get better, let's call it, agentic coaching, if you will, I think we'll find that we will obviously go to a GUI-less app, but we're not going to get there anytime soon. Human beings are human beings, and they will take time. And so that's the complexity. When you talk about as we go down into the classic enterprise applications and how those interfaces occur, that's going to be complexity. Second complexity that we see -- I wrote a book on this called the Anticipant. And the premise of the book, I wrote it with Mark Barrenechea, our former CEO and General David Fraser, who commanded troops in Afghanistan. The trick here in building apps is the users have to anticipate because you can't react.

Think of flash crash all those years ago. The humans didn't know that the market was going down for about 15, 20 minutes. And that's a lifetime for nanosecond trading. So the dilemma that we have is as we build these apps, the humans have to manage the bots, but the bots are so much faster. And so there is a degree in these applications that you have to start to anticipate. We're seeing that today in cybersecurity.

We're averaging -- I think if I got this right, we're 200,000 breach attempts per second. Think about that, 200,000 breach attempts per second. You have to architect your bots so that they're anticipating the other bots and you cannot participate at that nanosecond level. You can only reach yourself back. So I'm sure you're -- sorry, you asked that question, but that's the kind of stuff we have to think through as we go through this because we have a wide range of use cases.

Yes. No. I mean it's interesting times, right? And how quickly the tech is evolving here. Maybe we can connect it back a little bit to the financial side of the equation. I think Aviators have been out for 2.5, 3 years, something at this point. Just what contribution is that having today to revenue or to bookings? And maybe how do you kind of think about what that means for the go-forward financial model for [indiscernible]?

Yes. It's a great question because we debated how this was going to -- and now Aviator itself, although it was released in its first version about 1.5 years ago, it was really last year's Aviator that you could really deploy. And this year's version will really, really, I think, please our customers. But here's the thing, just like so many other disruptive operating system-level technologies, they themselves are not the drivers of revenue. I remember in my era, we came up with search engines. And we thought, oh, search engine, this is great. They were free within 24 months. And I think that's part of the dilemma that vendors have right now that they've invested billions into this and yet customers perceive the utility as table stakes of what they're doing within the application.

So in fact, the way we look at Aviator revenue is the revenue that it's enabling in the content servers. And so the content archives, the records management, all of those utilities that come with increased use of content, that's actually where we're making our money. And when you track us, management has been giving you all the content, cloud revenue bookings growth, that's where the money is.

And that's where they've had double-digit growth. So that's how you can tell. It's actually -- Aviator is an enabler. It's actually the core products that are growing. But without Aviator, you cannot access them to curate the data to then train Agentic AI.

Sure. So it's a second order effect.

Yes, it's a second order effect.

Okay. That makes sense. I have a couple of minutes left here. I just want to see if there's any last remaining questions in the room there.

It's also obvious.

Yes, right. I think one of the questions we've gotten from investors, just think about the past few years, what can OpenText do to kind of like improve execution and just kind of get back on kind of a steady foot and improve that moving forward?

Well, the execution operationally has actually been pretty good. Here we are 2 years later, having done an acquisition, which was of the equal size. So you took $1 billion multinational and added a second $1 billion multinational. And 2 years later, you're clipping along about flat growth and 35% EBITDA. So from an operations execution point of view, we're pretty happy actually. And so now it's to go into that growth cycle.

So I think the big message for investors is, I think all of us wish we had gone faster, but it was a pretty complex integration. And I think what investors have to look for now is, do we pare down to get to that core fast in this next year and grow from there. I think that's really the watch word for us is can we rationalize that portfolio and grow from that core? Because when you see the segment analysis, you'll see the core is growing. And so we want to make that really easy to track.

Okay. That makes sense. In the last minute here, let's think out 5 years, we're kind of through all the -- kind of what the core OpenText is at that point. What does the business look like? And maybe what are we kind of talking about what OpenText is moving forward as we get to that time period?

I hope for investors that it becomes a boring name that it's mid-single digits in its growth. It does tuck-unders for another mid-single digits. It keeps to its operating discipline of 35%, 40%. One of the great things for investors is can OpenText like other tech companies do the AI-first strategy, move away from Rule of 40 and maybe start to see Rule of 45, Rule of 50. That remains to be seen whether the industry can do that because we're a price competitive industry. We'll see.

But I would say that's what investors should look for. Back to basics for OpenText. We're not doing any more big transformative M&A. We'll do tuck-under, but expect more of the same, what we did for 30 years.

Yes. All right. That makes sense. I think we can leave it there. We're out of time. But Tom, I want to thank you so much for being here today. I want to thank everybody in the room for joining us as well.

Okay. Thanks.