Open Text (OTEX) Oppenheimer 27th Virtual Annual Technology, Internet & Communications Conference summary

Strategic vision and business model

• Focused on information management, managing large content repositories for compliance, security, and analytics needs.

• OpenText 3.0 emphasizes cloud, security, and AI as primary growth drivers.

• Cloud transition accelerated by Project Titanium and Titanium X, targeting full cloudification and AI/security integration by June next year.

• Micro Focus acquisition stabilized, integrated, and expanded product reach to more enterprise buying centers.

• Unified sales organization and business optimization initiatives to drive efficiency and growth.

Financial performance and targets

• Cloud bookings grew to 33% in FY24, with organic cloud revenue growth expected to reach 5% in FY25 and 7%-9% by FY27.

• EBITDA margin targeted to improve from low 30s to 36%-38% by FY27, driven by cloud margin improvement, business optimization, and SaaS mix.

• Free cash flow expected at $575M-$625M in FY25 (excluding AMC tax, over $800M), rising to $1.2B-$1.3B by FY27.

• 80% of revenue is recurring, providing strong visibility into future performance.

• Capital allocation plan dedicates 90% of FY25 free cash flow to buybacks and dividends, with future M&A focused on small/medium cloud deals.

Cloud and AI strategy

• Cloud growth driven by new workloads and deployments, not by migrating legacy data.

• Titanium X to complete cloudification and embed AI/security across all products by June next year.

• AI strategy includes preparing customer data for AI, selling AI-enabled Aviator products, and using AI internally for productivity.

• Early AI revenue is modest, but over 100 use cases are documented and pilots are underway.

• Internal AI initiatives (Project Athena) aim to improve code development and IT service management.