Open Text Corporation · TSX:OTEX
Open Text — Investor Presentation (July 2015)
33 slides from Open Text's investor presentation, Jul 29, 2015
Slide 1: Investor Relations - Strategic Overview
Investor Relations - Strategic Overview July 29, 2015 NASDAQ: OTEX TSX: OTC
Slide 2: Safe Harbor Statement
Safe Harbor Statement Certain statements in this presentation, including statements about the focus of Open Text Corporation (“OpenText” or “the Company”) in Fiscal 2016 on growth in earnings and cash flows, creating value through investments in broader Enterprise Information Management (EIM) capabi
Slide 3: We are guiding customers through the Digital journey
We are guiding customers through the Digital journey Connected Cloud New Business Processes Mobility Predictive A Millennial Analytics Workforce OpenText Confidential. ©2015 All Rights Reserved. 3
Slide 4: Digital is changing businesses at an unprecedented speed
Digital is changing businesses at an unprecedented speed 43% 51% 38% 70% 90% A business services 51% increase in 38% decrease in Percentage of Of the world’s company undertook lead-to-sale product defects at consumers that information that has a digital conversion rate an enterprise software want pe
Slide 5: Companies have no choice but to adopt to Digitization to survive
Companies have no choice but to adopt to Digitization to survive Digital maturity of the sector TOURISM Advanced Tipping incumbents MEDIA point and established Mainstream TECH AND TELECOM “startups” customers constitute RETAIL BANKING adopt the new Advanced normal incumbents start RETAIL DISTRIBUTIO
Slide 6: We help customers better manage information to grow faster and be more efficient
We help customers better manage information to grow faster and be more efficient in an increasingly digital world Mission statement Help our customers become digital businesses by applying our simplify, transform and accelerate operating principles to gain a competitive advantage and be more product
Slide 7: OpenText EIM brings together the four core elements needed to drive the digital transformation
OpenText EIM brings together the four core elements needed to drive the digital transformation Data and Information Business process Analytics information Exchange workflows Manage information flows Facilitate efficient, Enable businesses Utilize and drive engaging secure, and compliant to rapidly e
Slide 8: Through EIM we are very well positioned to help customers holistically
Through EIM we are very well positioned to help customers holistically with their digital journey Data and Information Business process Analytics information Exchange workflows CEM ECM Discovery Information Exchange BPM Analytics Used by a majority of the top 10 600,000 trading partners on Over a th
Slide 9: EIM is a $20B market and is growing at 7.4% Y/Y
EIM is a $20B market and is growing at 7.4% Y/Y Key markets Emerging focus CY2014 Actuals Information CEM ECM Discovery Exchange BPM Analytics Market $2.6B $5.4B $1.8B $3.8B $2.5B $4.0B Growth 10.2% 6.2% 10.6% 9.5% 6.4% 4.4% Product ▪ Web Experience ▪ Content ▪ Unified ▪ EDI / B2B ▪ Business ▪ Big D
Slide 10: We lead in Magic Quadrant/Wave evaluations…
We lead in 6 Magic Quadrant/Wave evaluations… Assessment of OpenText leadership3, 2014-15 “OpenText has the broadest ECM backbone for enterprise applications.” Count “Specifically, it’s best for embedding Recognized as leading in each of its markets ECM within the lead (tier 1) application, such as
Slide 11: …and showing leadership in key areas
…and showing leadership in key areas Forrester Wave Placements1 Enterprise Business ECM Transactional Intelligence Platforms, Content Services, Q3 ’15 Q1 ’15 Digital Asset Management Document Output For For Customer Experience, Customer Communications Q1 ’14 Management, Q1 ’14 1 SOURCE: Forrester Wa
Slide 12: We have four different revenue streams
We have four different revenue streams Total revenue $M License 1,852 7-yr CAGR 1,625 294 4.3% +14% p.a. 1,363 306 1,207 Maintenance 273 732 10.5% 1,033 912 294 707 786 269 726 238 658 6.4% 230 221 219 657 Services 561 238 508 364 405 252 605 83.2% 373 (over last 151 167 204 257 180 143 2 yrs only)
Slide 13: Our license and maintenance revenues are driven by our core EIM products
Our license and maintenance revenues are driven by our core EIM products Discovery BPM ECM CEM Information Analytics Exchange Accelerate time Drive Manage the Deliver a Facilitate Generate to value using productivity flow of consistent user efficient, critical insights search and and operational inf
Slide 14: Our Services are a consistent revenue generator
Our Services are a consistent revenue generator OpenText Services Professional Consulting Teaching and Learning Information Outsourcing services services services ▪ Implementation ▪ Learning as a Service ▪ Data processing and ▪ Onboarding document management ▪ Distance learning business process serv
Slide 15: Our Cloud business is comprised of 3 major components
Our Cloud business is comprised of 3 major components Managed Cloud services Business Network Applications as a Service ▪ Managed applications ▪ Trading Grid ▪ SaaS ▪ Hosting services ▪ On Demand Messaging ▪ Subscriptions 800+ Customers 64,000 Customers 500+ Customers Our business is augmented by ou
Slide 16: Our Cloud offerings are getting great traction
Our Cloud offerings are getting great traction Cloud growth drivers New MCV for Cloud $M Capacity expansion with existing customers 82% New customer sign-ups FY16 MCV 211 bookings target: $280-$320 million 116 Acquisitions 10 FY12 FY13 FY14 FY15 High retention rate Cloud N/A 180 373 605 Revenue Gros
Slide 17: Our leading indicators of performance in Cloud are trending positively
Our leading indicators of performance in Cloud are trending positively Retention Cloud contracts signed Retention rate in Cloud business Number of FY15 Cloud MCV transactions over $500K Mid-90’s 83 Managed Cloud services New spending sampling Active customers Proportion of 10% enterprise contracts 8
Slide 18: Our strategic intent is to take a customer-paced approach to Cloud substitution
Our strategic intent is to take a “customer-paced” approach to Cloud substitution Enable customer choice with balanced Our strategic intent is to pricing Equally capture new spend from incentivize existing and new sales across customers. Protect License and Cloud bottom line and maximize In our targ
Slide 19: Our hybrid strategy is working
Our hybrid strategy is working License revenue Cloud revenue New license revenue Cloud revenue $M $M Growth Consistent Performance 605 373 294 273 306 294 180 FY12 FY13 FY14 FY15 FY12 FY13 FY14 FY15 Adjusted 27% 29% 31% 31% 27% 29% 31% 31% Operating Margin1 1 Before taxes and interest expense. See r
Slide 20: Our financial trends for FY2015 are strong
Our financial trends for FY2015 are strong FY13 FY14 FY15 FY16 FY17 ▪ Total revenue $1,852M million ▪ Partners contributed 39% ▪ Cloud Revenue $605M up 62% Y/Y of license revenue Total Revenue up ▪ License Revenue $294M million ▪ Average Cloud MCV deal down 4% Y/Y size: $405K 14% Y/Y ▪ ▪ 61 transact
Slide 21: We have a track record of growth and value creation
We have a track record of growth and value creation Adjusted EPS ($) Operating Cash Flow ($M) 7 yr CAGR 19% 7 yr CAGR 18% 3.37 3.46 523 2.79 417 2.30 2.04 319 1.56 266 214 223 1.26 166 186 1.02 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY07 adjusted EPS $0.73. A
Slide 22: Our recurring revenue has been consistently growing
Our recurring revenue has been consistently growing Recurring Revenue % Recurring revenue trend (includes Cloud, Services, and Maintenance) 84 82 80 84% 81% 78 80% 76 76% 74 FY12 FY13 FY14 FY15 OpenText Confidential. ©2015 All Rights Reserved. 22
Slide 23: We are diversified across geographies…
We are diversified across geographies… FY15 – Geographic revenue distribution EMEA $638M 34% Americas $1,035M 56%* APJ $178M 10%* Region FY15 $M % of bus. *Percentages are rounded up to add to 100% OpenText Confidential. ©2015 All Rights Reserved. 23
Slide 24: We outperform our peers across key dimensions
We outperform our peers across key dimensions OTEX Peer average1 Revenue Operating Cash Flow 200 250 200 150 150 100 100 50 50 0 0 CY2011 CY2012 CY2013 CY2014 CY2011 CY2012 CY2013 CY2014 Free Cash Flow Adjusted EPS 250 200 200 150 150 100 100 50 50 0 0 CY2011 CY2012 CY2013 CY2014 CY2011 CY2012 CY201
Slide 25: Path to 2020 with Target Model
Path to 2020 with Target Model Intelligent Cloud growth yields top-line and operating margin growth ▪ Continued focus on growing recurring 2020 revenue profile aspirations ▪ Unwavering focus on (includes acquisitions) margin improvement to maximize value 2016 ▪ Seven year revenue growth CAGR of 14%
Slide 26: Our business model is based on Intelligent Growth, enabled by OTIGS
Our business model is based on “Intelligent Growth,” enabled by OTIGS™… Acquisitions are core to our strategy, and OTIGS has enabled us to acquire companies and quickly integrate and optimize them On-board acquisitions to our Integrate operating model within 1 to 2 years Customer Financial and Partn
Slide 27: …which has helped us accelerate our growth and value creation
…which has helped us accelerate our growth and value creation 14% Revenue CAGR over the last 7 years We are focused on “Intelligent Growth Growth” – our growth strategy is to acquire solid EIM companies that have recurring revenues, integrate them with our suite of EIM products and services, and opt
Slide 28: Our track record is proven over the years
Our track record is proven over the years OpenText was founded in 1991 We estimate ~$3 billion in gross acquisition capacity over the next several years OpenText Confidential. ©2015 All Rights Reserved. 28
Slide 29: We have several growth and margin improvement initiatives in action
We have several growth and margin improvement initiatives in action Focused push on cost optimization plans ▪ Increased automation in managed Cloud services ▪ Reduction in infrastructure costs via data center consolidation, efficiencies of scale, and usage of open source software Restructuring of th
Slide 30: FY16 External Target Model
FY16 External Target Model* Revenue Type 2015 Target Model Fiscal 2015 Actuals Fiscal 2016 Target Model* Annual Recurring Revenue (ARR) 80 - 84% 84% 82 - 86% Product License 15 - 20 % 16% 14 - 18% Cloud Services 28 - 33% 33% 31 - 36% Product Maintenance 35 - 40% 40% 38 - 42% Professional Services 10
Slide 31: We have a comprehensive partner strategy that enables accelerated delivery of our solutions
We have a comprehensive partner strategy that enables accelerated delivery of our solutions 1250 PARTNER Direct Sales AE, ISR, Specialists PARTNERS INFLUENCE Force Strategic Alliances System Integrators ▪ 1,250 WW partners ▪ 39% license VARs revenue ▪ We are passionate about Partner Success ▪ 25% cl
Slide 32: We have a world class management team
We have a world class management team Mark J. Barrenechea President and CEO John Gordon Adam Lisa David James Russ Gary Muhi Simon “Ted” George Andy Doolittle Davies Howatson Zangari Jamieson McGourlay Stuebing Weiss Majzoub Harrison Schulze Wild Chief Financial Chief Legal Chief Chief Human Chief G
Slide 33: OPEN TEXT
OPEN TEXT ENABLING THE DIGITAL WORLD SIMPLIFY. TRANSFORM. ACCELERATE.