Open Text (OTEX) Q4 FY26 earnings call: guidance and Q&A

Asked for a breakdown of the 2-3% core growth expectation for FY27 across segments, specifically if Content will accelerate and if ITOM/Cyber will return to growth.

Management confirmed that each core category is expected to grow in FY27. Content is anticipated to have a faster growth trajectory than the overall core, and both Cyber and ITOM are also expected to grow, supported by R&D reallocation and AI/cloud infusions.

“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.”

asked by Kevin Krishnaratne · answered by Ayman Antoun

Inquired about the expected R&D and Sales & Marketing percentages of revenue for FY27, given the stated growth investments.

CFO Steve Rai advised modeling R&D consistently with FY26 percentages, with some internal reallocation. Sales and Marketing percentages are expected to pick up by 1 or 2 points due to the focus on go-to-market investments.

“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.”

asked by Kevin Krishnaratne · answered by Steve Rai

Asked about the time horizon for completing the investment in 300 new sales reps, how much benefit is expected in FY27, and how it's factored into guidance.

CEO Ayman Antoun stated that sales capacity is expected to reach target levels by the end of FY27, with precise enablement programs to accelerate productivity. This ramp-up and capacity are factored into the core growth guidance for FY27.

“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.”

asked by Analyst Doug Taylor · answered by Ayman Antoun

Sought clarification on whether cloud growth is primarily driven by migration of existing business or net new customer acquisition.

Ayman Antoun highlighted that 92% of cloud bookings in FY26 came from new clients, rather than existing on-premise customers converting to cloud. He noted clients appreciate the choice between on-premise and cloud, and public or private cloud options.

“92% of our cloud bookings were new clients going to the cloud as opposed to base converting to the cloud.”

asked by Analyst Doug Taylor · answered by Ayman Antoun

Asked if discussions regarding divestitures are ongoing or paused due to current market conditions, particularly deal financing.

CFO Steve Rai confirmed that divestiture discussions are absolutely continuing with an active process. He acknowledged that debt markets remain tight, but there is significant capital on the sidelines. OpenText is being methodical, not inclined to 'fire sale' assets, as they are profitable and cash-generating.

“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.”

asked by Sagar Karri · answered by Steve Rai

Requested further detail on the $100 million to $200 million growth investment, specifically the split between R&D, sales capacity, and partner ecosystem.

Ayman Antoun clarified that a significant portion of the investment in FY27 is for adding over 300 quota-carrying sales reps and reactivating the ecosystem partner channel. This includes investing in partner enablement, sales plays, and attractive financial models for hyperscalers, system integrators, and vertical ISVs.

“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.”

asked by Stephanie Price · answered by Ayman Antoun

Asked why past sales capacity investments might not have paid off as expected and how the current approach differs.

Ayman Antoun outlined three key differences: 1) Surgical allocation of capacity to focused client segments, bringing an 'integrated OpenText' view. 2) Empowering 16 global market leaders with decision rights for speed. 3) Significant investment in the ecosystem, which was previously insufficient, to act as a force multiplier.

“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.”

asked by Paul Treiber · answered by Ayman Antoun

Inquired if the capital allocation strategy is primarily focused on organic growth and debt reduction, and if a slower pace of buybacks is expected.

Ayman Antoun confirmed that debt reduction and organic growth investments are the top priorities. While the NCIB was renewed for FY27, buybacks will be prioritized after the first two, indicating a potentially slower pace compared to the previous year.

“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.”

asked by David Kwan · answered by Ayman Antoun

Asked if OpenText has observed deal elongation or increased approval hurdles for AI products, similar to some software peers.

Ayman Antoun stated that OpenText has not seen any material slowdown or deal delays in Q4 FY26. He attributed this to the company's core value proposition as a foundational data layer for AI, which is critical for clients translating AI ambitions into reality.

“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.”

asked by George Iwanyc · answered by Ayman Antoun