FIRST QUARTER FISCAL 2027 EARNINGS CONFERENCE CALL AND WEBCAST - OPEN TEXT CORP

Explicit Guidance:

• Q2 FY2027 Revenue: Projected between $1.26 billion and $1.29 billion.
• Q2 FY2027 Adjusted EBITDA Margin: Projected between 33% and 34%.
• FY2027 Full-Year Adjusted EBITDA Margin: Maintained within prior guidance range; expected to be lower in the second half than the first half due to the timing of growth investments and typical seasonality (January salary resets, vacation accruals).
• FY2027 Full-Year Core Revenue Growth: Target of 2–3% year-over-year growth in constant currency.
• FY2027 Organic Growth: Expected to accelerate in the second half of the fiscal year as investment weighting increases.
• FY2027 Free Cash Flow: Maintained within prior guidance; Q1 results ($139 million) were on track.
• Investment Weighting: Growth investments (sales, marketing, R&D) are weighted heavily toward the second half of FY2027.

Business-Segment Outlook:

• Content Cloud: Leading growth trajectory with 20.7% YoY growth in Q1; expected to maintain ~20% annual growth; deals including Aviator AI agents are on average four times larger.
• Cybersecurity & ITOM: Q1 performance was below expectations due to sales execution gaps; management expects material improvement in Q2, Q3, and Q4 of FY2027 as new specialist vertical structures and partner enablement take effect, targeting double-digit improvement.
• Core Business Growth Strategy: Every core category (Content, Business Network, ITOM, Cyber) is committed to growing for the full FY2027 "foundation year."
• Aviator AI Agents: Over 150 agents infused across the core portfolio; clients using Aviator Studio can build custom agents; expected to drive larger deal sizes and enterprise-scale adoption beyond pilots.
• Core vs. Non-Core: $116 million in Q1 revenue reclassified from core to non-core (legacy on-prem, maintenance-mode products, and duplicate acquisition assets); future reclassifications possible based on enterprise assessment findings.
• Client Support: Expected to continue declining in non-core segments; core client support trends show a slowing rate of decline, with full color to be provided at the February Investor Day.

Market and Competitive Outlook:

• Go-to-Market Model: Fully deployed "One OpenText" model with 300 filled Client Executive roles across 15 markets; clients report reduced complexity and increased speed in decision-making.
• Partner Ecosystem: Focus on "reactivating" partners (Hyperscalers, GSIs, ISVs, Regional SIs) as extensions of the sales force; partner enablement and financial models aligned to increase sales capacity.
• Deal Velocity: Clients report faster decision-making with a single point of contact; partnership with Cohere and integration with SAP's AI Jewel platform expand orchestration capabilities.
• Competitive Positioning: Transitioning from generalist cyber sellers to deep-skilled specialists by vertical to compete against competitors who typically offer fewer pillars; expecting this shift to close execution gaps.

Macro / Industry Outlook:

• Geopolitical Impact: Minor pause in transaction activity observed in the Middle East market due to regional instability; impact deemed immaterial to overall results.
• Cloud Migration: Accelerating client migration from on-prem to cloud, driven by simplified tooling and the "cloud of their choice" strategy; 23 consecutive quarters of organic cloud growth.
• AI Adoption: Clients moving from "AI pilot" to "enterprise AI at scale," leveraging OpenText's trusted context and connected data layer; 150+ Aviator agents driving measurable outcomes in supply chain, service management, and contract management.
• Financial Flexibility: Successfully raised $1 billion in bonds in a volatile market; net debt reduced by $949 million YoY; leverage at 2.55x (within target range) to support transformation and organic growth.

Strategic Initiatives:

• Multi-Year Growth Plan: To be unveiled at the Investor Day on February 10, 2027; components include a strategic framework, financial model, and execution plan with KPIs.
• Organizational Restructuring: Establishment of an Enterprise Transformation Leader and Cloud Acceleration Leader to operationalize the assessment findings.
• R&D Reallocation: Shift in R&D focus toward core product categories, specifically AI infusion (Aviator), cloud migration tools, and new capabilities for Business Network and Cyber; R&D investment expected to stabilize and prioritize core growth.
• Divestitures: Active process for non-core businesses; no "fire sale" strategy; disciplined review against return requirements; non-core assets continue to contribute to margin/cash flow.
• Sales Force Expansion: Added 300 quota-carrying reps; future hiring and partner enablement investments focused on closing Cyber/ITOM execution gaps.

Risks and Headwinds to Outlook:

• Investment Timing: Second-half EBITDA margin compression is anticipated due to the upfront nature of growth investments (sales, marketing, R&D) and seasonal expense increases (January salary resets, vacation accruals).
• Execution Risk: Cyber and ITOM segments face temporary underperformance due to the transition from generalist to specialist sales structures; timeline for return is expected to be Q2–Q4 FY2027 but relies on successful adoption of new selling motions.
• Geopolitical Uncertainty: Middle East market pause noted; while currently immaterial, broader instability could impact client timing.
• Reclassification Volatility: Future revenue reclassifications between core and non-core may alter reported growth rates for specific segments.
• Valuation Environment: Ongoing volatility in the M&A and divestiture landscape may affect timing and valuation of non-core asset sales.

Management Tone on the Future:

• Confidence Level: High; CEO stated, "I have never been more confident in the path ahead."
• Foundation Year: FY2027 described as a "foundation year" focused on building the framework for future multi-year growth.
• Discipline: Strong emphasis on "discipline execution," "prudent expense management," and balancing growth investments with financial health.
• Client Sentiment: Described as "overwhelmed with positive feedback" regarding the new client executive model and the clarity of the "One OpenText" value proposition.
• Forward Guidance: Maintained full-year outlook despite Q1 in-line results; no changes to annual guidance ranges despite reclassifications.

Miscellaneous:

• Investor Events: Upcoming investor day scheduled for February 10, 2027, in Toronto.
• Financial Reporting: Management now reports leverage using net debt and adjusted EBITDA from reported financials for industry alignment.
• AI Partnerships: Strategic partnership with Cohere announced in July to power the "agentic enterprise" with integrated language models.
• Product Portfolio: Continuous assessment of subcategories to ensure every product is optimized for growth; legacy products in maintenance mode are being deprioritized.