Thank you for standing by. This is the conference operator. Welcome to the OpenText Corporation Fourth Quarter Fiscal 2022 Earnings Conference Call. [Operator instructions] And the conference is being recorded. [Operator instructions] I would like to turn the conference over to Harry Blount, Senior Vice President, Investor Relations.

Please go ahead, sir..

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 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 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'm pleased to hand the call over to Mark..

continued enterprise cloud bookings of 15% plus, total revenue organic growth between 2% and 4%, increased bookings to drive increased cloud organic revenue growth of 6% to 8%. This is really important, I want to repeat this. Our three-year aspiration, our fiscal 2025 medium-term aspirations includes cloud organic growth revenues of 6% to 8%.

ARR up to 85% of total revenue, adjusted EBITDA margin between 37% to 39% given our increased R&D investments to drive more cloud growth. And annual cash flows of approximately $1.1 billion and the slight change is due to the U.S. dollar strength and our updated non-GAAP tax rate in the low-20s.

Continued capital allocation of 33% of free cash flows to dividends and buybacks. Let me wrap up my prepared remarks before I hand the call to Madhu and then your questions. We're prepared for this dynamic environment. And we prepared uniquely in the OpenText way for the opportunity that we see for OpenText.

We are investing to outcompete our rivals and our R&D and cloud investment for F'23 is up $75 million to a total of $1 billion in annual investment driving Titanium, the OpenText Zone, increased distribution, and the OpenText LOVE model. We're also preparing for a better company and a better tomorrow.

Today, we published our third corporate citizenship report. Please read it. It reflects our culture, our commitments to our employees, our commitments to our customers, to our partners and our commitment to you and to the world around us and the communities in which we live and work. We welcome and value your feedback. I'm an optimist.

I deeply believe the future is brighter than today because the future is made of the best parts of today. OpenText is committed to ensuring that growth, that our growth is based on inclusivity and sustainability. I recently came back from just a fantastic customer employee tour in Europe. Let me put a customer.

Time and people are the greatest assets of our company, and it's time for radical prioritization. At our strategic technology table is Microsoft, Oracle, SAP, Salesforce, Google and OpenText.

"OpenText has demonstrated amazing flexibility, time to value and unwavering commitment to us during the pandemic, and you earned your seat." It's time to standardize on companies built for the long-term like OpenText.

I'd like to thank our employees, our customers, our partners, and our shareholders for your continued trust and confidence in OpenText. It was just a fantastic fiscal year. We're off to a great start in fiscal 2023. We're humbled and proud to help advance your mission and goals and work and to make OpenText in the world better for everyone.

We're that brings peace, bring peace for all. With that, let me turn the call over to our amazing CFO, Madhu Ranganathan. Madhu, over to you..

Thank you, Mark, and thank you all for joining us today. All references are in millions of USD and compared to the same period in the prior fiscal years and are on a quarter basis unless stated otherwise.

As I shared our strong results in the quarter, and full year ending June 2022, and let me start with entire OpenText team's execution during the quarter and the fiscal year, which was remarkable, and now let me expand in Q4 fiscal 2022 results.

Q4 revenue; we are very pleased with our record Q4 revenue, our record annual recurring revenue and record cloud revenue. On revenues and adjusted EBITDA, we are well within the expectations shared with you as part of our quarterly factors in May 2022. First on foreign exchange, the U.S.

dollar strengthened throughout the quarter, creating an additional headwind beyond what we shared back on May 4th. Foreign exchange in Q4 was a revenue headwind of $33 million, impacting customer support and cloud revenues the highest. We grew total revenues 4.7% on a constant currency basis and 1% on a reported basis.

Cloud revenues grew 16.6% in constant currency and 14.3% in reported currency, and our sixth consecutive quarter of organic growth. Strong renewal rates of 94% in cloud and 94% in off-cloud, and we see this continuing given strong performance of our renewals organization and customer validation.

And now moving to other financial metrics; GAAP-based net income was $102.2 million during the quarter, down from Q4 of fiscal 2021 income of $181.3 million due to Zix integration, higher special charges including our facility optimization and lower year-over-year equity gains on limited partnership investments.

Adjusted EBITDA for Q4 was $313.6 million or 34.8% of revenue versus $314.8 million or 36.2%.

As you see in our Q4 results, on a non-GAAP basis, cost of sales and operating expenses were higher by $12 million year-over-year as we proactively balanced the integration of Zix, our foreign exchange expense, plus the continued investment in growth focused R&D, marketing and automation-related internal technology projects.

Operating and free cash flows. We generated $251.9 million in operating cash flows. Free cash flows in the quarter were $213.8 million or 23.7% of revenue. During the quarter, consolidated DSO, day sales outstanding, were 43 days, consistent with the same quarter a year ago.

Our team continues to deliver strong working capital efficiency and conversion from adjusted EBITDA to free cash flow. Our conversion rate from adjusted EBITDA to operating cash flow was 80%, and a high conversion of 85% from operating to free cash flow. Now let us move to our full fiscal year 2022.

We generated record revenue, ARR, and sales revenue for the full fiscal year. As we accelerate our business into the cloud, we believe the better way to measure our business tempo is enterprise cloud bookings plus reported revenue.

For fiscal 2022, our enterprise cloud bookings were $466 million, representing strong double-digit growth over the prior year.

The growth is broad-based across our enterprise product offerings, and we're seeing a growing number of large multiyear cloud deals with an average commitment of over four years, reflecting the strategic importance of OpenText to our customers. A few trends relating to our enterprise cloud bookings.

The trend of larger deals defined as $1 million contract value continued during the fourth quarter. Content Cloud was strong in telecommunications, utilities, and retail.

Our Experience Cloud growth of strong insurance, healthcare and chemical manufacturing, while Business Networks saw strong cloud-driven sectors that rely on supply chains such as food and beverage, manufacturing, automotive, and retail. We will begin to disclose enterprise cloud bookings every quarter on a trailing 12-month basis.

On revenues for the year, we grew total revenues 4.3% on a constant currency basis, 3.2% on a reported basis and 1.7% on an organic constant currency basis. Cloud revenues grew 9.8% in constant currency and 9.1% in reported currency and 3.6% on an organic constant currency basis.

ARR revenue grew 5.5% in constant currency, 4.5% on a reported basis and 2.2% in organic constant currency. The impact of foreign exchange to revenue for the full year was $39 million, most affecting customer support and cloud revenue.

And now moving to other financial metrics; GAAP based net income was $397.1 million, up 27.8% from $310 million in fiscal 2021 due to lower tax provisions relating to the prior year IRS settlement, offset by higher costs from Zix acquisition, our facility optimization charges, and debt extinguishment related to our successful refinancing during the year.

Adjusted EBITDA for fiscal 2022 was $1.26 billion or 36.2% of revenue versus $1.32 billion or 38.8% of revenue in fiscal 2021, once again, reflecting our continued investments in cloud, edge, security, and Zix integration. We remain on track to have fixed operating model by December 2022.

Operating and free cash flow; for fiscal 2022, we generated $981.8 million in operating cash flows and $888.7 million in free cash flows or 25% of revenue. The conversion rate from adjusted EBITDA to operating cash flow on an annual basis of 78% and a high conversion to free cash flow of 91% given our continued CapEx efficiency.

Now moving to balance sheet and liquidity. We ended the quarter with $1.7 billion of cash, another $750 million available on our undrawn revolver and a very strong net leverage ratio of two times and approximately 75% of our debt on fixed rates. Let's turn to outlook, our updated targets and aspirations. The U.S. dollar remains strong.

We plan our business in constant currency, and we will present our business this year on constant currency basis, but our four new factors, total growth strategy and medium-term aspirations. For the first quarter of fiscal 2023, you will see our quarterly factors outlined on Page 7 of the investor presentation.

For Q1, on a year-over-year basis in constant currency, we expect cloud revenues up 13% to 15%. ARR up 6% to 8%. Total revenue is up 4% to 6% and FX revenue headwind of $40 million to $45 million.

Adjusted EBITDA dollars flat year-over-year in constant currency, while continuing to make investments in cloud, in security and edge, and continued integration of the Zix acquisition. We expect FX to be an adjusted EBITDA headwind of approximately $20 million.

Our fiscal 2023 total growth strategy in constant currency we have provided on Page 8 of our investor deck. Enterprise cloud bookings of 15%-plus, total cloud revenues up 6% to 8%. ARR up 3% to 4%. Total revenue growth, up 3% to 4%. At current exchange rates, FX would be a headwind of approximately $100 million for the full year.

As noted on Page 9, our fiscal 2023 target model remained largely unchanged from fiscal 2022 level, except for an increase in net interest expense of $12 million to $22 million and a decrease in CapEx of $3 million to $13 million.

Our fiscal 2025 aspirations are provided on Page 10 of our investor deck and specifically, enterprise cloud bookings of 15%-plus growth. Organic revenue growth of 2% to 4%, led by cloud organic growth of 6% to 8%. ARR at 85% of total revenues.

As you can see from our results, outlook, and medium-term aspirations with respect to cloud revenue, we have grown cloud revenues from zero in fiscal 2012 to $1.5 billion in fiscal 2022. We delivered 9.8% constant currency total growth in the cloud in fiscal 2022.

We are communicating today fiscal 2023 outlook to deliver 6% to 8% constant currency total growth in fiscal 2023 through cloud revenue. Most important, constant currency organic growth in the cloud improved from 1.8% in fiscal 2021, to 3.6% in fiscal 2022.

And today, we are communicating our medium-term aspirations outlook of 6% to 8% organic growth in fiscal 2025.

This truly reflects OpenText's acceleration to the cloud with emphasis on cloud organic growth leading, acquisitions remain a strong optionality and consistent with our total growth strategy of grow, retain and acquire; this is a fantastic accomplishment. So moving to adjusted EBITDA margin for our medium-term aspiration, 37% to 39%.

Free cash flows of $1.1 billion plus, with an opportunity to do better through stronger revenue, improving currency exchange and higher benefits from tax structure optimization. We expect our effective tax rate to stay at approximately 14% in fiscal 2023 before moving to the low-20s in fiscal 2025. And finally, let me echo Mark's comments.

The relevancy of our technology and expertise for customers has never been higher. OpenText is not just prepared for the future. We are well poised to thrive.

With our strong financial model, we expect continued investments for growth and innovation, remaining focused on both creative and ongoing actions, operational excellence, and disciplined execution. In summary, for all of us at OpenText, it was a remarkable finish to our fiscal year.

On behalf of OpenText, I would like to thank our shareholders, our loyal customers, and partners. A special thank you goes out to my OpenText colleagues around the globe. Thank you. You are the best in industry. I will now open the call to your questions..

Thank you. [Operator instructions] The first question comes from Stephanie Price of CIBC World Markets. Please go ahead..

Hi. Good evening..

Hey Steph..

Hey.

On the other 15% cloud bookings expected in fiscal 2023, I was hoping you could walk through the cloud offerings that you see driving the growth there?.

Yes. Sounds great. Very happy to. So, first, Stephanie, we're going to introduce new bookings and – for the year and going forward. And we're going to keep you up to date quarterly. We do that on a trailing 12-month basis as Madhu said, so we can keep a lot of visibility right on here and this is enterprise bookings for us.

It does not include SMB, its enterprise bookings. There're a variety of – the two top of the list are continued strength in customers migrating from off-cloud to our cloud for the content cloud. This is the continued digitalization, finding, being a bit short on resources, skills, security, compliance, they need to go global on workflows.

So just that continued drumbeat of digitalization for the content cloud.

Second, or code number one, I would rather, is we're seeing a lot of activity in the supply chain as companies are in full throttle for regionalization and derisking from around the world, getting more control of just-in-case inventory, more control towers and a new set of requirements around their 2030 pledges.

Even whole of the macro, we see just a sustained commitment to 2030 pledges. We were Toyota's partner in the supply chain as they drive toward their 2030 electrification goals, for example.

So, Stephanie, I'd put a continued drumbeat of digitalization in the content cloud and supply chain, code number ones driving toward what we think is going to be strong double-digit growth in our cloud bookings. And just to recall, that's kind of base of $466 million of new bookings in 2022 and a 15% plus in fiscal 2023..

That's helpful. And then maybe the other side of the equation, can you talk a bit about the incremental $75 million in cloud investments in fiscal 2023.

What are the major investments in the roadmap? And maybe related, it looks like these investments will continue into the future given the fiscal 2025 aspirational margins about 100 basis point below the fiscal 2024 one.

So maybe talk a bit about what you're seeing going forward there?.

Yes, very good. Put that $75 million additional and total $1 billion in R&D and cloud operations. Number one, Titanium objective; public, cloud, parity to our amazing private and off-cloud capabilities, top of the list. Second is security and compliance. We just see a – just a huge opportunity to be the trusted cloud operator and information management.

They don't meet the requirements of a data zone in France, a data zone in Germany. We're seeing customer’s post-Russia's war on Ukraine, we're seeing commercial customers ask for banking level-type security in the private cloud.

We think literally only a handful four or five companies around the globe can deliver these type of requirements, whether they be HIPAA, SOX, BaFIN, data zones, sovereignty type data zones, and sovereignty type requirements. So Steph that would be the second area. And then third is what we call the OpenText zone.

We're going to compete – we're just getting started in SMB. I mean, it was an amazing two-year journey from zero to approaching $700 million of revenues. And there's a lot of automation we're going to put behind growing our MSPs and RMMs all through automation, self-service, trying, buying, downloading installed base management.

So those are the three big areas that we're going to – can see the lion's share of the $75 million..

That's helpful. Thank you very much..

The next question comes from Raimo Lenschow from Barclays. Please go ahead..

Great. Thank you. This is Jeremy on for Raimo today. I wanted to ask also on cloud.

Just on the performance in the quarter, can you speak to how much of that is net new versus customers migrating over from licenses? And then, in terms of product, anything kind of stand out across content or network or security? Or would you say it was pretty consistent from past quarters across the board? Thank you..

Yes. So Jeremy thanks for the question. Yes, we're not breaking out that, which is brand new versus – that which is a migration or just like a pure migration or migration in a new workload or a new customer. But I can tell you, it's really a mixture of all of that.

And, look I think the second half of last year was stronger than the first half for our cloud bookings. So we look at the $466 million of – this is new value. This is the total value of what we booked. This is only the incremental value to those cloud bookings. So the second half of the year was certainly stronger than the first.

We're going to keep everyone updated quarterly here on a trailing 12-month basis, so you can track our progress to this double-digit new booking value for enterprise cloud growth. But, Jeremy, actually it was a mixture of those – the installed base migrating, which is still the No.

1 opportunity we have to migrate our installed base to migrate and add new workloads. Like we've had some customers add eSignature that were either migrating or just moved. And then completely new customers like Close Brothers in the cloud. So a mixture of all three..

Thank you..

The next question comes from Richard Tse from National Bank Financial. Please go ahead..

Yes. Thank you. So kudos on the continued execution there.

With respect to the macro environment, I understand you said that it's in your outlook, but what are your customers saying today about their budgets for tech spending as we look for the remainder of this year? Are they feeling kind of continually optimistic? Or are they kind of perhaps putting some pause or slowing the cadence of some of the projects?.

Richard, yes, thanks for the question. Good to hear from you. I would say, on the demand side, in aggregate, our demand is steady. We have strong visibility and it supports our outlook for the year. And this is a strong outlook, a double-digit 15%-plus cloud bookings growth.

We're looking to grow our cloud revenue, which takes bigger bookings, right, between 6% to 8%, and then total growth between 3% to 4%. And so I'd say, in aggregate, demand is steady. We got very strong visibility and it supports the outlook we have for the year. Let me drill down just into a little bit and maybe into three places around the world.

In Germany, there's a lot of attention on Germany, of course, a lot of activity, fuel costs, a lot of headline news. But we're very strong in government heavy manufacturing, heavy industries manufacturing. And should there be a downturn in Germany, we're in a great position because we're going to be where customers are spending.

Government, defense, aerospace, heavy industries manufacturing, there's always been a – look, in our history there over a decade is well chronicled that were this all-weather business in Germany because of our sector exposure. We're paying a lot of attention to the U.K. as well.

And that's a little more on the inflation side versus the spend side, and we talked about our win program with Inflation Now. We got a lot of campaigns around that. And I'll tell you in the U.S., demand is very strong. And the U.S. economy is not predetermined to go red, not predetermined. So, look, our demand is steady. We got very strong visibility.

We're paying attention to Germany and U.K. very uniquely and more apparel in the U.S. right now..

All right. Okay. And then you made some comments on the cloud bookings, and thanks for providing more disclosure going forward on that.

But I just want to clarify, is that kind of all organic here? Or does that include some acquisitions?.

100% organic..

Okay. Okay. And the last question for me is, obviously, the labor market has been fairly tight.

Given your stability, are you finding it easier to retain talent and bring on new talent?.

Another great question, and look, I'm going too – short answer is yes. Our talent and company brand has never been stronger. I'm just back from a great trip in Europe. I was with customers and our team in France, in Germany, the Netherlands, U.K. I've been traveling throughout the U.S.

I'm here in Waterloo right now, preparing for a trip to India next month. And let me zone in like India because it's probably our largest hiring market. We are 100% back to work in India, 100%. And it's invigorating, right, to see the teams back with such intrinsicness [ph] and robustness. So our talent in corporate brand has never been stronger.

We are competitive in the market, and this is going to support our 2% headcount expansion. Like a lot of companies, we're going to put a lot of weight behind performance reviews this year, right, and raise the bar internally on our expectations of all of us.

But we're in great shape, Richard, for hiring and meeting our talent needs for the year, specifically in places like India and the Philippines..

That's great..

Yes. And if I could just – I'm sorry, if I could just add, this is might be here to your question on the bookings for the benefit of you and maybe others on the call as well when Mark explained organic. So these are new, these are incremental.

These are kudos to our sales team, and this is what the sales team brings new business, new contract value each year. Again, I just wanted to expand on your question and Mark's answer. Is this new, is this, I mean, like big organic, 100%..

Like the milk carton, 100% organic. So we do – we do if I just can't – if you don't mind me calling on you, you're just back from India. Maybe share your voice on your trip to India and Team OpenText India..

Yes, fantastic. Well, thank you, Mark. So as Mark said, I was in India in June, and we've had a long-standing presence in India. And first of all, it's just great to be there. They have amazing talent in the fields of engineering, cloud operations, in customer solutions group and everyone just valued the time, the time in person.

The appetite there for learning’s, for growth, and just the pride there sitting in India and delivering to a marquee customer base around the globe, product and innovation is very high. And as market as we look forward to is even going further in India..

That's great. Thank you..

Yes. Thanks Richard..

The next question comes from Thanos Moschopoulos from BMO Capital Markets. Please go ahead..

Hi. Good afternoon. Mark, Microsoft had called out some SMB softness in the quarter.

Can you comment on what you're seeing there, I guess, both the [indiscernible] and more broadly, given that seems to be a bit more macro-sensitive area?.

I'm sorry, Thanos, there was a little breakup in the line. I couldn't hear the second part of it..

Yes. Sorry, Mark. I was saying Microsoft called out some softness in SMB during the quarter. So if you could comment on what you're seeing with Zix and more broadly in your SMB business.

And also in terms of the resiliency you expect in a down trough within SMB?.

Yes, sure. Fair enough. So yes, maybe starting at putting it all in context for us. We've – we created our SMB&C business from zero to approaching near $700 million. And this is just our second fiscal year. The business is growing. It's growing organically.

We got gross margins in the high-80s, and we're taking a very unique distribution model, right? We don't sell direct to SMB&C. We do – there's always a little bit around the edges. But the 90% plus of what we do is trying to build this unique distribution model to MSPs and RMMs and doing that through a unique platform. We've written the software.

We were in salesforce.com, right, for MSPs and RMMs, and we're expanding that massively to go out and attract RMMs and MSPs to come to our OpenText Zone, register, download, try, purchase, distribute the software, collect install base information from their customers to manage, monitor what they're doing.

So it's a very unique distribution strategy, and we got over 100 people writing software for SMB to automate the selling. We're looking – our biggest partner, of course, is Microsoft. It is all about a Microsoft ecosystem. They are just getting started on their new commerce experience platform.

So I want to speak about what were the expectations externally about when MCE would start to ramp. But MCE is down in the market. And we're a top five partner for their conversion to MCE. So we're in a great position right there with Microsoft. Second is, we see the opportunity to resell Zix into the Carbonite installed base.

We see a lot of disruption with data. We're investing in the Zone. We got SMB&C M&A opportunities in our pipeline. So we had a great second year. We've only been at it for two years, and we're going to – we expect to grow and grow organically Thanos here in fiscal 2023..

Great.

Just to clarify, so the Zix point, not really seeing slowdown in the macro and SMB?.

No. No. We have a lot of great levers here because – we can bring Zix into the Carbonite installed base. We can bring Carbonite into the Zix installed base. So those are things unique to us that are levers that others don't have. Also, there is some real disruption with data, and we're going to be there to be helpful to those are MSPs.

And Microsoft just getting started in their conversion to NCE, and we're on the Top 5 CSPs to help them. So you put all that together, and I'm sure there's some demand aspects out there, but that all together, it sort of mutes any demand noise out there for us..

Okay. That's helpful. And then just a quick one for Madhu. I think I heard you say in your prepared remarks that it is 2.3% organic total revenue growth and 3.6% organic cloud growth for the fiscal year.

Is that correct?.

Yes, 3.6% constant currency cloud growth..

Okay.

I'm sorry, have you disclosed organic total revenue growth or no?.

So we do have an appendix as we do on an annual basis in our investor deck that spells out the organic growth details for the year..

Okay. Sorry about that. Okay, thanks a lot..

Great, Thanos..

Yes. Great. Thank you..

The next question comes from Paul Treiber of RBC Capital Markets. Please go ahead..

Thanks very much and good afternoon. Just trying to dovetail a couple of things with your medium-term outlook. First, obviously the enterprise cloud bookings is quite strong, particularly relative to your TAM.

Is it a fair statement that, within enterprise cloud, you believe that you're gaining share relative to the TAM?.

Yes..

Okay. That's a starting point. And then the second question is with – in medium term, the growth, this 6% to 8% organic cloud growth, at what point does that start driving up overall organic revenue growth because it's still in the 2% to 4% range.

At what point does the recent tipping points start driving that and you start seeing faster growth? And also related to that, should we expect other segments like licensed, customer support, professional services to decline over the medium term as you do that transition?.

Yes. So let me take a part of it and then hand apart to Madhu. And I just wanted to be brief in my answer to you on the first part of vacant share. So the short answer is yes. Maybe just adding a sentence to that, look, there's a real opportunity. It's a time to standardize on companies like OpenText.

And it's a Darwin moment in technology where it's time to outcompete your rivals. It's a Darwinian moment. And so when I look at kind of the Tier 2 and Tier 3 competitors, and I don't mind calling them out, Kofax, Hyland, SPS Commerce, FileNet, Sterling Commerce, Adaco, I think it is a Darwinian moment to be more aggressive to outcompete arrivals.

So, yes, I think I'm very confident with this bookings growth, this new value enterprise bookings growth we are taking share. And it will flow into revenue as you're seeing it work through our model. And we hit – if I look at our license business in the quarter, then I'll hand the microphone over to Madhu.

Constant currency license was about 10% of our business. Remarkable, right? I mean down from almost third of our business 10 years ago to 10%, and cloud was up 9.8% or $137 million. So even though license was down about $15 million in absolute dollars, cloud was up $137 million.

And I think trading $17 million for $137 million, that's – maybe called [indiscernible] that's a good trade. So we're going to continue to sell a license. Customers who purchase license today are in three camps. They look for long-term economic value, they look for some capacity expansion and they look for a very trusted deployment.

The license is also our largest cloud opportunity to convert that installed base over time. So our LIBOR where we are, methodically moving through that installed base. So there are a couple of real events to watch. License falling below 10%, that is the moment in time and we're getting real close.

Titanium, public cloud at parity to everything else, those two events should be accelerators for us – accelerants to more cloud growth. Let me hand the microphone over to Madhu..

Thank you, Mark. And you shared a great bit of perspectives here. I would just add saying, if the question is, how do we get beyond the current levels of organic growth in fiscal 2025 about what we stated? I would just point out to what is getting bigger, right? The annual recurring revenues are 82% going to 85%.

So our focus is really within that a leading growth being cloud. That's what we sort of focused on, right? And certainly, you should look beyond that above the current ranges. But I would also point out 1.8% cloud constant currency fiscal 2021, 3.6% in fiscal 2022, and we're making a big leap to 6% to 8% organic growth in fiscal 2025.

So I would just say, as the 85% gets bigger, right, what's really going to drive the total is going to be that 85%. And within that, it's going to be the cloud [indiscernible]..

Okay. That's helpful. One last one for me. Just with the outlook for this current year, you're calling for license revenue growth, but it did contract this year.

Why do you see the turnaround in the short-term for license revenue?.

It's all the nature of the visibility in pipeline, Paul, where we see – these are sales cycles that are times multi-quarter. And we can see we have the visibility and pipeline of customers looking to build very fortified and secured environments. And so that's just – we're calling it like we see it through the visibility and pipeline.

So it doesn't change the view that we think license is going to be relatively constant over time, as we just said we disproportionately grow cloud. But we're going to see – we expect to see a positive green carat next to license this year..

Okay. Thank you for taking my questions..

Thank you. I will now hand the call back over to Mr. Barrenechea for closing remarks..

All right. Well, thank you, everyone, for joining us today, and it was real delight to walk through our Q4 results, our annual results, our outlook for F'23, on our aspirations for F'25. Please read our corp citizenship report. We're very proud of it. And we're – we look forward to and we value your feedback.

We look forward to being on the road at our investor conferences this year. Madhu, myself, Harry, and Greg, I will personally be at the Citibank Conference in New York, and we'll be there in person and hope to see many of you there. Have a great afternoon, and thanks for joining the call today..

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