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Hey there,

So if you are looking at today's debt levels they are 100% elevated. That said, they are on the high side because they recently closed on the transformative MicroFocus acquisition (debt is up 73% since the deal). After repaying $175M since closing, the company's leverage ratio stands at around 3.8x today (it was 2.2X a year ago) and the expectation is that it will retreat below 3x within 8 quarters. OTEX is one of the better capital allocators in the space and has successfully integrated several large-scale acquisitions which saw debt spike, then dip after the company has successfully repaid debt. OTEX generates strong cash flows and in Q3 alone it generated $306M in free cash flow.

So while yes - in the company's first quarter post MicroFocus acquisition the company's debt profile looks poor. However, it has a plan in place to repay that debt and has a history of executing such strategies. It is for this reason, we are not worried about the high debt load today.

Mat