Slide 1: Investor Presentation
Investor Presentation NASDAQ: OTEX | TSX: OTEX February 3, 2022
Slide 2: Safe Harbor and IP Statement
Safe Harbor and IP Statement This presentation contains forward-looking statements. These forward-looking statements are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 and other applicable securities laws of the United States and Canada. All state
Slide 3: Q2 Fiscal 2022 Financial Results
Q2 Fiscal 2022 Financial Results OpenText ©2022 All rights reserved 3
Slide 4: Q2 Fiscal 2022 Financial Highlights
Q2 Fiscal 2022 Financial Highlights with Y/Y comparisons Reflects continued investments in talent, innovation and go-to-market to drive organic growth Q2 FY’22 Trailing Twelve Months (TTM) Ending Q2 FY’22 2.5% 4.1% Total Revenues $876.8M Total Revenues $3.44B 2.7% in CC(1) 2.0% in CC $699.8M 2.2% $2
Slide 5: Q2 FY'22 Customer Wins
Q2 FY’22 Customer Wins Content Content Services Services Novartis Pharmaceuticals is one of the largest global Volkswagen is one of the largest motor vehicle manufacturers, pharmaceutical companies, bringing innovative medicines to headquartered in Germany. market to enhance health outcomes for pati
Slide 6: Q3 FY'22 Quarterly Factors
Q3 FY’22 Quarterly Factors Externalities Company Specific(1) • Expect Q3 Revenue Y/Y: • Total Revenue up mid-high single-digit • Continued pandemic effects • ARR up mid single-digit • Geopolitical • Includes FX headwind between $20 million to $25 million • Inflation, supply chain and labor shortages
Slide 7: FY'22 OpenText Total Growth Strategy
FY’22 OpenText Total Growth Strategy(1) FY’21 Actual(1) FY’22 Prior(2) FY’22 New(3) $1,407.4 Cloud 3%-4% 8% - 10% $1,334.1 Customer Support Constant to slightly up Constant $2,741.5 ARR Low single-digit Low mid single-digit $384.7 License Decline mid single-digit Constant $259.9 Professional Service
Slide 8: FY'22 Target Model
FY’22 Target Model New Fiscal 2021 Actuals Previous Fiscal 2022(3) Revised Fiscal 2022(3,4) Revenue Type: Cloud Services and Subscriptions 41.6% 41% - 43% 42% - 44% Customer Support 39.4% 39% - 41% 37% - 39% Annual Recurring Revenue (ARR) 81.0% 81% - 83% 81% - 83% License 11.4% 9% - 11% 9% - 11% Pro
Slide 9: Our Financial Aspirations
Our Financial Aspirations FY’24 Long Term Aspirations Total Revenue Organic ARR A-EBITDA Margin(2) Free Cash Flows(2) (FCF) Growth(1) % of Total Revenue 2% - 4% 85% 38% - 40% $1.2B+ M&A will be additive A-EBITDA margin over 40% to be re-invested in organic growth Target Capital Allocation Strategy:
Slide 10: Strong Liquidity and Cash Position
Strong Liquidity and Cash Position Current Liquidity (US$) Total Cash & Cash Equivalents 2,000 1,846 1,693 1,735 Total Cash & Committed Liquidity(1) $2.3B 1,453 1,501 1,476 1,607 1,512 1,500 Millions USD 1,000 Capital Expenditures as % of Total Revenue 500 4.0% 3.7% - 3.5% Q3 FY'20 Q4 FY'20 Q1 FY'21
Slide 11: Strong Cash Flows and Balance Sheet
Strong Cash Flows and Balance Sheet TTM Q2 FY’22 (US$M) Trended Consolidated Net Leverage Ratio(1) Operating Cash Flows(2) $766 Carbonite Zix Acquisition Acquisition Closing Closing Less: CapEx $78 2.3x 2.3x 2.0x 2.0x 1.8x Free Cash Flows(2) $688 1.6x 1.6x 1.5x 1.4x Less: Principal(3) $10 Less: Divi
Slide 12: Strategy
Strategy OpenText ©2022 All rights reserved 12
Slide 13: Be Digital – GROW with OpenText 2022 Investor Day
Be Digital GROW with OpenText 2022 INVESTOR DAY Tuesday, March 1, 2022 | Virtual Information in the right hands knows no bounds. Growing ideas further, faster, wider. OpenText is at the center of that growth, helping businesses to expand everywhere and anywhere. OpenText ©2022 All rights reserved 13
Slide 14: OpenText Snapshot
OpenText Snapshot Leader in Large Growing Addressable Market with Marquee Customer Base $84B 89 24 75K 470K Total Addressable of the Top 100 of the 30 largest Enterprise SMB Market growing 8% companies supply chains Customers Customers Track Record of Growth, Profitability and Capital Efficiency 12%
Slide 15: How We Create Value
How We Create Value Model Value Creation Total Revenue • Organic growth Growth Total Revenue 12% Total Revenue • Acquired growth Growth CAGR (FY’13 to FY’21) • High recurring revenues • Upper quartile A-EBITDA margin Profitability 39% A-EBITDA (FY’21)(1) Value • Growing free cash flows Capital • Fre
Slide 16: Total Growth Strategy
Total Growth Strategy • Growing sales breadth and depth • Product innovation GROW Information • 80% ARR(1) • 94% Customer support renewals(2) Management • 93% Cloud renewals(2) • Drives organic growth • Gain market share ACQUIRE • High free cash flow returns RETAIN 1. ARR as a percentage of Total Re
Slide 17: Large and Growing Addressable Market
Large and Growing Addressable Market Information Management(1) Information-led Transformation OpenText Cloud CY21E to CY24E CAGR Content $24B +11% Master Modern Work Business Network $20B +7% Digitize Supply Chains Digital Experience $21B +7% Power Modern Experiences Security & $19B +6% Strengthen C
Slide 18: 89 of the top 100 largest companies in the world
Marquee Customer Base 89 of the top 100 largest companies in the world(1) Life Consumer Financial Technology Manufacturing Telecom Sciences Goods 10 of top 10 8 of top 10 10 of top 10 10 of top 10 10 of top 10 8 of top 10 Great foundation for growth 1. The top 100 is based on the Forbes Global 2000
Slide 19: FY'21 Revenue Breakdown
FY’21 Revenue Breakdown Total Revenue Mix Total Revenue by Geography ARR by Industry 3% 8% 8% 6% 7% 23% 11% 42% 9% 31% 61% 10% 16% 39% 11% 15% Financial Services Cloud Services & Subscriptions Consumer goods Americas Technology Customer Support Public Sector EMEA Healthcare License Basic materials a
Slide 20: The OpenText Cloud
The OpenText Cloud Cloud Editions Run Anywhere | Off-Cloud | Private-Cloud | Public Cloud | API-Cloud Public cloud Private-cloud Off-cloud API-cloud 11 million subscribers 3,000+ customers 75,000+ customers 1 Trillion calls/year OpenText ©2022 All rights reserved 20
Slide 21: Investing in Organic Growth
Investing in Organic Growth Research & Development Sales & Marketing ($ and in % of Total Revenues)(1),(2) R&D% of Total Revenues Enterprise Sales Goal R&D US$ 12-14% • Full coverage of G10K by end of CY’23 12.2% SMB/C Goal • Grow SMB/C partners – RMMs, MSPs 10.5% Customer Engagement $194 M $421 M •
Slide 22: GROW with OpenText – Our Growth Plan
GROW with OpenText – Our Growth Plan Market leaders by industry GROW Top supply chains by industry our Strategic Accounts Grow long-term customer value and share of wallet Migrate and upgrade install base to Cloud Editions GROW our Cloud Editions New product releases every 90 days Full coverage of G
Slide 23: Comprehensive Go-to-Market
Comprehensive Go-to-Market Cross-sell and upsell Enterprise Solutions SMB/C Solutions Direct Strategic Partners Channel Partners 2,000+ ~23,000 Field Facing Professionals MSP Partners OpenText Digital Zone OpenText ©2022 All rights reserved 23
Slide 24: The Information Management Journey
The Intelligent, Secure & Connected Business Cloud Power the API Editions Economy Be Cyber Resilient Power Modern Digital Experiences All Points of Business Departure Master Network Modern Work The Information Management Journey OpenText ©2022 All rights reserved 24
Slide 25: Scalable, High-Velocity, Frictionless Business Model
Scalable, High-Velocity, Frictionless Business Model Digitization and Automation: • Automate DevOps New Customer Engagement Model: • Automate routine R&D • Pre-sales – demand creation automation Product is built for: • Self-sell – upsell, cross-sell • Self-service • Post-sales – renewal automation •
Slide 26: OpenText Digital Zone
OpenText Digital Zone A strategic investment in frictionless customer engagement Digital Room Developer New opentext.com Test-Drive Communities OpenText ©2022 All rights reserved 26
Slide 27: GROW with OpenText: Acquiring growth
GROW with OpenText: Acquiring growth M&A Strategy Key Drivers High adjacency within Information Management Expands market presence, customer base, technology position Contributes to organic growth On operating model in 12 months Free Cash Flows, returns-based, 5-7 year payback OpenText ©2022 All rig
Slide 28: Sustainable Growth Through Retention and Upgrades
Sustainable Growth Through Retention and Upgrades Annual Recurring Revenue Renewal Rate(1) (ARR) (US$M) $2,742 105% $1,337 Cloud Customer Support 93% 94% FY'15 FY'21 Customer satisfaction is a foundation for growth 1. For the quarter ended December 31, 2021. Excludes Carbonite. OpenText ©2022 All ri
Slide 29: Proven Track Record of Growth
Proven Track Record of Growth Total Revenue Growth in CC (US$M)(1) $3,305 $3,147 $2,922 $2,743 $2,318 $1,936 $1,904 19.2% 2.8% 27.0% 19.7% 3.8% 9.7% 6.3% FY'15 FY'16 FY '17 FY'18 FY'19 FY'20 FY'21 7 Consecutive Years of Y/Y Growth in CC(1) 1. CC: Constant currency for this purpose is defined as the
Slide 30: Proven Durable Business Model
Proven Durable Business Model Growing ARR and Upper Quartile Margin(1),(2) 81.0% ARR FY’22 Model: % of Total Revenues 81% - 83% 54.4% (1) A-EBITDA 38.8% 38.8% FY’22 Model: Margin 35.5% - 36.5% 29.1% 11.4% License 24.3% % of Total FY’22 Model: Revenues 9% - 11% FY'12 FY'13 FY'14 FY'15 FY'16 FY'17 FY'
Slide 31: Strong Track Record of Financial Performance
Strong Track Record of Financial Performance Annual Recurring Total Revenues Cloud Revenue A-EBITDA(1) Free Cash Flows(1) Revenue (US$M) (US$M) (US$M) (US$M) (US$M) $1,407 $1,315 $812 $2,742 $3,386 83% 105% 133% 111% 82% $445 $1,852 $1,337 $624 $605 FY'15 FY'21 FY'15 FY'21 FY'15 FY'21 FY'15 FY'21 FY
Slide 32: Proven Track Record of Value Creation
Proven Track Record of Value Creation We run a disciplined Free Cash Flows(1) return business FY’19 FY’20 FY’21 A-EBITDA and FCF Trends $1,350 FCF/Revenue(2) 28.3% 28.4% 24.0% $1,250 FY’21 FCF $1,150 includes FCF/Avg Total Assets(3) 10.4% 9.7% 8.2% $1,050 $299.6M USD in millions $950 IRS FCF/Avg Inv
Slide 33: Strong Track Record of Shareholder Returns
Strong Track Record of Shareholder Returns Dividends Paid and Shares Repurchased (US$M) Target Capital Allocation Strategy(1) Dividends and Shares Repurchased Available for anti-dilutive Dividends corporate purposes share buyback $119.1 Dividends Paid (7-year CAGR): 16% ~ 33% $65.5 TTM $210.7 Free C
Slide 34: The OpenText Zero Initiative
The OpenText Zero Initiative The Future of Growth is both inclusive and sustainable Zero Barriers By 2030: • Advancing Equality, Diversity and Inclusion ▪ Majority diverse ▪ 50/50 key roles ▪ 40% female in leadership positions • Creating and enhancing education opportunities ZERO • Tackling the hung
Slide 35: Corporate Citizenship Reflects our Culture
Corporate Citizenship Reflects our Culture Progress We’ve Made: 2nd Corporate Citizenship Report published Canada’s • Adopted GRI sustainability reporting Most Admired standards Corporate Cultures • New ED&I department, mandate and initiatives Canada’s Top • Enhanced Human Rights Statement Employers
Slide 36: We Strive To Do The Right Thing
We Strive To Do The Right Thing Our Customers Our Communities Rapid Radiology and OpenText Accelerate Diagnostic OpenText Donates US OpenText Provides 4 Results to Help Improve Patient Care $1M to Global Food Million Meals for 58 Jun 25, 2020 Banks Communities in 21 Dec 11, 2020 Countries Worldwide
Slide 37: OpenText Products Enhance Global Sustainability
OpenText Products Enhance Global Sustainability Paperless Workflows Ethical Supply Chain Data Privacy and Protection Digitizes 26 billion Paper reduction saves 5.1 Paper reduction saves GHG transactions per year million trees emissions of 725,000 tonnes of CO2e OpenText ©2022 All rights reserved 37
Slide 38: Executive Leadership Team (ELT)
Executive Leadership Team (ELT) Mark J. Madhu Muhi Ted Kristina James Prentiss Barrenechea Ranganathan Majzoub Harrison Lengyel McGourlay Donohue CEO and CTO EVP, EVP, EVP, EVP, EVP, EVP, CFO Chief Product Officer Enterprise Sales Customer Solutions International Sales SMB & Consumer Sales Sandy Pau
Slide 39: Thank you
Thank you twitter.com/opentext linkedin.com/company/opentext opentext.com
Slide 40: Appendix
Appendix OpenText ©2022 All rights reserved 40
Slide 41: Appendix A: Use of Non-GAAP Financial Measures
Appendix A Use of Non-GAAP Financial Measures In addition to reporting financial results in accordance with U.S. GAAP, the Company provides certain financial measures that are not in accordance with U.S. GAAP (Non-GAAP).These Non-GAAP financial measures have certain limitations in that they do not h
Slide 42: Summary of Quarterly Results with Constant Currency
Summary of Quarterly Results with Constant Currency Q2 FY'22 % Change (In millions U.S. dollars, except per share data) Q2 FY'22 Q2 FY'21 $ Change % Change in CC* in CC* Revenues: Cloud services and subscriptions $364.9 $350.5 $14.4 4.1 % $365.0 4.2 % Customer support 334.9 334.5 0.4 0.1 % 335.4 0.3
Slide 43: Summary of Year to Date Results with Constant Currency
Summary of Year to Date Results with Constant Currency % Change (In millions U.S. dollars, except per share data) FY'22 YTD FY'21 YTD $ Change % Change FY'22 YTD in CC* in CC* Revenues: Cloud services and subscriptions $721.5 $691.4 $30.0 4.3 % $718.2 3.9 % Customer support 670.1 663.9 6.2 0.9 % 663
Slide 44: Reconciliation of Selected Non-GAAP Measures | Q2 FY'22
Reconciliation of Selected Non-GAAP Measures | Q2 FY'22 Three Months Ended December 31, 2021 (In ‘000's U.S. dollars, except per share data) GAAP % of Total Non-GAAP % of GAAP Adjustments FN Non-GAAP Revenue Total Revenue COST OF REVENUES Cloud services and subscriptions $ 122,129 $ (897) (1) $ 121,
Slide 45: Reconciliation of Selected Non-GAAP Measures | Q2 FY'22
Reconciliation of Selected Non-GAAP Measures | Q2 FY'22 FOOTNOTES 1 Adjustment relates to the exclusion of share-based compensation expense from our Non-GAAP-based operating expenses as this expense is excluded from our internal analysis of operating results. Adjustment relates to the exclusion of a
Slide 46: Reconciliation of Selected Non-GAAP Measures | FY'22 YTD
Reconciliation of Selected Non-GAAP Measures | FY'22 YTD Six Months Ended December 31, 2021 (In ‘000's U.S. dollars, except per share data) GAAP % of Total Non-GAAP % of GAAP Adjustments FN Non-GAAP Revenue Total Revenue COST OF REVENUES Cloud services and subscriptions $ 241,908 $ (1,804) (1) $ 240
Slide 47: Reconciliation of Selected Non-GAAP Measures | FY'22 YTD
Reconciliation of Selected Non-GAAP Measures | FY'22 YTD FOOTNOTES 1 Adjustment relates to the exclusion of share-based compensation expense from our Non-GAAP-based operating expenses as this expense is excluded from our internal analysis of operating results. Adjustment relates to the exclusion of
Slide 48: Reconciliation of Selected Non-GAAP Measures | Q2 FY'21
Reconciliation of Selected Non-GAAP Measures | Q2 FY'21 Three Months Ended December 31, 2020 (In ‘000's U.S. dollars, except per share data) GAAP % of Total Non-GAAP % of GAAP Adjustments FN Non-GAAP Revenue Total Revenue COST OF REVENUES Cloud services and subscriptions $ 117,882 $ (1,143) (1) $ 11
Slide 49: Reconciliation of Selected Non-GAAP Measures | Q2 FY'21
Reconciliation of Selected Non-GAAP Measures | Q2 FY'21 FOOTNOTES 1 Adjustment relates to the exclusion of share-based compensation expense from our Non-GAAP-based operating expenses as this expense is excluded from our internal analysis of operating results. Adjustment relates to the exclusion of a
Slide 50: Reconciliation of Selected Non-GAAP Measures | FY'21 YTD
Reconciliation of Selected Non-GAAP Measures | FY'21 YTD Six Months Ended December 31, 2020 (In ‘000's U.S. dollars, except per share data) GAAP % of Total Non-GAAP % of GAAP Adjustments FN Non-GAAP Revenue Total Revenue COST OF REVENUES Cloud services and subscriptions $ 230,506 $ (1,979) (1) $ 228
Slide 51: Reconciliation of Selected Non-GAAP Measures | FY'21 YTD
Reconciliation of Selected Non-GAAP Measures | FY'21 YTD FOOTNOTES 1 Adjustment relates to the exclusion of share-based compensation expense from our Non-GAAP-based operating expenses as this expense is excluded from our internal analysis of operating results. Adjustment relates to the exclusion of
Slide 52: Reconciliation of Adjusted EBITDA and Free Cash Flows
Reconciliation of Adjusted EBITDA and Free Cash Flows (In '000's U.S. dollars) Q2 FY'22 Q2 FY'21 FY'22 YTD FY'21 YTD GAAP-based net income (loss), attributable to OpenText $ 88,298 $ (65,477) $ 220,213 $ 37,899 Add: Provision for (recovery of) income taxes 39,266 267,559 82,716 310,303 Interest and
Slide 53: Reconciliation of Adjusted EBITDA and Free Cash Flows
Reconciliation of Adjusted EBITDA and Free Cash Flows (In '000's U.S. dollars) FY'12 FY'13 FY'14 FY'15 FY'16 FY'17 FY'18 FY'19 FY'20 FY'21 Adjusted EBITDA GAAP-based net income, attributable to OpenText $ 125,174 $ 148,520 $ 218,125 $ 234,327 $ 284,477 $ 1,025,659 $ 242,224 $ 285,501 $ 234,225 $ 310