Open Text Corp Q1 FY2022 Earnings Call

Thank you, operator. Good afternoon, everyone, and welcome to OpenText's First Quarter 2022 Earnings Call. With me on the call today are OpenText's Chief Executive Officer and Chief Technology Officer, Mark Barrenechea; and our Executive Vice President and Chief Financial Officer, Madhu Ranganathan. We have some prepared remarks, which will be followed by a question-and-answer session. This call will last approximately 60 minutes with a replay available shortly thereafter. I would like to take a moment and direct investors to the Investor Relations section of our website, investors.opentext.com, where we have posted our investor presentation that will supplement our prepared remarks today. The presentation includes information and financials specific to our quarterly results, notably our updated quarterly factors on Page 6 as well as a strategic overview. Before I proceed with the reading of our safe harbor statement, I would like to inform you that we will be participating in several conferences in the coming weeks, including TD's Virtual Technology Conference on November 15, RBC's Global TIMT Virtual Conference on November 16, Needham's Virtual Tech Week on November 17, NASDAQ's Investor Conference on November 30, Credit Suisse Annual Technology Conference on December 1, BofA's Leverage Finance Conference on December 2, Barclays Global TMT Conference on December 7, and Raymond James Technology Investor Conference on December 8. Please reach out to any member of our Investor Relations team if you are interested in joining our schedule. In addition, I'm also pleased to invite investors to OpenText's annual user conference, OpenText World, taking place on November 16 to the 18th. Investors are invited to explore our latest product innovations and information management during this 3-day virtual tech event. To register for OpenText World, please reach out to the IR team at investors@opentext.com. We look forward to our upcoming engagements with you. And now for our safe harbor statement. Please note that during the course of this conference call, we may make statements relating to the future performance of OpenText that contain forward-looking information. While these forward-looking statements represent our current judgment, actual results could differ materially from a conclusion, forecast, or projection in the forward-looking statements made today. Certain material factors and assumptions were applied in drawing any such statement. Additional information about the material factors that could cause actual results to differ materially from a conclusion, forecast, or projection in the forward-looking information as well as risk factors including in relation to the current global pandemic that may project future performance results of OpenText are contained in OpenText's recent Forms 10-K and 10-Q as well as in our press release that was distributed earlier this afternoon, which may be found on our website. We undertake no obligation to update these forward-looking statements unless required to do so by law. In addition, our conference call may include discussions of certain non-GAAP financial measures. Reconciliations of any non-GAAP financial measures to their most directly comparable GAAP measures may be found within our public filings and other materials, which are available on our website. And with that, I'll hand the call over to Mark.

Thank you, Harry. Good afternoon to everyone, and thank you for joining today's call. Fiscal '22 is off to a great start as we delivered record Q1 revenues powered by organic growth, and we are on track for our fiscal '22 annual targets of organic growth and longer-term fiscal '24 aspirations. The OpenText approach to creating long-term shareholder value is a balance between total growth, profitability, and capital returns. We are executing our value creation approach. In Q1, we delivered 3.5% organic revenue growth, 38.9% adjusted EBITDA, and we estimate free cash flow as a percent of revenues will be in the high 20s for fiscal '22, and we expect free cash flow dollars to increase significantly in fiscal '22 over fiscal '21. Consistent with what we have shared before, our bold ambitions remain: to be the leader in information management, to double our revenues over the next 5 to 7 years to $7 billion in annual revenues, to have at least 85% of our revenues recurring, to deliver an organic growth profile between 2% to 4% by fiscal '24, to maintain upper quartile adjusted EBITDA while investing any adjusted EBITDA above 40% back into growth, to generate $6 billion in cumulative free cash flow over the next 5 years and return 33% of our trailing 12 months free cash flows via dividends and buybacks. As our free cash flow grows, so does our dividend and our buyback. This is a winning formula. Our solid execution reinforces our ambitions. Over the last few quarters, we have returned to organic growth and established our fiscal '24 aspiration that illustrates an acceleration in that growth. We have increased our R&D investment targets to 14% of revenues. We are making additional fiscal '22 investments in people, go-to-market, and digital initiatives to drive future growth, and our trailing 12-month cloud bookings have now grown at double-digit rates. We have accomplished a lot since we last spoke. Specifically, we continue to successfully execute our cloud-led total growth strategy, with ongoing adoption of our cloud solutions. Notably, we added 89 new private cloud customers in Q1, including CNA, Bernardo in the U.K., and Mitsui. We've expanded our relationship with Google and other hyperscalers. We renewed our normal course issuer bid for up to $350 million of common shares and updated our shelf offering for up to $2 billion of debt and equity securities. In a few minutes, I will discuss how we will introduce the best and most comprehensive cloud products in OpenText history at OpenText World in a few weeks. Let me transition to our results for the first quarter, powered as I mentioned earlier, by organic growth. We delivered record Q1 revenue of $832.3 million, up 3.5% year-over-year or 2% in constant currency. Record Q1 annual recurring revenue of $691.8 million, up 3.2% year-over-year or 1.7% in constant currency and accounting for 83% of our total revenue. Record Q1 revenue from $356.6 million was up 4.6% year-over-year or 3.6% in constant currency. Our adjusted EBITDA was $323.4 million at a 38.9% margin. Free cash flow was $163 million or 20% of revenue, reflecting our increased investments in talent, innovation, and sales coverage to fuel future organic growth. Let me highlight some impressive customer wins in the quarter. Notable customer wins for the OpenText Content Cloud included BDO, one of the world's largest global accounting firms, which selected OpenText Extended ECM to improve information governance by centralizing its content management systems. Brenntag, a global distributor of chemicals, selected OpenText Extended ECM for SAP and M365 to enhance document processing via digital workflows. I'm also pleased to highlight CNA Financial, one of the largest U.S. commercial property and casualty insurance companies, which selected OpenText for its leading-edge content service capabilities. In the OpenText Business Network Cloud, JCB, a global payment company based in Tokyo, chose our managed services to simplify their processing and payment. We have strengthened our relationship with Mastercard, which has selected OpenText trading grid managed services to connect with more partners and banks. Additionally, PepsiCo selected OpenText as their information management platform underneath SAP's success factors. For the OpenText Experience Cloud, AIA, the largest independent publicly listed Pan-Asian life insurance group, chose our Core Experience products to manage their customer communications for marketing campaigns. In the OpenText Security and Protection Cloud, notable wins include the U.S. Army Criminal Investigations division, now utilizing OpenText EnCase Forensics for digital investigations, and TD, one of Canada's largest banks, migrating data to our secure cloud environment. PG&E, California's largest utility, is also using our products to enhance their operational resilience during emergencies. At OpenText World, you'll hear from our customers, partners, and industry experts at our annual conference, and I personally invite you to attend the event during the week of November 15. We have a fantastic speaker lineup, including Dr. Neil deGrasse Tyson, who will share his insights with us, and Arianna Huffington, who will discuss the future of growth and the world post-pandemic. You'll also hear from key customers including Shell, Dell, L'Oreal, and the Academy of Motion Pictures. In my keynote, I will delve into the five forces influencing every business, emphasizing that work is distributed, every transaction is becoming digital, customers seek tailored experiences, security and privacy must be prioritized, and the future of growth needs to be inclusive and sustainable. The response to these forces needs to be simplicity, which brings us to the theme of OpenText World, 'Be Digital.' Touching on the OpenText Cloud highlights, the OpenText Content Cloud allows organizations to master modern work. We have once again been recognized as a leader in content services for the 17th consecutive year by Gartner. At OpenText World, we'll introduce a comprehensive update to the OpenText Content Cloud, designed to empower organizations with a distributed workforce during cloud edition 21.4. This update integrates with leading business applications, streamlining collaboration and access to information throughout organizations. Key highlights include expansions of core content, Salesforce, SAP S/4HANA, and Microsoft 365 as a SaaS offering, along with strengthened e-signature archiving and improved eDiscovery capabilities. We're also providing a return to workplace playbook to manage operational restart plans. Additionally, at OpenText World, we plan to reveal new capabilities for our customers to digitize and modernize their supply chains. We have been recognized again as a leader in the multienterprise supply chain commerce grid by IDC. We will announce new self-service capabilities that allow smaller and medium-sized businesses access to enterprise products currently used by some of the largest supply chains, thereby increasing serviceability in our total addressable market. We will also introduce new capabilities that support ethical supply chains and sustainability. The OpenText Experience Cloud is enhancing work experiences for our customers. We launched a new offering at Google Cloud Next 21 that deeply integrates with Google's marketing platform. The offering combines our customer data platform and OpenText Extreme with Google's marketing tools. In the June quarter, we will fully integrate this offer as a SaaS offering for deployment in public cloud settings. The OpenText Security Protection Cloud is also significantly improving our capabilities in detection and response for the SMB market. We have introduced a managed detection and response service that combines our security infrastructure with expert personnel, offering it as a private cloud service. We're excited about this service, which integrates the capabilities of Webroot with leaders in security. The OpenText Developer Cloud will be prominently featured at OpenText World. This is our first information management as a service offering specifically designed for enterprise workloads through APIs. Our Developer Cloud helps developers build the API economy more efficiently and includes 20 available APIs for various functions. We're expecting more capabilities to be cloud-based than off-cloud, marking a significant milestone for us. As we integrate Webroot into our public and private clouds, we are gaining critical mass in our API cloud. In October, we processed 98 billion requests through our 20 APIs. Our new service provides real-time risk scores for content streamed to our API. This high volume indicates our momentum in becoming a leading API company. Customers using our API Cloud include CVS, Geico, Trinity Health, Novartis, the government of Ontario, Impossible Burger, F5, and Aruba. Looking ahead, our roadmap for Cloud Editions 22.1 through 22.4 includes a focus on security, frictionless migrations, scaling our new MDR services, and enhancing our API cloud services, all aimed at helping our customers consume our solutions in the way that best suits them. We are committed to ensuring that the future of growth is inclusive and sustainable, which will be a focus of the OpenText Zero initiative. We operate our business with this vision and expect our partners to align as well, aiming to assist others in achieving their ESG goals through the OpenText Cloud. Now, let me address our outlook and M&A. We are positioned to grow organically in fiscal '22, and Madhu will provide more details on our financial targets and aspirations. On the macro front, customers are facing increased complexities compared to a year ago, including the ongoing effects of COVID-19, supply chain issues, rising shipping costs, labor shortages, and inflation. Our response to customers remains clear: focus on making the shift to digital and automate. Labor and supply chain pressures call for automation to gain visibility and remove costs, especially in a tightening manufacturing and transportation environment. Our consistent message is to embrace digital automation using the OpenText Cloud. Regarding M&A, we remain proactive in seeking targets that meet our criteria with the management capability and financial resources to pursue new deals. We are focused, disciplined, and patient as we improve our financial standing and invest in products to drive organic growth and enhance the profitability of future acquisitions. In conclusion, we are building on our foundation to reach our long-term goals and ambition to double the company. It took us 30 years to achieve approximately $3.5 billion in revenues, and we aim to double that in the next 5 to 7 years while delivering value through our balanced approach to growth, profitability, and capital returns. It is crucial that our growth strategy is inclusive and sustainable, and we intend to lead with the OpenText Zero initiative. We achieved record Q1 revenues and anticipate a successful fiscal '22 with significant overall and organic growth while maintaining upper quartile margins and returning capital as promised. I would like to extend my gratitude to our shareholders, loyal customers, partners, and employees for their contributions to our success. I am proud of our culture and resilience. Please join us for OpenText World the week of November 15. I'm pleased to hand the call over to Madhu Ranganathan, OpenText's Chief Financial Officer. Madhu?

Thank you, Mark, and thank you all for joining us today. We had a strong Q1. We delivered another quarter of organic growth, kicked off our fiscal 2022 plan, and intentional investments in the business, including talent, innovation, sales coverage, and capital expansion. Also in Q1, we internally mobilized a robust digital roadmap to support technology in many of our organic growth initiatives. Our Q1 results and a strong roadmap, including rapid quarterly releases of innovative cloud edition products to support the momentum in our cloud growth, have given us a strong start to the fiscal year. This aligns with what we shared with you last quarter, we had strong Q1 execution behind us to drive our fiscal '22 targets and aspirations. Starting this quarter, my commentary will focus on selected financial highlights and certain operational initiatives underway that will enable us to grow faster and scale our business. Please refer to our press release, our investor presentation, and 10-Q posted on our IR website for more detailed financial data. All references will be in millions of USD and compared to the same period in the prior fiscal year. So let me start with revenues. As a note, the growth rates I will share here are all organic growth. Total revenues for the quarter were $32.3 million, up 3.5% or up 2% on a constant currency basis. There was a favorable FX impact to revenue of $12.6 million. Annual recurring revenues for the quarter were $691.8 million, up 3.2% or up 1.7% on a constant currency basis. As a percent of total revenues, ARR was 83% for the quarter, the same as Q1 '21. Cloud revenues were $36.6 million, up 4.6% or up 3.6% on a constant currency basis. Our cloud renewal rate, excluding Carbonite, was approximately 9%. Customer support revenues were $335.2 million, up 1.8% or down 0.3% on a constant currency basis. Our customer support renewal rate was 94%. Our license revenues were $7.5 million, up 7.3% or up 5.8% on a constant currency basis. The professional services revenues were $67 million, up 2.8% or up 0.8% on a constant currency basis. As I note here, we achieved positive organic growth in both cloud and ARR during the quarter on a reported and constant currency basis. I would also highlight that we saw double-digit growth in cloud bookings in the quarter on a year-over-year basis, and our expectation is that this momentum continues, supported by our investments in product innovation and go-to-market. We anticipate providing you with more detailed cloud metrics beginning in fiscal '22. Clearly, the investments we have been making during the last several quarters and our organic growth initiatives are bearing fruit. We intend to continue to expand investment as part of our commitment to achieve our fiscal '24 expiration. GAAP net income was $131.9 million, up compared to net income of $102.4 million in the prior year and reflecting lower amortization costs and COVID-related restructuring charges. Non-GAAP net income was $27.8 million, down 5.8% or down 6.6% on a constant currency basis, again reflecting our planned and intentional investments I spoke about earlier to support organic growth. GAAP earnings per share diluted was $0.48, an up $0.10 from earnings per share diluted of $0.38. Non-GAAP earnings per share diluted was $0.83, down $0.06 from $0.89 and down $0.06 on a constant currency basis. Let's turn to margins. GAAP gross margin for the quarter was 69%, constant. Non-GAAP gross margin for the quarter was 75.7%, down 80 basis points due to specific royalty payments in the quarter as well as slightly higher investments in our cloud. Adjusted EBITDA was $323.4 million this quarter, down 5.5% or down 6.2% on a constant currency basis. This represents a 38.9% margin, down from 42.6% in the same quarter last year. Recall that Q1 fiscal '21 had COVID-related savings, while Q1 fiscal '22; our current quarter includes higher investments. Specifically in Q1 on an adjusted basis year-over-year, R&D expenses were higher by 6% and sales and marketing up by 10%. We are investing. Operating and free cash flows. Operating cash flows were $189.7 million for the quarter. Free cash flows were $163 million for the quarter. During the quarter, free cash flows were impacted by four important items. First, cash outlays in Q1 for performance bonuses, commissions, and incentives relating to our strong fiscal '21. Second, our restoration of prior year's COVID-related compensation. Third, Q kicks off a planned intentional investment for fiscal '22, as outlined earlier. Fourth, increased CapEx and investments of stronger operations through digital initiatives. We estimate free cash flow as a percentage of revenue to be higher in the 20s for fiscal '22 and expect FCF dollars will increase significantly over fiscal '21. Our working capital is an essential element of our cash flows. Our working capital efficiency remains high with continuous improvements. DSOs were 40 days for Q1 '22 compared to 44 days in Q1 fiscal '21, and every other metric such as customer payment terms, collection efficiency index, and cash conversion cycle are all higher on a year-over-year and sequential basis. Our strong working capital engine gives us confidence in our FCF aspirations and the ability to integrate a potential acquisition into our cash flow framework. We're also introducing this quarter specific free cash flow metrics, including our FCF return on average invested capital, which consistently exceeds the cost of capital, reflecting a strong cash flow return and value creation. For our fiscal 2021, FCF to revenue was 24%, FCF to average total assets was 8.2%, and FCF to average invested capital was 10.8%. From a balance sheet perspective, we ended the quarter with approximately $1.7 billion in cash. We have a $750 million revolver undrawn and fully available, bringing our total cash and committed liquidity to approximately $2.5 billion. Our consolidated net leverage ratio is 1.36x, an improvement from 1.45x last quarter. About the shelf capacity. Today, we're also announcing the renewal of our shelf offering for an aggregate of up to $2 billion in equity and debt securities. We are well-positioned to move should the right M&A opportunity present itself. Now let me turn to our share buyback plans and NCIB renewal. Today, we also announced the renewal of our share repurchase program, and we intend on purchasing from time to time up to $350 million of our stock over the next 12 months. As mentioned during our last quarter, we tend to purchase sufficient stock to at least keep our share count flat in fiscal '22 while remaining flexible in our capital allocation for acquisitions. Turning to quarterly factors. As a reminder, we view our business as annual, and quarters will vary. I would add that while inflation is top of mind for all of us, at OpenText, we're watching the trends closely and putting continuous measures into effect. We have increased our investments in talent, hiring, and compensation with merit increases baked into our fiscal '22 target model. We'll continue to roll out annual pricing adjustments in our customer contracts, and we have a focused operational lens on all our spending, which gives us a substantial envelope to invest for organic growth, as I outlined earlier. Our cash flow position, leverage ratio, debt maturity, and strong balance sheet leave us well-positioned to execute our dividend, buyback, and M&A strategy. Thank you to the entire OpenText team for another outstanding quarter. I would now like to open the call for your questions. Back to you, operator.

This is Jeremy on for Raimo. I was wondering if you could talk a bit about what kind of cross-selling opportunities you're seeing across the 5 cloud products and maybe specifically with regard to the Security and Protection Cloud, if you've noticed like any sort of expansion with some of the SMB customers who came along as part of the Carbonite acquisition.

Yes. Thank you for the question. Let me just start a bit structurally on cross-selling. We've essentially recreated the business in our cloud additions, Content Cloud, Security Protection Cloud, Business Network Cloud, Developer Cloud. And our cloud offerings are inherently integrated, where in the past, they were not. You needed more professional services to get the integrated value. Through engineering and our new destination of cloud additions, it's easier to turn on module 2, 3, 4, and 5 than it is in the off-cloud world. So I'm very excited about that kind of structural advantage we'll have going forward. We're focused right now in bringing customers up from a module to the full suite in their respective cloud. If you're using archive, we want to get you to the full content cloud. If you're using e-signature, which is a great add-on cross-selling opportunity, we want to get you to the full content cloud. If you're using our trading partners, go to the full Business Network Cloud that also allows you to use active community, active invoicing, or sustainability module, etc. So we're very focused on now that we have this destination of cloud additions, bringing customers from a feature or module to the full respective suite. And then look, I think the destination ultimately across the entire portfolio, not any different than ERP, can we get 10% of our installed base using the entire cloud, if you will. But we'll focus on going from module 1 or 2 into the full cloud suite. In terms of SMB, the teams just made really great progress. We have historically sold through RMMs as a part of the Carbonite business. But we've been building up our direct MSP program. And roughly, we ended the quarter with about 16,000 active MSPs. With our new MDR service, we're able to bring those now directly to MSPs and RMMs but also more so directly to SMBs. So the new thing that we're doing is we're focused on MSPs, and we've built up more capacity, and we have a new MDR service that we're bringing to MSPs.

Just following up on that question around the cloud. You mentioned double-digit growth in cloud bookings. Just curious if you could talk a bit about what was driving that growth in bookings, whether it was specific services and also if there were any major wins that drove that growth?

Yes. Thanks, Stephanie. I'd point to a few things here. The first is our strategy is differentiated in that for us, cloud encompasses both off-cloud with integrated services back into the cloud. It's private cloud, public cloud, and our API cloud. I want to maintain the uniqueness of their tailored environments and their deep integrations, and we're seeing a nice competitive uptake against IBM. With the carve-out of Kendra, every FileNet customer and Sterling Commerce customer has to negotiate a new contract with Kendra. So if you were having a managed service with IBM for FileNet store in commerce, you don't want to continue with IBM when you can have control. So we're seeing this as an opportunity to win business at some accelerated rates against IBM. CNA is a great example, a big FileNet customer that didn't want to continue what Kendra had been offering and has come over to the OpenText Cloud. We're in the upper right for Gartner, while IBM is in the lower left. We have a public cloud offering; they don’t. We provide one SLA. You have to go to two companies for IBM. So private cloud was also a driver of growth. G&A is another great example. Our API cloud is picking up a little faster than I expected. We processed almost 100 billion service requests in October alone. So we had some nice wins, as I highlighted on the API side, and also some trends for a return to work drove opportunity. So those are some places where we saw outsized growth. Yes, very good. Look, we like the market we're in: content services, business network, experience, maybe a digital experience platform, security and protection, and SMB. So both in the enterprise and in SMB. I wouldn't like to highlight a particular functional area or enterprise versus SMB, except to say we like the market we're in. We like those adjacencies. We look for open spaces. We look for the ability to expand customers or partners across that landscape. As for the Canadian shelf prospectus, it was time to renew, and the previous one was expiring. Commensurate with our market cap, we felt that upsizing it to $2 billion was appropriate.

Gross margins for license were a bit lower this quarter. I think I heard Madhu refer to royalty payments, maybe just if you could expand on that and just confirm that that was a nonrecurring item.

Yes, Thanos, this is Madhu here. As I spoke about from a gross margin perspective, we did have slightly higher royalty payments on a couple of the license transactions we did, not specific to product related. As you can see, overall, the gross margin was still at 75.7, but I just want to call that out.

This is Mark. Yes. We call it MCV, but it means the new booking value. If we had a customer with $1 million and we signed a contract for $1.5 million, it would be $500,000 of new bookings. So it is the new booking value, not the total contract value, but the new booking value. And that new booking value grew double digits. It was very healthy. It is the first time we've hit double digits on a sustained basis, and this will turn into future revenues, right? As we get customers live and operational.

Okay. Great. And then just if you could speak to the higher rate environment. I mean obviously, you're looking to make some more investments this year. Any potential constraints as far as being able to make those investments ramp up sales accordingly? Or is that not an issue for now?

Thanos, I'm sorry, I had a little difficulty hearing that question. I apologize.

I'm sorry. Yes, I was referring to the higher environment, just given the labor environment as you're looking to make more investments this year, whether that could be a financial constraint or whether you're able to bring on the resources needed relative to the growth you're looking for?

Yes. Got it. Look, we're doing extremely well in hiring. Our prospective employees are, and appropriately so, mission and purpose-led. We've received a lot of feedback, and I'm very excited to announce our OpenText Zero initiatives at OpenText World concerning zero barriers, zero net greenhouse gases, and zero friction. All companies really need is a router hanging on their wall connected to cloud-based services such as the OpenText Cloud. We're beating the market right now on attrition. Our return-to-workplace strategy is flexible first. Engineering and cloud operations are returning to physical workspaces, but it's flexible. We believe we're better together, but in a flexible manner. We're also introducing the call proximity employees, so as long as you’re within 100 to 150 kilometers of an office, we'll come back together for the moments that matter, two to three days a week. We believe you need to be together, flexibly lead with purpose, and I'm proud to say we're beating the market on hiring, attracting, and retaining talent.

So congratulations on that organic growth, it's certainly kind of nice to see. Just wondering if you can elaborate a little bit in terms of the split of the organic growth. Could you maybe sort of share or give us some context in terms of the proportion coming from upselling into the existing base versus net new customer wins?

Richard, it's Mark. Thanks for the question and the comments. Really appreciate it. It's a combination. What is front and center in my mind share is competitive wins against IBM, SPS Commerce, FileNet, and Sterling Commerce, which is probably driving a bit more of the growth than selling module 2 or module 3. There's certainly some of that. Ontario is standardizing in our e-signature acts as an add-on capability to a foundation we have in the province of Ontario. CNA is a wholesale win, just a wholesale win. I look at Magellan Risk Guard; it's going to be a nice add-on feature module 2 or 3 to some customers. So it's a balance, but I'd say it's leaning a bit more to new wins with certainly add-on modules for sure.

Okay. That's great. And just one last question. I noticed that you increased the shelf. Regarding the leverage ratio that you're still comfortable with, is it still in the mid-3s?

We can't hear you; you might be on mute.

Yes, sorry. I was saying that that's right in terms of available liquidity as of now, we are up to $2.5 billion between cash and the revolver. From a ratio perspective, in and around 3, slightly above 3 is where we've headed, and we obviously have a plan to bring it back to lower levels as you've seen in the past.

So Mark, you're quite enthusiastic about OpenText's current product portfolio and vision in the road map. From a bottoms-up perspective, what fundamentally do you see as the gating factor in terms of customers' ability to adopt all of your products or the suite of products to move to more modules? What is holding them back at this point?

Yes. Thank you, Paul. I am enthusiastic, and that is coming through in my tone. The Cloud Editions 21.4, as I said in the past, is going to be a major release for us. We're like 1.5 weeks away from OpenText World. This audience may be different, but I'm speaking about unveiling a bit of 21.4. But it’s about more capabilities now than our off-cloud offering. That's a major milestone. It's pre-integrated because there aren't seven module clouds. It's one integrated platform, and the integration has always been a challenge off-cloud, so it nearly goes away in the cloud. It now turns to configuration, not integration. So we've eliminated that friction. The APIs remove a barrier. I believe we have the sales force to make the connections. Christina's new organization for customer success is also well set up to enable that migration and success. Yes. We'll support our off-cloud deployments fully. Release 16 has begun to reach end-of-life. I mean, I remember when we built and delivered early Release 16, but it's been over 5 years now. It's coming towards the end of life. Those customers need to move forward. We're very skilled at moving our customers from off-cloud to private cloud or off-cloud to public cloud. Now that public cloud has greater capabilities, it's not about product capabilities anymore. I think that's what I wanted to convey. As I said in my prepared remarks, we remain very busy actively engaging with companies. In the past, we've managed to stand out for higher valuations at a time like Liaison or slightly higher than Carbonite to meet a growth profile. At other times, we see a value-based asset, which creates a stronger return and can lead to a certain valuation target. We're growing increasingly confident in our organic growth prospects. Looking back, we can see what we've delivered and our confidence in this year. I think there's an asset class with some higher growth that would lead to a certain multiple or an asset with certain cash flows leading to another multiple. I don't see us compromising on a metric as much as having conviction about getting the cash flow or having the conviction to drive growth. Well, thank you very much for joining us today, and we hope you'll join us at one of our upcoming conferences as you heard from Harry. This is a time to be very visible to our employees and have high touch with our customers and partners, including our key stakeholders such as you. We hope you'll join us at OpenText World as well. Thank you for joining today's call.

This concludes today's conference call. You may disconnect your lines. Thank you for participating, and have a pleasant day.