Slide 1: Investor Presentation
Investor Presentation February 2, 2023 NASDAQ: OTEX | TSX: OTEX OpenText ©2023 All rights reserved 1
Slide 2: Safe Harbor and IP Statement
Safe Harbor and IP Statement This presentation contains forward-looking statements or information (forward-looking statements) within the meaning of the Private Securities Litigation Reform Act of 1995, Section 21E of the U.S. Securities Exchange Act of 1934, as amended (the Exchange Act), Section 2
Slide 3: OpenText Strategic Overview
OpenText Strategic Overview OpenText ©2023 All rights reserved 3
Slide 4: OpenText Snapshot
OpenText Snapshot Including Micro Focus(1) Large, Strategic and Growing: $200B+ Information Management Market(2) Who We Are Targets & Aspirations Human One of the World’s Centric New Rules In Constant F’23 F’24 F’26 Largest Software and Digital Work Currency(3) (Preliminary) (Aspirations) New Cloud
Slide 5: OpenText: Our History of Value Creation
OpenText: Our History of Value Creation Market Expansion and Value Creation 2023 Our Mission: Micro Focus Expands Digital We power and protect information Transformation Capabilities 2021 Our Purpose: Zix: a top 2022 Microsoft To elevate every person and every organization to SMB/C Titanium gain the
Slide 6: OpenText Business System
OpenText Business System Our Competitive Advantage: It’s Who We Are, and How We Do What We Do Core Value Drivers Customers talk, we listen Growth is inclusive and sustainable • Total revenue growth Shareholders • A-EBITDA $/FCF • Return on Invested Capital (ROIC) Innovation defines our future We com
Slide 7: How We Create Value: Running the OpenText Playbook
How We Create Value: Running the OpenText Playbook Revenue Growth Organic Revenue Cloud growth + + Growth Acquisitions Margin Expansion Gross Margin + Strong Free Cash Flows Reinvest R&D R&D + for + (1) Growth S&M Capital Allocation (e.g. Dividends) S&M + G&A Acquisitions Improve Automation = Cost +
Slide 8: Track Record of Total Revenue Growth
Track Record of Total Revenue Growth Expected Rapid Growth and Increased Predictability (2) Total Revenues and Estimated Growth +33% to 35% $6.2 to $6.4 Expected growth In $Billions Revenue Growth +28% to 30% 11.7% Expected growth F’11 to F’22 CAGR • Track record of double-digit revenue growth $3.5
Slide 9: Track Record of A-EBITDA Expansion
Track Record of A-EBITDA Expansion Upper Quartile A-EBITDA Margins (1) A-EBITDA Dollars and Estimated Margin 38% to 40% Expected A-EBITDA Margin 36% to In $Billions 38% A-EBITDA Growth 36% to 38% Expected A-EBITDA Margin 32.5% to 13.8% 33.5% 32.5% to 33.5% • Culture of upper-quartile F’11 to F’22 CA
Slide 10: Track Record of Free Cash Flows (FCF) Expansion
Track Record of Free Cash Flows (FCF) Expansion Expected Acceleration in Free Cash Flows (1) Estimated Free Cash Flows 20%+ $1.5B+ FCF as % In $Millions of Revenue FCF Growth 15.2% F’11 to F’22 CAGR • Track record of Cloud Acquisition Investment integration $882 $889 $800 to $900 upper-quartile FCF
Slide 11: History of Value Creation Through Transformative M&A
History of Value Creation Through Transformative M&A Strategic Buyer of Value Assets that Drive Future Organic Revenue and A-EBITDA Growth Micro Focus OpenText Transformative M&A Transaction detail Revenue A-EBITDA • ~$5.8B Enterprise Value Acquisition Close Date Multiple(6) Multiple(6) • 2.3x Micro
Slide 12: Q2 Fiscal 2023 Highlights
Q2 Fiscal 2023 Highlights OpenText ©2023 All rights reserved 12
Slide 13: Q2 Fiscal 2023 Financial Highlights
Q2 Fiscal 2023 Financial Highlights (with Y/Y comparisons) (1) Strong Quarterly Enterprise Cloud Bookings of $145M up 12% Y/Y, TTM $511M up 25% Y/Y Q2 F’23 Trailing Twelve Months (TTM) Ending Q2 F’23 $897.4M 2.4% $3.53B 2.9% Total Revenues Total Revenues $945.0M in CC 7.8% in CC(2) $3.67B in CC 6.9%
Slide 14: Q2 F'23 Customer Wins and Renewal Rates
Q2 F’23 Customer Wins and Renewal Rates Business Network Content Lear Corporation is an American manufacturer of Barnardo’s is the largest children’s charity in the UK Enterprise(1) automotive seating and automotive electrical systems. working to protect and care for vulnerable young people. Renewal
Slide 15: Strong Cash Flows and Balance Sheet
Strong Cash Flows and Balance Sheet Pro forma Cash (USD$B) (as of 12/31/22) Net Leverage Ratio(2) Net Leverage Ratio(2) Assumes Debt Reduction of at least $175M per quarter, expected to commence Q4 F’23 Total Cash(1) $2.82B 3.8x TTM Q2 F’23 (USD$M) < 3.0x 2.0x 2.0x 2.1x 2.0x 1.9x Operating Cash Flow
Slide 16: Outlook
Outlook OpenText ©2023 All rights reserved 16
Slide 17: OpenText Financial Targets and Aspirations
OpenText Financial Targets and Aspirations Continued Investment in Growth Initiatives Driven by 15%+ Enterprise Cloud Bookings Growth (Y/Y) Financial Target Preliminary Financial Target 3 Year Aspirations (in constant currency) * * F’23 F’24 F’26 Organic Growth (%Y/Y)(1) 1% to 2% 1% to 2% 2% to 4% T
Slide 18: Q3 F'23 Quarterly Factors
Q3 F’23 Quarterly Factors Externalities Company Specific(1) Expect Q3 Y/Y Revenue in constant currency: • Recession risk • Total revenues of $1.18B to $1.22B • Micro Focus contributing $310M to $325M • Inflation, supply chain • OpenText standalone to achieve positive organic growth • Strength of US
Slide 19: Q3 F'23 Target Model Ranges
Q3 F’23 Target Model Ranges Constant Currency OpenText with Micro Focus (as of Feb 2, 2023) Q3 F’23(2,3) Micro Focus Onboarding Revenue Type: % of Total Revenues Cloud Services and Subscriptions 35% - 37% • Financial consolidation (starting Feb 1, 2023) Customer Support 46% - 48% Annual Recurring Re
Slide 20: F'23 Total Revenue Growth & Bookings Strategy
F’23 Total Revenue Growth & Bookings Strategy Y/Y Expected Growth in Constant Currency(3) F’22 Actual(1) F’23 Updated F’23 Updated (Excluding Micro Focus) (Including Micro Focus) $465.8 Enterprise Cloud Bookings(2) 15%+ 15%+ $1,535.0 Cloud Revenue 8% to 10% 11% to 13% $1,331.0 Customer Support Reven
Slide 21: F'23 Target Model Ranges
F’23 Target Model Ranges Constant Currency F’22 F’23 F’23 Actuals Previous (as of Nov 3, 2022) Updated (3) Revenue Type (% of Total Revenue): 43.9% Cloud Services and Subscriptions 46% - 48% 37% - 39% 38.1% Customer Support 35% - 37% 41% - 43% 82.0% Annual Recurring Revenue (ARR) 82% - 84% 79% - 81%
Slide 22: F'26 Medium-Term Aspirations
F’26 Medium-Term Aspirations (1) (in constant currency) Enterprise Cloud Bookings Growth(2) 15%+ Cloud Editions (CE), private cloud expertise, APIs, Titanium Organic Revenue Growth(3) 2% to 4% Micro Focus returns to organic growth in F’25 and beyond Cloud Organic Revenue Growth(3) 7% to 9% Continued
Slide 23: Rapid Eight Full Quarter Deleveraging Program
Rapid Eight Full Quarter Deleveraging Program Long-term Debt Reduction of at least $175M per quarter Expect to commence Q4 F’23 ending June 30, 2023 Pro Forma Total Debt 10 consecutive years of Consolidated Net Leverage Ratio(1) (Expected as of 3/31/23) increased dividends paid(2) 5.9 yrs $1.48B ret
Slide 24: Integration Execution Framework
Integration Execution Framework OpenText Continues Strong Execution 1st 6 months 2nd 6 months 3rd 6 months F’25+ Pre-Acquisition Post– Acquisition Execution Evolution Micro Focus generates Total growth Engage customers on vision Begin uplift Micro Focus Continue Micro Focus uplift to organic growth
Slide 25: Delivering on Our Acquisition Commitments
Delivering on Our Acquisition Commitments Enhanced Accelerate Micro Focus Accretive integration of Return Micro Focus to organic Visibility into cloud growth and Micro Focus growth our markets improve renewals ✓ Immediately accretive to ✓ Enterprise cloud bookings of ✓ F’23 Onboarding F’23 A-EBITDA
Slide 26: Our Business
Our Business OpenText ©2023 All rights reserved 26
Slide 27: Businesses Are Facing Urgent Need to Transform
Businesses Are Facing Urgent Need to Transform Current Business Platforms Business 2030 Every company we work with is facing an … driving an urgent need to increasingly complex and hybrid environment… Digitally Transform their business BUSINESS AND PROCESS Every Industry Digitally Transformed Human-
Slide 28: OpenText Drives Digital Transformations
OpenText Drives Digital Transformations OpenText Creates Digital Fabrics and Frictionless Business based on Information and Automation. Intelligent Analytics & AI Content Management Application Delivery & Quality Any Data Cybersecurity Connected Application Modernization Any Application Any Device A
Slide 29: $200B+ Information Management Market
$200B+ Information Management Market CY’22 Worldwide Information Management Market (1) Strategic Importance of Micro Focus • Expands strategic presence in key Information Management Market Size CAGR% markets ($ in billions) 2022-26 Analytics & AI $4B Positive • Broadens and deepens digital transform
Slide 30: Acknowledged Leadership by Market
(1) Acknowledged Leadership by Market Content Content Business Network Experience Analytics and AI IDC MarketScape: Worldwide Cloud Content Services, IDC MarketScape: Multi-Enterprise IDC MarketScape: Worldwide Customer Forrester Wave™: Document-Orientated Text Analytics Forrester Wave™: Content Pla
Slide 31: OpenText's Leading Digital Transformation Capabilities
OpenText’s Leading Digital Transformation Capabilities Leverage Products and Capabilities for Continued Growth Digital Operations Analytics & AI Application Automation Business Network Content & Experience Cybersecurity Management Unstructured Data & Mainframe Dev Tools, Secure AppDev & Optimizing I
Slide 32: Organized to Accelerate Customer Impact
Organized to Accelerate Customer Impact With the combined capabilities of OpenText and Micro Focus, we will help customers gain an Information Advantage and accelerate their Digital Transformation. OpenText’s Digital Transformation Markets Analytics and Application Business Content & Digital Operati
Slide 33: Driving Annual Recurring Revenue Growth
Driving Annual Recurring Revenue Growth Customer Choice Maximizes the Opportunity to Grow and Take Share Most Customers Have Multiple Deployment Types Cloud (public, private, APIs) Off-Cloud Accelerate the Cloud and… …Protect & Expand Customer Investment • Growing portfolio of public cloud/SaaS and
Slide 34: Accelerate the Cloud and Protect Customer Investment
Accelerate the Cloud and Protect Customer Investment Successful Track Record of Expand Capabilities into Looking Ahead Enhancing Acquired Products Accelerating Cloud Growth… Aligning Micro Focus to OpenText Cloud and Off-Cloud Growth $1,800 (in USD$M) Align Micro Focus to OpenText’s $1,600 90-day pr
Slide 35: Multiple Paths to Return Micro Focus to Organic Growth
Multiple Paths to Return Micro Focus to Organic Growth Bring Micro Focus Renewals Offering OpenText Private Cloud Enhancing to OpenText Standards to Micro Focus Customers… Micro Focus Products… Public Cloud Public Cloud Deployment Options Deployment Options Customer Support Private Cloud OpenText Pr
Slide 36: Strategic Growth Priorities
Strategic Growth Priorities OpenText: The platform of platforms for Information Management Analytics and Application Business Content and Digital Operations Win Each Market AI Automation Network Experience Cybersecurity Management Extend OpenText Private Cloud to Micro Focus Customers Prioritizing l
Slide 37: OpenText Zero-In: Our 2030 Pledge
OpenText Zero-In: Our 2030 Pledge • Help our customers digitize Zero • Zero waste from operations by 2030 Footprint • Science-based emissions reduction target of 50% net reduction by 2030/net-zero by 2040 • Advance Equity, Diversity and Inclusion (ED&I): • Majority Diverse Zero • 50/50 for key roles
Slide 38: Be a Climate Innovator
The 1% Challenge Be a Climate Innovator 3 Trillion Trees in the world A tree produces 10,000 pages of paper Information Management can save 1% of the world’s trees by 2030 … by eliminating 300 Trillion Printed Pages ! OpenText ©2023 All rights reserved 38
Slide 39: Executive Leadership Team
Executive Leadership Team Sales & Demand Products, Strategy, Customers Operations Ted James Prentiss Muhi Paul Tony Madhu Doug Brian Harrison McGourlay Donohue Majzoub Duggan Kong Ranganathan Parker Sweeney EVP, Enterprise EVP, International EVP, EVP, Chief EVP, Chief SVP, Corporate EVP, CFO EVP, Co
Slide 40: Thank You
opentext’ Thank You
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 (1) See reconciliation of GAAP-based measures to Non-GAAP-based measures at the end of this presentation. (2) Please also see Note 14 to the Company's Fiscal 2018 Consolidated Financial Statements on Form 10-K. Reflective of the amount of net tax b
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 23 FY 22 $ Change Change FY 23 in CC in CC Revenues Cloud services and subscriptions $813.3 $ 21.5 $ 1. 12. % $840.0 16.4 % Customer support 633. 6 0.1 (36.3) (5.4) % 6 4.6 0. % Total an
Slide 44: Reconciliation of Selected Non-GAAP Measures | Q2 FY'23
Reconciliation of Selected Non-GAAP Measures | Q2 FY'23 OpenText ©2023 All rights reserved 44
Slide 45: Reconciliation of Selected Non-GAAP Measures | Q2 FY'23
Reconciliation of Selected Non-GAAP Measures | Q2 FY'23 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'23 YTD
Reconciliation of Selected Non-GAAP Measures | FY'23 YTD OpenText ©2023 All rights reserved 46
Slide 47: Reconciliation of Selected Non-GAAP Measures | FY'23 YTD
Reconciliation of Selected Non-GAAP Measures | FY'23 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'22
Reconciliation of Selected Non-GAAP Measures | Q2 FY'22 OpenText ©2023 All rights reserved 48
Slide 49: 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 50: Reconciliation of Selected Non-GAAP Measures | FY'22 YTD
Reconciliation of Selected Non-GAAP Measures | FY'22 YTD OpenText ©2023 All rights reserved 50
Slide 51: 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 52: Reconciliation of Adjusted EBITDA and Free Cash Flows
Reconciliation of Adjusted EBITDA and Free Cash Flows OpenText ©2023 All rights reserved 52
Slide 53: Reconciliation of Adjusted EBITDA and Free Cash Flows
Reconciliation of Adjusted EBITDA and Free Cash Flows OpenText ©2023 All rights reserved 53