Q4 2026 Open Text Corporation Earnings Call Transcript
Key Points
- Open Text Corp (OTEX) delivered solid Q4 fiscal 2026 results with total revenue up 2.9% year-over-year and core portfolio revenue up 5.3%, exceeding expectations.
- Cloud revenue in the core portfolio grew 8.9% in constant currency, marking the 22nd consecutive quarter of organic cloud growth, with 64 cloud deals over $1 million closed, a 49% increase year-over-year.
- The company is making strategic investments in growth, including adding over 300 new quota-carrying sales representatives and expanding its partner ecosystem, which is expected to drive core revenue growth of 2% to 3% in fiscal 2027.
- Aviator, the company's AI platform, is gaining strong traction, with deals including Aviator agents being four times larger, and the number of such deals more than doubling annually.
- Open Text Corp (OTEX) reduced its net leverage ratio from 3.02 times to 2.75 times, aligning with its historical target range, and paid down $649 million in debt during fiscal 2026.
- The company reported strong profitability improvements, with non-GAAP diluted EPS up 26.8% in Q4 and adjusted EBITDA margin expanding 170 basis points for the full year.
- Open Text Corp (OTEX) is committed to capital discipline, prioritizing debt reduction and organic growth investments while maintaining its dividend and renewing its share repurchase program.
- Open Text Corp (OTEX) provided a cautious fiscal 2027 outlook, expecting total revenue to decline 1% to 2% on a reported basis due to divestitures and a $30 million foreign currency headwind.
- The company's adjusted EBITDA margin is expected to moderate to 32% to 33% in fiscal 2027, down from 36.3% in fiscal 2026, due to planned investments of $100 million to $200 million in sales capacity and R&D.
- Free cash flow guidance for fiscal 2027 is significantly lower at $625 million to $725 million, compared to $808 million in fiscal 2026, impacted by growth investments and the divestiture of profitable businesses.
- The Cloud net renewal rate declined 180 basis points year-over-year to 94%, indicating some customer churn or contraction in the cloud business.
- Customer support revenue continued to decline, down 4.6% year-over-year in Q4, reflecting the impact of divested businesses and ongoing pressure in the legacy on-premise segment.
- The company's divestiture strategy remains challenged by tight debt markets, limiting the ability to complete transactions at desired valuations, which could delay portfolio optimization.
- Open Text Corp (OTEX) is discontinuing its Enterprise Cloud bookings metric, which may reduce transparency for investors tracking the company's sales momentum.
Thank you for standing by. This is the conference operator. Welcome to the Open Text Corporation fourth 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, operator, and good morning, everyone. Welcome to Open Tech's fourth quarter fiscal 2026 earnings call. With me on the call today are Open Text'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 replay available shortly thereafter on the Open Text 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 Open Text Investor Relations website. Please see
| Access to All Earning Calls and Stock Analysis | |
| 30-Year Financial on one screen | |
| All-in-one Stock Screener with unlimited filters | |
| Customizable Stock Dashboard | |
| Real Time Insider Trading Transactions | |
| 8,000+ Institutional investors’ 13F holdings | |
| Powerful Excel Add-in and Google sheets Add-on | |
| All data downloadable | |
| Quick customer support | |
| And much more... |
Trustpilot
We'd love to learn more about your experiences on GuruFocus.com and how we can improve!
Take Survey
