Q2 2022 Open Text Corp Earnings Call
Thank you for standing by this is the conference operator.
Welcome to the open text Corporation second quarter fiscal 2022 earnings conference call.
Speaker 1: standing by. This is the conference op...
Speaker 1: Welcome to the Open Text Corporation second quarter fiscal 2022 earnings conference.
As a reminder, all participants are in listen only mode and the conference is being recorded after the presentation. There will be an opportunity to ask questions to join the question queue simply press Star then one on your Touchtone phone should anyone need assistance during the conference call. They may signal, an operator by pressing star and zero on their toes.
Speaker 1: As a reminder, all participants are in listen-only mode and the conference is being recorded. After the presentation, there will be an opportunity to ask...
Speaker 1: To join the question queue, simply press star then 1 on your touch tone.
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The phone.
I would now like to turn the conference over to Harry Blount Senior Vice President Investor Relations. Please go ahead.
Speaker 1: I would now like to turn the conference over to Harry Blount, Senior Vice President, Investor Relations. Please go ahead.
Yeah.
Thank you operator, good afternoon, everyone and welcome to open text second quarter fiscal 'twenty two earnings call with me on the call. Today are open text, Chief Executive Officer, and Chief Technology Officer, Mark J, <unk>, and our executive Vice President and Chief Financial Officer, Madhu Reagan Nathan.
Speaker 2: Thank you, operator. Good afternoon, everyone, and welcome to Open Tech second quarter fiscal 22 earnings call with me on the call today. Our Open Text chief executive officer and chief technology officer Mark J. Baron Shay and our executive vice president and chief financial officer.
Please note that we have shortened our prepared remarks this quarter to allow more time for the question and answer session. Today's call is being webcast live and recorded with a replay available. Shortly thereafter on the open text Investor Relations website earlier today, we posted our inaugural quarterly.
Speaker 2: Please note that we have shortened our prepared remarks this quarter to allow more time for the question and answer session.
Speaker 2: Today's call is being webcast live and recorded with replay available shortly thereafter on the Open Text Investor Relations website. Earlier today, we posted our inaugural quarterly shareholder letter along with our press release and investor presentation.
The shareholder letter along with our press release and Investor presentation.
These materials will supplement our prepared remarks and can be accessed on the open text Investor Relations website investors that open text dotcom.
Speaker 2: These materials will supplement our prepared remarks and can be accessed on the Open Text Investor Relations website, investors.opentext.com.
Before I proceed with a reading of our Safe Harbor statement I would like to inform investors that open text 2022 investor day will take place virtually on March 1st registration for the event will be available in the coming days on our Investor Relations website.
Speaker 2: Before I proceed with the reading of our safe harbor statement, I would like to inform investors that open text 2022 investor day will take place virtually on March 1. Registration for the event will be available in the coming days on our investor relations website.
In addition, open text management will be participating at the Scotiabank TMT conference on March eight and the Morgan Stanley TMT Conference on March nine.
Speaker 2: In addition, Open Text Management will be participating at the Scotiabank TMT Conference on March 8th and the Morgan Stanley TMT Conference on March 9th.
And now for our Safe Harbor statement.
Please note that during the course of this conference call. We may make statements relating to the future performance of open text that contain forward looking information. While these forward looking statements represent our current judgment actual results could differ materially from a conclusion forecast or projection in the forward looking.
Speaker 2: Please note that during the course of this conference call, we may make statements relating to the future performance of open text that contains forward looking information.
Speaker 2: While these forward-looking statements represent our current judgment, actual results could differ materially from a conclusion, forecast, or projection in the forward-looking statements made today.
<unk> made today.
Certain material factors and assumptions were applied in drawing any such statements additional information about the material factors that could cause actual results to differ materially from a conclusion forecast or projection in the forward looking information as well as risk factors, including in relation to the current global pandemic that may.
Speaker 2: Certain material factors and assumptions were applied in drawing any such statement.
Speaker 2: additional information about the material factors that could cause actual results to differ materially from a conclusion forecast or projection in the forward looking information as well as risk factors, including in relation to the current global pandemic. That may project future performance results of open text are contained in open text recent forms 10k and 10q as well as in our press release that was distributed earlier today, which may be found on our website.
Jack future performance results of open text Archon change in open texts recent forms 10-K, and 10-Q as well as in our press release that was distributed earlier today earlier this afternoon, 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.
Speaker 2: 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-gape financial measures, reconciliation of any non-gape 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, it's a great pleasure to hand the call over to Mark.
Materials, which are available on our website and with that it's a great pleasure to hand, the call over to Mark.
Thank you Harry and good afternoon to everyone and thank you for joining today's call.
Today, we are introducing our new call format.
Speaker 2: Thank you, Harry. Good afternoon to everyone and thank you for joining today's call. Today we are introducing...
Earlier today, we published our inaugural quarterly shareholder letter in addition to our press release and Investor presentation, all available on investors that open text dot com.
Speaker 3: Earlier today, we published our inaugural quarterly shareholder letter in addition to our press release and investor presentation all available on investors.opentext.com.
The three documents are intended to provide more insight into our strategy aspiration growth programs and results.
Speaker 3: The three documents are intended to provide more insight into our strategy, aspirations, growth programs, and results over short, medium, and long-term horizons.
Over short medium and long term horizons.
Going forward you can expect our quarterly shareholder letter and shorter prepared remarks from Madhu and myself, leaving more time for Q&A.
Speaker 3: Going forward, you can expect a quarterly shareholder letter and shorter prepared remarks from a do-it-myself, leaving more time for Q&A.
Today, I will spend a bit more time in our remarks to ensure a smooth transition to our new format.
Speaker 3: Today we'll spend a bit more time in our remarks to ensure a smooth transition to our new format.
We welcome your continued feedback on how to improve our communications.
Onto Q2 accomplishments, we had an amazing quarter financially and strategically.
Speaker 3: We welcome your continued feedback on how to improve our communication.
We provide demonstrable progress towards our longer term fiscal 'twenty four aspiration of up to 4% organic growth.
Speaker 3: We had an amazing quarter financially and strategically.
Speaker 3: We provide demonstrable progress towards our longer term fiscal 24 aspirations of up to 4% organic growth.
38% to 40% adjusted EBITDA margin and free cash flows of $1 2 billion plus.
Speaker 3: 38 to 40% adjusted EBITDA margin and free cash flows of 1.2 billion plus.
Today, we increased our fiscal 'twenty two targets to include total growth of up to 4% and cloud revenue growth of up to 10%.
Speaker 3: Today we increased our fiscal 22 targets to include total growth of up to 4% and cloud revenue growth of up to 10%.
This reinforces our aspiration to generate over 6 billion in cumulative cash flows.
Speaker 3: This reinforces our aspirations to generate over $6 billion in cumulative cash flows over the next.
Over the next five years.
Please recall our plan to return 33% of free cash flow to investors in the form of dividends and buybacks, while investing in the majority of our cash in organic growth and corporate purposes, primarily M&A.
Speaker 3: Please recall, our plan to return 33% of free cash flow to investors in the form of dividends and buybacks while investing the majority of our cash in organic growth and corporate purposes, primarily M&A. Our capital return strategy has two fundamental pillars, one, for 20% to trailing 12 months free cash flow via dividends, and two, keeping our share count constant via our buyback program.
Our capital return strategy has two fundamental pillars, one returning 20% of trailing 12 month free cash flow via dividends and to keeping our share count constant.
Our buyback program.
We believe our cash generation prospects and capital allocation strategy.
And download position to create sustained long term value.
Speaker 3: We believe our cash generation prospects and capital allocation strategy puts us in a stellar position to create sustained long term value.
I looked at our quarterly accomplishment in the shareholder letter, but let me call out just a few.
We bettered our best and delivered the strongest Q2 revenue quarter in the history of the company at $876 8 million up two 5% year over year cloud up four 1% year over year with bright line organic growth.
Speaker 3: I listed our quarterly accomplishments in the Shareholder letter, but let me call out just a few.
Speaker 3: We battered our best and delivered the strongest Q2 revenue quarter in the history of the company at 876.8 million up 2.5% year over year, cloud up 4.1% year over year with bright line organic growth.
It was a very strong cloud bookings quarter with double digit year over year growth.
Adjusted EBITDA of 39, 2%.
Speaker 3: with a very strong card bookings quarter with double digit year over year growth adjusted EBITDA of 39.2%
We are expecting strong year over year annual growth in our free cash flow, we view our business as annual we make decision many decisions based on that while driving upper quartile adjusted EBITDA and free cash flow on an annual basis.
Speaker 3: We're expecting strong year-over-year annual growth in our free cash load. We view our business as annual. We make decisions, many decisions based on that, while driving upper-qual tile adjusted IBIDA and free cash load on an annual base.
I'm very proud of the recent talent recognition, our teammates received including Canada. Most admired cultures candidates top employer for young people and being named one of Forbes best employers the pandemic strengthened our culture and results.
Speaker 3: I'm very proud that the recent talent recognitions our teammates received, including Canada's most admired cultures, Canada's top employer for young people, and being named one of four best employers. The pandemic strengthened our culture and results.
We announced the open text zero initiative with bold ESG objectives, we plan to lead here.
Speaker 3: We announce the OpenTech Zero Initiative with bold ESG objective. We plan to lead here.
Two our core we believe the future of growth at open text is both inclusive and sustainable.
Speaker 3: To our core, we believe the future of growth at OpenTax is both inclusive and sustainable. By 2030, we are setting out to achieve zero barriers, zero waste and zero net emissions. These are all three pillars to the OpenTax zero initiative. Specifically, on zero barriers, we are actively striving to become a majority diverse company and to expand our leadership to a total of 40% female leadership defined as manager and up.
By 2030, we are setting out to achieve zero barriers zero waste and zero net emissions. These are our three pillars to the open text zero initiative, specifically on zero barriers. We are actively striving to become a majority diverse company and to expand our leadership to a total of 40% female leadership.
As defined as manager and up.
I'll comment on mid market, and VIX and enterprise growth programs and partners in a moment simply said Zach significantly improves our mix.
Speaker 3: I'll comment on mid-market and Zix and enterprise growth programs and partners in a moment. Simply said, Zix significantly improves our mix.
It was an exceptional quarter across the board.
We entered Q3 with increased visibility both near term and over the longer horizon and open text best days are ahead.
Speaker 3: It was an exceptional quarter across the board. We entered Q3 with increased visibility, both near-term and over the longer horizon, and open text best days are ahead. Let me tell you why.
I can tell you why.
Businesses of all sizes are transforming and they are transforming into the cloud and by digitizing processes, but more importantly, they are transforming through information or as I like to call. It information led transformations.
Speaker 3: Businesses of all sizes are transforming. And they are transforming into the cloud and by digitizing processes, but more important.
Speaker 3: They are transforming through information, or as I like to call it, information led transformation.
<unk> the way their employees work and how we're all mastering modern work. This includes the way they manage their supply chains and digitizing supply chain. It includes the way, we sell and go to market and how we power modern experiences and the way, we secure our digital infrastructures and strengthen.
Speaker 3: This includes the way their employees work and in how we're all mastering modern work. This includes the way they manage their supply change and digitizing supply.
Speaker 3: It includes the way we sell and go to market and how we power modern experiences and the way we secure our digital infrastructures and strengthen cyber resilience.
<unk> cyber resilience.
We are the information management market leader and our cloud edition offerings are optimized to help our customers regardless of their size or where they are in their transformation journey we.
Speaker 3: We are the information management market leader, and our Cloud Edition offerings are optimized to help our customers, regardless of their size or where they are in their transformation journey.
We are going to take market share through organic growth and acquisitions on a path to doubling the company over the next five to seven years, we had amazing wins in the quarter and you can read the detail in our investor presentation on some.
Speaker 3: We are going to take market share through organic growth and acquisition.
Speaker 3: on our path to doubling the company over the next five to seven years. We had amazing wins in the quarter. You can read the detail in our investor presentation. Some of those wins include Volkswagen, Kimberly Clark, the US Army Corps of Engineers, Raytheon Space and Intelligence, and Amazon is new Pillpack in many more. Let me turn to Zix.
Some of those wins include Volkswagen Kimberly Clark the U S Army Corps of Engineers, Raytheon space, and intelligence and Amazon's, New pill pack and many more.
Let me turn to Zacks.
Our enterprise growth programs and partners each strategic points of emphasis within my prepared remarks.
X.
We see an amazing opportunity to expand our information management leadership in the enterprise and the SMB market.
Speaker 3: each strategic point of emphasis within my prepared remarks. I'm Zick.
Speaker 3: We see an amazing opportunity to expand our information management leadership in the enterprise and the SMB market. Nearly 50% of US GDP is generated by small and medium sized businesses and most need a secure and scalable digital presence.
Only 50% of U S. GDP is generated by small and medium sized businesses and most need a secure and scalable digital presence.
We just started our third year as a scale provider of information management and SMB.
Speaker 3: We just started our third year as a scaled provider of information management in SMB. And with the acquisition of ZX, we have market-leaning platforms for data protection, data in email security, as well as being a top Microsoft Cloud solution provider for mid-market solutions.
And with the acquisition of <unk>, we have market, leading platforms for data protection data and email security as well as being a top Microsoft cloud solution provider for our mid market solutions.
By bringing together Carbonite, Webroot, Zika and cloud ally plus our strategic relationship with the most important endpoint company on the planet, Microsoft We're able to offer the industry's most complete total protection and security platform to arm EMS and the 23000 Msp's diary.
Speaker 3: by bringing together Carbonite, WebRoot, Zix, and Cloud Ally. Plus our strategic relationship of the most important endpoint company on the planet, Microsoft. We're able to offer the industry's most complete total protection and security platform to RMMs and to 23,000 MSPs direct from OpenTech.
<unk> from open text.
We intend to lead grow and win information management by a dry by addressing the high compliance and cyber resilience needs for small and medium businesses.
Speaker 3: We intend to lead, grow, and win information management by addressing the high compliance and cyber-resilience needs for small and medium businesses. And you can expect us to continue to acquire.
And you can expect us to continue to acquire.
The S&P market.
On to the enterprise and the enterprise and for larger businesses, we have a fantastic direct sales force and high impact strategies to drive profitable growth first one of our most important recent investments is to cover our top 100 customers direct with global account managers that's pro.
Speaker 3: Under the Enterprise. In the Enterprise and for a larger business.
Speaker 3: We have a fantastic direct sales force and high impact strategy.
Speaker 3: to drive profitable growth. First, one of our most important recent investments is to cover our top 100 customers direct with global account managers. This program is now in place.
Graham it's now in place.
One of our important recent investments covered Iraq. The top 20 supply chain companies. This program is now in place.
Speaker 3: Second, one of our important recent investments has covered direct to top 20 supply chain companies. This program...
And as the large get larger and more global we have a clear opportunity to grow the top of the market and we are investing to do just that via our top 100 customer Gan program and our top 50 supply chain program.
Speaker 3: And as the large get larger and more global, we have a clear opportunity to grow the top of the market. And we are investing to do just that via our top 100 customer GAM program and our top 50 supply chain program.
On partners third I want to speak about partners here as we are building a remarkable business model with enterprise partners.
Speaker 3: on partners. Third, I want to speak about partners here as we are building a remarkable business model with enterprise partners.
We are fully committed to this model and partners are a force multiplier over the long term, Google we announced today a greatly enhanced partnership.
Speaker 3: We are fully committed to this model, and partners are a force multiplier over the long term. Google, we announced today a greatly enhanced partnership to bring our joint content and experience solution.
To bring our joint content and experience solutions to enterprise customers. Microsoft we have massively expanded our F N b in security relationship Amazon and AWS is the core data platform for our protection cloud.
Speaker 3: to enterprise customers. Microsoft, we have massively expanded our SMB and security relations.
Speaker 3: Amazon and AWS is the core data platform for our protection cloud. SAP, we are a leading cloud partner with SAP, with near 3 million cloud users already, and strong product and selling momentum heading into the new calendar year. ServiceNow is a new opportunity for us to bring extended ECM to their large and expanding install base. Here's the e-mail.
We are leading a well we are a leading cloud partner with that with.
With near 3 million cloud users already and strong product and selling momentum heading into the new calendar year service now as a new opportunity for us to bring extended ECM to their large and expanding installed base here to even greater macro point.
Our API cloud our developer cloud, we have the opportunity to win the next generation set of cloud App vendors for their information management needs through content services metadata workflow capture it supply chain threat intelligence and more via our developer and API cloud.
Speaker 3: via our API cloud, our developer cloud. We have the opportunity to win the next generation set of cloud app vendors for their information management.
Speaker 3: through content services, metadata, workflow, capture, supply chain, threat intelligence, and more via our developer and API.
I am delighted with our Q2 results and our strategic progress with cloud editions.
M B in VIX, and our enterprise growth programs and partners, we believe our outlook heading into calendar 'twenty two is vastly more positive than the previous two years.
Speaker 3: I'm delighted to welcome our Q2 results and our strategic progress with cloud additions, SMB and ZIX, and our enterprise growth programs and partners. We believe our outlook heading into calendar 22 is vastly more positive than the previous two years.
I hope in taxes on the offensive as it relates to inflation because the best answer to inflation is to remove labor, where you can reduce your friction cost and create new just in time supply chain to the digitalization of global processes and to do this smartly through information led transformation.
Speaker 3: OpenTax is on the offensive as it relates to inflation because the best answer to inflation is to remove labor where you can, reduce your friction costs, and create new just-in-time supply chains through the digitalization of global processes and to do this smartly through information-led transformation. We intend to help our customers be on the offensive as it relates to inflation. Let me conclude by saying
We intend to help our customers beyond the offensive as it relates to inflation let.
Let me conclude by saying.
I'm humbled by the resilience.
And on Stoppable nature of my colleagues through this pandemic we.
We use the last two years to transform into a cloud company with 80% annual recurring revenue and today, we are raising our cloud growth target to up to 10%.
Speaker 3: courage, and unstoppable nature of my colleagues through this pandemic.
Speaker 3: We use the last two years to transform into a cloud company with 80% annual recurring revenue, and today we are raising our cloud growth target to up to 10%.
The leadership team is excited to presented our March one investor day, and they plan to detail. Our next generation of cloud capabilities and our business journey to achieve increased market share customer success and financial aspiration, let.
Speaker 3: The leadership team is excited to present in our March 1 Investor Day. And they plan to detail our next generation of cloud capabilities and our business journey to achieve increased market share, customer success and financial aspiration.
Let me leave you with two things.
Getting up to 10% cloud growth in VIX and proves our mix now let me turn the call them a deal to provide the financial commentary on the quarter is X and our outlook Madhu.
Speaker 3: Let me leave you with two things. Targeting up to 10% cloud growth, and Zixx improves our mix.
Speaker 3: Now let me turn the call to Madhu to provide the financial commentary on the quarter, Zix, and our outlook. Madhu?
Thank you Mark and thank you all for joining us today.
This is our new call format and will focus on selected financial highlights and I'll go back in line by line debuted on.
Speaker 4: Thank you, Mark, and thank you all for joining us today. This is our new call format, and we'll focus on selected financial highlights rather than a line-by-line review. On the investor relations section of our website at opentex.com, please find under Q2 the latest quarterly results. You'll see the PDF of our earnings, the PDF of our shareholder letter, as well as the quarterly investor presentation.
On the Investor Relations section of our website and open text Dotcom piece signed under Q2. The latest quarterly results you will see the P. D. F earnings the PDF of our shareholder letter as well as the quarterly Investor presentation. All that chances are in millions of USD and compared to the same period in the prior fiscal year.
And on a reported basis.
Speaker 4: All veterans are in millions of USD and compared to the same period in the prior fiscal year and are on a reported basis unless site-state otherwise.
Goodbye.
Q2 fiscal 'twenty two that's out there.
We are pleased with our record Q2 revenue that could annual the cuttings Avenue and that could drive that.
Speaker 4: Q2 is a 22 results. We're very pleased with our record Q2 revenue, our record annual recruiting revenue, and record cloud revenue.
Gross annual to cutting revenue eight odd in cloud bookings.
Total revenue no single digit organically.
Speaker 4: growth, annual recurring revenue, ARR, and cloud bookings. We grew total revenues, low single-digit organic.
We posted another quarter of double digit enterprise cloud bookings.
Speaker 4: We posted another quarter of double-digit enterprise cloud bookings.
Devin you saw its fourth consecutive quarter of low single digit organic growth with positive organic growth in all of our cloud market domain.
Speaker 4: Cloud revenues saw its fourth consecutive quarter of low-simple digital organic growth with positive organic growth in all of our cloud market domain.
Strong renewal rate and cloud and off cloud.
And Q2 annual recurring revenue at 80% of our total revenues in the first half year basis.
Speaker 4: strong renewal rates in cloud and off cloud. And Q2 annual recurring revenue at 80% of our total revenues on a first half year basis, ARR was 81% of total revenues.
I was 81% of total revenue.
On the bookings front enterprise cloud bookings were strong across many products and geographies and our large deep trend.
Speaker 4: On the bookings front, enterprise cloud bookings were strong across many products and geographies, and our large deal trend was up.
Gasoline as net income was $88 2 million during the quarter higher than Q2 of fiscal 'twenty, one loss of $65 5 million, primarily due to the tax that has been recorded in the prior year.
Speaker 4: Gap-based net income was $88.3 million during the quarter, higher than Q2 of fiscal 21, loss of $65.5 million, primarily due to the tax settlement recorded in the prior year.
Adjusted EBITDA for Q2 was $343 5 million or 39, 2% down slightly from Q2 fiscal 2021.
Speaker 4: Adjusted EBITDA for Q2 was 343.5 million or 39.2%, down slightly from Q2 fiscal 2021 of 360.8 million, primarily due to our investment in talent across the board, including restoration of compensation, sales coverage and growth initiatives. Turning to
68 million, primarily due to our investments in talent across the board, including destination of compensation sales coverage and growth initiatives.
Operating and free cash flows we generated $216 6 million in operating cash flows in the quarter down, 22% and $756 1 million in the trailing 12 months down 32%.
Speaker 4: we generated $216.6 million in operating cash flows in the quarter, down 23.3%, and $766.1 million in the trailing 12 months, down 32%.
We generated 206 million in free cash flows in the quarter down, 25% and 688 million in the trailing 12 months down 35, 6% during the quarter and compared to prior year that all three items I want to share with you, but you expect the ocs in Fcs.
Speaker 4: We generated $206 million in free cash flows in the quarter, down 25%.
Speaker 4: and 688 million in the trailing 12 months down 35.6%.
Speaker 4: During the quarter and compared to prior year, there are three items I want to share with you with respect to OCF and FCS.
Integration cost relating to the six acquisitions in the current quarter.
And then timing of tax refunds in the prior year, including cares act benefits, but I'm not putting in this quarter and two months of saturday's comparing to the prior year now this tour and augmented with competitive salary increases as well.
Speaker 4: First, integration costs relating to the VIX acquisitions in the current quarter.
Speaker 4: Second timing of tax refunds in the prior, including CARES Act benefits that are not occurring in this quarter. And two months of salary forbearance in the prior, now restored and augmented with competitive salary increases as well.
And.
Yeah.
In a few minutes and I wasn't happy with FEMA.
Our working capital metrics are strong looking capitalization from 1.4 times to one six times on a year over year. Yeah. So two from 47 to 44 days, but our cash conversion cycle into by cheating.
Speaker 4: And let me spend a few minutes and I'll look at the screen.
Speaker 4: A working capital matrix are strong. Working capital ratio in streams from 1.4 times to 1.6 times. On a year-to-year basis, they are still in tune from 47 to 44 days where a cash conversion cycle in tune by 3 days.
Operating cash flows and free cash flows and a trailing 12 month basis. The reason to spend the night in terms of cares Act benefits last year.
Speaker 4: Operating cash shows and free cash shows in a tiny 12 month basis, the reasons of similar in terms of care-back benefits, locked year, salicybearance, plus the one-time IRS settlement in the current year.
Plus the one time I have a second you mentioned the current yet.
Our next quarter Q2 is expected to remain our strongest speak task quarter also free cash flow comparisons with continued improvement year over year basis anyway.
Speaker 4: Our next quarter Q3 is expected to remain our strongest pre-cashable quarter. Also, pre-cashable comparisons will continue to improve on a year-over-year basis as the anniversary of the ILS settlement payment last year and co-ordinated comparisons will also become easier.
Anniversary the I've got a settlement payment last year and Covid related comparison also become easier.
Turning to balance sheet and liquidity, we ended the quarter with $2 3 billion of cash and available liquidity and a very strong net leverage ratio of two times.
Speaker 4: Turning to balance sheet and liquidity, we ended the quarter with $2.3 billion of cash in available liquidity and a very strong net leverage ratio of two times.
And before I speak to our outlook and expectations that we shared details regarding this acquisition.
Speaker 4: And before I speak to our outlook and aspirations, let me share details regarding our zigzag.
We closed the acquisition of December 'twenty 2021 .
And then it's just a VIX reporting prior to our acquisition. Please note the following.
Speaker 4: We closed the ZIX acquisition on December 23rd, 2021. And relative to ZIX reporting, prior to our acquisition, please note the following. Open text will record revenues on a net revenue basis. It will be 100% part of cloud with gross margins in the low 80s.
Open text will be called Devon, using a net revenue basis, it would be 100% part of cloud gross margins in the low eight.
During integration would be all factoring your one customer apartments exception that overall model.
We expect to share with you at the end of this fiscal year as we complete the June quarter, the combined growth prospects SMB powerhouse offering that marked veterans in his commentary.
Speaker 4: During integration, we are factoring year one customer partner disruption and overall models. We expect to share with you at the end of this fiscal year as we complete the June quarter, the combined growth prospects for our S&B powerhouse offering that Mark referenced in his comment.
And now let me turn to our updated targets and expertise.
For the third quarter of fiscal 'twenty, two and on a year over year basis, we look for total revenue to grow mid to high single digits.
Speaker 4: And now let me turn to our updated targets then, Asperi.
Speaker 4: For the third quarter of fiscal 22 and on a year-over-year basis, we look for total revenue to grow mid to high single digits, ARR, annual recurring revenue to grow mid single digits year-over-year, and FX headwind of.
Our our annual depending that we need to go mid single digits year over yet.
And FX headwind of 20 to 25 million.
We expect adjusted EBITDA margin percentage to be down 450 to 500 basis points due to higher investments in talent and continued support of our growth ambitions Vicks acquisition and typical calendar year reset of higher benefits expense.
Speaker 4: We expect adjusted even their margins percentage to be down 415 to 500 basis points due to higher investments in talent and continued support of our growth and vision, zig-zag position, and typical talent-led reset of higher benefits.
So for your fiscal 2022 that increasing our cloud revenue growth outlook from 1% to 2% to a range of 3% to 4% and our cloud revenue growth from 3% to 4% to a range of 8% to 10%.
Speaker 4: For full year fiscal 2022, we're increasing our cloud revenue growth outlook from 1% to 2% to a range of 3% to 4%. And our cloud revenue growth from 3% to 4% to a range of 8% to 10%.
The higher revenue outlook is predicated on our cloud bookings contributions from fixed and confidence from strong Q2, and some taxes.
Speaker 4: A higher revenue output was dedicated on our cloud booking, contributions from six and confidence from strong Q2 and first task results.
And they expanded on the on the cloud revenue dime off fiscal 2022 clouds grow at 8% to 10% include the Vicks acquisition.
Speaker 4: And let me expand on the cloud revenue line. Office of 2022 cloud growth at 8 to 10% includes this exact position. We expect to grow cloud organically, both in reported and constant currency in fiscal 22, despite the Q3 FX segment. And where we sit today, we expect FX headwinds in Q3 as well.
We expect to grow organically both in support it and constant currency in fiscal 'twenty two despite the Q3, FX headwind and where we sit today, we expect FX headwind in Q1 as well.
Extending its exercise.
We saw the strongest booking growth in our enterprise cloud bookings during the first half and along with our expanding hyperscale relationships Carbonite and Vicks acquisition, we expect cloud to continue to drive our future organic growth destination.
Speaker 4: Accepting effects aside, as I said earlier, we saw the strongest looking growth in our enterprise cloud looking during the first half, and along with our expanding hyper-scaler relationships, carbonite, and this acquisition, we expect cloud to continue to drive our future organic growth aspirations.
Moving to adjusted EBITDA margin, we now expect our fiscal 'twenty two adjusted EBIT margin to be in the range of 35.5 to 36, 5%, reflecting the integration of <unk> and internal investment to support growth initiatives. We have made demonstrable progress towards a solid fiscal 'twenty to finish and continued momentum.
Speaker 4: Moving to Adjusted EBITDA margin, we now expect a fiscal 22 adjusted EBITDA margin to be in the range of 35.5 to 36.5%, deflecting the integration of risk and internal investment to support the initiatives. We have made demonstrable progress toward the solid fiscal 22 finish and continued momentum into fiscal 23.
Into fiscal 'twenty three.
Fiscal 'twenty four aspirations I mean unchanged at up to 4% organic note, 85% Daniel the cuttings Avenue.
Speaker 4: Our fiscal 24 aspirations remain unchanged at up to 4% on organic growth, 85% on your recruiting revenue, 38 to 40% adjusted even the margins and 1.2 within plus of pre-cash.
38% to 40% adjusted EBIT margin and $1 2 billion plus of free cash goes live.
Plan to continue to invest anything higher than 40% back into sales marketing and product initiatives driving organic growth.
Speaker 4: We plan to continue to invest anything higher than 40% back into sales, marketing and product initiatives driving organic growth.
We see growth in all the right places our investment in talent since Congress in innovation are paying off in organic growth a strong bookings also give us long term disability, while the predictability of our business remains high and.
Speaker 4: We see growth in all the right places. Our investment in talent, sales covers and innovation are paying off in organic growth. As strong bookings also give us long-term visibility while the predictability of our business remains high. All of this is made possible by the amazing open tech team and your contributions are invaluable.
All of this is made possible by the amazing open text team and your contributions that intangible.
On behalf of open text I would like to thank our shareholders customers partners and employees across the globe.
Speaker 4: On behalf of OpenTest, I would like to thank our shareholders, loyal customers, partners, and employees across the globe. I would now like to turn the call over to your questions and over to your operator.
I would now like to turn the call over to your questions and over to you operator.
Thank you.
We will now begin the question and answer session anyone who wishes to ask a question May Press Star then one on their touch tone telephone to join the question queue, you'll hear a tone acknowledging your request. If you are using a speaker phone. Please ensure you lift the handset before pressing any Keith if you wish to remove yourself from the <unk>.
Speaker 1: Thank you. We will now begin the question and answer session. Anyone who wishes to ask a question may press star then one on their touch tone telephone to join the question.
Speaker 1: You'll hear a tone acknowledging your request. If you are using a speaker phone, please ensure you lift the handset before pressing any...
Q you May press star and to anyone who has a question May press star and one at this time.
Speaker 1: If you wish to remove yourself from the question queue, you may press star and two. Anyone who has a question may press star and one at this time.
Our first question comes from Raimo Lynch you of Barclays. Please go ahead.
Speaker 1: Our first question comes from Raymo Lenshue of Barclays. Please go ahead.
Hey, Thank you congrats from me on these solid numbers.
Mark the more bigger ticket to picture question. The one thing that gets discussed a lot with so for investors here at the moment is and the demand situation in terms of spending.
Speaker 5: Hey, thank you, Conqueror, for me on these solid numbers. Mark, the more big a picture question, the one thing that gets discussed a lot with the software investors here at the moment is the demand situation in terms of...
With customers.
Digital transformation was a big theme the last couple of years, the pandemic kind of really sharpened People's minds here and if there's kind of notion that we kind of overspend a little bit over the last year and now we're coming back to kind of more normal levels. What are you seeing in terms of how this is playing out for you and I had one follow up for me.
Speaker 5: spending with customers, digital transformation was a big theme the last couple of years, the pandemic really sharpened people's mind here. And that is kind of notion that we kind of overspend a little bit over the last year and now we're coming back to more normal levels. What are you seeing in terms of how this is playing out for you? And I had one follow-up for my do please. Yeah, thanks. Thanks for it.
Two please.
Yeah, Thanks, Raimo and good to hear from you.
Like I said in my prepared remarks, I mean coming into 'twenty two it's a vastly calendar 'twenty two it's a vastly more positive year for us.
Speaker 3: Like I said, I'm my prepared remarks. I mean, coming into 22, it's a vastly calendar 22, it's a vastly more positive year for us.
And I mean look at our look at our customer wins, Novartis and new machine learning and capture Volkswagen and building a new a new platform for electric cars and no rough math 10 million cars times a thousand documents.
Speaker 3: And I mean, look at our customer wins. Novartis and new machine learning and capture. Volkswagen building a new platform for electric cars and rough math, 10 million cars times a thousand documents.
10 billion documents a year across perching delivery Assembly service warranty and more U S. Army Corps of engineer, a big new projects going on in the U S.
Speaker 3: you know, ten billion documents a year across purchasing delivery, assembly, service warranty and more.
The 600 down to the 2000 Levy levies.
Speaker 3: US Army Corps of Engineers, big new projects going on in the US.
And they're all on cloud edition, so we see increased demand not not not shortening demand as we come into 'twenty two calendar 'twenty two.
Speaker 3: Umm 600 Damas bombing in 2000 Leave heating
Speaker 3: and they're all on cloud addition. So we see increased demand, not shortening demand as we come into 22, calendar 22. And we're very focused on also upgrading and migrating our install base into our cloud addition. So at least open text position is more positivity coming into 22 than we had over the last two months.
And we're very focused on also up upgrading and migrating our install base into our into our cloud edition. So at least to open tax position is.
More positivity coming into 'twenty two than we had over the last two years okay.
Okay perfect. Thank you that's good to hear and then so am I do like if you if I think about <unk>.
Speaker 5: Perfect. Thank you. That's good to hear. And then, so, Madhu, like if I think about your EBITDA guidance, if I do the math, it came down a little bit. Can you talk a little bit about the drivers in terms of... If I look at the absolute level, if I look at the drivers here in terms of between FX, kind of investment to business, higher employee cost, etc. Could you break down a little bit? Thank you and congrats from...
EBITDAR.
<unk> guidance.
If I do the math it came down a little bit can you talk a little bit about the drivers in terms of.
If I look at the absolute level.
I look at the drivers here in terms of between FX kind of investment to business.
Employee cost et cetera, and just could you break down a little bit. Thank you and congrats from me.
Yeah. Thank you, Hey, Moe or are the problem and so I think FX and certainly on the topline revenue FX definitely a big though they're calling it out in our quarterly factors and the two lines that FX impacts. The most is the cloud services line as well as customer support and.
Speaker 4: Yeah, thank you, Rainbow, for the comments. So I'll take FX source and certainly on the top line on revenue, FX just to a big role. We're calling it out in our quarterly factors and the two lines that FX impacts the most is the cloud services line as well as customer support. And we definitely see that in Q3 and where we sit today, I would say expect a similar FX impact.
And we definitely piece are seeing that in Q3, and where we sit today I would say expect assuming that FX impact in Q4, again, where we sit today, but the underlying business as I've said is absolutely growing well and growing from an organic basis as part of the adjusted EBITDA goes I put the number one vicks acquisition and this is not.
Speaker 4: again, where we sit today, but the underlying business, as I said, is absolutely growing and growing from an organic.
Uncommon for US if you go back to the Carbonite acquisition, we did the quarter immediately following yes, we did take a downward tick on adjusted EBITDA and then you saw how we came back up so the number one reason is going to be decks and are targeting to get six to our operating model in our usual timeframe I'll forget plus.
Speaker 4: As far as I just read the numbers, I put the number one as the exact position and this is not uncommon for us. If you go back to the carbonite acquisition, we did the quarterly immediately following. Yes, we did take a downward kick on adjusted we did and then you saw how we came back up. So the number one reason is going to be X and we're targeting to get six to our operating model in our usual time frame of a year plus.
And number two as you outlined yes, we did have some sadly for band into the compensation, but more importantly, they did pass due to better than teachers in the investing in talent. Overall in addition to investing in talent from an expansion perspective as we've shared it's James coverage marketing R&D product innovation. So in terms of the order of the visa.
Speaker 4: And number two, are you outlying? Yes, we did have some salvage forbearance and contrast relation, but more importantly, we did pass through two valid increases in their investing in Calend.
Speaker 4: Overall, in addition, investing in talent from an expansion perspective, as we share sales coverage, marketing, R&D products and innovations. So in terms of the order of the reasons that go, anytime we do a large acquisition, vaccine and number one, and in and your number two people investment and more go to market and product as well.
Can that go and anytime you do a large acquisition VIX, you know number one and in it and and number two people investment and more go to market and products as well.
Perfect. Okay. Thank you.
Thank you.
Yeah.
Our next question comes from Paul steep Scotia capital. Please go ahead.
Hey, good evening, just two quick ones, Marc maybe you could just update us on the roadmap for 'twenty two dot two and maybe other key releases that should be on our radar screen and then Madhu just can you when we get to it can you go back because it doesn't look like the transcript caught your third comment after.
Speaker 1: Our next question comes from Paul Steep of Scotiacapital. Please go ahead.
Speaker 6: I'll give you two quick ones. Mark, maybe you could just update us on the roadmap for 22.2 and maybe other key releases that should be on our radar screen. And then, Medoo, just can you, when we get to it, can you go back? Because it doesn't look like the transcript caught your third comment after Gross Margin's low 80s in terms of maybe the impact on customer that we broke up on my side as well.
Gross margins low eighty's in terms of maybe the impact on customer that we broke up on my side as well and then just one last one on gross versus net six thanks.
Yeah, Paul Thank you for the question and good to hear from you and we're going to have a large and important product update.
Speaker 6: One last one on Gross versus NetHit 6. Thanks.
Speaker 3: Yeah, Paul, thank you for the question and good to hear from you. And we're going to have a large and important product update at investor day. So I'm going to save some of the gunpowder for March 1. But in advance of that for 22.2 and 22.3, first we remain on our 90 day cadence, which is our battle cry.
At Investor Day.
So.
I'm going to save some of the gunpowder for March one, but in advance of that for.
For our $22 two and $22 three.
First we remain on our on our 90 day cadence, which is our battle cry.
And the reason I highlight that have highlighted that is it so important.
Speaker 3: And the reason I highlight that, have highlighted that, is it so important? How do we help a developer go faster?
How do you how do we.
How do we help develop our go faster.
And how can we go faster and how can we go from thought to code to quality to pre prod production capabilities in customers' hands faster and faster.
Speaker 3: and how can we go from thought to code, to quality, to pre-prod, production, capabilities and customers hands faster and faster.
Were now releasing to 20000 facets features into over quarter across our clouds and I go back to the days when when Silicon Valley and that was part of this model. We moved talent to India now wasn't just labor arbitrage, we're able to work 24 hours a day.
Speaker 3: We're now releasing two 20,000 facets, features and tools a quarter across our clouds. And I go back to the days when Silicon Valley, and I was part of this model, we moved talent to India. It wasn't just labor arbitrage. We were able to work 24 hours a day. And that differentiated very large companies from their process.
Okay and that differentiate at very large companies from their process.
This is the next big process improvement.
It's to go faster every 90 days, so with that or what we can look forward to over the next 90 days is our content cloud all support for partners and embedding extended ECM on the content side, which is really enabling Salesforce service now S. P. Google.
Speaker 3: So this is the next big process improvement is to go after every 90 days.
Speaker 3: So with that, what we can look forward to over the next 90 days is on our content cloud, all support for partners.
Speaker 3: and embedding extended ECM on the content side, which is really enabling Salesforce, service now, SAP, Google, Microsoft, so that this notion of extended ECM, on the business, network cloud, and we actually have a supply chain summit coming up in a couple of weeks. We have a new global invoicing capability supporting about 60 countries that are gonna enable what we call just-in-case supply.
Hum Microsoft Phil.
So this notion of extended ECM on the business network cloud and we we actually have a supply chain summit coming up in a couple of weeks, we have a new global invoicing capabilities supporting about 60 countries that are gonna enable what we called just in case supply chains, not just in time, but just in <unk>.
Case, and we're bringing to market, our new mid market offering directly targeted at Sps Commerce, and then mid market with our with a product line called the freeway.
Speaker 3: not just in time, but just in case. And we're bringing to market our new mid market offering, directly targeted at SPS Commerce in the mid market with a product line called Freeway. On the Experience Cloud, we have a new CPAS cloud.
Experience cloud we.
We have a new CPAP platform.
Hum in the marketplace and enhanced over the next 90 days.
Speaker 3: in the marketplace and enhanced over the next 90 days. We're going to be integrating ZIX very rapidly for email protection and encryption within the Security Protection Cloud.
And we're gonna be integrating zacks very rapidly for email protection and encryption.
Oh within the security and protection cloud.
And.
More advanced AP is Magellan risk guard Sandisk content, we'll send you back our content score does it have a sudden number and it does have a social security number is it a violation of GDP are we just want a real nice win at Paladin cyber for threat API and over a dozen customers for machine learning.
Speaker 3: And more advanced APIs, Magellan Risk Guard, you know, send us content. We'll send you back a content score. Does it have a SIN number? Does it have a Social Security number? Is it an violation of GDPR? We just want to be all nice when at Paladin Cyber for threat API and over a dozen SAP customers for machine learning and capture. So it would be more machine learning capability.
And capture so it'll be more machine learning capabilities.
That's a bit of a flavor across our five clouds in 'twenty two dot two but please expect a very important significant.
Speaker 3: So that's a bit of a flavor across our five clouds in 22.2. But please expect a very important, significant product roadmap update at Investor Day.
<unk> product roadmap update at Investor Day in March.
Okay.
Yeah, Thank you Martin and.
Let me address the 16th as well again, keeping in mind mix was a public company before we acquired them suddenly data and information out there about six we wanted to take the opportunity to clarify how we at approaching six so as I mentioned, we closed the acquisition on December 23rd.
Speaker 4: Okay, thank you Mark and follow that.
Speaker 4: Let me address the six key as well. Again, keeping in mind, which was a public company before we acquired, and there's certainly data and information out there about six, we want to take the opportunity to clarify how we had approached things.
We will record revenues and a net revenue basis, we've done a complete and total you said that's the perfect way in our view and by the way keep in mind that our sales channel and the partner.
Speaker 4: So as I mentioned, we closed acquisition in December 23rd. We will record revenues in a net revenue basis. We've done our complete and thorough diligence, and that's the appropriate way in our view. And by the way, keep in mind that our sales channel, the partner channel, they're all bringing in business from a gross perspective, and that's what they're supposed to do, right? So this doesn't sort of discount the totality of the efforts that goes into the business. Did we want to emphasize that financial reporting? We will be recording on a net revenue basis. All in six, seven years goes in as part of cloud.
The channel get all bringing in business from a close perspective, and that's what they're supposed to do as I said this isn't a sort of discount the totality of the effort that goes into the business did what empathize that financial reporting we will get accordingly, and that type of a basis. All in fixed 70 goes in as part of cloud and good smart didn't even know 80 during.
During integration, we generally do this for every acquisition, we do factor a yoga one customer Hoffman disruption in our overall revenue models, we certainly strive to meet the higher end of it but.
Speaker 4: and grow smaller than the low 80.
Speaker 4: During integration, we generally do this for every acquisition. We do factor a year-one customer partner disruption in our overall revenue model.
But it is prudent to factor some discount to the normal one day, just keeping your one customer disruption and that was my point number two and the third point, which we'll share with you at the end of this fiscal year.
Speaker 4: We certainly strive to meet the higher end of it, but it is prudent in our view to factor some discount to the normal run rate, just given year one customer partner disruption. And that was my point number two. And the third point was, we'll share with you at the end of the fiscal year, the combined growth prospects lesson, the powerhouse that Mark talked about in his comment.
And by the prospects of that shouldn't be powerhouse that mark talked about in his commentary.
Great.
Wind was what we'd miss on the integration should we think to the traditional I believe we were used to be 18% to 20% sort of step down is that what sort of embedded into the thought process at this point.
Speaker 6: The last line was what we'd missed. So on the integration, should we think to the traditional, I believe we were used to be 18 to 20% sort of step down. Is that what sort of embedded into the thought process at this point?
Well, yes, I would agree yes. Thank you.
Sorry last clarification on Covid I promise.
Can you give us a sense of the Duke how what that sort of translation obviously from gross to net is on their revenues. It's I'm certain folks are gonna be looking to physics numbers and trying to read across understandable and you stated already did deal that you would get a.
Speaker 6: Sorry, last clarification, I'll leave it. I promised, can you give us a sense to do how what that sort of translation, obviously from gross to net, is on their revenues? And certain folks are gonna be looking at the ZIX numbers and trying to read across, understandable, and you stated already at the deal that you were gonna recast it in your IFRS.
Recast it in your higher for a standard.
Right.
A totality is goes to the totality of Mac.
Speaker 4: Right. A totality of growth to the totality of net.
Again, I would think somewhere in the range of.
They have two different types of business insight and the resale business is where we've taken the position that he would go from a neck go to our next 70 basis and without getting into the heavy components here.
Speaker 4: Again, I would think somewhere in the range of, look, they have two different types of businesses, right? And the resale business is where we're taking the position that we will go to a net revenue basis. Then without getting into the hairy components here, on the resale side, it really translates into somewhere in the 30 to 35% of a dollar of resale revenue.
We sell side, it really translates into somebody, but 30% to 35% of a dollar of them be self debit.
Perfect. Thank you very much folks.
Thank you.
Our next question comes from Thanos, most Joe Bliss of BMO capital markets. Please go ahead.
Speaker 1: Our next question comes from Thanos, Nostropolis of BMO Capital Markets. Please go ahead.
Hi, Good afternoon, maybe just a follow up on VIX and accounting when we look at their deferred revenue balance would that have been some resale revenue in there that needs to be marked down to a net basis or with the stuff. They hadn't deferred as a public company was that all pertain to the stuff that you're recognizing that.
Speaker 7: Hi, good afternoon. Maybe just to follow up on on Zix and accounting, when we look at their deferred revenue balance, would that have been some resale revenue in there that needs to be marked down to an F basis? Or would the stuff they had in deferred as a public company that all pertain to the stuff that you're recognizing that anyway?
Anyway.
Yeah again, it's a great question VIX had had.
Had adopted a gross revenue accounting for that entire business sites, but aside from that it's all down to yourself.
Speaker 4: Yeah, again, it's a great question. VIX had adopted a gross revenue accounting for their entire business, right? So that applies to the default revenue as well.
Okay. So even the resell revenue had some deferred element in it that would be deferred retinal detachment point element yeah, yeah, yeah. Okay.
Speaker 7: Okay, so even the resale revenue had some deferred element in it that would be deferred revenue balance. Absolutely. That element. Yeah. Okay. Also, given that it's going to be a higher gross margin profile, does that mean that, you know, once integrated, it might actually be above your target operating model?
Also given that it's going to be a higher gross margin profile does that mean that you know.
Once integrated.
It should be above your target operating model.
Oh, yes in fact, the convergence to a target operating model is absolutely. The goal as we've come off of integration that mentioned at the close of market. It is important because you would expect that some sort of a SaaS cloud based business in the low eighties and that's why we wanted to make it a point very akin to carbonite.
Speaker 4: Yes, in fact, the convergence to a target operating model is absolutely the goal as we come out of integration. The mention of the gross market is important because you would expect that from sort of a staff cloud-based business in the low 80s and that's why we want to make it a point. Very akin to Cardiff.
Okay.
Finally, mark just touching on M&A.
You, obviously announced a new head of corporate development.
Speaker 7: Okay. Then finally, Mark, just touching on M&A, you obviously announced a new head of corporate development, and we're seeing valuations come down in the public markets. I'm not sure if you're seeing that yet at this point in terms of assets you may be exploring, but any color update on that front would be good. Thanks.
And you know were seeing valuations come down in the public markets I'm not sure if you're seeing that yet at this point in terms of assets you might be exploring but and any color update on on that front would be good. Thanks.
We are very happy to and thank you Sir.
And good good to hear from you.
So first as I'm I'm.
Speaker 3: Yeah, very happy to and thank you, Senator Nelson and good to hear.
I'm pleased to.
Give my first live voice to the promotion.
Speaker 3: So first is I'm pleased to give my first live voice to the promotion of...
Of.
Doug leading Corp, Dev and reporting to me and.
Somewhat expansion of the team we have a fantastic.
Speaker 3: The dog leading corp dab been reporting to me and somewhat expansion of the team we have a fantastic
The house corporate development organization, and Doug just a fantastic leader.
Speaker 3: in-house corporate development organization, and Doug's just a fantastic leader.
And I'm delighted to have him.
Reporting to me and let me just use this also opportunity to add my voice to Gordon's retirement, he's been a great partner over the last decade, and we wish him all the best in his continued journey and his retirement.
Speaker 3: and delighted to have him reporting to me. And let me just use this also opportunity to add my voice to Gordon's retirement. He's been a great partner over the last decade and we wish him all the best in his continued journey and his retirement.
Doug a.
Promoted working for me expanded team in Corp Dev.
And we.
Speaker 3: So Doug promoted working for me, expanded team in Corp Dev.
We are seeing more assets today.
Then we were a year ago.
Speaker 3: And then we are seeing more assets today than we were a year ago.
We're seeing a better valuation as well so there's more optionality that we see.
Speaker 3: We're seeing better evaluations as well. So there's more optionality that we see.
You should expect us to complete more deals here in calendar 'twenty two.
Speaker 3: You should expect us to complete more deals here in calendar 22.
And I'd also note that if you look at our cash flows and the strength of our cash flows.
Speaker 3: And I'd also note that if you look at our cash flows and the strength of our cash flows
Hum.
We can.
B voluntary, but we can fund double digit acquired growth straight from our cash flow.
And we may choose to use other instruments, but.
Our cash flows are strong enough that we.
Speaker 3: and we may choose to use other instruments, but our cash flows are strong enough that we can now fund double digit growth, acquired growth straight from our cash.
We can now fund double digit growth acquired growth straight from our cash flows.
So those are the things I would note for M&A.
Doug reporting to me expanded team.
Speaker 3: So those are things I would note for M&A, Doug reporting to me, expanded team.
Seeing more assets improvement in valuation we're expecting to.
To get more deals done in calendar 'twenty, two and the strength of our cash flows.
Speaker 3: seeing more assets, improvement in valuation, we're expecting to get more deals done in calendar 22, and the strength of our cash flows directly implies strong acquired growth straight from cash flows.
Ah is a directly implies.
Strong acquired growth straight from cashless.
Great with offline. Thanks.
Yep. Thank you.
Our next question comes from Richard Tse of National Bank Financial. Please go ahead.
Speaker 1: Our next question comes from Richard C. of National Bank Financial. Please go ahead.
Yes. Thank you.
I've kind of been in a falling your website here and you've got a lot of material there on IBM and it seems like you guys are still making some pretty big gains against them.
Speaker 8: Yes, thank you. I've kind of been following your website here and you've got a lot of material there on IBM and it seems like you guys are still making pretty big gains against them. As that sort of change in any way in terms of those share gains that you've had over the past few quarters.
Is that sort of changed in any way in terms of those share gains that you've had over the past few quarters.
Hey, Richard Thanks for the thanks for the question and good to hear from you.
We launched at the beginning of January a campaign called the bye Bye blue.
Speaker 3: Director, thanks for the, thanks for the question and good to hear from you. We launched at the beginning of January campaign called By By Blue.
And the campaign, which is very asset rich very program rich.
Speaker 3: and the campaign which is very asset rich, very program rich.
Is communicating to file on that.
And.
Speaker 3: is communicating to file net and
Sterling Commerce customers the challenge they have when Kindle got carved out of IBM.
Speaker 3: Sterling Commerce customers, the challenge they have, when Kindrol got
That you now have two different companies two different roadmaps to different contracts to different F. L E N.
Speaker 3: that you now have two different companies, two different road maps, two different contracts, two different SLAs, and the increased complexity of running your supply chains or information management plan.
And the increased complexity of running your supply change our information management platform.
We think it's a great time to call every filenet and Sterling commerce customer and provides an alternative because they're not investing more in the upper right for Gartner Theyre not we have a private cloud. They don't we have a SaaS alternative they dumped.
Speaker 3: We think it's a great time to call every FileNet and Sterling Commerce customer and provide an alternative because they're not investing. We're the upper right for Gartner. They're not. We have a private cloud. They don't. We have a SaaS alternative. They don't.
So.
Yeah.
This is going to yield wins, it's going to yield wins, probably over the next one to three years and so we just love. The campaign, we have one customers. We're building tools to make the automation off the IBM platform even more.
Speaker 3: So this is going to yield wins. It's going to yield wins probably over the next one to three years. So we just love the campaign. We have one customers. We're building tools to make the automation of the IBM platform even more rapid.
More rapid.
Let me just also note on the competitor front.
That in the mid market, we're very focused on bringing our business that work into the mid market and I've spent a lot of time on a product line, which we call freeway.
Speaker 3: Let me just also note on the competitor front that in the mid market, we're very focused on bringing our business network into the mid market. That's been a lot of time on a product line, which we call freeway, and it's now an alternative to SPS commerce in the marketplace.
And and it's now an alternative to Sps commerce in the marketplace.
And we're very focused on winning more.
Microsoft transition helping customers.
Speaker 3: And we're very focused on winning Microsoft transition, helping customers support the Microsoft transition. So as Microsoft moves to their NCE program, we want to be right there to help Microsoft. And any competitor in our way is also going to be an important watchdog for us because we're here to help Microsoft establish their NCE program. So that would be my comment.
Support the Microsoft transition, so as Microsoft moves to their N. C. E program, we want to be right there to help Microsoft and any competitor in a way.
And it's also going to be an important a.
Watchdog for us because we're here to help Microsoft established a N C E program.
So that that would be my comments on our competitors.
Okay, and then I guess kind of a related question on acquisitions if they're.
Not investing and they view that sort of information management business as noncore if they if they were to sort of think about spinning that off is that an asset that you would consider looking at.
Speaker 8: And then I guess kind of related question and acquisitions is there non-investing and they view that sort of information management businesses non-correl. They were to sort of think about you know, spending that as an asset that you would consider looking at.
Well the short answer of course is yes, we'd look at it.
And it has to be at the right value, but but of course it of course would look at it.
Speaker 3: Well, the short answer of course is yes, we'd look at it. And it has to be a thorough value, but of course, of course we'd look at it. And but I'm very happy with our competitive position. But of course, we'd look at it. It's been in the market way to, it's been established for way too long and of course we'd look at it. Having said that, I really like how we're competing against them. And we're going to keep competing and we got to...
And but I I'm very happy with our competitive position.
But of course, what I look at it it's been in the market way too it's been established for way too long and and of course would look at it having said that I really like how we're competing against them.
And.
And we're gonna keep competing and we got a great campaign in the market.
Okay, great. Thank you.
Yes.
Speaker 9: OK, great. Thank you.
Once again, if you have a question. Please press Star then one our next question comes from Paul Treiber of RBC capital markets. Please go ahead.
Speaker 1: Once again, if you have a question, please press star then one.
Speaker 1: Our next question comes from Paul Traber of RBC Capital Markets. Please go ahead. Thanks very much and good afternoon.
Thanks, very much and good afternoon.
In the prepared remarks that you called out double digit cloud bookings growth and I was wondering you know how important it was content cloud 20 went up for the release this quarter the gross AR.
Speaker 10: And in the prepared remarks that you call the double digit cloud bookings growth. And I was wondering, how important was content cloud 21.4 the release of this quarter to growth of bookings? And then more generally speaking, how do we think about products cycles in the future? And do you expect the absent flows in cloud bookings around more significant product releases? Or is that the less of?
Our bookings and then more generally speaking you know how do we think about product cycles in the future I mean do you expect the ebbs and flows in cloud bookings around more significant product releases or is that less of a factor.
Yeah, Paul Thank you for the question and good to hear from you.
There's no doubt that our content cloud is a is a call out right now.
Speaker 3: Yeah, Paul, thank you for the question and good to hear from you.
And if we look at some of our customer wins novartis, great content cloud customer.
Speaker 3: There's no doubt that our content cloud is a callout right now.
Speaker 3: And if we look at some of our customer wins, Novartis, great content cloud customer, bringing machine learning, capture machine learning capability.
Bringing machine learning, our capture and machine learning capabilities.
Into many of their information rich processes from regulated documents to clinical trials.
Speaker 3: into many of their information-rich processes from regulated documents to clinical trials.
Volkswagen.
I had mentioned a little earlier 10 million cars times are under a 100 K documents equals 10 million documents a year whenever you from purchasing to warranty that's the single platform of content.
Speaker 3: Volkswagen, I mentioned a little earlier, 10 million cars times 100k documents equals 10 million documents a year. Remember, we were from purchasing to warranty. That's a single platform of content.
U S Army Corps of Engineers I'm very proud of this win and very very proud to partner with one of the most prestigious engineering firms in the world from everything from civilians and military construction.
Speaker 3: U.S. Army Corps of Engineers, I'm very proud of this win and very proud to partner with one of the most prestigious engineering firms in the world, from everything from civilian to military construction.
And everything from dams locks hydroelectric facilities levies.
Speaker 3: and everything from dams, locks, hydroelectric facilities, levees, water supply to over 100 cities in the US, one information platform, content services, all on cloud dishes.
Water supply to over 100 cities in the U S. One information platform content services all on cloud editions.
So yeah, our 90 day cycles really important.
22 that one really brought up big capabilities 22, dot too as I highlighted earlier and Investor day, I'm real eager to get the March one two.
Speaker 3: So, um, yeah, our 90 day cycle is really important. Uh, 22.1, um, uh, really, uh, brought up big capabilities. 22.2 as I highlighted earlier.
They have some significant announcements for the roadmap ahead. So if you allow me Paul I am going to hold onto some of our gunpowder for Investor day, and the big pieces of the roadmap ahead, but they're significant.
Speaker 3: and investor day, I'm real eager to get to March 1 to have some significant announcements for the roadmap ahead. So if you allow me, Paul, I'm gonna hold on to some of our gunpowder for investor day and the big pieces of the roadmap ahead, but they're significant. But yeah, 2021.4, 2022.1, really contributed to some of these very impressive cloud addition win. you
But yeah 20.
'twenty, one dot for 2022 dot one really contributed to some of these very impressive cloud edition win.
Innovation matters.
Yeah.
My second question and maybe it relates to the roadmap, but I'll try to speak about it more generally is this an F N b in the opportunity there the products that you mentioned.
Speaker 10: My second question, and maybe it relates to roadmap, but I'll try to speak about it more generally, is just on SMB and the opportunity there, you know, the products that you mentioned, you know, have been acquired to, you know, build out or further build out your SMB product portfolio. Should we expect
<unk> had been acquired to build out a further build out the product portfolio should we expect you know the more sort of traditional enterprise grade software. The openings have you repositioned down into SMB or do you think that that is a you know.
Speaker 10: You know, the more traditional enterprise-grade software the OpenTix has.
Speaker 10: reposition down to SMB or do you think that that is a distinct market and it would require distinct
Distinct market and it would require a distinct products.
It's it's a bit of both but it is a distinct product and you know going back to kind of our vision.
Speaker 3: It's a bit of both. It is a distinct product and you know going back to kind of our vision.
And our strategy for information management, it's both in the cloud.
And at the edge and we think both are really important right now no edge no cloud no cloud know Ed. So they are both really important and that the edge. It's data protection. It's information security. It's E Mail security E. D. R. M D R and forensics.
Speaker 3: and our strategy for information management. It's both in the cloud.
Speaker 3: And at the edge, and we think both are really important, right? No edge, no cloud, no cloud, no edge. So they're both really important. And at the edge, it's data protection, it's information security, it's email security, EDR, MDR, and forensic.
And it is helping customers constantly move information off the edge.
Speaker 3: And it's helping customers constantly move information off the S.
Into more cloud based solutions, but we do we spend our lives on the edge and we innovate at the edge. So they're all unique technologies for the edge and the edge is both SMB and it's it's enterprise.
Speaker 3: into more cloud-based solutions. But we spent our lives on the edge and we innovate at the edge. So there are unique technologies for the edge. And the edge is both SMB and its enterprise.
All it takes them to the X technology, we think the email encryption.
Integrated really well into our experience cloud.
Speaker 3: You know, I'll take some Zix technology. We think the email encryption integrates really well into our experience cloud for secured information and health.
For security information and health care.
We think the secure edge email security is going to be really helpful. In the business that work for.
Speaker 3: We think the secure email security is going to be really helpful in the business network for our Kovacent cloud.
For our Cobra and platform.
And those technology scale up but they didn't have a sales force.
To bring there.
Speaker 3: And those technologies scale up, but they didn't have a Salesforce to bring there. We think our guidance software goes into SMB very well for law enforcement, but we didn't have a big channel to do that.
We think our guidance software it goes into SMB very well for law enforcement horsemen, but we didn't have a big channel to do that.
So, it's it's multilayered right its edge and cloud.
It's SMB and enterprise there are unique technologies for both but that intersecting circle is large enough that we can bring technologies both ways.
Speaker 3: So it's multi-layered, right? It's edge and cloud.
Speaker 3: It's SMB and enterprise. There are unique technologies for both, but that intersecting circle is large enough that we can bring technologies both ways.
And last one for me and I was on your developer website today and and I went through all the API that are available and there's quite a number of them.
Speaker 10: Last one for me. I was on your developer website today and I went through all the APIs that are available and there's quite a number of them. What I was thinking through though is, you know, what's the marketing strategy for developer cloud? I mean, it seems quite different of a channel than enterprise sales. So how do you, you know, what's the plan to raise awareness for OpenTexas APIs for developers?
Yeah, what I was thinking through though as you know what's the marketing strategy for developer cloud I mean, it seems quite different of a channel than than enterprise sales. So how do you. What's the plan to raise awareness for open Texas API to developers.
Well, it's a great.
I'm delighted you're on developer at open text that gobs of things are being there so.
Speaker 3: Oh, it's a great, well, I'm delighted you're on developer.opentech.gov. So thanks for being there. So, look, I think it's one of the gems we have inside the company, and we haven't cracked the scale code yet. You know, it is roughly $100 million business today inside of OpenTech. And it's atWillia locked inside our company.
Look I think it's one of the gems, we have inside the company and we haven't cracked the scale code yet is roughly $100 million business today inside of open text and its a twilio locked inside our company.
So part of the strategy to unlock it.
I'm always bringing us Andy Oh, no onboard our new Chief marketing Officer, we've set up a new internal group to to to go to market, we think being able to come in and attach and API sale.
Speaker 3: So part of the strategy to unlock it was bringing a Sandy Ono on board, our new chief marketing officer.
Speaker 3: We've set up a new internal group to go to market. We think being able to come in and attach an API sale.
Two a platform sale is a good strategy for example at our back and Dickinson, we bought some API into that and to that sale on our business network. We want over a dozen S. P customers for machine learning and capture.
Speaker 3: into a platform sale is a good strategy. For example, back in Dickinson, we brought some APIs into that sale on our business network. We won over a dozen SAP customers for machine learning in CAP.
Vita, we've introduced some new eat API, Magellan risk guard and an enhanced our threat intelligence.
Speaker 3: We've introduced some new APIs in Magellan Risk Guard and enhanced our threat intelligence.
But it's it's it's going to be a combination of things, we got a new chief marketing officer, who understands the market, we've set up a new selling team.
Speaker 3: It's going to be a combination of things. We've got a new chief marketing officer who understands the market. We've set up a new selling team reporting into Ted Harrison.
Reporting to Ted Harrison.
We are gonna attach it to platform sales.
Kristina and our customer success group is going to set up he asked the organization.
Speaker 3: We are going to tax it to platform sales. Christina and our customer success group is going to set up a PS organization to build applications on top of it. It's going to be that comprehensive learning from Twilio and making this a future growth driver for us. But we have the technology, we have the know-how. Now we're going to crack the...
Two unbilled AR applications.
<unk> on top of it and it's gonna be that comprehensive learning from Twilio and I'm, making this a future growth driver for us, but we have the technology, we have the knowhow.
Now, we're going to crack the scale coke.
Thanks for taking I guess, you could hear the passion of my voice on this one because it's it's something very unique we have.
Speaker 3: You can hear the passion in my voice on this one because it's something very unique we have.
Thank you.
Our next question comes from Stephanie price of CIBC. Please go ahead.
Speaker 1: Our next question comes from Stephanie Price of CIBC. Please go ahead.
Good afternoon.
Hi, Stephanie.
And you talked a bit about the shelf and you could go partnerships that you announced this afternoon. How are you thinking about that partnership evolving.
Speaker 11: And you talk a bit about the potential for new Google partnerships that you announced this afternoon. How are you thinking about that to partner?
Yeah, very good and thanks for joining us Stephanie and good to have good to hear good to hear from you.
Speaker 3: Yeah, very good. And thanks for joining us, Stephanie, and good to hear from you. Yeah, I purposely focused my prepared remarks on our and.
Yeah, I I purposely focused.
My prepared remarks.
On our enterprise partners.
And.
We've just come a long way and in developing out our technology and our strategy with partners.
Speaker 3: And we've just come a long way in developing out our technology and our strategy with partners.
Relation to Google, which we also announced today, we we announced we put a new Mou in place and a greatly enhanced partnership and the enterprise.
Speaker 3: So in relation to Google, which we also announced today, we announced we put a new MOU in place in a great Leigh-Enhanced partnership in the enterprise. One is we're going to jointly and we are really really recommend this new? remove sale? , our starting Alistair Youq, are trying to delete this live language story and this is a new year's beleza. Secondceume,
One is we're going to jointly innovate together.
We are but open tax going to consume more of their platform for our customers and our youth.
Speaker 3: We are at OpenText going to consume more of their platform for our customers and our youth.
And we're gonna bring our content and experience platforms to their customers.
Speaker 3: And we're going to bring our content and experience platforms to their customers via their workspace platform.
Via their workspace platform.
And we will build out a joint selling teams.
Speaker 3: And we will build out a joint selling team.
Like what we've done at FTP and other places to engage with enterprise customers.
So it's a it's a very evolved.
Speaker 3: Like what we've done at SAP and other places to engage with enterprise cuts.
And our complete strategy to move kind of into the next level of engagement around joint innovation.
Speaker 3: So it's a very evolved and complete strategy to move kind of to the next level of engagement around joint innovation, a more mutual.
More mutual consumption.
And bringing our content cloud and experience cloud to the enterprise via the Google Workspace and then layering are around that.
Speaker 3: and bringing our content cloud and experience cloud to the enterprise via their school goal works.
Joint selling organization.
Speaker 3: and then layering around that a joint selling organization to create demand, close deals, and make customers very successful and happy. So, that's a bit more on the
Create demand closed deals that make customers very successful unhappy.
So that's a bit more on the Google announcement today.
Great. Thank you.
Switching to the SMB market I'm curious about the ability to cross sell other SMB solutions through our partner channel and what the timeline looks like for starting up.
Speaker 3: And then switching to the SMB market, and to reach about the ability to cross sell other SMB solutions through the partner channel and what the timeline looks like for starting that. Sure thing. I would highlight a couple things today. The...
Sure thing.
I would.
Highlight a couple of things today.
The.
First opportunity.
Is to bring VIX product.
<unk>.
To Carbonite webroot customers opportunity number one.
Two is to bring <unk> email security, which is a cloud service.
Speaker 3: Two is to bring ZX email security, which is a cloud service.
They're processing 100 million emails a day.
Like proof point.
Speaker 3: Um, they're processing a hundred million emails a day.
And bring that scaled service into our C. C pass platform and experience to strengthen healthcare auto.
Speaker 3: and bring that scaled service into our CPaaS platform and experience.
And or.
Some other of our our big Edr traffic. If you will we think theres a good relation a good opportunities and immediate opportunity there.
Speaker 3: strengthen health care, auto, and some other of our big EDI traffic, if you will. We think there's a good relation, a good opportunity, an immediate opportunity there.
Also think on the Microsoft reseller side.
As we've identified close to 5000 MSP.
Speaker 3: We also think on the Microsoft reseller side is we've identified close to 5,000 MSPs.
And the Carbonite Webroot World.
That doesn't have a relationship with.
Speaker 3: in the carbonite webroot world, that doesn't have a relationship with Microsoft NCE, and we're actively reaching out to them to bring the cloud service platform from Microsoft to those new 5000 MSPs. And that's immediate active real-
Microsoft N E and we're gonna we're out actively reaching out to them.
To bring the cloud.
Cloud service platform from Microsoft to those new 5000, MSP and that's immediate active real time that we're doing that.
It's definitely those are some of the immediate programs.
That.
Speaker 3: So those are some of the immediate programs that were...
We're going to cross sell and cross pollinate.
That's helpful and finally from the queue customer support came down as a percentage of total overall revenue in the target model just curious about the puts and takes here.
Speaker 11: And finally from the view, customer support came down as a percentage of total overall revenue in the target model.
Yeah, So Stephanie I want.
Say two things one.
It's more of an adjustment at the cloud revenue you'd see going up kind of mid model slightly that said that's the main driver of customer support continues to have very strong the new okay.
Speaker 4: Yeah, so Stephanie, I would say two things. One, it's more of an adjustment as the cloud revenue you see going up the target model slightly. That's the main driver. A customer support continues to have very strong the mobile gates as you see in our commentaries. And maybe the last comment I've shared is I spoke about effects and effects impacts. The headwinds do impact customer support and the cloud lines as well.
As you see in our commentary and maybe the last comment I'm sure that I spoke about FX and FX impacts that had been doing pack customer support and cloud length as well.
Alright, Thank you very much.
Thank you.
Our next question comes from Howard Leung of Veritas investment Research. Please go ahead.
Speaker 1: Our next question comes from Howard Leung of Veritas Investment Research. Please go ahead.
Thanks, and thanks for taking my questions.
It it doesn't sound like a I guess, the six acquisition a lot of the focus on the call.
Speaker 12: It doesn't sound like, I guess, from the sixth acquisition, a lot of the focus on the call, the marks are above the crossbell.
The marks are kept up the cross sell.
Which makes sense and it sounds like I guess for the resale part of their business, even with the larger side that are open Texas combined Dar it doesn't look like you will try to renegotiate those those margins or trying to get a little bit of a lift there.
Speaker 12: which makes sense. And it sounds like, I guess, for the resale part of their business, even with the larger size that OpenText and Vix combined are, it doesn't look like you'll try to renegotiate those margins or try to get a little bit of a lift there.
Howard welcome and.
And thanks for your question and good to hear from you.
Speaker 3: Howard, welcome and thanks for your question and good to hear from you.
No there's.
Multiple vectors here of opportunity first obviously, there are the Zika <unk> secure cloud products.
Speaker 3: No, there's multiple vectors here of opportunity. First, obviously, there are the Zicks SecureCloud products.
And and <unk>.
And I noted.
Hum are kind of the better integration with data protection.
Speaker 3: And I noted kind of the better integration with data protection, information security.
Information security and email security.
And ultimately our strategy is to have an integrated.
Endpoint edge platform.
Speaker 3: And ultimately our strategy is to have an integrated endpoint edge platform.
This is another strong component for us to do that across data protection information and an email security plus our forensic offerings and then eventually E D R and M. D. R. That's the that's the that's the arc of our strategy to an integrated platform.
Speaker 3: And this is another strong component for us to do that across data protection, information, and email security, plus our forensic office.
Speaker 3: and then eventually EDR and MDR. That's the arc of our strategy to an integrated platform.
Second is our ability to cross sell across those companies as noted being bringing zacks into webroot and carbonite customers, bringing carbonite webroot interdictes customers.
Speaker 3: Second is our ability to cross out across those companies, as noted, bringing Zix into WebRoot and Carbonite customers, bringing Carbonite and WebRoot into Zix customers.
And then the resell opportunity.
Theres just enormous opportunity.
Speaker 3: And then the resell opportunity. There's just enormous opportunity. Reset equals relationship, the relationship is the power, ultimately, and the force multiplier for us.
Yes.
Equals relationship the relationship is the power ultimately in the force multiplier for us so the ability to go.
Go further with.
Our great Microsoft relationship, bringing that relationship into the Carbonite Webroot M. S P's.
Speaker 3: So the ability to go further with our great Microsoft relationship, bringing that relationship into the Carbonite and WebRoot MS.
Hum is it is a it's very important and then expanding larger than 23000.
Speaker 3: is very important. And then expanding larger than 23,000 MSPs as well. And then on top of that, there's no reason we can't bring even other third-party resales into that singular platform. And I won't go into others we're working with on top of Microsoft, Microsoft Complementary to bring in there for even a little more resale.
S P's as well and then on top of that there's no reason, we can't bring even other third party resells into that singular platform and I won't go into others, where we're working with on top of Microsoft Microsoft complementary to bring in there for even a little more.
Resell.
So Howard it's a very comprehensive approach to create madhu called the SMB powerhouse for us from everything from an integrated.
Speaker 3: Um, so, so Howard, it's a very comprehensive approach.
Speaker 3: We do call the SMB Powerhouse for us from anything from an integrated platform at the edge.
<unk> platform at the edge through the power of the relationship with Microsoft and Microsoft complementary vendors.
Speaker 3: through the power of the relationship with Microsoft and Microsoft Complement.
No. Thanks.
So I wanted to be here.
Sure.
Yeah I would.
Speaker 12: No, thanks. Thanks. Sure. Thanks.
Just going to say thank you for the question as well.
No problem no problem and then actually I, just just to follow up on the MSP.
Speaker 12: I was just going to say thank you for the question as well. No problem, no problem. And then actually, just to follow up on the MSPs, can you talk about your process of how to onboard, or how you guys, I guess, introduced the new MSPs to your products and maybe talk through that a bit? Absolutely. And...
Can you talk about your process of you know how how to onboard that or how you guys get introduced to the new MSP used to your products and maybe talk to that a bit.
Okay.
Absolutely and.
This is.
A very important question because its all driven by software.
Speaker 3: a very important question because it's all driven by software.
And Oh, we're going to speak a bit about it at Investor day, but effectively our digital zone is a software running in the cloud as a platform.
Speaker 3: We're going to speak a bit about it at investor day, but effectively our digital zone is software running the cloud as a platform.
The goal is to have a single pane of glass or one application that msp's come to self service.
Speaker 3: The goal is to have a single pane of glass or one application that MSPs come to.
And after our selling and after our engagement and their tries and buys but a single platform in the cloud where they can transact.
Speaker 3: And after our selling and after our engagement and their tries and buys, but a single platform in the cloud where they can connect and they can provision. Um. Yeah.
And they can provision.
And they can support and they can renew.
And so part of our.
Strategic approach.
Speaker 3: Um, and so part of our
As to invest in that platform, writing software to them.
Speaker 3: strategic approach is to invest in that platform, writing software, to remove the friction from trying by, remove the friction from selling, buying, renewing, monitoring.
Move the friction from a.
Try and buy remove the friction from selling.
Buying renewing monitoring.
And a week today call that or.
Hum.
Speaker 3: and we today call that our digital.
Our digital selling.
That's a that's really helpful. Thanks for explaining the process and then just maybe one final one for me on the on the renewal rates I know on the on the cloud side I think it's.
Speaker 12: That's really helpful, thanks for explaining the process. And then just maybe one final one for me on the renewal rates. I know on the cloud side, I think it's...
Slipped a bit from 90 693 is there anything you wanted to call out there you know should we expect it to go back up or.
Speaker 13: flipped a bit, you know, from 96, 93. Is there anything you wanted to call out there? You know, should we expect it to go back up? Or it's, I guess the growth directory is more about new deals and maybe less about the mid 90s retention.
I guess the the.
The growth trajectory is more about new new deals and maybe less about the mid nineties.
Retention.
But do you may be on mute.
Oh my apologies.
So we know how it was saying we announced I believe a quarter ago, Paul Duncan He isn't Oracle veteran running a $5 billion of new business he's been heading up IR.
Speaker 4: So, you know, how whatever saying we announce, I believe, a quarter ago, Paul Doughery, he is an Oracle veteran in running a five-bit-and-dollar renewal business. He's been heading up our, our, our, our, our renewal. There are a lot of new and, uh, interpretation ideas are coming along, so I would say stay tuned. Um, and the second piece is that would also lead to a continuous improvement.
I didn't get there wasn't a lot of new and our interpretation of ideas are coming along so I would say stay tuned and the second piece is that we would also lead to a continuous improvement in the cloud and the web site.
Earlier questions about products and innovation and value and expect its obligation to keep introducing that to our customers.
Speaker 4: in the cloud in lower grades, right. There were earlier questions about products and innovations and value and expect this organization to keep introducing that to our customers. There is churn, but I would say the value is going to be higher than the churn as we look ahead.
There is churn, but I would say the value that's going to be higher than that as we look ahead.
Okay.
Thanks for the comments and I'll turn it back.
Yep. Thanks Howard.
Speaker 12: Thanks, thanks for the comments and I'll turn it back.
Yeah, Thanks, and good morning, yeah in any given quarter any given quarter will vary on a cloud renewal rate.
Speaker 3: yep thanks howard um... thank you for any any given quarter any given quarter will vary on a cloud renewal rate uh... but the trajectory is is definitely into the mid-to-toe highton
But the trajectory is definitely into the mid to high <unk>.
This concludes the question and answer session I will now hand, the call back over to Mr. Burns for any closing remarks.
Speaker 1: This concludes the question and answer session. I'll now have the call back over to Mr. Berrensche for an closing remarks.
Alright, very very very good and thank you for joining today and we welcome your feedback on our new format, where our quarterly shareholder letter, but you and I I'm going to be very disciplined to keep our remarks are majoring in the majors and end and narrowing our prepared.
Speaker 3: All right, very, very, very good. And thank you for...
Speaker 3: joining today and we welcome your feedback on our new format with our quarterly shareholder letter. I'm gonna do an eye.
Speaker 3: going to be very disciplined to keep our remarks majoring in the majors. And
<unk> to provide more time in Q&A, which we think is the most important point of this call I hope you'll join US on March 1st for our Investor Day, the executive team will be altogether out here in Silicon Valley live and you are most welcome to join us in person.
Speaker 3: and now we're preparing to provide more time in Q&A.
Speaker 3: we think is the most important point of this call.
Speaker 3: I hope you'll join us on March 1st for our investor day. The executive team will be all together out here in Silicon Valley live.
Or virtually.
Speaker 3: and you are most welcome to join us in person or virtually for our investor day on March 1st and look forward to seeing you then.
Our Investor day on March 1st and look forward to seeing you that thank you.
This concludes today's conference call you may disconnect. Your lines. Thank you for participating and have a pleasant day.
Speaker 1: This concludes today's conference call. You may disconnect your lines. Thank you for participating and have a pleasant day.
Yeah.
Okay.
Okay.
Yeah.
Yeah.
Yeah.
Okay.
Yes.