Open Text Corporation Q3 2023 Earnings Call
Speaker 1: In constant currency, we delivered 45% total growth, positive organic growth, 1 billion plus in ARR, record adjusted EBITDA dollars, and 25% pre-cash flow as a percent of revenue.
Speaker 1: As I've always said, our results will speak for themselves.
Speaker 1: To use a sports analogy, we are playing to win by fielding both a strong offense and a strong defense. On our offense, we have significantly expanded our mission in TAM with the acquisition of Micro Focus to now include enterprise security, digital operations management, application automation, the developer, and AI.
Use a sports analogy, we are playing to win by fielding both a strong offense and a strong defense on our offense, we have significantly expanded our mission and Tam with the acquisition of micro focus to now include enterprise security Digital operations management application automation, the developer and AI.
Speaker 1: All in, we are addressing a $200 billion information management market.
All in we are addressing a 200 billion information management market.
Speaker 1: On our offense, Project Titanium is complete and affords new growth opportunities in SAST and APIs. Re-announce Project Titanium X.
On our offense project titanium is complete and our forged new growth opportunities in fact, an API.
<unk> project titanium X and.
Speaker 1: and we are well positioned to help organizations complete their digital transformations and leverage the next generation of value through AI. And our go-to-market is focused on marquee customer segments that include the global 10,000 key governments and tech savvy SMBs. On our defense, we achieved ARR of 81%.
And we are well positioned to help organizations complete their digital transformations and leverage the next generation of value through AI.
And our go to market is focused on marked key customer segments that include the global 10000 key government and tech savvy Smbs on our defense, we achieved <unk> of 81%.
Speaker 1: and growing organically. Upper-quotile adjusted EBITDA dollars of $365 million in the quarter, upper-quotile free cash flow at 25% of revenue for $306 million in the quarter, a capital strategy via our dividend targeting 20% of trailing to a month free cash flow. As free cash flow grows, so does our capital allocation and cost efficient operations via automation.
Growing organically upper quartile adjusted EBITDA dollars of $365 million in the quarter upper quartile free cash flow of 25% of revenue or $306 million in the quarter, our capital strategy via our dividend targeting 20% of trailing 12 month free cash flow as free cash flow growth. So does our capital allocation.
And cost efficient operations via automation.
Speaker 1: The world is multi-cloud. In fact, it is an Internet of cloud.
The World is multi cloud in fact, it is an internet of clouds and information.
Speaker 1: And information management is the interconnect for the internet of clouds.
<unk> management is the interconnect for the Internet of clouds open taxes in a unique position as the leader in information management, our products go to market and employees have us well positioned for continued growth and profitability and we have momentum and I like our on ramps for additional growth continued transition.
Speaker 1: Open Text is in a unique position as the leader in information management. Our products go to market and employees have us well positioned for continued growth and profitability. And we have momentum and I like our on ramps for additional growth. Continued transition from off cloud to cloud. New public cloud, SaaS products.
Off cloud to cloud.
New public cloud SaaS products introduction of large languish models in AI, which I'll speak to in a moment.
Speaker 1: Introduction of large language models in AI, which I'll speak to in a moment. Climate innovation remains a top priority. Security and trust. Every company is a software company and have their requirements of developer and platform accelerators.
Climate innovation remains a top priority security and Trust every company is a software company and have their requirements of developer platform accelerators.
Speaker 1: And of course the need to continue to consolidate around strategic providers and reduce costs.
And of course, the need to continue to consolidate around strategic providers and reduce costs or.
Speaker 1: Our Q3 financial results are a reflection of customer and partner trust, a reflection on how information management is transforming business, and a reflection on the dedication and expertise of our 25,000 employees.
Our Q3 financial results are a reflection of customer and partner Trust for a reflection on how information management is transforming business and a reflection on the dedication and expertise of our 25000 employees.
Speaker 1: I am extremely proud of every Open Text.
I am extremely proud of every open texture.
Speaker 1: I can't emphasize this enough. We view our business annually, because it allows us to make the right short term trade-offs and investments to enhance long-term performance. With that said, let me-
I can't emphasize this enough we view our business annually because it allows us to make the right short term trade offs in investments to enhance long term performance with that said, let me provide a few quarterly highlights total revenues of $1, two 8 billion up 45% with positive organic.
Speaker 1: Total revenues of $1.28 billion, up 45%, with positive organic growth in constant currency. Over $1 billion in quarterly ARR and our ninth consecutive quarter of organic growth in constant currency.
Growth in constant currency over $1 billion in quarterly <unk> in our ninth consecutive quarter of organic growth in constant currency.
Speaker 1: Cloud revenues were 444 million of 10% with positive of organic growth and constant currency. Trailing 12 month cloud bookings are up 9%. It will remain on track for fiscal 23 cloud bookings growth of 15% plus.
Card revenues were $444 million up 10% with positive organic growth in constant currency trailing 12 month cloud bookings were up 9% and we remain on track for fiscal 'twenty, three cloud bookings growth of 15% plus.
Speaker 1: So I'll note that within Q3 our cloud bookings were constant at 108 million.
Note that within Q3, our cloud bookings were constant at $108 million, we generate $365 million of adjusted EBITDA dollars or 29, 3% adjusted EBITDA margin free cash flow was $306 million or 25% of revenue adjusted EPS of <unk> 73.
Speaker 1: We generate $365 million of adjusted EBITDA dollars, or 29.3% adjusted EBITDA margin.
Speaker 1: Pre-cash flow was $306 million or 25% of revenue. Adjusted EPS of 73 cents.
Speaker 1: And Microfocus contributed strong revenues of $374 million since closing, reflecting customer excitement and confidence about being part of OpenTex to show support for accelerated cloud roadmap.
And micro focus contributed strong revenues of $374 million since closing reflecting cut.
Customer excitement and confidence about being part of open text.
Show of support for accelerated cloud roadmap.
Speaker 1: In summary, we delivered record Q3 revenue, record ARR revenue, and record adjusted IBITDA dollar.
In summary, we delivered record Q3 revenue record a record cloud revenue and record adjusted EBITDA dollars.
Speaker 1: We had a fantastic, we had fantastic customer wins at CAR4, California EDD, Australia Post, PAC LIFE, the Man Energy Group, Ehrlich Weed, and Hydro One, ranging from our content cloud to our security cloud. Transformation themes include the need to innovate faster, secure the infrastructure, improve service experience, and solve for resource constraints. We had notable microfocus wins in enterprise security, mainframe migrations, and IT operations management.
We had a fantastic fantastic customer wins at Karr for California, Edd, Australia Post Pac life, The man Energy group, <unk> and hydro one ranging from our content cloud to our security cloud transformation themes include the need to innovate faster secure the infrastructure improved service experience.
And software resource constraints, we had notable microfocus wins in enterprise security mainframe migration in it operations management.
Speaker 1: Government, transportation and high-tech firms were top of the demand curve.
<unk> transportation and high Tech firms were top of the demand curve.
Trust is earned not give it.
Speaker 1: Trust is earned, not given. And I'd like to thank our customers for their continued support.
And I'd like to thank our customers for their continued support.
Speaker 1: Today we have revised upwards our F23 Revenue and Cash Low Target.
Today, we have revised upwards, our F 'twenty three revenue and cash flow targets and constant currency, we expect to complete fiscal 'twenty three in the following ranges.
Speaker 1: In constant currency, we expect to complete fiscal 23 in the following ranges.
Speaker 1: Total revenue of $4.54 billion to $4.61 billion for 30% to 32% total growth with 1 to 2% total company organic growth.
Total revenue of $4 $5 4 billion to $4 61 billion or 30% to 32% total growth with 1% to 2% total company organic growth cloud bookings growth of 15% plus adjusted EBITDA margin of 32, 5% to 33, 5% and free cash.
Speaker 1: Cloud Bookings grow of 15% plus. Adjusted Ibit-Amargin of 32.5 to 33.5% and free cash low of 580 million to 600 and 20 million.
Low of $580 million to $620 million.
Speaker 1: Our views on fiscal 24 and fiscal 26 remain strong and unchanged. And you can expect updates on our Q4 call when we kick off fiscal 24.
Our views on fiscal 'twenty four in fiscal 'twenty six remained strong and unchanged and you can expect updates on our Q4 call when we kick off.
Fiscal 'twenty four.
Speaker 1: Let me speak about our markets and products. Project titanium is our second generation private cloud and second generation API cloud. We announced that OpenText World in Mia, we have successfully delivered titanium for clouded edition 23.2. And we are already seeing strong customer adoption from companies such as Onji, close brothers, Styrocycle, and Solaris banks.
Let me speak about our markets and products our products project titanium is our second generation private cloud and second generation API cloud, we announced at open text World EMEA, we have successfully delivered titanium or cloud editions totaled $3, two and we're already seeing strong customer adoption from companies such as one sheet close brush.
Others, Stericycle and Soliris bank.
Speaker 1: Delivering on Titanium is a major milestone for us. It now includes full public cloud SaaS for enterprise content management, including SaaS content workflow, collaboration, e-signature, case management, capture, archive, and records management.
Delivering on titanium is a major milestone for US and now include full public cloud SaaS for enterprise content management, including SaaS content workflow collaboration Esignature case management capture archive and records management, we have further expanded our public cloud SaaS capability that <unk>.
Speaker 1: We have further expanded our public cloud SaaS capability that now includes not just the ECM core I just talked about, but value edge, SMACs, Fortify, and D-Brick.
Now includes not just the ECM core I, just talked about but value edge smacks fortify and deep bricked.
Speaker 1: With titanium delivered, we have fortified our support for customer choice. Off cloud, private cloud, public cloud and API cloud. This is another strong step to continue our annual aspirations of 15% plus cloud bookings growth.
With titanium delivered we have fortified our support for customer choice off cloud private cloud public cloud and API cloud. This is another strong step.
To continue our annual aspiration of 15% plus cloud bookings growth.
Speaker 1: Further, we announce Titanium X for Cloud Edition 25.
Further we announced titanium acts or cloud edition is 25% over.
Speaker 1: Over the next two years, we will strategically invest approximately 2.5 billion USD to deliver Titanium X. We are a growth company and it is the right time to invest and gain share. Here are the top 5 aspects of Titanium X.
Over the next two years, we will strategically invest approximately $2 5 billion USD to deliver titanium X. We are a growth company.
It is the right time to invest and gain share here are the top five aspects of titanium X.
Speaker 1: We intend to be the most trusted and secure information management cloud with NetIQ and voltage integrated and built in. It's a full cloudification of micro focus. There'll be tens of thousands of new features and assets delivered every 90 days. We'll introduce new clouds that include XDR as a service, IoT as a service, and a massively expanded developer cloud, and AI.
We intend to be the most trusted and secure information management cloud with net IQ and voltage integrated and built in it.
Full clarification of micro focus there'll be tens of thousands of new features and facets delivered every 90 days, we will introduce new clouds that include xdr as a service Iot as a service and a massively expanded developer cloud.
And AI.
Speaker 1: which means integrating IDLE across all of our major clouds and adoption of private large language models or LLMs. So I'm going to use the acronym LLM instead of always saying large language models. Last week at Open Text World EMEA, we previewed titanium X integration into two LLMs, T5 and CHAT-GBT. At the heart of LLM has to be trusted information management.
Means integrating idle across all of our major clouds and adoption of private large language models or LMS. So let me use the acronym llm's instead of always saying large language models last week at open text World EMEA, we previewed titanium ex integration into to <unk> <unk> five.
And chat GBT at the heart of LLM has to be trusted information management.
Speaker 1: LLMs help enterprises upskill and reduce cost through text generation, information classification, knowledge answering, and dialogue generation. LLMs also help companies find new paths for growth.
<unk> help enterprises, upskill and reduce cost through tax generation information classification knowledge answering and dialogue generation Llm's also help companies find new paths for growth.
Speaker 1: AI is an additional path of value for OpenText, including the other things we've talked about, cloud, climate, trust and security.
AI is an additional path of value for open text, including the other things we've talked about cloud climate Trust and security.
Speaker 1: We are committed to delivering large language models to open text customers in the open text cloud. Trusted, secured, based on their reliable information.
We are committed to delivering large language models to open text customers in the open text cloud trusted secured based on their reliable information open taxes in unique position to help customers unlock the value of their information via Llm's in gain the information advantage we are already.
Speaker 1: Open Taxis is a unique position to help customers unlock the value of their information via LLM and gain the information advantage. We are already working with strategic customers on specific LLM deployment.
<unk> working with strategic customers onto specific.
L. M deployments, we're working with a large legal organization to reduce contract risk, we're working with a financial services firm to assess audit risk and auto company to assess meantime to failure and service strategies and a biotech company.
Speaker 1: We're working with a large legal organization to reduce contract risk.
Speaker 1: We're working with a financial services firm to assess audit risk, an auto company to assess mean time to failure in service strategies, and a biotech company accessing the acceleration of their clinical trial processes, quality, and regulatory submission.
Assessing the acceleration of their clinical trial processes quality and regulatory submissions youll.
Speaker 1: You'll see us deliver dozens of LLM use cases in our private cloud over the coming quarters as a standard product offering.
You will see us deliver dozens of LLM use cases in our private cloud over the coming quarters as a standard product offering.
Speaker 1: There's operational data, there's experience data, and I believe there will be learning data. LLMs will be the third pillar of enterprise information management.
There's operational data there was experienced data and I believe there will be learning data.
<unk> will be the third pillar of enterprise information management.
Speaker 1: Information is not the new oil. This is absolutely the wrong analogy. Information is the new water. And our information management platform is a reservoir feeding operational data, spriance data, and learning data. We are making this a strategic priority, and we will help our customers build their third pillar and their applications on top of it. We'll keep you updated along the way.
Information is not a new oil this is absolutely the wrong analogy information as the new water and our information management platform as a reservoir feeding operational data experience data and learning data.
We are making this a strategic priority and we will help our customers build their third pillar and their applications on top of it.
We'll keep you updated along the way.
Speaker 1: Let me provide an update on the integration of Micro Focus. We promised a rapid and results oriented approach. The integration is ahead of schedule. Let me provide a few key highlights. First on the timeline, let me walk you through our major milestones and achievements. On people and organization, we are done.
Let me provide an update on the integration.
Micro focus we promised a rapid and results oriented approach.
The integration is ahead of schedule, let me provide a few key highlights first on the timeline, let me walk you through our major milestones and achievements on people and organization we are done.
Speaker 1: on a public product roadmap. We are done.
On a public product roadmap we are done.
Speaker 1: on an F24 integrated company plan, go to market, and customer engagement approach, we're done and ready to go.
On an F. 'twenty four integrated company plan go to market and customer gains Patriot approach, we're done and ready to go we will complete our systems integration over the next four to six quarters and it's just fantastic to generic to transition our time and energy to growing the business. So on growth we're committed to work.
Speaker 1: We will complete our system's integrations over the next four to six quarters. And it's just fantastic to transition our time and energy to growing the business.
Speaker 1: So on growth, work for Medicare returning micro focus to growth. And 93 days into owning and operating the business and based on Q3 results, we remain confident with onboarding the business fiscal year, 2.3 billion in revenues in fiscal 24 and returning to organic growth in fiscal 25.
Turning micro focus to growth and 90 to 93 days into owning and operating the business and based on Q3 results. We remain confident with Onboarding. The business. This fiscal year $2 $3 billion in revenues in fiscal 'twenty for that returning to organic growth in fiscal 'twenty five.
Speaker 1: On people, our people are the greatest resource of the company. We're organized for growth, innovation, customer impact, and speed. With empathy and great care, we have completed the vast majority of our 8% workforce reduction.
On people our people are the greatest resource of the company, we're organized for growth innovation customer impact and speed with empathy and great care. We have completed the vast majority of our 8% workforce reduction.
Speaker 1: And now it's our responsibility and privilege to carry the company forward on a new path to growth.
And now it's our responsibility and privilege to carry the company forward on a new path to growth.
Speaker 1: On innovation at Open Text World Amia two weeks ago, we announced the accelerated roadmap of microfocus products, including a full-closed cloud roadmap. For DevOps, Paul DeKon, Private Cloud Options available today. For cybersecurity, fortifying deep-bricked available today.
On innovation that open text World EMEA, two weeks ago, we announced the accelerated roadmap of micro focus products, including a full cloud cloud roadmap for Dev ops public and private cloud options available today for cyber security fortifying deep bricked available to date full security cloud available by 'twenty four dot too.
Speaker 1: Full Security Cloud available by 24.2. Just a few more I wanted to call off item. Public Cloud Smacks, Fennops, and UCMDB available today. All the other private cloud options available between 23.3, 23.4, and 24.2. All the other private cloud options available.
A few more I wanted to call up item public cloud snack spinoffs and UC MTB available today, all the other private cloud options available between $23 $323, four and 'twenty four dot to AMC private cloud available today and for AI and advanced technology, the vertical private cloud will.
Speaker 1: AMC, Private Cloud available today. And for AI and Advanced Technology, the Vertica Private Cloud will be available by 24.1. So we've announced our full product roadmap for MicroFocus product.
Available by 24 one.
So we've announced our full product roadmap for micro focused products.
Speaker 1: On Love, recall, when we close the acquisition, we created a new customer success organization, led by Paul Duggan, who brought together into one organization, support professional services, renewals, and cloud onboarding.
On love recall, when we closed the acquisition, we created a new customer success organization led by Paul Duggan, who are brought together into one organization support professional services renewals and cloud Onboarding.
Speaker 1: We provide a few organizations and enhanced missions that we call OpenTextLove. Land, Operate, Value, Expand.
We provided the organization and enhanced mission that we call open tax love land operate value expand in Q3. The open text enterprise delivered 95% renewal rates for both on and off cloud our expertise and Knowhow will uplift microfocus customers enrolled <unk>.
Speaker 1: In Q3, the OpenText Enterprise delivered 95% renewal rates for both on and off cloud. Our expertise and know-how will uplift micro-focused customers and renewal rates into the 90s.
Rates into the nineties.
Speaker 1: In the first 93 days, the dialogue with customers has radically changed. Innovation, cloud, and value. And we expect NFISCAL 24, having uplifted micro focus for an orate from the low 80s to the mid 90s, and making continuous improvement into the 90s in the coming quarter.
In the first 93 days the dialogue with customers has radically changed to innovation cloud and value and we expect to end fiscal 'twenty four having uplifted microfocus renewal rates from the low eighty's to the mid nineties and making continuous improvement into.
Into the Ninety's in the coming quarters.
Speaker 1: We do will provide more detail, but let me add, we're on track to our 400 million cost reductions and our capital structure plan of allocating 20% of drilling 12-month free cash flows via dividends and returning to a net leverage ratio under 3X. We promised our rapid and results oriented approach.
<unk> will provide more detail, but let me add we are on track to our $400 million cost reductions in our capital structure plan of allocating 20% of trailing 12 months free cash flows via dividend and returning to a net leverage ratio under three X. We promised a rapid and results oriented approach.
Speaker 1: Let me provide my final comments. There's a lot of news that's earning seats and on the demand environment. I reviewed our key internal metrics from pipeline growth, closing cancel rates, and deal-files.
Let me provide my final comments, there's a lot of news this earning season on the demand environment.
I reviewed our key internal metrics from pipeline growth closing cancel rates and deal sizes are Q4 dashboard reads just as strong as our Q3 dashboard. So we are steady as it goes <unk>.
Speaker 1: Our 24 dashboard reads just as strong as our 23 dashboard. So we are steady as it goes.
Speaker 1: Q3 highlights our potential, and we raise our annual F23 targets in revenue and free cash flow. We are ahead of schedule on the integration, and we're moving with speed and purpose.
Q3 highlights our potential and we raised our annual F. 'twenty three targets in revenue and free cash flow we're.
We are ahead of schedule on the integration and we're moving with speed and purpose.
Speaker 1: F-24 is extremely promising as a unified company pursuing a $200 billion tam with a cloud-first approach with our preliminary target near six billion revenues, 36 to 38% adjusted EBITDA, free cash flows of to 900 million while returning microfocus focused to constant at 2.3 billion a revenue.
F. 'twenty four is extremely promising as a unified company pursuing a 200 billion Tam with a cloud first approach with our preliminary target near <unk> 6 billion in revenues, 36% to 38% adjusted EBITDA free cash flows up to $900 million, while returning micro focused focused constant at two.
$3 billion in revenues.
Speaker 1: Where do you need position? The world is multi-cloud. In fact, it is an internet of cloud.
We're in a unique position the world is multi cloud in fact, it is an internet of clouds and information management as the interconnect for the Internet of clouds are.
Speaker 1: And information management is the interconnect for the Internet of Cloud.
Speaker 1: Our products and go-to-market approach have us well positioned for continued growth and profitability, and we now have an additional growth driver with AI, idle, and large language model.
Our products and go to market approach have us well positioned for continued growth and profitability and we now have an additional growth driver with AI.
Idle and large language models my deepest gratitude to our 25000 open text colleagues, who did an outstanding job in Q3, delivering amazing results, while managing many strategic priorities and we remain focused on creating the next generation of value for all our stakeholders.
Speaker 1: My deepest gratitude to our 25,000 Open Text colleagues who did an outstanding job in Q3, delivering amazing results while managing many strategic priorities, and who remain focused on creating the next generation of value for all our stakeholders.
Speaker 1: May the one that brings peace bring peace for all.
Maybe the one that brings peace.
Piece for all and.
Speaker 1: And let me turn the call over to the do-regination, open text, CSL, over to reduce.
Let me turn the call over to Purdue resonating open tech CFO over to Richard.
Speaker 2: Thank you, Mark, and thank you all for joining us today. As Mark highlighted, we delivered outstanding Q3 results above expectations across the board. This was driven by disciplined execution at Open Text, agile integration, and earlier than expected contributions from Micro Focus. In fact, we are just 93 days from our January 31st closing of Micro Focus. We are well advanced and ahead of schedule on our planned operational integration.
Thank you Mark and thank you all for joining us today as Mark highlighted we delivered outstanding Q3 results above expectations across the board.
And by disciplined execution at open text agile integration and earlier than expected contribution from microphone <unk>.
In fact, we have just 93 days from a January 31st closing of microscope, when advanced and ahead of schedule on our planned operational integration.
Speaker 2: We are expecting a strong, Q-Full finish to the fiscal year. And today we are reaffirming our long-term targets in aspiration.
We are expecting a strong Q4 finish to the fiscal year and today, we are reaffirming our long term targets and explanation I.
Speaker 2: I would like to remind all of you that we continue to view our business on an annual basis. This is reflected in the strength and growth of our annual recurring revenues and cloud bookings, which are generally longer ten years than one year, as our customers make long-term decisions with open text. We will continue to drive strong quarterly performance, each quarter on all fronts, and yet they all weave into the annual nature of our business and our long-term aspirations.
I would like to remind all of you that we continue to view our business on an annual basis. This is reflected in the strength and growth of our annual recurring revenues and cloud bookings, which are generally longer tenure than one year as our customers make long term decisions with open text, we will continue to drive strong quarterly performance each quarter and all.
And yet they all weaved into the annual nature of our business and our long term aspirations.
Speaker 2: Speaking to Q3 results, please refer to page 12 of the investor presentation. All references I'm making here are in millions of USD and compared to the same period in the prior fiscal year and are on a reported basis on the side state otherwise.
Speaking to Q3 results. Please refer to page 12 of the Investor presentation. All references I am making here are in millions of USD and compared to the same period in the prior fiscal year and are on a reported basis unless I state otherwise on a year over year basis total revenue was $1, two 4 billion up 41% and 45.
Speaker 2: On a year-over-year basis, total revenue was 1.24 billion up 41% and 45% in constant currency, with micro focus contributing 374 million in the quarter. ARR revenue of 1.01 billion up 38% and 41% in constant currency, 81% of total revenue.
5% in constant currency with micro focus contributing $374 million in the quarter.
Revenue of $1 1 billion up 38% and 41% in constant currency, 81% of total revenue.
Speaker 2: Crown revenue of 435 million up 8% and 10% in constant current.
Cloud revenue of $435 million up 8% and 10% in constant currency.
Speaker 2: Strong renewals, 95% enterprise cloud and and off cloud also 95%
Strong renewals, 95% enterprise cloud and <unk> cloud also 95%.
Speaker 2: Enterprise cloud bookings of 108 million constant year over year. Foreign exchange in Q3 was a revenue headwind of 34 million. Approximately half of this impacted customer support and the remainder having a significant impact on cloud revenue. This was our ninth consecutive quarter of organic growth and constant currency for both cloud and ARR.
<unk> cloud bookings of $108 million constant year over year.
Foreign exchange in Q3, with a revenue headwind of $34 million approximately half of this impacted customer support and the remainder are having a significant impact on cloud revenue.
This was our ninth consecutive quarter of organic growth in constant currency for both cloud and Iraq.
Speaker 2: and moving to other financial metrics. Gap led in from 58 million, down from 75 million, primarily due to higher operating and intersex expenses related to the acquisition of Biker Focus, offset by tax benefits.
And moving to other financial metrics GAAP net income was $58 million down from $75 million, primarily due to higher operating and interest expenses related to the acquisition of micro focus offset by tax benefits gap.
Speaker 2: Cap close margin of 70% with a 69% will led by license and an improved mix of revenue.
GAAP gross margin of 70% with a 69% was led by license and an improved mix of Kevin.
Speaker 2: At just the EBITDA of $365 million or 29.3% of revenue versus $284 million or 32.2% up 28.3% and up 29.1% in constant current.
Adjusted EBITDA of $365 million or 29, 3% of revenue versus 284 million or 32, 2% up 28, 3% and up 49, 1% in constant currency and breaking this down further open text adjusted EBITDA margin was 32% with micro focus which had an adjusted EBITDA margin of $23.
Speaker 2: And breaking this down further, OpenTech's adjusted EBITDA margin was 32% with Micro Focus, which had an adjusted EBITDA margin of 23.1%. Our cost of sales and operating expenses were up $430 million on a GAAP basis, related to higher revenue and expense from the acquisition of Micro Focus and growth-related investments in R&D, sales, and marketing.
1%.
Our cost of sales and operating expenses were up $430 million on a GAAP basis related to higher revenue and expense from the acquisition of micro focus and growth related investments in R&D sales and marketing.
Speaker 2: We generated 337 million in operating cash flows in the quarter. Cash flows in the quarter of 336 million, constant year-over-year, and 25% of revenue. Working capital performance remains strong. Year-over-year, our cash position was impacted by 5.7 billion purchase of micro-focus net of cash. 3.9 billion proceeds from debt and revolts.
We generated $337 million in operating cash flow during the quarter.
Free cash flow in the quarter of $306 million constant year over year, and 25% of revenue working capital performance remained strong.
Our cash position was impacted by $5 7 billion purchase of micro focus net of cash $2 9 billion proceeds from debt and revolver.
Speaker 2: Our DSOs were 45 days compared to 44 days in the prior year. Our Q3 DSO reflects the continued excellent execution of OpenText paired with an agile integration of Micro Focus. We expected to make progress in Micro Focus working capital performance and, in fact, made significant strides two months from close as reflected in our FCS performance. And needless to say, Micro Focus contributed well.
Our Dsos were 45 days compared to 44 days in the prior year. Our Q3 DSO. It reflects the continued excellent execution of open text paired with an agile integration of Microsoft.
We expect it to make progress in micro focus working capital performance and in fact made significant strides to months some clothes as reflected in our FCS performance and.
And needless to say Microfocus contributed well.
Speaker 2: Turning to Enterprise Cloud Bookings are in quarter cloud bookings, they're 108 million constant year over year. And our training 12 month cloud bookings were 511 million up 9% year over year. We remain on plan to deliver 15% plus Enterprise Cloud Bookings for fiscal 2020.
Turning to enterprise bookings are in quarter cloud bookings of $108 million constant year over year, and our trailing 12 month cloud bookings were $511 million up 9% year over year, we remain on plan to deliver 15% plus enterprise cloud bookings for fiscal 'twenty three.
Speaker 2: Turning to the balance sheet, please see page 14 of the investor presentation. We finished March quarter with approximately 1.4 billion in cash and 9.3 billion in debt. The increase in debt was related to the closing of the Microfocus acquisition. On that leverage ratio was 3.3 times for Q3 and just like higher EBITDA, stronger cash flows and low and net debt driven by higher cash balance.
Turning to the balance sheet. Please see page 14 of the Investor presentation. We finished march quarter with approximately $1 4 billion in cash and $9 3 billion in debt the increase in debt related to the closing of the micro focus acquisition. Our net leverage ratio was three three times for Q3 and discuss Hyatt <unk>.
EBITDA from the cash flows and lower net debt driven by higher cash balances.
Speaker 2: As for our debt and D-level plan, after we close the quarter in March, during April , we further reduce the debt by 175 million as part of our minimum debt repayment commitment. And looking ahead, you may see net leverage ratios slightly fluctuate quarter to quarter based on investments and the impact of special charges on cash flows. We expect to exit fiscal 24 at 3.3 times or lower, and our on track to be less than three times net leverage within eight full.
As for our debt and Delever plan. After we closed the quarter in March during April we further reduced the debt by $175 million as part of our minimum debt repayment commitment and.
Looking ahead, you may see net leverage ratio slightly fluctuate quarter to quarter based on our investments and the impact of special charges and cash flows we expect to exit fiscal 'twenty four at two two times or lower and are on track to be less than three times net leverage within eight full quarters.
Speaker 2: With respect to the banking situation today, I would like to share the following. At Open Text, we were unaffected by Credit Suisse, First Republic, Signature or Silicon Valley Bank. Our banking footprint is centered on the GSIB. It's a globally systemically important bank with strong capital ratios and solid balance.
With respect to the banking situation today I would like to share. The following at open text. We are unaffected by credit Suisse first Republic signature of Silicon Valley Bank a.
Our banking footprint is centered on the DSV globally systemically important bank with strong capital ratios and solid balance sheets.
Speaker 2: Our investments are in money market funds that hold short-term government debt and to play a raiding. We have minimal exposure to US Legion and things.
Investments are in money market funds that whole shutdown government debt and AAA rated we have minimal exposure to U S regional banks.
Speaker 2: So now let me speak about the continuance of our dividend program. We intend to grow our dividend as our FCF grows. The Open Text Bold approved a cash dividend of $0.24299 per share with a record date of June 2nd and a payment date of June 23rd.
So now let me speak about the continuance of our dividend program, we intend to grow our dividend as our FCS Gov.
<unk> Board approved a cash dividend of <unk> 24 to nine <unk> per share with a record date of June 2nd and a payment date of June 20 <unk>.
Turning to outlook targets and aspirations, we plan our business in constant currency and present, our business in constant currency for a quality factors total growth strategy and medium term aspiration.
Speaker 2: Turning to outlook, targets and aspirations, we plan our business in constant currency and present our business in constant currency for our quarterly factors, total growth strategy and medium-term aspirations.
Speaker 2: Starting with Q4 fiscal 23 quarterly factors and constant currency on page 17 of our investor presentation. We expect revenue of 1.46 to 1.51 billion with open text being constant a better.
Starting with Q4 fiscal 'twenty three quarterly factors in constant currency on page 17 of our investor presentation.
We expect revenue of 146% to 151 billion with open texting constant debate.
Speaker 2: ARR of 1.12 billion to 1.16 billion with open text constant of error.
<unk> of $1 2 billion to $1 $1 6 billion with open text constant debate at.
Speaker 2: and exchange rates being forecasted currently, foreign exchange would be a headwind of 10 to 20 million.
At exchange rates being forecasted currently part of mix change will be a headwind of $10 million to $20 million adjusted EBITDA on a year over year basis, the margin percentage down 250 to 450 basis points again, continuing to reflect the macro focused integration costs.
Speaker 2: Adjust the libidol on a Euro-Vial basis, the margin percentage down, 0.50 to 4.50 basis points, again continuing to reflect the micro focus integration cost.
Speaker 2: And we expect effects to be an adversity with the sad wind of less contentment.
And we expect FX to be an adjusted EBITDA headwind of less than $10 million as mentioned earlier, we view our business on an annual basis, a solid Q3 and year to date performance along with our visibility and confidence into Q4, we're looking for a strong finish to the fiscal year setting an excellent platform for fiscal 'twenty, four and our long term.
Speaker 2: As mentioned earlier, we view our business on an annual basis. Our solid Q3 and your today's performance, along with our visibility and confidence in the Q4, we're looking for a strong finish to the fiscal year, setting an excellent platform for fiscal 24 and our long-term expertise.
Conditions.
Speaker 2: A fiscal 23 total growth strategy in constant currencies provided on pay 18 of the investor presentation. You will see we're increasing all revenue targets and a price cloud booking target from changed at 15%.
Our fiscal <unk> total growth strategy and constant currencies provided on page 18 of the Investor presentation, you will see that increasing all revenue targets enterprise cloud bookings target unchanged at 15% plus.
Speaker 2: Total revenue growth up 32% ARR up 27% to 29% Cloud revenues up 12% to 14% Customer support revenue up 46% to 48% At current exchange rates, effects would be a headwind of approximately 1.30 to 1.40 million for the full year
Total revenue growth up 30% to 32%.
There are up 27% to 29% cloud revenues up 12% to 14% customer support revenue up 46% to 48% at current exchange rates FX would be a headwind of approximately $130 million to $140 million for the full year.
Speaker 2: Our fiscal 23 target model has noted on page 19 of the investor presentation. It remains largely unchanged, except for a 20 million decrease in interest expense to a range of 330 to 350 million. After luminary F24 financial targets select 26 medium to mass perations, also remain unchanged. These are included in our investor materials notably on pages 4, 16, 20 and 21.
Our fiscal 'twenty target model as noted on page 19 of the Investor presentation. It remains largely unchanged except for the $20 million decrease in interest expense to a range of $330 million to $350 million opportunity.
Our preliminary F 'twenty four financial targets in F. 'twenty six medium term aspiration also remain unchanged. These are included in our investor materials, notably on pages 40, <unk> 2020 one.
Speaker 2: And today we're providing additional details on our financial integration framework. I would point you to a new slide on page 21 of our Investor presentation. This slide illustrates the timing and financial impact of cost savings, special charges, and integration expense or a adjusted EBITDA and free cash flow targets.
And today with providing additional details on our financial integration framework I would point you to a new slide on page 21 of our Investor presentation. This slide illustrates the timing and financial impact of cost savings special charges and integration expense.
<unk> EBITDA and free cash flow targets.
Speaker 2: Let me update you on our $400 million in annual cost savings. Approximately $240 million of the savings comes from a workforce reduction that Mark previously commented on. The savings should begin to be realized in fiscal 24.
Let me update you on our 400 million in annual cost savings.
Approximately $240 million of the savings come from a workforce reduction that Mark previously commented on the savings should begin to be realized in fiscal 'twenty four.
Speaker 2: 140 million in annualized savings from vendor consolidation and strategic improvements will span across fiscal 24 and into 25. The balance of the savings will come from elimination of redundant facilities, which would be substantially complete by the middle of fiscal 24.
$140 million in annualized savings from vendor consolidation and strategic improvements will span across fiscal 'twenty four and into 'twenty five the balance of the savings will come from elimination of redundant facilities, which will be substantially complete by the middle of fiscal 'twenty four.
Speaker 2: We have previously highlighted 80 million of anticipated integration spend to support systems alignment as well as other integration expenses. We expect integration expense to span into the early portion of fiscal 2020.
We have previously highlighted $80 million of anticipated integration spend to support systems alignment as well as other integration expenses, we expect integration of things expense to span into the early portion of fiscal 'twenty five.
Speaker 2: We have highlighted 380 to 420 million in special charges that will continue to impact our near term FCS. Off this amount, approximately 200 million will be related to seven, to restructuring advisory and other charges, spanning through the end of fiscal 24, and approximately 200 million will be for global entity simplification, tax structure initiatives, and technology footprint optimization, primarily spanning most of fiscal 24 and 25.
Highlighted $380 million to $420 million in special charges that will continue to impact our near term FCS off this amount approximately $200 million will be related to severance restructuring advisory and other charges spanning through the end of fiscal 'twenty, four and approximately $200 million will be a global entity.
Suffocation tax structure initiatives and technology footprint optimization, primarily spanning most of fiscal 'twenty four and 'twenty five.
Speaker 2: All of these charges, investments, expenses and savings estimates are fully reflected in our targets and expertise.
All of these charges investments expenses and savings estimates are fully reflected in our targets and aspirations.
Speaker 2: Turning to fiscal 23 free cash flow, we are raising our fiscal 23 FCS range to 580 to 620 million from our prior range of 500 to 600 million. This upward division reflects continued strong performance and agile integration of microservices.
Turning to fiscal 'twenty three free cash flow, we are raising our fiscal two minutes, the Fcs range to $580 million to $620 million from our prior range of $500 million to $600 million. This upward revision reflects continued strong performance and agile integration of micro focus in.
Speaker 2: In summary, we are very pleased with outstanding Q3 performance. Having completed our initial integration of like a focus operation in the head of schedule, we remain on track to meeting our near term and long term operating goals. We fully expect the momentum of open texture to continue into Q4 for a strong finish 12 fiscal year.
In summary, we are very pleased with that outstanding.
Outstanding Q3 performance, having completed our initial integration of micro focus operations ahead of schedule. We remain on track to meeting our near term and long term operating goals, we fully expect the momentum of <unk>.
Open text to continue into Q4 for a strong finish to our fiscal year.
Speaker 2: On behalf of OpenText, I would like to thank our shareholders, loyal customers, partners, and team members as we embark on the exciting journey ahead.
On behalf of open text I would like to thank our shareholders loyal customers partners and team members as they embark on exciting journey ahead.
I will now request the operator to open the call for your questions operator.
Speaker 3: Thank you. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on their touchtone telephone to join the question queue. You will hear a tone acknowledging your request. If you are using a speaker phone, please ensure you lift the handset before pressing and.
We will now begin the question and answer session anyone who wishes to ask a question May press star and one on their touchtone telephone to join the question queue, you will hear a tone acknowledging your request.
Using a speaker phone. Please ensure you lift the handset before pressing any keys, if you will.
Speaker 3: If you wish to remove yourself from the question queue, you may press star, then two. Anyone who has a question may press star, then one at this time.
Wish to remove yourself from the question queue. You May Press Star then to anyone who has a question May Press Star then one at this time.
Our first question comes from Raimo <unk> of Barclays. Please go ahead.
Thank you and congrats for a first.
Kind of a quarter of the combined entity it.
It seems like you'd look at BD role here.
That was all from my first question Mark like so.
Obviously micro <unk> had long.
During the year of restructuring integrating businesses et cetera, like how it has been the hours.
Has been the experience so far in terms of what you're seeing there in terms of what your diligence.
Diligent short you and what Youre seeing in real life, now that you've kind of own the asset and are working with the asset.
Any.
Any comment there and then I had one follow up.
Speaker 1: Sure thing, Raymo, thanks for the question and thanks for joining us today. You know, as I noted previously, we've always been very impressed with the products to people.
Sure. Thanks, Raimo, Thanks for the question and thanks for joining us today.
As I noted.
Previously, we've always been very impressed with the products.
The people and the customers.
And.
You can do all the research and due diligence and observations you want.
But then once you own and operate.
You then get the next level of insights and it's just as we had planned into diligence we are extremely impressed with.
With the people the products and the customers.
Speaker 1: and we're leading with innovation across the board. So enterprise security never more relevant.
And we're leading with innovation.
Across the board, so enterprise security never more relevant.
Speaker 1: IDLE, just a fantastic product, highly relevant today with AI, especially combined with large language models. The movement of ITOM into digital IT, into the cloud.
Idle just a fantastic product highly relevant today with AI.
Especially combined with large language models the movement of.
Digital IP items.
Hi, Tom and to digital it.
To the cloud.
Speaker 1: So, Rayma, I would just start with, it's as we had theorized and great to see in practice just the strength of the people, the products and the customers, and how receptive they are to a broader platform of innovation and speed of innovation.
So raimo I would just start with it is as we had.
Theorized and great to see in practice.
Just the strength of the people the products.
And the customers and how receptive they are.
Two broader.
Broader platform of innovation and speed of innovation.
Speaker 4: And then the follow up is actually, and you started mentioning it already with idle and a long language model. If you think about now that you're on idle and fear you have the perfect combination because you have the content management size and then you have the search.
And then the follow up at <unk>, and you started mentioning it already with Idaho and lock language models, if you'd think about.
Now that you're on the island here you have the perfect combination because you have the content management side and then you have the search side with hydro can you speak a little bit towards the cross sell opportunity back into the open text space and then like all good part of it like a little bit like how how does that.
Speaker 4: side with IRL. Can you speak a little bit towards the cross-cell opportunity back into the open-text space?
Speaker 4: And then also as part of that, like a little bit like, how does that kind of change with the last language when it was coming in? It looks like it's broadening it even further. Thank you.
Kind of changed with Las Vegas models coming in.
It's broadening it even further thank you.
Speaker 1: Yeah, absolutely. And you hit on a lot of very important topics there.
Yes, absolutely and you hit on a lot of very important topics there.
Speaker 1: We're the market leader in content management and we've helped.
We're the market leader in content management, and we've helped 10000 organizations over a decade, two decades to be able to organize our enterprise information management and we kept that we've added lots of capabilities to time, we've we've helped customers take the information.
Speaker 1: 10,000 organizations over a decade, two decades.
Speaker 1: to be able to organize or enterprise information management. And we kept out, you know, we've added lots of capabilities to time. We've helped customers take the information exposed on the web. We've helped customers add search. We've helped customers do archive and records management. We've helped, uh...
Exposure on the web we've helped customers AD search.
Customers to archive and records management, we've helped.
Speaker 1: customers do legal tech on top of that. Now we're gonna help them go from not just their operational data and their experience data, but a third pillar, which is learning data. We are in such a great position to help customers with large language models. And I know chat GBT has a lot of attention, right? And GBT is sending for generative pre-trained transformers.
Customers do legal tech on top of that.
Now, we're going to help them.
Our Gulf of not just their operational data and their experience data that a third pillar.
Which is learning data we are in such a great position to help.
Customers with large language models and I know chat GBT has a lot of attention right in GBT is doing for generative pre trained transformers.
Speaker 1: But there are many other LLMs out out there like T5. So our strategy is going to be to set up next door transactional operational platform, an LLM platform for each of our private cloud cuffs.
But there are many other llm's out out there like <unk> five so our strategy is going to be to set up next door transactional operational platform.
L. A LLM platform for each of our private cloud customers.
Speaker 1: and then have a connector between the two. And what IDLE does is help take some data and just, video, voice, imaging, and turn it into metadata. So it's another way to get data to be useful.
And then have a connector between the two and what Idol does it help take some data and just internal video voice imaging.
And turn it into metadata. So it's another way to get data to be useful.
Speaker 1: And then the private cloud LLM will sit next to every single private cloud customer. As I noted, we're already working deeply with a handful of customers. One in legal tech who has millions of contracts looking for risk. Financial services firm is going to augment their internal audit plan.
And then the private cloud LLM will sit next to every single private cloud customer as I noted, we're already working deeply with a handful.
Customers one in legal Tech, who has millions of contracts looking for risk financial services firm is going to augment their internal audit plans an auto company.
Speaker 1: an auto company looking to create the next generation of service agreements. And a very interesting one, a biotech company who actually thinks they're going to transform their clinical trials through a large language model.
Looking to create the next generation of service agreements and a very interesting one a biotech company, who actually thinks they're going to transform their clinical trials through our large language model. So this is a this is an additive and it could be top of stack growth driver for us not just off cloud to cloud not just moving to SaaS or climate.
Speaker 1: So this is an additive and could be top of stack growth driver for us, not just off cloud to cloud, not just moving to SaaS or climate.
Our trust.
Speaker 1: I'm spending a lot of time on it and because it could be our top growth driver in the coming quarters. Thank you.
I'm spending a lot of time on it.
And because it could be our top growth driver in the coming quarters.
Yes, I'm pretty excited thank you.
Yeah. Thank you Dana.
Speaker 3: Our next question comes from Daniel Cham of TD Cowan. Please go ahead.
Our next question comes from Daniel Chan of TD Cowen. Please go ahead.
Okay.
Speaker 1: Thanks, congrats on the first quarter, Mark. Just noticing that there's a big uptake in your customer support and license revenue growth expectations. Just wondering if you could shed some color on that, whether it's from some of the early changes you've made to microfocus's renewals business.
Thanks.
That's on the first quarter Mark.
Just noticing that there's a big uptick in your customer support and license revenue growth expectations. Just wondering if you could shed some color on that whether it's from some of the early changes you've made to micro focus is renewals business.
Okay.
Yes.
Speaker 1: Do you want to take the question? Yes, sure. I can take it and fact it on Q-Mark. But then, yes, it simply deflects the growth coming from my co-focus.
<unk> do you want to take the questions, Yes, sure Ireland can take and in fact on Kumar Dan Yes. It simply reflects the growth coming from micro focus.
Speaker 2: And when you take some of the measures we've taken, yes, two months into it, as Mark mentioned, Paul Durgan's organization has done an amazing job bringing their customer support as we talked about in the last few months. And certainly continued measures for OpenTech side on the customer support, whether it's APA annual price adjustment, and you saw our renewal rate is 95% on both sides, enterprise cloud and off cloud. So yes, you're definitely seeing all those measures coming to play.
And when you say some of the measures we've taken yes two months into it.
As Mark mentioned pause that EMS organization has done an amazing job, bringing that customer support as we talked about in the in the last few months and certainly continued measured so open tech side on the customer support whether it's AP annual price adjustments and you saw our renewal rate is 95% on both sides enterprise.
Cloud and off cloud, so, yes, youre definitely seeing all those measures come into play yes. Thanks. Thank you Madhu.
Speaker 1: Yeah, yeah, thank you. The so it's partly given the integration with microfocus, open text, core open text.
So it's partly given the integration with micro focus open text core open text performing extremely well off and on cloud at 95% renewal rate and then we're going to make steady progress.
Speaker 1: performing extremely well off an on-cloud at 95% renewal rate.
Speaker 1: And Dan, we're going to make steady progress on Microsoft, Microsoft, Microsoft, Micro Focus renewals from, you know, we started in the low 80s. We'll finish this fiscal year or this quarter mid 80s. And we'll just look to make continuous improvement until we get into the into the low 90s. We can already see the confidence building with a stronger roadmap.
On Microsoft Micro focus off Microfocus renewals, yes.
From we started low eighty's will finish this fiscal year or this quarter mid eighties, and we'll just look to make continuous improvement.
Until we get into the into the low Ninety's, we can already see the confidence building with a stronger roadmap.
Speaker 1: new innovation, private cloud options, the confidence is raising. We had a fantastic week in Europe and just very deep engagement. And the stories over and over again, in-person meetings with customers saying,
New innovation private cloud options the confidence is raising we we had a fantastic week in Europe .
Very deep engagement and the stories over and over again in person meetings with customers, saying.
Speaker 1: You've earned the right for us to stay with you and give you a really strong chance. So that's...
You've earned the right for us to stay with you and give you a really strong chance so thats what youre seeing.
Speaker 5: You also talked earlier about you getting some microfocus wins in the quarter, just wondering whether these deals were in the pipeline when you acquired microfoters. So whether these are new deals that entered the pipeline over the last 90 days and any update on the cross-el pipeline would be great as well. Thank you.
You also talked earlier about.
You're getting some micro focus wins in the quarter just wondering whether these deals were in the pipeline. When you acquired micro focus or whether these are new deals that entered the pipeline over the last 90 days and any update on the cross sell pipeline would be great as well. Thank you.
Speaker 1: Yeah, so the deals we close are more primarily in the pipeline. Of course, we've only owned the company for roughly 60 days. But the combined entity gave them a lot of confidence.
Yeah. So.
The deals we closed more primarily in the pipeline of course, we will we only owned the company for roughly 60 days.
The combined entity.
Gave them a lot of confidence.
Speaker 1: as you can see in the results. We've built new pipeline for sure.
As you can see in the results, we've built new pipeline for sure.
Speaker 1: And the places that add strength inside a Q3, certainly our content services business, our business network buying.
And the places that added strength inside of Q3, certainly our content services business.
Our business network volumes were up but.
Speaker 1: But the enterprise security business is going to be a rising star for us.
But the enterprise security business.
Is going to be a rising star for us.
Speaker 1: And also moving workloads off the mainframe to our cloud services. We're in a better position to do that than micro-focus on their own. And the growing needs for developers and the continued transition to multi-cloud. So we'll spend more time on this in the coming quarters. But those are the areas we're certainly expecting to see very strong demand and drive the business back to constant and then to growth.
And also moving workloads off the mainframe to our cloud services, we're in a better position.
To do that than micro focus on their own and the growing needs for developers and the continued transition to.
Multi cloud.
So it will spend more time on this.
In the coming quarters.
But those are the areas, we're certainly expecting to see very strong demand in.
And drive the business back to constant and then to growth.
Speaker 3: Our next question comes from Steve Enders of Citi. Please go ahead.
Our next question comes from Steve Enders of Citi. Please go ahead.
Speaker 6: Hi, this is George on for Steve. I'm just going to echo my congratulations on a really strong start to this new journey. First question on Titanium X. I think you threw out a 2.5 billion investment number. Yeah. Obviously a big number, but a big opportunity as well. Just to help us understand how much, if any of that is kind of incremental spend, is there any kind of repurposing of existing resources towards this and just how we should think about that?
Hi, This is George on for Steve just kind of Echo my congratulations on a really strong start to this new journey.
First question on titanium X I think you threw out a $2 $5 billion investment number obviously, a big number, but a big opportunity as well.
Just could you help us understand how much if any of that as kind of incremental spend is there any kind of repurposing of existing resources towards this end and just how we should think about that.
Yes for sure.
Speaker 1: Yeah, for sure. So if we look at fiscal 24 and 25, we're looking at approximately 2.5 billion USD across engineering and cloud operations, right? We own and operate our own private cloud, our own business network. So that's an all in investment. And looking at the combined company, as I said earlier, it wasn't so much a spend issue, but a prioritization.
So if we look at fiscal 'twenty, four and 'twenty five.
We're looking at approximately $2 5 billion USD across engineering.
And in cloud operations right.
We own and operate our own private cloud our own business network.
So that's an OLED investment and looking at the combined company.
I said earlier.
It wasn't so much a spend issue, but a prioritization.
Speaker 1: So we have significantly reprioritized what we're doing in our first 93 days, as you can see from Enterprise World and our road maps that we've published. So it's mainly a reprioritization, but it's also an increase in people. So as part of our workforce for structuring, we're also increasing our people, our headcount in Canada, India, film.
So we have significantly re prioritize what we're doing in our first.
93 days as you can see from Aw.
Enterprise World.
And are the roadmap that we've published so it's mainly a re prioritization, but it's also an increase in people. So that part of our workforce restructuring. We're also increasing our our people are our head count in Canada.
India, Philippines, so the.
Speaker 1: So the repriorit- the combined spend we're keeping high. We've reprioritized. We're also adding more people because you're being more leveraged in how we spend those dollars.
<unk> priority.
The combined spend we're keeping high we've re prioritized, we're also adding more people because youre being more.
More leveraged in how we spend those spend those dollars.
Speaker 6: Got it really helpful color and then just one follow up. You know, most metrics came in, came in the think well ahead of where we were at, but just wanted to dig in on with the cloud bookings in the quarter. Obviously a metric that you have quite a bit of fluctuation from quarter to quarter, but just if you could help us understand what you're seeing there and how we should think about that.
Got it really helpful color and then just one follow up.
Most metrics came in came in I think well ahead of where we were at but just wanted to dig in on with the.
Cloud bookings in the quarter, obviously, a metric for sure have quite a bit of fluctuate from quarter to quarter, but just if you could help us understand what youre seeing there and how we should think about that going forward.
Speaker 1: Absolutely. So, again, as noted, we're up 9% on a trailing 12-month basis, and we're holding to our forecast of 15% plus growth for the year, but we're a constant in Q3. And that's why I emphasize we're an annual business.
Absolutely. So again as noted were up 9% on a trailing 12 month basis.
And we're holding to our forecast of 15% plus growth for the year, but we are a constant in Q3.
And that's why when we do an eye.
Emphasize we're an annual business.
Speaker 1: And look, I can't say that any clearer than the following. We're going to make the best long term decisions for the business.
And look I can't say it any clearer than the following we're going to make the best long term decisions for the business.
Speaker 1: And it's better for open text, you know, not to work under the pressure of, you know, a last week or two of a quarter. So it's part of the reasons why we view our business annually.
And it's better for open text not to work under the pressure of the last week or two over quarter. So <unk> <unk>.
Part of the.
Part of the reasons, why we view our business annually.
Speaker 1: So we're gonna get the best terms, work with the customers the way they need to and use an annual boundary, not a quarterly boundary. So we're on target for 15% plus cloud bookings grow, even though we are constant with within the quarter. And we got great confidence in Q4 to deliver to that 15% plus. Great, thanks.
We're going to get the best terms work with the customers the way they need to then use an annual boundary not a quarterly boundary. So we're on target for a 15% plus cloud bookings growth, even though were constant with.
Within within the.
Quarter, and we've got great confidence in Q4 to deliver to that 15% plus.
Great. Thanks, again and congratulations.
Thanks George.
Speaker 3: Our next question comes from Thanos Mostopolis of VMO Capital Markets. Please go ahead.
Our next question comes from Donald MS Jobless of BMO capital markets. Please go ahead.
Speaker 6: Hi, good afternoon. Mark, my current focus obviously performed better than you've got it for last quarter. Just to clarify, was that primarily conservatism under part of prior guidance, or is there anything more specific that you would point to?
Hi, good afternoon.
Mark Micro focus obviously performed sure.
If it's better than your target for last quarter.
To clarify was that.
Primarily conservatism on your part with prior guidance or is there anything more specific that you would point to.
Okay.
<unk>.
Speaker 1: I'll point to a handful of things, Thanos. One is...
I would point to a handful of things Thanos.
One is our confidence.
Speaker 1: As I said in my notes, it's a new day. Customers renew and make purchasing decisions not just for the features you have today, you are bringing them in the coming years.
As I said.
In my notes, it's a new day.
Customers renew and make purchasing decisions not just for the features you have today, but where you, but where you are bringing them in the coming years.
Speaker 1: And it's why we accelerated, who did all of pre-planning and accelerated, getting our roadmap and intentionally designed to get onto the road in Europe and elsewhere to present in person that roadmap. So I'd say number one, confidence.
And.
It's why we accelerate it who did all our preplanning and accelerated getting a roadmap and intentionally designed to get onto the road in Europe and elsewhere to present in person that roadmap. So I'd say number one comp.
Confidence.
Speaker 1: and excitement from our 25,000 employees.
And excitement.
From our 25.
1000 employees look we're also modeling right its only its just two months.
Speaker 1: Look, we're also modeling, right? It's only, it's just two months, right? And we moved them from two six month cycles to our 490 day cycles. So it's not conservatism. I will start with confidence.
And we move them from two six months cycle, two or 490 day cycles.
It's not conservativism.
<unk>.
I will start with confidence and we're also.
Speaker 1: And we're also getting aligned to our 90-day periods, which we've now done.
Getting aligned to our 90 day periods, which we've now done.
Speaker 6: Great. And then, I guess I'm going to give, right then outside, I'd add to maybe one third, which is executed really well.
Great.
And then Dan.
And I guess I'll start.
I would add a third which is execute it really well.
Yes.
Speaker 6: I'm sorry, guys, down. Great. Yeah, and then on 13, you know, that you've launched it and you have public cloud for, you know, broader suite. Can you talk about how public cloud adoption is trending as you look at the pipeline? And it reminds us of the already cannibalization dynamic where if a customer's going for public instead of private,
I'm, sorry, I got down okay great.
And then on titanium.
We launched it in <unk> public cloud for Rob.
Roger you broader suites.
Can you talk about how public.
Public cloud adoption is trending as you look at the pipeline and remind US is there any cannibalization dynamic where if a customer is looking for public instead of privates.
Speaker 6: You get less revenue because you're losing any infrastructure hosting fees or should we think of it more as being additive revenue that you might not have captured otherwise. Give it enough.
You get less revenue because youre, who is in the infrastructure.
Pes or should we think are interesting additive revenue captured otherwise.
And a sport in public cloud.
Speaker 1: Yeah, for sure. So, the titanium delivered or cloud additions 23.2 is a really important milestone for the company. ECM now has a full public SaaS option. So we can deliver content management, off-cloud, public SaaS cloud, private cloud, API cloud.
Yeah for sure so.
Yes, titanium deliver to our cloud editions 23 that is a really important milestone for the company ECM now has a full public SaaS option.
So we can deliver content management off cloud.
While the SaaS cloud private cloud API cloud.
Speaker 1: And it's very clear that our features will outpace in public staff than anywhere else. But we also have now a very strong portfolio of public staff.
And.
It's very clear that our features will outpace public SaaS that anywhere else.
But we also have now a very.
Our strong portfolio of public SaaS.
Speaker 1: Mean FMB completely public cloud, resist network completely pu cloud, ECM now completely public cloud.
SMB completely public cloud business network completely public cloud ECM now completely public cloud.
Speaker 1: We did a big update to service management in the public cloud called Smacks from Micro Focus.
We did a big update to service management in the public cloud called snacks from micro focus we did a big update.
Speaker 1: We did a big update at the end of April for value edge or for developer technologies in April . Fortify on demand, available as a public staff option. And this small company, but I think a larger contributor over time called Deepbrick.
At the end of April for value edge or.
Sort of develop our technologies.
And April fortify on demand available as a public SaaS option.
And as a small company, but I think a larger contributor over time part D bricked.
Speaker 1: that's part of the portfolio. So, Paul the staff is going to become more and more part of our narrative. It is a growth driver for sure. It's going to contribute to our 15% plus cloud bookings growth. I do not see a cannibalizing revenue. I see us going after new...
That's part of the portfolio. So public SaaS is going to become more and more part of our narrative it as a growth driver for sure.
It's going to contribute to a 15% plus cloud cloud bookings growth I do not see it cannibalizing revenue.
Ics going after new workloads.
Speaker 1: I see customers when transitioning to that new workloads, paying the same and or expanding capacity and increasing their consumption with us. Now, we've never been interested in revenue substitution. We've always been interested in adding revenues, whether it be API or private. I think the same dynamic is gonna hold for public staff as well.
IC customers when transitioning to that new workloads are paying.
Paying the same <unk> expanding capacity.
And increasing their consumption with us.
We've never been interested in revenue substitution right. We've always been interested in adding revenues, whether it be API or private and I think the same dynamic is going to hold for public SaaS as well.
Thanks, Mark Congrats on the topline.
Okay. Thank you Daniel.
Speaker 3: Our next question comes from Paul Treiber of RBC Capital Markets. Please go ahead.
Our next question comes from Paul Treiber of RBC capital markets. Please go ahead.
Speaker 7: Oh, thanks so much and good afternoon. Just a follow up question on the strength that you saw in micro focus.
Alright, thanks, very much and good afternoon, just a follow up question on the strength that you saw him in micro focus.
Speaker 8: The, you know, there's a five-month period between the announcement of the acquisition and the close. Was there a two degree, a catch-up of deals, that license deals that may have been sitting in the pipeline after the acquisition was announced? And, you know, we're waiting, we're waiting to close and they needed that confidence of the acquisition close to...
There was a five month period between the announcement of the acquisition and the close was there to a degree a catch up of deals that license deals that may have been sitting in the pipeline. After the acquisition was announced and.
Andy just waiting waiting to close and they needed that.
Confidence.
Because you can close too.
Speaker 8: to complete those deals. And, you know, if so, do you see that that catch up continuing into into future quarters? Or is it more just a one quarter from now?
To complete those those deals and if so do you see that catch up continuing into into future quarters or is it more just a one quarter phenomenon.
Yes, Paul Thanks for the question.
Speaker 1: Yeah, Paul, thanks for the question. Now I wouldn't use the terminology catch up. There's no doubt it was confidence. It was.
No I wouldn't use the terminology.
Catch up.
<unk>.
There's no doubt.
Confidence.
It was execution.
Speaker 1: A little bit of modeling. We only had the business for 60 days.
So a bit of modeling, we only had the business for 60 days and we're aligning to our.
Speaker 1: And we're aligning to our quarters.
Our quarters.
Speaker 1: Um, you know, they, um, April used to be a boundary for microfocus. No longer is. It was a end of March. July used to be a boundary.
Yes.
April used to be a boundary for micro focused on longer is it was end of March July used to be a boundary now it's end of June .
Speaker 1: And even those memories, those boundaries are becoming distant memories for the combined workforce.
And even those memories those boundaries are becoming distant memories.
For the combined workforce so.
Speaker 1: So I'm sure there was a little bit of hesitation in there, but nothing significant that I would call out. Confidence.
I'm sure there was a little bit of hesitation in there, but nothing significant.
That I would I would call out confidence.
Speaker 1: It's execution, stronger roadmap, and a very energized work.
If execution stronger roadmap.
And in a very energized workforce.
Speaker 8: That's helpful. And from a forward looking point of view in terms of your pipeline and what you're seeing upstream, how would you say, you mentioned your dashboard for Q4 is very strong. I mean, overall, when you look maybe more broadly in terms of your pipeline, how do you see it building here, particularly in light of the macro environment, in a certain scene macro, is that having an impact, if so, how is it?
That's helpful.
From a forward looking point of view in terms of your pipeline and.
What you're seeing upstream how would you say you had mentioned your dashboard for Q4 is very strong and overall more broadly in terms of your pipeline. How do you see it building here, particularly in light of the macro environment and the uncertainty in macro is that having an impact.
If so how is it how is it impacting us.
Speaker 1: Yeah, I mean, more every company is my phraseology here is observing the macro.
Yes.
Every company is my phraseology here is observing the macro.
Speaker 1: every company is doing that. When we look at our dashboard and we run well operationally, we have a single global instance of Salesforce that we use.
Every company is doing that when we look at our dashboard and we will run well operationally we have a single global instance of sales force that we use.
Speaker 1: So, and lots of history, which by the way, we now pump into Vertica and other tools that we have for correlation analysis. But when we look at our dashboard of new pipe regenerate,
So and lots of history.
Which by the way, we know pump into a vertical and other tools that we have.
For a correlation analysis, but when we look at our dashboard.
New pipe we generate.
Speaker 1: kind of our field metrics and customer dynamics, it reads the same here in early Q4 as it did in early Q3. So it's down.
Kind of our deal metrics and customer dynamics. It reads the same here in early Q4.
As it did in early Q3.
So it's steady as it goes.
Speaker 1: Now, what are the dynamics for us is going to be adding more stats. Our stats are slowly just stood up significantly with color addition 23.2 and some acceleration within ITAM, acceleration within application automation and developer automation.
Now.
One of the Diamond dynamics for us is going to be adding more SaaS, our SaaS portfolio.
Stood up significantly where competition is $23 two.
And some acceleration within item.
Acceleration within <unk>.
Application automation and develop our automation.
Speaker 1: So I think a dynamic for us is becoming experts at building a SaaS pipeline. And that's a nice new motion for us and our customers.
I think the dynamic for us is becoming experts at building SaaS pipeline.
And that's a nice new motion for us and.
And our customers and larger language models, our wheel if I can get that in here and talk a little more about it.
Speaker 1: And let large language models are real. If I can maybe get that in here and talk a little more about it. This is a very real thing. Generative pre-trained transformer engines have been out there for a while.
This is a very real thing.
Generative pre trained.
Transformer engines have been out there for a while and.
Speaker 1: And T5 is a great open source version. There's a few other versions. Of course, Chatchy-P-T is captured. Everybody's imagination. I truly feel that this is...
<unk> five is a great open source version there is a few other versions of course chat GPT has captured everybody's imagination I truly feel that this is.
Speaker 1: than a very large item that we're going to lean all in and stand up a private platform next to every private cloud customer, or even if you're using our public staff, we'll set up a private instance for you for large language models. And this too will be a driver for growth for us. And I think that'll be a dynamic for us as well in our pipeline.
Ben.
A very large item that we're going to lean all in and stand up a private platform next to every private cloud customer.
But even if they're using our public SaaS will set up a private instance for you.
We're a large language models and this too will be a driver for growth for us and I think that'll be a dynamic for us as well in our pipeline.
Okay, great to hear I'll pass on.
Thank you Paul.
Speaker 3: Our next question comes from Stephanie Price of CIBC. Please go ahead.
Our next question comes from Stephanie price of CIBC. Please go ahead.
Hi, good evening and congrats on the quarter.
Speaker 9: So I'm going to zoom in on the fiscal 24 target model here. It's unchanged despite the strong Q3. Just curious if you could talk a little bit about where you might have based on some conservatism in fiscal 24 and what kinds of puts and takes are as you look at the fiscal 24 target model.
Yes.
And on the fiscal 'twenty four target model here, it's unchanged. Despite the strong Q3 just curious.
Curious if you could talk a little bit about where you might have taken us with Macquarie participant in fiscal 'twenty, four and what kind of the puts and takes are.
Look at fiscal 'twenty four targets.
Speaker 2: Yes, Stephanie's mother here. I'll take it on, and Hannah, which Mark, thanks for the questions. And look, we are leaving it unchanged for all the factors and even the prior question that we asked. And our focus remains very strong on Q4. And we, Marlonne, I have shared with you the sentiment relating to Q4. And we'll be observing the macro. We look forward to delivering a strong Q4. And so, you know, certainly if things merit at that point of time, we'll make ads to fiscal 24. And 26, etc. But good use is we are keeping fiscal 24 and 26, you know, where it is today.
Yes, Stephanie it's Medicare I'll take it on and turn it over to Mark.
Thanks for the question.
Look we are leaving it unchanged for all of us.
The factors and even the prior question that would asking our focus remains very strong on Q4, and the multi family market I have shared with you the sentiment relating to Q4.
And we'll be observing the macro we look forward to delivering a strong Q4, and certainly if things merit at that point of time will make ads to fiscal 'twenty, four and 'twenty six et cetera, but good news is we are keeping the fiscal 2000 402006.
Like where it is today.
Speaker 2: and that would be very fun.
That would be my response.
Speaker 1: I mean, the only thing I'd add to thank you, Medoo, is, you know, we have our usual cadence that when we complete the year and announce Q4 and kick off the next few years, we'll give an update on fiscal 24. So, we're, as we do note, we're holding to, and reconfirming our preliminary targets of near-six billion in revenues.
The only thing I'd add thank you Madhu is we have our usual cadence that when we complete the year and announced Q4 and kick off the next two year.
We will give an update on fiscal 'twenty four.
So we're as we do know that we're holding to.
And Reconfirming, our preliminary targets of near $6 billion in revenues, 36% to 38% adjusted EBITDA and free cash flows up too.
Speaker 1: 36 to 38% adjusted EBITDA and free cash lows up to 900 million and staff will give a we'll give it update on Next quarter's call
$900 million and Steph will give us will give an update on.
Our next quarters call.
Speaker 2: Yeah, I'm just a couple things to add and thinking about, is to just say to the earlier questions as well. Look, our premise was to apply the strong open text operational methodology to micro focus.
And just a couple of things to add and thank you Mark just said to the earlier questions as well.
This was to apply the strong open text operational methodology to micro focus, but the returns on that premise that suddenly been strong as you can see and that gives us a step up confidence in how we approach mid approach, Microsoft, but a big portion of that is sort of one and done with this quarter's performance and you're only going to seek liquidity continued <unk>.
Speaker 2: one and done with the squatters performance, and you're only gonna see, I mean, and you're only gonna see continued momentum. And we are sharing from a free cash group perspective, I will say we have up the targets of fiscal 23. And at this point, we're sharing more color on the site 21 I mentioned as to how the components of free cash will place. And as we close the year, we'll simply come out with updates as needed. Great, thank you very much. Thank you. Once again, if you have a question, ask a question, please press star then one. Our next question, please press star then one.
Mentum and we are sharing from a free cash flow perspective, I will say, we have upped the targets for fiscal 'twenty three and at this point, we're shedding more color in the slide 21, I mentioned as to how the components of free cash flow place and as we close the year, we'll certainly come out with updates as needed.
Great. Thank you very much.
Speaker 9: Great, thank you, Graham.
Speaker 3: Thank you. Once again, if you have a question, please press star then one.
Okay. Thank you.
Once again, if you have a question. Please press Star then one.
Speaker 3: Our next question comes from Adhir Tadeve of H. Capital. Please go ahead.
Our next question comes from adhere <unk> of eight capital. Please go ahead.
Okay.
Speaker 6: Hi guys, let me add my congratulations to the strong quarter here. Mark, last quarter, you mentioned the six markets that you're going to go after trying to get the full stack in each of those markets. I know it's only 60 days into the micro focus acquisition here, but where are you really seeing most promising go-to-market motions that are those? I know you talked about some of them, but just maybe digging deeper into where you're seeing and what's really exciting.
Hi, guys. Let me, let me add my congratulations to the strong quarter here.
Mark last quarter, you mentioned, the six markets that youre going to Youre going to go after trying to get that full stack in each of those markets.
I know, it's only 60 days kind of into the core into the into the micro focus acquisition here, but where are you really seeing most of the most promising go to market motions out of those.
No you've kind of talked about some of them, but just maybe digging deeper into where you see and what's really exciting you after that.
Speaker 1: Yeah, it's like having six beautiful children and loving every single one of them for the year. So...
Yes.
<unk>.
Like having six beautiful children and loving every single one of them for the year. So.
Yes.
Speaker 1: Let me highlight a few. No doubt that content services.
Let me highlight a few no doubt that cause.
Content services.
Is cool again.
Speaker 1: And it's all about what we can now offer it anyway a customer wants, including public staff, and the value or proposition of investing this platform. Now there are some of the moments along the way.
And it's all about what we can now offer it any way a customer wants including public SaaS.
And the value proposition of investing this platform now there are seminal moments along the way.
Speaker 1: And the large language models is a seminal moment as to why you want to consolidate, why you want to standardize on a model cloud content platform. So content service is absolutely top of the stack for us. Next to it continues to be enterprise.
And.
The large language models is a seminal moment as to why you want to consolidate why you want to standardize on a modern cloud.
Content platform.
Content services, absolutely top of the stack for US next to it continues to be enterprise.
Speaker 1: Excuse me, cybersecurity. And for all the obvious reasons and all, I talk a lot about and tech forms about vectors of attacks.
Excuse me cyber security.
And for all the obvious reasons.
Or.
Talk a lot about.
And it's sort of our tech forms about vectors of attack.
Speaker 1: whether it be the network, email, endpoints, applications, identity. And we just have a lot of optionality on cybersecurity given we cover each of those vectors of attack and have
Whether it be the network.
E mail endpoints applications identity.
And we just have a lot of optionality on cyber security given we cover each of those vectors of attack.
And have.
Speaker 1: just a lot of our optionality in the business.
Just lots of Optionality in it.
On the business.
Speaker 1: Developer, every company is a software company and the application automation platform is very robust.
Developer every company is a software company.
And the application automation platform is very robust and.
Speaker 1: And it's really going to thrive inside of our 9,000 developers in a developer mindset and bringing that to market.
It's really going to thrive inside of our 9000 developers.
And a developer mindset and bringing that to market. So I'll just highlight a highlight those three.
Speaker 1: So I'll just highlight those three, of course, with supply changes in our business network, moving workloads off the mainframe, which is just one of the worst climate platforms you could be on. We're going to benefit from moving those workloads as well. But I put content, cybersecurity and the developer, AKA application automation, top of the stack growth range.
<unk> with supply chain changes in our business network.
Moving workloads off the mainframe, which is just one of the worst climate platforms, you could be on we're going to benefit from moving those workloads as well, but I put content.
Cyber security and the developer applications automation top of the stock price right now.
Excellent just one more and then pass the line just maybe you've talked a lot about the large language models can you just give us a sense of what sort of investments. It will take for them for open text to really kind of get there and allow you to stand up this private platform for all of your customers.
Speaker 6: Just one more in the past line. Maybe you've talked a lot about the large language models. Can you just give us a sense of what sort of investments it'll take for for open text to really kind of get there and allow you to stand up this private platform for all your customers?
We've already stood it up.
And.
Speaker 1: and the fact that we have
The fact that we have.
Speaker 1: I'm gonna maybe off by 100 people or so 800, 900 people in our private cloud operations, our cloud operations has allowed us to take T5, open source T5 and stand it up.
May be off by 100 people or so eight to 900 people in our private cloud operation. Our cloud operations has allowed us to take T. Five open source T. Five instead it up.
Speaker 1: and through our professional services organization, our cloud operation.
And our.
Through our professional services organization, our cloud operations.
Speaker 1: We are open for business today to stand up that TFA, that any open source LLM for customers and connect it to their private cloud. And this is a benefit of scale. It's why the private cloud was so strategic for us. You see yet another reason why we own our own professional services organization in 2000 people inside that organization.
We are open for business today.
Stand up that <unk>.
The open source.
For our customers.
Connected to their to their private cloud and this is the benefit of scale. It's why the private cloud was so strategic for US is yet another reason why we own our own professional services organization in 2000 people inside that organization.
Speaker 1: And so, you know, within our R&D budget, we will build our connectors and our feeders, et cetera. But we already have our first platforms up in operation out here.
And so within our R&D budget, we will build our connectors and our feeders et cetera, but we already have our first platforms up and operational it here.
Excellent guys, Congratulations again I'll pass along.
Thank you.
Speaker 3: Our next question comes from Richard C. of National Bank Financial. Please go ahead.
Our next question comes from Richard Tse of National Bank Financial. Please go ahead.
Speaker 5: Hey, thank you. I just have one question, Mark, you talked a lot on this call about confidence here. And I'm just trying to understand.
Thank you.
One question Mark you talked a lot on this call about confidence here and I'm just trying to understand.
Speaker 5: But where is that confidence? It's sort of like confidence in your balance sheet, and the tech, and the support. Like, what were micro-focus as customers not confident on before?
Maybe give some more specifics.
Where is that confidence in sort of like confidence in your balance sheet in the tech and the support.
Or micro focus as customers do not call for that one before.
While they weren't sure if where the company was going to go.
Speaker 1: into hands of private equity and reduced 20% expense where division's gonna be sold off. So customers make a decade-long decision in the enterprise. And if it's uncertain where that platform's gonna be just in 90 days or even a year, people will hesitate.
Up into the hands of private equity and reduced 20% expense or division is going to be sold off or.
So.
Customers.
Decade, a decade long decision in the enterprise.
And if it is uncertain where that platform is going to be just a 90 days or even a year people hesitate.
Speaker 1: So we purchased the entire company. We're operating the entire company. We publish a roadmap for each of the groups.
So.
We purchased the entire company.
We're operating the entire company.
We publish a roadmap for each of the groups.
Speaker 1: And we have a fantastic reputation as being a steady innovator for our customers. And we share a lot of customers.
And we have a fantastic.
Fantastic reputation as being a steady innovator.
For our customers and we share a lot of customers.
Speaker 1: So that's where the, we still have a lot to do. We got to earn trust every day, but that gives us a richer confidence. Giving customers a cost.
That's where the look we still have a lot to do we got where we got to earn trust every day.
But that gives us Richard.
Confidence.
Giving customers the confidence.
Speaker 5: Right, and I know that was the last question, but I guess related to it. So, the fact that you're kind of just, let's call it not even a quarter yet.
Right and I know of that was the last question, but I guess related to it so okay.
Fact that youre kind of just let's call it not even a quarter end.
And it would be reasonable to think that that sort of confidence would actually scale.
Speaker 5: that that sort of confidence would actually scale. Is it kind of reasonable to think that, you know, that...
Is it kind of reasonable to think that you know the numbers that youre, putting out there, even though you're taking our numbers up conservative still.
Speaker 1: But do has taught me never to use the word conservative, so I won't. What a gen.
Madhu has taught me never to use the word conservative so I will adjourn.
Yeah.
Speaker 1: No, look, we call it like we see it, as we always have.
Now look we.
We call it like we see it as we always have.
Speaker 1: and our Q4 dashboard is just as strong as our Q3 dashboard. So we're calling it like we...
And our Q4 dashboard.
Is just as strong as our Q.
And consistent with our Q3 dashboard.
So we're calling it like we see it right now.
Speaker 1: And that's where we've raised that's our F23 numbers as you see.
And thus we've we've raised FRS 23 numbers as you've seen.
Speaker 1: And it's just, it's not the right time to talk about F24 or 3 year aspirations. We'll do that. When we get into our into our Q4 call, so. You know, I'm delighted with bringing our revenue guidance targets up to 4.54Billion to 4.61Billion. Total growth up to 32% or 1 to 2% organic growth cloud bookings, go to 15% plus.
And it's just it's not the right time to talk about F. 'twenty four or three year aspirations will do that when we get into our into our Q4 call. So.
I am delighted with bringing our revenue guidance targets up to $4 54 billion to $4 61 billion.
Total growth up to 32% or 1% to 2% organic growth cloud bookings growth of 15% plus adjusted EBITDA margins up to 33, and a half and free cash flow up to $620 million.
Speaker 1: adjusted dividend margins up to $33.5 and free cash flow up to $620 million.
Speaker 1: And we'll let those results speak for themselves when we deliver.
<unk>.
We'll let those results speak for themselves when we deliver.
Yeah understood I would just add and thank you Mark all the comments you've heard about the aspects of integration Mark called out is done and what I called out as well.
Speaker 2: And Richard, I would just add, and thank you, Mark, to all the comments you heard about the aspects of integration Mark called out as done and what I called out as well. We're delighted to be where we are as a company with Micro Focus and the performance that we were able to generate, which was our premise, that we could apply an operational excellent methodology. But as we've done better than we anticipated, gives us the momentum to keep continuing.
Delighted to be where we are as a company with micro focus and the performance that we were able to generate which was a premise that we could apply in operational excellent methodology, but as we've done better than we had than we anticipated gives us the momentum to keep.
You know keep continuing.
Okay alright, thank you.
Speaker 1: Operator, I think that's the last question. And okay, well Harry, I'm gonna do thank you very, very much. And I thank everyone for joining today's poll and we look forward to seeing you at Needham, V of A, Barkley, CIBC and our marks were written by two human beings and not Jackie BG. So have a great day.
Operator, I think that's the last question.
Okay, well, Harry and Madhu, Thank you very very much.
And thank you everyone for joining today's call and we look forward to.
See you at Needham Bofa Barclays CIBC and.
Our remarks were written by two human beings and notch at GBT, So have a great day.
Speaker 3: This concludes today's conference call. You may disconnect your lines. Thank you for participating and have a pleasant day.
This concludes today's conference call you may disconnect. Your lines. Thank you for participating and have a pleasant day.
Sure.