Thank you for standing by. This is the conference operator. Welcome to the OpenText Corporation Fourth Quarter Fiscal 2025 Financial Results Conference Call. The conference is being recorded. I would like to turn the conference over to Greg Secord, Head of Investor Relations. Please go ahead.

Thank you, Rocco, and good morning, everyone. Welcome to OpenText's fourth quarter and fiscal year 2025 earnings call. With me on the call today are OpenText's Chief Executive Officer and Chief Technology Officer, Mark J. Barrenechea; together with Chadwick Westlake, our Executive Vice President and Chief Financial Officer; Todd Cione, our President of Worldwide Sales; Paul Duggan, our President and Chief Customer Officer; and Cosmin Balota, our Senior Vice President and Chief Accounting Officer. Today's call is being webcast and recorded with a replay available shortly thereafter. All the information in the presentations today are available on the Investor Relations website at OpenText, investors.opentext.com. On today's webcast, we'll have our prepared remarks coordinated with slides on the Q4 financial presentation. This presentation is also available on the website. Please note that if you're logged into the live webcast, you're already set up for the slideshow. I'll point out that there are two presentations on our website: the Q4 fiscal '25 IR results and the Investor Presentation that we use for our investor meetings. Turning to the safe harbor statement. During this call, we'll make forward-looking statements relating to future performance of OpenText. These statements are based on current expectations, assumptions, and other material factors that are subject to risks and uncertainties, and actual results could differ materially from the forward-looking statements made today. Additional information about the material factors that could cause actual results to differ materially from such forward-looking statements, as well as the risk factors that may impact future performance results of OpenText are contained in our recent forms 10-K and 10-Q as well as the press release distributed yesterday afternoon, which can be found on our website. We undertake no obligation to update these forward-looking statements unless required to do so by law. Additionally, 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 in our public filings and other materials available in the Investors section of our website. With that, I'll turn the call over to Mark.

Thank you, Greg, and welcome, everyone, to the start of our new fiscal '26, and a big welcome from Waterloo. Every fiscal year has its journey. For OpenText in fiscal '25, that included completing a material divestiture of our mainframe business, a large business optimization program, the acceleration of our margin opportunity, significant new AI, cloud and security innovations, and our strongest year of capital return. Fiscal '26 is a completely different year, led by growth in a strong product cycle and a robust financial outlook that includes total revenue growth of 1% to 2%, cloud growth of 3% to 4%, adjusted EBITDA expansion of 50 to 100 basis points, free cash flow expansion of 17% to 20%, continued strong capital allocation with a 5% dividend raise, and a new $30 million share repurchase program, as well as a return to M&A. Our priorities for building a stronger and more competitive OpenText remain clear and consistent: to expand our competitive advantage through business AI, business cloud, and business security. Our new MyAviator will bring business AI to every OpenText end user. We will drive total revenue growth through compelling solutions, great distribution, and transformative customer success led by our cloud growth and increasing contributions from business AI and security, along with upper-quartile operating excellence, which means continued margin and free cash flow expansion while creating shareholder value. Our previously announced business optimization has accelerated our margin opportunity, and our medium-term business model focuses on approaching the Rule of 40. The results speak for themselves: Q4 was the first full quarter of Titanium X in the market, and we ended fiscal '25 with strong performance, as seen in the numbers published yesterday. Total revenues were $1.31 billion and we grew organically year-over-year, excluding the impact of AMC, IP rights, and DXC. Our cloud bookings surged to $238 million, a 32% year-over-year growth, all of which translates to cloud RPO. Cloud revenue is $475 million, with a growth of 2%; license revenue is $173 million with a growth of 7% excluding AMC; adjusted EBITDA dollars are $444 million, up 34%, with a strong margin excluding AMC. We achieved impressive cloud wins this quarter across banking, automotive, healthcare, biotechnology, and retail, including 43 cloud deals over $1 million. For the full fiscal year '25, total revenues were $5.17 billion, less AMC down 3%, and less IP rights and DXC down approximately 1%. In our Investor Presentation, a three-year trended slide illustrates the magnitude of total revenues, cloud revenues, and cloud growth rates for our business. Cloud revenues were $1.86 billion for the year, up 2%. I’d like to provide some further color on our cloud business and revenue performance by area. Year-over-year, approximately: cybersecurity was 30%, BN was 30%, content was 25%, OSM and DevOps were 10%, and other segments made up the remaining 5%. Content, OSM, and DevOps each grew faster than 10% year-over-year, while BN remained constant. Cybersecurity showed a negative growth of 4%, which we expect to recover this fiscal year. Also noteworthy is the rebranding of our ITOM business to Observability and Service Management, or OSM, and the renaming of Application Automation to DevOps. Cloud bookings total $773 million, up 10%, aligning with our outlook range. Total RPO increased by 9%, with total cloud RPO up 13%. Our cloud renewal rate reached 96% at the end of Q4—signifying substantial cloud expansion. Adjusted EBITDA dollars of $1.8 billion reflect a margin of 34.5%, up strongly excluding AMC. We achieved an adjusted EPS of $3.82, an increase excluding AMC; and free cash flows totaled $687 million, exceeding the high end of our range, while our ending cash was $1.156 billion. For the year, we allocated a record $683 million to capital return, returning $272 million via dividends and repurchasing $411 million of stock, canceling 14.5 million shares at an average price of $28.29. Fiscal ’25 was filled with strengths and confidence, along with challenges, including the unprecedented trade and tariff turmoil and the divestiture of our mainframe business, which was executed flawlessly. We're focused on rebuilding our margin post-divestiture, modernizing the Micro Focus platform, executing a large business optimization, delivering Titanium X, and creating an AI foundation for the future. We are disappointed that the full fiscal year showed negative growth, which you can see on Slide 10—a clear exception to our long record of growth. Thank you for your feedback this past year. We'll strive to enhance our communications and continue sharing insights to provide an equal view of both challenges and opportunities, as I believe we are doing today. Looking ahead, I am confident in the trajectory of the business. Fiscal 2026 signals an important period of growth for the company. Our priorities for building a stronger and more competitive OpenText remain clear, as reiterated earlier. We are excited about the next wave of innovation in business AI, the MyAviator and Aviator Studio platforms for creating digital workers, and core content SaaS within our business cloud. We will target new verticals like insurance and enhance employee experience through OSM and corporate help desk systems. On the business technology side, we focus on threat detection and response, SaaS Identity and Access Management, and our partnership with Microsoft in the go-to-market strategy. We are a portfolio company, and we anticipate performance from all our businesses while identifying immediate growth potential in content security and observability and service management. Our M&A pipeline across core business units is re-establishing, and we will consider divestitures when strategically advantageous for driving business growth or returning value to investors. The organization is gathering momentum in this focused strategy. Now, let's discuss our fiscal '26 outlook with year-over-year comparisons. On the macro front, global customers are investing and taking control of their platforms via sovereign clouds while also mitigating risks from tariffs and trade uncertainties. Customers are investing in AI, cloud, and security. Fiscal '25 taught us to expect unexpected challenges, underscoring the need to focus on what we control. Our fiscal '26 outlook includes total revenue growth of 1% to 2% while growing in constant currency, total cloud revenue growth of 3% to 4%, supported by strong RPO backlog and new cloud bookings growth of 12% to 16%. We anticipate adjusted EBITDA margin growth of 50 to 100 basis points, free cash flow growth of 17% to 20%, and a planned annual dividend increase of 5%. Moreover, we will initiate the purchase and retirement of $300 million of our stock this fiscal year. Regarding our maintenance business, we expect to cut the rate of decline in half, from a negative 4% in fiscal '25 to a negative 2% in fiscal '26, with a return to growth projected for fiscal '27. Expectations are grounded in our customer support business and further contributions from our recent initiatives. Additionally, our efforts in AI, SaaS, and security are well-positioned to enhance our revenues, with a positive contribution expected from the security sector this year. We believe we have the position to exceed expectations based on stronger demand, adoption, and execution while facing less macro unpredictability. In terms of Q1 estimates, please remember our business is conducted on an annual basis. We operate and make decisions concerning our annual plan. Our quarterly estimates provide short-term insights but will vary within our annual planning context. We project total revenue growth for Q1 between constant to 1% and adjusted EBITDA of 35% to 35.5%. I would also like to introduce our medium-term business model over the next three years, which we refer to as the Rule of 40 growth. This combines total revenue growth plus adjusted EBITDA margin percentages, which we expect to approach 40%. We aim for continuous year-over-year margin improvements while achieving adjusted EBITDA in the mid-to-high 30s and balancing margin expansions with growth investment opportunities. Free cash flow is also a priority, with targets of growing free cash flow over revenue into the high teens and allowing free cash flow growth over our outstanding shares. Capital allocation will continue to focus on strategically deploying resources across M&A, dividends, buybacks, and divestitures, always with the lens of creating long-term shareholder value. We will keep you updated on our progress. In closing, fiscal '26 represents a significant growth period for the company driven by our cloud business and the momentum generated by Titanium X, business AI, and business security. Content OSM and DevOps all showed strong growth last year. Our cloud RPO was up 13%, renewing at rates of 96%—expecting 3% to 4% organic cloud revenue growth and new bookings growth between 12% to 16%. We have strong renewal rates and continue to see a strong outlook for continued growth and expansion. I want to thank all OpenTexters for their excellent performance in Q4 and the momentum heading into fiscal '26, as well as our customers for their enduring trust. We have a strong finance organization, and I want to welcome Cosmin Balota, who is present on the call today and will serve as Interim CFO starting August 15. Our CFO search is active, and we are excited about the contributions an open-market search will bring. I want to express my gratitude to Chadwick for his service to OpenText and wish him well in his continued journey—he's going to excel as a CEO. Now, I’ll pass it over to Todd and Paul, followed by Chadwick.

Thank you, Mark. We're clearly experiencing momentum coming out of Q4 and entering fiscal '26. Market demand is evident, our worldwide commercial team is executing effectively, and our partner ecosystem is more impactful than ever. Additionally, our pipeline is strong and growing. Mark referenced the dynamic global economic environment, which is leading enterprises to seek clear and measurable business justifications before investing in technology. This aligns with our worldwide commercial team's capabilities to guide our customers effectively. We are successfully translating OpenText's Titanium X platform into quantifiable business case value for both existing and new customers. In Q4, we secured significant customer wins, including BMO, Groupe Clarins, HARGASSNER, and Rightmove. I’d like to highlight several strategic victories within our business cloud to exemplify how we are effectively competing. One of Europe's largest healthcare and life sciences companies selected OpenText as a fundamental part of their SAP cloud migration project, benefiting from our SAP cloud-first partnership. A large Canadian financial services organization utilized OpenText Content Management Cloud to support its unstructured data vault for mission-critical business systems. A leading U.S. hospital network chose OpenText's Observability and Service Management Cloud in direct competition with ServiceNow, representing a significant new logo win. A Fortune 100 pharmaceutical and biotechnology firm selected OpenText DevOps Cloud for e-signature solutions to mitigate regulatory risks while supporting their cloud and AI initiatives. This win showcases our continued momentum in assisting highly regulated enterprises to build, deploy, and manage compliant applications. One of Europe's leading forensic research institutions opted for OpenText Fortify Application Security Platform to bolster the security of its business-critical software, marking a significant new logo win showcasing our leadership in secure development within high-compliance environments. Additionally, a top 5 global automotive manufacturer further integrated OpenText Business Network Cloud to manage treasury and global supply chains. Many of these victories were made possible by OpenText partnerships, which are playing a crucial role in our commercial momentum. For instance, our partnership with SAP is an essential aspect of our content management cloud growth, and in Q1, we expanded this partnership to include our experience cloud for resale by SAP. Our collaboration with Microsoft is also flourishing, as we have launched the Cybersecurity Threat Detection and Response offering, which actively integrates with Microsoft’s ecosystem, including Defender and Entra ID. Our GSI partnerships are contributing to growth with larger and more strategic deals, such as collaborating with Capgemini to launch a digital government solution serving agencies across our OpenText content, experience, and security clouds. We are also working with HPE to implement database management and information governance solutions on HPE GreenLake. For technology and ISV partnerships, they are enabling us to deliver differentiated vertical industry solutions to the market. For example, we've collaboratively introduced a joint solution with Guidewire targeting the worldwide insurance marketplace. Our continued investment aims to scale further into financial services through ISV ecosystem partnerships. As Mark noted, we are doubling down on sovereign cloud and sovereign AI. We're thrilled about our recent partnership with TELUS, providing the Canadian market with secure private cloud services underpinned by trusted Canadian infrastructure. We're also noticing increasing demand and execution through our channel partner ecosystem, assisting us in extending OpenText's distribution into the SMB segment, the public sector, and emerging global markets. Finally, our effective sales, marketing, and partner execution have built a solid and expanding full-year pipeline. In fact, our pipeline for licenses is up over 10% year-over-year, while our pipeline for cloud is up by nearly 30%. We're improving our pipeline conversion rates, and in Q4, we achieved the highest account executive productivity we've recorded in the last 8 quarters. We're also increasing our sales capacity to convert our growing pipeline effectively. To summarize, I'm very proud and thankful for our worldwide commercial team's performance in Q4. We kicked off the new year with enthusiasm at our worldwide company and sales kickoff here in Waterloo, and the team is brimming with energy to drive execution in fiscal '26. Partnerships are significantly contributing to our progress, and we've developed a robust pipeline with improving conversion rates. Now, I'll hand it over to Paul.

Thank you, Todd. It’s great to be here with you, Mark, and the rest of the team in Waterloo. I will focus on three areas today: highlights from the prior quarter as we closed out fiscal '25, where our team is concentrated to achieve a stronger outcome for fiscal '26, and what to expect for our maintenance business in the upcoming year. Let's dive right in. Q4 turned out to be a solid quarter for the business. The OpenText renewals flywheel continues to be stable and predictable, illustrated by a net renewal rate of 96% for cloud and 91% for off-cloud, improving 100 basis points quarter over quarter. Our core operating metrics across our recurring revenue business are improving. Past dues have decreased, timely renewals are up, and annual price adjustment (APA) has increased. In fact, we observed all-time record achievements in several categories and closed the year exceeding our bookings plan, including notable large early renewals on the cloud side as customers sought to lock in pricing for the coming years. Growth remains the top priority for our team, driving a singular focus on customer centricity. At its core, customer centricity is a business mindset that ensures every decision starts from a profound understanding of how to best deliver value to our customers. It’s not merely about good service; it’s about proactively anticipating customer needs and shaping our offerings accordingly. We’re targeting three key areas for fiscal '26: enhancing our maintenance business lifetime value, diversifying post-sales offerings, and ensuring customer success through our LOVE model—land, operate, value, expand—approach. A quick example: we reorganized our professional services sales team by practice area, now concentrating on Titanium X upgrades that target those off-cloud customers who are several releases behind, aiming to bring them current with the latest product versions. As for our LOVE model, we are in the second year of rolling out our new cloud customer success initiative, contributing to incremental bookings that bring value to fiscal '25 cloud ARR. In terms of post-sale, this quarter we launched advanced customer support (ACS), expanding our support subscription offerings and introducing a dedicated sales team that will generate new inflows into our maintenance revenues. These programs are strategically designed to bolster growth in fiscal '26. Central to these efforts is a keen focus on the customer, underpinning the consistent achievement of growth through execution excellence. As for the maintenance business outlook in fiscal '26, I’d like to reaffirm last year’s messaging. We are witnessing strength and resilience in our core maintenance operational metrics. With AMC excluded, we finished fiscal '25 with a decline rate of 4%. Our Q4 decline rate was 3%, reflecting substantial improvements compared to Q3. Our outlook anticipates a decline of just 2% for fiscal '26—essentially halving the year-over-year decline. Moreover, we expect ARR to revert to growth during fiscal '26, with cloud growth outpacing the maintenance decline. Clearly, we have positive momentum heading into the maintenance business resurgence, which we project to achieve by fiscal '27. Our operational metrics are illuminating green signals. New revenue channels are being added to our maintenance business, and selling new licenses will contribute to incremental maintenance revenue streams. Moving forward, as cloud continues its ascent, these initiatives provide an opportunity to shift the focus toward ARR, RPO, and CRPO while including maintenance in strategic conversations. In summary, our confidence has been strengthened with our Q4 results. I observe undeniable momentum within the business, and there is much to be excited about as we approach the year ahead. With that, I will turn it over to Chadwick.

Thank you, Paul, and good morning. I will provide further context regarding Q4 results and OpenText's growth momentum as we head into fiscal 2026. It was an excellent outcome with $238 million in enterprise cloud bookings for Q4, reflecting a year-over-year increase of 32.3%, thereby closing out fiscal 2025 within our annual target range of 10.1% total growth. Our results encompass full-year RPO and CRPO with year-over-year comparisons, capturing the strength of our cloud backlog. When discussing our cloud business, we focus on four key metrics: cloud revenue growth, enterprise cloud bookings expansion, cloud renewal rates, and new cloud bookings. Cloud CRPO is a subcomponent of RPO and offers visibility into the portion of cloud RPO committed over the next 12 months, encompassing all our cloud product offerings—Enterprise and SMBC, new and renewed—which provides a clearer view of our cloud business. Given the bookings progress in Q4 and our expectations for fiscal '26, OpenText is positioned for growth. We reported strong annual recurring revenue (ARR) of roughly 81% in Q4, up about 20 basis points year-over-year. As indicated on Slide 22 for Q4, cloud revenues amounted to $475 million, a 2.1% year-over-year rise, representing approximately 36.2% of total revenue. Q4 marks the 18th consecutive quarter of cloud organic growth, driven by demand for our AI readiness and robust content and cloud offerings. Our non-GAAP cloud gross margin increased by approximately 40 basis points to 63.2% year-over-year. Customer support or maintenance revenue for Q4 stood at $581 million, while the full-year total closed at $2.334 billion, slightly exceeding our expectations. Progress continues on this front as Q4's non-GAAP maintenance gross margin remained robust at 89.2%, up 20 basis points year-over-year. Overall, Q4's non-GAAP gross margin was recorded at 76.2%. We're adding additional disclosures to provide deeper insight into areas where cloud revenue growth exceeded expectations for fiscal '25, particularly in content, DevOps, and Observability and Service Management. Now, turning to the bottom line. We achieved a solid adjusted EBITDA margin of 34.5% for the overall fiscal '25, surpassing the top end of our targeted range of 33% to 34%. This achievement is attributed to our progress with business optimization as well as higher revenues in Q4. Last quarter, we expanded our business optimization plan, aimed at generating total annualized savings of approximately $490 million to $550 million, of which we realized about 35% during fiscal 2025. Our fiscal '26 outlook captures another 35% of these benefits, and after reinvestment, we expect continued adjusted EBITDA margin expansion. To date, we have invested around $128 million, with the plan scheduled for substantial completion by the second quarter of fiscal '27, totaling an estimated investment of approximately $260 million. In Q4, we generated $687 million in free cash flow, which was $37 million above our target range. Year-over-year, our interest expense declined, showcasing the positive impact of the business optimization savings. The Resilient OpenText operating model, with revenue growth, ARR durability, margin expansion, and free cash flow generation, offers us flexibility to allocate our capital strategically across M&A, dividends, and share buybacks. The Board of Directors approved a cash dividend of $0.275 per share for the first quarter of fiscal '26, with a record date of September 5, payable on September 19, 2025. We will maintain our strategic and flexible approach to capital allocation. Adjusted EPS was also strong in Q4, reported at $0.97 diluted, reflecting a 1% year-over-year decline, but indicates an increase year-over-year once adjusted for the impacts of the AMC divestiture. This outcome was supported by repurchasing and canceling 14.5 million shares in fiscal 2025. Our momentum continues with the announcement of a new $300 million share buyback program in fiscal 2026. In closing, I echo my sentiment from last quarter; this is a favorable time for investors to hold and purchase OpenText stock. We are leaders in information management with a substantial installed base, loyal customers, strong core businesses, and an earnings profile that is clear. I am confident in OpenText's ability to reinvest strategically in products that outperform while delivering meaningful returns for our investors. I thank Mark and all my OpenText colleagues for the privilege of working with such an extraordinary group. This is an iconic Canadian company, and I am proud to serve our stakeholders. Now, Rocco, can we open the floor for our equity analysts for Q&A?

And our first question today comes from Raimo Lenschow with Barclays.

Thanks for all the clarity in the presentation. Mark and team, obviously, there's the stuff that you can do, but then there's the stuff that kind of is given to you in terms of the economy. You talked a lot about like what you're doing at the moment. What are you seeing though from end demand, customer behavior, et cetera, at the moment given all the uncertainties? And maybe just kind of break it down by region. And then I had one quick follow-up.

Sure. Raimo, thanks for the question. I'll start by saying we are noticing a strong and positive trend towards sovereign cloud. With our unique position as a global company that has strategically invested in operations and cloud infrastructure, we can offer local control. We are actively deploying Sovereign cloud solutions across multiple countries including France, Germany, and the U.K., with further initiatives planned in Canada, Japan, Singapore, and Australia. In fact, we view sovereign cloud as an opportunity in our business and expect strong bookings growth in fiscal '26 between 12% to 16%. Simultaneously, we observe customers striving for more control to deploy on-premise, and we are well-positioned to facilitate that choice. Notably, we see the recent volatility creating a net positive demand driver for us. That said, we are experiencing some delays from customers, particularly in the supply chain response reflected in our constant Business Network revenue. Overall, we are optimistic about our future, assisting customers in regaining control while concurrently advancing their strategic projects.

Okay, perfect. And then the I like the additions to talk about maintenance a little bit. Bringing that to that 2% decline line, is that how much of that is kind of operations? And then is there also an element that you can do to think about pricing?

Raimo, Paul Duggan. Thanks for the great question. There’s a short answer and a long answer. The short answer is the maintenance decline rate is improving due to the consistent focus on performance and growth progress over the past year or two. The longer answer centers on three essential areas. Maintenance business health will always revolve around key operational metrics, serving as critical indicators of installed base performance strength. As illustrated, Q4 net renewal rates were up 100 basis points quarter-over-quarter. We have also reduced cancellations, improving both past due and on-time metrics significantly. We’ve set records, indicating that we've established positive momentum. Besides, our annual price adjustment, or APA, was indeed up in Q4, suggesting a proxy for the value that clients recognize in our roadmap. In an effort to add value, we initiated a launch of advanced customer services, or ACS, this quarter, which will introduce upsell opportunities for premium services on top of maintenance. Finally, as we alluded to the past quarters, we encountered challenges in license, in OSM, and other areas along with one-time setbacks (notably DXC). The core objective is a consistent improvement in our business metrics, and we anticipate the positive outcome of ACS will enhance the maintenance business progressively.

And our next question comes from Samad Samana with Jefferies.

This is actually Billy Fitzsimmons on for Samad. The new disclosures on cloud growth and cloud as a percentage of revenue are very helpful for us. Can we dig into those numbers a little more? Which cloud or business units are seeing outsized growth because of accelerated on-prem to cloud migrations? Where is growth driven by customer demand for products? At this point, what are some businesses where you believe there's extra work needed to achieve higher growth?

Thanks, Billy. Appreciate the question. All our disclosures revolve around offering singular insights into our cloud business and opportunity. Last year, we initiated our RPO disclosure, and while we did not have prior history, we wanted to track it. As it stands today, our total cloud RPO is $2.5 billion, showcasing a 13% growth. The total current RPO reached $1.2 billion, a rise of 8%. Additionally, the total long-term RPO was $1.1 billion, with a growth of 17%. Cloud renewal rates are at 96%, which continues to strengthen. ARR is anticipated to return to growth in '26, and the additive cloud revenues will outpace the decline in maintenance revenue. Total cloud bookings for '25 reached $773 million, exhibiting a growth of 10%, and we project total bookings in '26 to grow between 12% and 16%. Concerning specific segments, approximately 30% of our cloud revenues stem from cybersecurity, an additional 30% from the business network, with content at 25%, OSM and DevOps accounting for 10%, and other segments collectively constituting 5%. While content, OSM, and DevOps each showed growth above 10% last year, BN revenue remained stable, and we aim to boost that growth in '26 through AI initiatives and new control tower technologies. Unfortunately, cybersecurity posted negative growth of 4% last year due to the SMBC business, but we have plans to revert this sector to positive growth.

And our next question today comes from Richard Tse with National Bank Financial.

Yes, thanks for all those disclosures. Regarding the fiscal '26 growth numbers, how much of that is already visible in your RPO?

Yes, Richard, great to hear your voice, and thanks for the question. Our illustrative slide in Chadwick's portion outlines bookings flowing in consistently for CRPO. Our cloud current RPO comprises roughly 60% of our revenues. That percentage reflects the current state of the balance sheet flowing into the revenue stream, and our aim is to push that percentage higher over time. In this year, as Todd mentioned, cloud pipeline increased by 30%. We plan to amplify opportunities within our installed base, drive expansion capabilities, and win new business, generating new revenues. Therefore, we maintain strong visibility with our expectation for a 3% to 4% organic cloud revenue growth in fiscal '26.

Okay. And then a second question here. It was interesting to hear your comments on restarting M&A. What conditions would have you pursue that? Would it involve deleveraging the balance sheet? You mentioned potential divestitures. Following those conditions, what types of assets would you focus on? Are you looking to deepen your focus in content management or explore opportunities outside of that?

Yes, thanks for the question. We believe our balance sheet is ready for the right acquisition. We are mainly interested in cloud technologies that will further support outperforming segments of our business. Our team is rebuilding our pipeline, with a consistent approach towards crafting strong financial and strategic platforms. We will assess potential divestitures when they make strategic sense to drive higher growth rates. Our ultimate goal is to continue accelerating organic cloud growth; we had 2% growth in '25—with a projected 3% to 4% growth outlook for next year. The question is rooted in enhancing our cloud's growth trajectory.

And our next question today comes from Stephanie Price at CIBC.

Thanks for the additional disclosures this morning. As you assess the different business segments, where are you currently investing the most, and where do you see the highest opportunities moving forward?

Steph, thanks for the question, and thank you for attending the call today. We aim for all of our business areas to perform well. However, when managing a comprehensive portfolio, we identify specific categories with potential for greater performance. We perceive opportunities to excel in the content, security, and OSM sectors as we enter the year. We are also keen to revitalize growth in business networks, which has remained constant, and anticipate substantial contributions from our cybersecurity initiatives over the long term.

Thanks for the insight. Switching to the expanded restructuring initiatives, it appears the timeline has shifted a bit, with some earlier wins than expected. Can you share what you've accomplished to date with the restructuring and what remains to be done?

Yes, Steph. We remain on plan and on time, with no adjustments to the timeline. We have expedited some opportunities and commenced strong efforts, achieving 35% in '25, with expectations for another 35% in '26 and completing the remainder in the first half of fiscal '27. We have acted swiftly on workforce rebalancing, allowing reinvestment in the business. You've heard Todd discuss salesforce expansion and product diversification in AI and security. So, we moved promptly to achieve operational efficiency.

And our next question today comes from Paul Treiber with RBC Capital Markets.

The positive comments regarding pipeline growth for both cloud and licenses are encouraging. You've acknowledged this trend has existed for some time now, what has fundamentally changed to drive improvement? Also, how sustainable is this uplift in pipeline?

Thank you, Paul, and it’s great to hear your voice. I’ll begin the answer and pass it to Todd. The first full quarter of Titanium X launched is exhibit A. We have been emphasizing that Titanium X represents the largest engineering initiative in the company’s history over two years, developing security, AI, trusted cloud, and sovereignty. Q4 marked our first complete quarter with Titanium X in the market, allowing us to showcase our robust AI capabilities and driving bookings and pipeline expansion. Todd, go ahead.

Yes, thanks, Paul. Our pipeline builds from several sources: demand generation, sales team output, and partner contributions, all areas where we are executing well. The next step is effective conversion of that pipeline. Our sales force and partners are highly competent, as I noted in my prepared remarks, managing to translate Titanium X into value through business cases in our current macroeconomic environment. We are enthusiastic about the trends visible both at the top of the funnel and in their conversion into value.

If I could pose a second question...

Just before you continue, Paul, I want to take a moment to recognize the leaders on this call: Paul and Todd. They have truly excelled as business partners through the adoption of our dual-president structure. Their collaborative approach, respectively leading both the new business and post-sale segments, also grants me more opportunities for strategic focus on our products. I'd be remiss if I didn't highlight this outstanding leadership team.

Wonderful to hear about the leadership team! On my second question regarding free cash flow, I admired the 17% to 20% growth for fiscal '26. Are there headwinds or one-time elements we should account for when evaluating free cash flow conversion?

Yes, Paul, thanks for the inquiry. I can state plainly that we expect free cash flow growth in the range of 17% to 20% year-over-year. Last fiscal year, we had a significant one-time item, specifically a $250 million tax related to the gain from the divestiture. Some analysts may not have accurately incorporated this into their models for fiscal '26, which could stem from a knowledge gap or our communication of these elements. Regardless, we are optimistic about our forecast for '26. To summarize, an outlook of 17% to 20% free cash flow growth sounds favorable.

I echo that sentiment, Paul. The only additional consideration could arise from potential changes on the U.S. tax front. For now, we assumed constancy in tax levels post-Q4 along with any potential headwinds or tailwinds. However, we are comfortable with our assumptions. Overall, our model for fiscal '26 remains strong.

Indeed, we expect to maintain the adjusted tax rate from the K, and we don’t foresee any extraordinary items in '26. We're looking at a clean operating environment moving forward. Our outlook remains robust, aiming for a year-over-year expansion of 17% to 20%.

And our next question today comes from Kevin Krishnaratne with Scotiabank.

I joined a bit late. Apologies if some of these have been asked. I appreciate the insights on the cloud breakdown. Can you clarify if you're indicating that you will grow cybersecurity this year or if that's a future goal? Will cybersecurity still be positive this year? Additionally, on the slide regarding the business network's 30%, how much of that comprises transactional elements?

Our focus is to turn the current negative 4% growth in cybersecurity into positive numbers for '26. That’s our straightforward intent. Regarding the business network, I would prefer to address that separately to grasp your inquiry better.

Okay. No problem. My second question pertains to your capital allocation. You provided insight into the midterm plan. Can you elaborate on the divestiture aspect of it? Following up on your previous call, can you further break down which businesses are performing or outperforming, as well as your thought process on potential timing and valuations?

Absolutely. We will consider potential divestitures that align with our strategic priorities. Our rationale centers around accelerating growth rates. Each segment in our portfolio warrants thorough evaluation, seeking to maximize performance. We want to capitalize on strong areas but also recognize categories that may either be undervalued or not aligned with our vision for the future business growth trajectory. Like the recent mainframe divestiture, which was profitable yet did not support our forward-looking initiatives to grow our cloud segment. Our singular focus is on enhancing organic sales growth in the cloud.

And our next question today comes from Seth Gilbert at UBS.

Q4 free cash flow was stronger than I had modeled. Can you elaborate on the drivers for this? Did anything notable occur in Q4, such as early renewals or temporary lifts?

To be honest, the results were generally in line with our expectations, yet improved by robust core revenue outcomes and progress with business optimization. We did not experience any atypical items; this was core operational advancement, Seth. Overall, a great outcome that we are quite proud of.

Understood. As a follow-up, I want to express appreciation for the additional cloud growth insights. Could you describe what’s driving the acceleration? Are the contributors primarily the segments of content, OSM, and DevOps that are all enjoying continued strength? Or are you looking at certain areas, such as business network or cybersecurity, that still require additional effort?

Thanks, Seth. Content, DevOps, and OSM, all maintaining a strong pace of growth exceeding 10%, are distinctly impressive. We know the goal is to shift business network from stagnation toward growth, as indicated. We're excited about our new AI translation tool and significant wins to be made there as we aim for improving growth prospects. Cybersecurity has a central role to play as we strive to transition from a negative 4% growth to more favorable performance.

Thank you. This concludes our question-and-answer session. I'd like to turn the conference back over to Mr. Barrenechea for closing remarks.

Thank you, Rocco. As you can see, fiscal '26 is a year characterized by expansion and growth. I look forward to dedicating time to discuss the year ahead, while also listening and driving enhanced performance. I will personally attend several forthcoming conferences and events, such as the Oppenheimer Virtual Technology Conference on August 11, the National Bank Financial Montreal Roadshow on August 14, Citibank's Global Tech Conference in New York City on September 4, and the BMO's Tech Conference in Toronto on September 9. I look forward to sharing insights and engaging with you all, and I appreciate your time today. That concludes today's call.

Thank you. This concludes today's conference call. You may now disconnect your lines. We thank you for participating and wish you a pleasant day.