Open Text (NasdaqGS:OTEX) 2025 Conference December 02, 2025 04:15 PM ET Company ParticipantsTom Jenkins - Executive Chair and Chief Strategy OfficerConference Call ParticipantsSeth Gilbert - AnalystSeth GilbertMy name is Seth Gilbert. I'm one of the SMID software analysts here at UBS. Today we have the honor and the privilege of chatting with Tom Jenkins. Tom was the CEO of OpenText from 1994-2005. Now he's the Chief Strategy Officer and also the Executive Chair of the Board since 1998. So there might be no ...

Financial Data and Key Metrics Changes - Total revenues for Q1 Fiscal 2026 were $1.3 billion, an increase of 1.5% year over year, exceeding expectations, primarily driven by cloud and license revenues [17][19] - Cloud revenues reached $485 million, up 6% year over year, attributed to strong demand in the content product category [7][17] - Annual recurring revenue (ARR) was $1.1 billion, an increase of 1.8% year over year, representing 83.2% of total revenues [18] - Adjusted EBITDA for the quarter was $467 million, with a margin of 36.3%, up 130 basis points year over year [19] - Free cash flow was $101 million, a significant increase of $218 million year over year [19] Business Line Data and Key Metrics Changes - Content Cloud, the largest business unit, grew 21% year over year, driven by bookings in financial services, energy, utilities, and telecom verticals [8][9] - Customer support revenues were down 1.5% year over year, indicating challenges in that segment [18] - Enterprise cloud bookings increased by 20% year over year, with 33 deals greater than $1 million closed in Q1, up 43% year over year [8] Market Data and Key Metrics Changes - The company is experiencing a shift towards cloud solutions, with customers increasingly making faster decisions to transition workloads from on-premise to cloud [11][12] - The content management business is expected to dominate revenue sources as non-core units are divested [25][26] Company Strategy and Development Direction - The company is focusing on its core business units in enterprise information management and plans to leverage its extensive data connectors for training agentic AI [24][25] - A strategy to divest non-core business units is underway, with a goal to enhance shareholder value [25][28] - The company aims to maintain a hybrid model offering both on-premise and cloud solutions, catering to customer preferences [39] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's financial and operational position, expecting continued strength in the content business [10][12] - The outlook for Q2 total revenue is projected to be between $1.275 billion and $1.295 billion, with an adjusted EBITDA margin between 35.5% and 36% [10] - The company anticipates ARR to return to growth in fiscal 2026, with cloud growth outpacing maintenance declines [11] Other Important Information - The company is actively seeking a permanent CEO, with a search ongoing for both internal and external candidates [29] - The upcoming OpenText World event is expected to showcase new product offerings and innovations, particularly in agentic AI solutions [9][10] Q&A Session Summary Question: What is OpenText's competitive edge in content as it pivots to leveraging data for AI? - The competitive edge has been built over 35 years, with extensive data connectors critical for training agentic AI [36][38] Question: Can you provide insight into the growth of the content business? - Growth is driven by customer readiness for AI and the need for content curation [39][40] Question: What are the expectations for Q2 revenue guidance? - The guidance implies potential variability due to customer transitions to cloud solutions, affecting license revenue [44][62] Question: What is the strategy for divestitures moving forward? - The company plans to divest non-core units methodically, aiming for one divestiture per quarter [47][48] Question: How is the ITOM business expected to stabilize? - Stabilization is still to be determined, but there is positive demand and growth in cloud offerings [58]

Financial Data and Key Metrics Changes - Total revenue grew 16% year-over-year to $90.4 million, with core revenue increasing 14% to $83.9 million [27] - Adjusted EBITDA rose 14% to $29.7 million, with an adjusted EBITDA margin of 33% compared to 34% a year ago [29] - Client retention improved to 85%, up from 84% for four consecutive quarters [27][28] Business Line Data and Key Metrics Changes - Franchise premiums totaled $976 million, up 18%, while corporate premiums were $206 million, a 1% increase [28] - Franchise producers at quarter end were 2,124, up 1% year-over-year, with producers per franchise growing 6% [22] - The corporate team achieved new business commissions growth of 20% year-over-year, accelerating from 13% in the previous quarter [24] Market Data and Key Metrics Changes - Total written premium for the quarter was $1.2 billion, a 15% increase from the previous year [28] - Policies in force grew 13% year-over-year to 1.9 million [28] - Contingent commissions for the quarter were $4.5 million, an increase of 82% compared to $2.5 million in the previous year [29] Company Strategy and Development Direction - The company aims to become the largest distributor of personal lines insurance in the U.S. and has identified significant growth opportunities in a fragmented market [6][8] - Key strategic initiatives include expanding existing agencies, launching new franchises, and enhancing technology to improve client experience [9][10] - The digital agent technology is expected to revolutionize personal lines insurance distribution and drive significant growth [14][15] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about entering a stable pricing cycle, which is expected to enhance operational efficiency and client satisfaction [16][27] - The company anticipates continued improvement in client retention and premium growth, with expectations for revenue contributions from new partnerships starting in 2026 [20][28] - The management highlighted the importance of technology investments and partnerships in driving future growth [19][22] Other Important Information - The company repurchased and retired 685,000 Class A shares, utilizing $58.7 million of its share repurchase authorization [30] - Total debt outstanding was $299 million, with cash and cash equivalents at $51.6 million [30] - The company reiterated its full-year 2025 revenue guidance, expecting total revenues between $350 million and $385 million [30][31] Q&A Session Summary Question: Can you break out the margin profile of franchise versus corporate versus enterprise? - Management indicated that the enterprise sales business will have a more impactful margin profile over the long term compared to corporate and franchise businesses [34] Question: How many carriers are currently on the digital agent? - There are about 12 carriers integrated with the digital agent, and management is in discussions with major carriers for further integration [37][38] Question: What is the outlook for home sales and how does it affect written premium? - Management noted that housing activity remains depressed, but the company is well-positioned to capture leads as the market improves [41] Question: What is the expected growth in producer count? - Management expects consistent growth in producer count, emphasizing the importance of quality over quantity in franchise performance [46] Question: Why is the revenue trajectory not more upbeat? - Management expressed optimism about the business direction but acknowledged ongoing challenges in the product market, which is gradually improving [51][55] Question: What needs to happen to reach the high end of the revenue outlook? - Management highlighted the variability of contingent commissions and the need for a stable product market to achieve higher revenue [66]

Financial Data and Key Metrics Changes - Total revenue grew 16% year-over-year to $90.4 million, with core revenue increasing 14% to $83.9 million [27] - Adjusted EBITDA rose 14% to $29.7 million, with an adjusted EBITDA margin of 33% compared to 34% a year ago [29] - Client retention improved to 85%, up from 84% for four consecutive quarters [28] Business Line Data and Key Metrics Changes - Franchise premiums reached $976 million, up 18%, while corporate premiums were $206 million, a 1% increase [28] - Franchise producers at quarter end were 2,124, up 1% year-over-year, with producers per franchise growing 6% [22] - The corporate team achieved new business commissions growth of 20% year-over-year, accelerating from 13% in the previous quarter [24] Market Data and Key Metrics Changes - Total written premium for the quarter was $1.2 billion, a 15% increase from the previous year [28] - Policies in force grew 13% year-over-year to 1.9 million [28] - Contingent commissions for the quarter were $4.5 million, an increase of 82% compared to $2.5 million in the previous year [29] Company Strategy and Development Direction - The company aims to become the largest distributor of personal lines insurance in the U.S. and has identified significant growth opportunities in a fragmented market [6][8] - Key strategic initiatives include expanding existing agencies, launching new franchises, and enhancing technology to improve client experience [9][10] - The digital agent technology is expected to revolutionize personal lines insurance distribution and drive significant growth [14][20] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about entering a stable pricing cycle, which is expected to enhance client retention and overall business efficiency [16][26] - The company anticipates continued acceleration in revenue growth and improvements in client retention as market conditions stabilize [27][30] - Management highlighted the importance of technology investments and partnerships in driving future growth [19][22] Other Important Information - The company has invested $10.9 million into the digital agent platform in 2025, with plans to invest between $25 million and $35 million in 2026 and 2027 [19] - The company repurchased and retired 685,000 Class A shares, utilizing $58.7 million of its share repurchase authorization [30] Q&A Session Summary Question: Can you break out the margin profile of franchise versus corporate versus enterprise? - Management indicated that the enterprise sales business will have a more impactful margin profile over the long term compared to corporate and franchise businesses [34] Question: How many carriers are on the digital agent right now? - Currently, there are about 12 carriers integrated with the digital agent, and major carriers are supportive of the initiative [37][38] Question: What are you seeing in home sales and how is that affecting written premium? - Management noted that housing activity remains depressed, but the company is well-positioned to capture leads as the market improves [41] Question: What is the expectation for producer count growth? - Management expects consistent producer count growth, focusing on quality and strategic geographic expansion [46] Question: Why is there a wide range in the full-year outlook? - The wide range is due to the variability of contingent commissions and the unpredictable nature of the market [66] Question: How will the digital agent impact future growth? - The digital agent is expected to allow the company to penetrate additional markets and significantly increase total written premium growth [68]

Financial Data and Key Metrics Changes - Total revenue grew 16% year-over-year to $90.4 million, with core revenue increasing 14% to $83.9 million [26] - Adjusted EBITDA rose 14% to $29.7 million, with an adjusted EBITDA margin of 33% compared to 34% a year ago [29] - Client retention improved to 85%, up from 84% for four consecutive quarters [26][27] Business Line Data and Key Metrics Changes - Franchise premiums totaled $976 million, up 18%, while corporate premiums were $206 million, a 1% increase [27] - Franchise producers at quarter end were 2,124, up 1% year-over-year, with producers per franchise growing 6% [20] - The corporate team achieved new business commissions growth of 20% year-over-year, accelerating from 13% in the second quarter [23] Market Data and Key Metrics Changes - Total written premium for the quarter was $1.2 billion, a 15% increase from the previous year [27] - Policies in force grew 13% year-over-year to 1.9 million, with the growth rate accelerating during the quarter [27] - Contingent commissions for the quarter were $4.5 million, an increase of 82% compared to $2.5 million in the previous year [28] Company Strategy and Development Direction - The company aims to become the largest distributor of personal lines insurance in the U.S. and has identified significant growth opportunities in a fragmented market [5][6] - Key strategic initiatives include expanding existing agencies, launching new franchises, and enhancing technology to improve client experience [8][10] - The company is investing heavily in its digital agent platform, expecting it to drive substantial growth in total written premiums over the next five years [19][60] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about entering a stable pricing cycle, which is expected to enhance client retention and overall business efficiency [14][25] - The company anticipates continued improvement in client retention and premium growth, with expectations for acceleration in 2026 [26][49] - Management highlighted the importance of technology investments and partnerships in driving future growth and improving service delivery [18][20] Other Important Information - The company repurchased and retired 685,000 Class A shares, utilizing $58.7 million of its share repurchase authorization [30] - The company expects to invest between $25 million and $35 million annually in the digital agent platform for 2026 and 2027 [18] Q&A Session Summary Question: Can you break out the margin profile of franchise versus corporate versus enterprise? - Management indicated that the enterprise sales business will have a more impactful margin profile in the long term compared to corporate or franchise business, with franchise business still being the primary driver of total written premium [33][34] Question: How many carriers are currently on the digital agent? - Currently, there are about 12 carriers integrated with the digital agent, and management is in discussions with major carriers for further integration [36][37] Question: What is the outlook for home sales and how does it affect written premium? - Management noted that while housing activity remains depressed, the company is well-positioned to capture market share as housing activity improves [39][40] Question: What is the expected trajectory for client retention next year? - Management is optimistic about continued improvement in client retention, driven by investments in service delivery tools and a stable pricing environment [73] Question: Were there any one-time revenue adjustments this quarter? - Management confirmed there were no one-time revenue adjustments in the third quarter, and improvements in commission rates are ongoing [75]

Financial Data and Key Metrics Changes - Total revenue grew 16% year over year to $90.4 million, with core revenue increasing 14% to $83.9 million [29] - Adjusted EBITDA for the quarter grew 14% to $29.7 million, with an adjusted EBITDA margin of 33% compared to 34% a year ago [33] - Client retention improved to 85%, up from 84% for four consecutive quarters [30] - Total written premiums for the quarter were $1.2 billion, up 15% from a year ago [31] Business Line Data and Key Metrics Changes - Franchise premiums were $976 million, an increase of 18%, while corporate premiums were $206 million, a 1% increase from a year ago [31] - Franchise producers at quarter end were 2,124, up 1% from a year ago, with producers per franchise growing 6% [23] - The corporate team generated new business commissions growth of 20% year over year, accelerating from 13% in the second quarter [26] Market Data and Key Metrics Changes - The industry has over $530 billion in total written premium annually, with the company growing from over $2 billion in premiums in 2022 to over $4 billion in 2025 [7] - The company still represents less than 1% of total market share, indicating significant growth potential [7] Company Strategy and Development Direction - The company aims to become the largest distributor of personal lines insurance in the U.S. and has identified five key strategic initiatives to support this goal [10] - The digital agent technology is expected to revolutionize personal lines insurance distribution, allowing for a more seamless client experience [15] - The company plans to invest between $25 million and $35 million annually in the digital agent platform for 2026 and 2027 [21] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about entering a stable pricing cycle, which is expected to improve client retention and overall business efficiency [17] - The company anticipates continued acceleration in revenue growth and premium growth in 2026 [65] - Management highlighted the importance of technology investments and partnerships in driving future growth [20] Other Important Information - The company repurchased and retired 685,000 Class A shares, utilizing $58.7 million of its share repurchase authorization [34] - The company expects total revenues for 2025 to be between $350 million and $385 million, representing organic growth of 11% to 22% [34] Q&A Session Summary Question: Can you break out the margin profile of franchise versus corporate versus enterprise? - The enterprise sales business is expected to have a more impactful margin profile over the long term compared to corporate or franchise business [37] Question: How many carriers are involved in the digital agent? - Currently, there are about 12 carriers integrated with the digital agent, and major carriers are supportive of the integration [42][44] Question: What is the outlook for home sales and how does it affect written premium? - The housing market remains depressed, but the company is building a referral partner network to capture lead flow [47] Question: What is the expected growth in producer count? - Producer count is expected to grow consistently, with a focus on quality over quantity [54] Question: Why is the revenue trajectory not more upbeat? - The company is optimistic about the direction of the business, but is cautious due to the variability in contingent commissions [58] Question: What needs to happen to reach the high end of revenue guidance? - The contingent commissions are variable, and the company is optimistic about potential upside based on current market conditions [70] Question: How will the digital agent impact growth? - The digital agent is expected to allow for significant market penetration and could drive total written premium growth of over 40% in the next five years [76]

Core Point - Ford Motor Company is recalling over 200,000 vehicles due to a software malfunction affecting rearview cameras, which increases the risk of crashes and potential injuries [1][6]. Group 1: Recall Details - The recall involves 200,061 vehicles, including models from 2018 to 2024 such as Transit Connect, MKZ, Edge, Continental, F-150, Nautilus, Fusion, Ranger, Mustang, EcoSport, Expedition, Navigator, Escape, F-250 SD, Corsair, Aviator, Transit, Explorer, Bronco Sport, and Maverick [2]. - A software error may cause rearview cameras to display a blank or frozen image when the vehicle is in reverse, which can distract drivers and reduce visibility [3][6]. Group 2: Customer Support and Actions - Affected vehicle owners can visit dealerships for free software updates to resolve the issue [9]. - Notification letters to owners are expected to be sent out by July 28, and customers can contact Ford customer service for inquiries [12].