Slide 1: OpenText Investor Day
OpenText Investor Day Toronto | July 11, 2017 NASDAQ: OTEX | TSX: OTEX
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 our fiscal year ending June 30, 2017 (Fiscal 2017) on growth in earnings and cash flows, creating value through investments in broader Enterpr
Slide 3: Agenda
Agenda Time Presenters Topic 11:30 AM – 12:00 PM Buffet Lunch Greg Secord 12:00 – 12:05 PM Welcome VP, Investor Relations Mark J. Barrenechea 12:05 – 12:50 PM Strategic Overview CEO & CTO John Doolittle 12:50 – 12:55 PM Liquidity Profile & Capital Allocation CFO James McGourlay Customer Engagement a
Slide 4: Today's Presentation
Today’s Presentation • OpenText is preparing for its fourth quarter Fiscal 2017 year-end results with an Investor call scheduled for August 3, 2017 • OpenText is in quiet period: there will be no new forward-looking financial or target model information discussed today • Today’s question period will
Slide 5: OpenText Investor Day: Mark J. Barrenechea
OpenText Investor Day Mark J. Barrenechea OpenText CEO & CTO NASDAQ: OTEX | TSX: OTEX
Slide 6: Growth in Cash Flow Driven By The OpenText Business System
Growth in Cash Flow Driven By The OpenText Business System Enterprise Content Division $600 HP CEM Assets 24% CAGR $500 Operating Cash Flow ($ M) $400 $526M $300 $200 $100 $61M $0 FY 2006 FY 2007 FY 2008 FY 2009 FY 2010 FY 2011 FY 2012 FY 2013 FY 2014 FY 2015 FY 2016 OpenText ©2017 All Rights Reserv
Slide 7: 20-Year Total Shareholder Return
20-Year Total Shareholder Return OTEX v. NASDAQ 4500% OpenText 4000% OTEX delta +3,884% OTEX NASDAQ to NASDAQ(1) 3500% 3000% 20 Year 3,884% 479% 3,405pp 2500% 2000% 1500% 1000% Nasdaq 500% +479% 0% 3/31/1997 3/31/1998 3/31/1999 3/31/2000 3/31/2001 3/31/2002 3/31/2003 3/31/2004 3/31/2005 3/31/2006 3/
Slide 8: OpenText Overview
OpenText Overview • Global leader in Information Management software and cloud services • We service a marquee set of Fortune 10,000 customers • Trailing 12 months sales of $2.1 billion, with approximately 41% of sales outside the Americas region (1) • Listed on the Nasdaq (since 1996) and TSX (sinc
Slide 9: Enterprise World Record Attendance
Enterprise World Record Attendance 5,000 Attendees (1) 50 Countries 400 Partners 43 Demo Pods 400 Future Forward 42 Partner Pods 230 Sessions 5 Days 120 Customer Speakers 1 Robot Select Customers KUKA, Bruce Power, BMO, Coca-Cola, J&J, AMEX, ECB, Google, The Private Bank Select Partners Accenture, D
Slide 10: OpenText: The Information Company
OpenText: The Information Company Connect with your information in a whole new way Business Applications IoT AI Developer Network Platform OpenText ©2017 All Rights Reserved. 10
Slide 11: Strong, Experienced Management Team
Strong, Experienced Management Team Mark J. Muhi John Gordon Adam David Barrenechea Majzoub Doolittle Davies Howatson Jamieson CEO & CTO EVP, Engineering EVP, CFO EVP, CLO & Corporate SVP, SVP, & IT Development CMO CIO Leslie Simon “Ted” George James Prentiss Gary Doug Sarauer Harrison Schulze McGou
Slide 12: Proven and Scalable Growth Strategy
Proven and Scalable Growth Strategy Operational Excellence “Intelligent Growth” Strategic New Products Acquisitions Organic Growth Global Expansion $35 Billion EIM 1 Market Opportunity Adjusted Disciplined Operating Capital Income and Deployment Operating Cash Flow 1. Data from various industry anal
Slide 13: Operational Excellence
Operational Excellence • Scalable and cost efficient centers of excellence in India, the Philippines and Canada • Proven track record of adjusted operating margin expansion • Opportunity to further “digitalize” our operations • We empower our leaders with clear financial goals, with systems to measu
Slide 14: Intelligent Growth: New Products
Intelligent Growth: New Products OpenText aligned to key customer drivers Industry Analyst Comments OpenText Response • >$1 trillion in IT spending will be Platform and Applications: Release 16 affected by the shift to cloud by 2018(1) EP2 / EP3 • By 2018, over half of large B2B: OpenText Business N
Slide 15: Intelligent Growth: Organic Growth
Intelligent Growth: Organic Growth • Leverage opportunities through new brand and B2B digital practices • Increase account coverage through management practices, capacity additions and global partners • Promote install-base adoption through specific programs: upgrade to R16, Information Life-cycle M
Slide 16: Intelligent Growth: Global Expansion
Intelligent Growth: Global Expansion • 42% of OpenText sales in FY’16 comes from outside the Americas • Significant opportunity in all geographies Americas EMEA APJ • Increased non-Americas sales from $572M to $775M (+35%) over Revenue: $1,049 M Revenue: $611 M Revenue: $164 M the last 5 years(1) (F
Slide 17: Adjusted Operating Margin and Operating Cash Flow
Adjusted Operating Margin and Operating Cash Flow (1) Adjusted Operating Margin Operating Cash Flow 36% $600 • +1,600 bps 34% 34% $523 $526 improvement in +1,600 bps 10-Year CAGR: improvement over 10 $500 24% AOM over the past 32% years 31% 31% $417 10 years • Significant long- 30% 29% $400 28% 28%
Slide 18: Strategic Acquisitions
Strategic Acquisitions • M&A is our leading growth driver, complemented by organic growth initiatives • Proven approach to M&A with 56 completed acquisitions • (1) Information Management is a $35 billion market and underpins our strategic thesis • Deliver value through integrated operations and inno
Slide 19: ECD: A Compelling Acquisition
ECD: A Compelling Acquisition • Worldwide leader in Content Services (OpenText + ECD) • Capture new opportunities in Information Lifecycle Management • ECD brings 5,000 marquee customers + 2,000 information experts • New relationships in life sciences, healthcare, global systems integrators, and all
Slide 20: Summary
Summary • Proven and scalable growth strategy • Increased customer interest in our solutions • M&A continues to be a leading growth strategy • Top organic opportunity is to expand install-base adoption (upgrades, cross sells, new markets) • Attract new customers through global partners • AI and IoT
Slide 21: OpenText Investor Day: John Doolittle, CFO
OpenText Investor Day John Doolittle CFO NASDAQ: OTEX | TSX: OTEX
Slide 22: Liquidity Profile & Balance Sheet
Liquidity Profile & Balance Sheet Liquidity Strong operating cash flow reflects high margins, superior earnings quality, and efficient working capital management As of March 31, 2017 Balance Sheet Cash & Short-term • Well diversified and solid liquidity profile Investments $ 452M • Next major princi
Slide 23: Capital Allocation
Acquisitions by Fiscal Year Capital Allocation $1,800 (US$M) $1,620 $1,600 • Maintain financial flexibility – strong balance $1,400 $1,252 $1,200 sheet, access to capital, preserve ratings, $1,000 reasonable cost $800 $600 $485 • CAPEX spending of $71M on LTM(1) basis $400 $410 $370 $273 $267 $381 $
Slide 24: OpenText Investor Day: James McGourlay
OpenText Investor Day James McGourlay SVP Global Customer Services NASDAQ: OTEX | TSX: OTEX
Slide 25: Global Customer Services
Global Customer Services Global Customer Services (GCS) Mission: “Deliver world class technical expertise to ensure our customers are successful in their use of OpenText solutions and services.” GCS goals A Team of 2,400 EIM experts • Drive growth in ARR and margin expansion • Technical Support • Ho
Slide 26: OpenText Best Practices
OpenText Best Practices OpenText operating principles for annual recurring revenue: Pricing, Renewal Customer Organizational packaging & Analytics process success enablers contracting • Support and • Clearly defined • Customer Success • Close collaboration • Enhanced customer maintenance through pla
Slide 27: OpenText Key Performance Indicators (KPI's)
OpenText Key Performance Indicators (KPI’s) Gross Margin for Renewal Rate for CS(1) 88% CS in low (FY’16) CS Revenue 90% range +33% growth since Customer FY’11 Net Satisfaction Promoter Score (CSAT) 92% Score (NPS) +39 or more over last 5 years points over last 3 years (1) CS – Customer Support Open
Slide 28: Summary
Summary 1. Continued ARR expansion and margin improvement 2. Focus on improving and refining OpenText Recurring Revenue best practices 3. Five KPIs drive CS performance 4. Long-term initiatives through: • Further deployment of Analytics • Extending from renewal to sales • Strong financial performanc
Slide 29: OpenText Investor Day: Muhi Majzoub
OpenText Investor Day Muhi Majzoub EVP, Engineering & IT NASDAQ: OTEX | TSX: OTEX
Slide 30: OpenText: The Information Company
OpenText: The Information Company Connect with your information in a whole new way Business Applications IoT AI Developer Network Platform OpenText ©2017 All Rights Reserved. 30
Slide 31: OpenText Information Applications
OpenText Information Applications Humans run in herds … they organize around the largest collections of corporate information 95% of all Corporate Release 16 Information is in these classes • People Center • Employees • CEM • Customers • Active Applications • Suppliers • Engineering & Construction •
Slide 32: OpenText Information Platform
OpenText Information Platform Enabling Digitalization … The Brilliant Basics Release 16 • Store, manage and secure • Content Suite, Documentum • Scan, capture and translate • Capture Center / Captiva • Metadata, facets, and search • InfoFusion • Discovery • InfoArchive • Information Lifecycle • Reco
Slide 33: OpenText Information Network
OpenText Information Network $7 Trillion in Annual Commerce Any Document, Any Format, Anytime, Anywhere Connectivity Enable Trading Deep Global & Made Easy in 7 days Analytics Secure • 25 Billion B2B Transactions per year • Connect to over 600k trading partners • The most connection types in the wor
Slide 34: OpenText Internet of Things (IoT)
OpenText Internet of Things (IoT) Trigger actions Drive insight Listen to the world through rules and through Analytics at IoT scale automated processes and AI Ingest billions of Simple, easy to use Improve business messages a day through applications to manage outcomes open protocols devices OpenTe
Slide 35: Information Lakes | AI
Information Lakes | AI 1 2 3 4 5 COLLECTION APPLICATIONS ALGORITHMS DEEP LEARNING INSIGHT Pipeline System Human | Machine (Fish the Lake) (Explore the Lake) (Lets go swimming!!!) (Connectors – Feed the Lake) (Feed the Lake) EIM Information | SQL, Hadoop, Spark, GraphX
Slide 36: OpenText Artificial Intelligence (AI)
OpenText Artificial Intelligence (AI) Information Algorithms Insights • Magellan = Actuate + Apache Spark + Nstein • Run standalone or Pre-integrated to OpenText EIM • Pre-packaged algorithms (via MLIB) • Write your own algorithms (via R and other languages) • Pre-certified x86 hardware configuratio
Slide 37: Information Developer
Information Developer (https://developer.opentext.com) Developers make all things POSSIBLE !!! Remove the friction in creating Enterprise Applications Build Apps in Write Once Low Code Micro Services only 7 Days Run Everywhere • Pre-Packaged data models (Employees, Asset, Suppliers etc…) • Multi-ten
Slide 38: Continuous Innovation
Continuous Innovation Point Releases Release 10 Suite 16 / Cloud 16 EP Series Banff Actuate Blue Carbon Core ANX Enterprise Content Division EasyLink GXS Daegis HP EP1 EP2 EP3 EP4 Our next generation Hybrid Platform Pre 2013 November 2013 March 2016 2016 – 2017 – 2018 2019 EIM investment We are Comm
Slide 39: Building Value for Our Customers
Building Value for Our Customers • Business process acceleration with Release 16 and OpenText Cloud • Connect global suppliers through our B2B Business Network • Incorporate machines through IoT • Generate better insights and stronger business decisions with Magellan AI • Rapidly deploy revenue gene
Slide 40: OpenText ©2017 All Rights Reserved.
OpenText ©2017 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
Slide 42: Reconciliation of Selected Non-GAAP Measures | Q3 F17
Reconciliation of Selected Non-GAAP Measures | Q3 F17 Three Months Ended March 31, 2017 (in ‘000s USD) GAAP % of Non-GAAP % of GAAP Total Adjustments FN Non- GAAP Total Revenue Revenue COST OF REVENUES Cloud services and subscriptions $ 77,225 $ (268) (1) $ 76,957 Customer support 34,442 (261) (1) 3
Slide 43: Reconciliation of Selected Non-GAAP Measures | Q3 F17
Reconciliation of Selected Non-GAAP Measures | Q3 F17 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 amo
Slide 44: Reconciliation of Selected Non-GAAP Measures | Fiscal 2017 YTD
Reconciliation of Selected Non-GAAP Measures | Fiscal 2017 YTD Nine Months Ended March 31, 2017 (in ‘000s USD) GAAP % of Non-GAAP % of GAAP Total Adjustments FN Non- GAAP Total Revenue Revenue COST OF REVENUES Cloud services and subscriptions $ 220,667 $ (839) (1) $ 219,828 Customer support 87,529 (
Slide 45: Reconciliation of Selected Non-GAAP Measures | Fiscal 2017 YTD
Reconciliation of Selected Non-GAAP Measures | Fiscal 2017 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 exclusi
Slide 46: Reconciliation of Selected Non-GAAP Measures | Q2 F17
Reconciliation of Selected Non-GAAP Measures | Q2 F17 Three Months Ended December 31, 2016 (in ‘000s USD) GAAP % of Non-GAAP % of GAAP Total Adjustments FN Non- GAAP Total Revenue Revenue COST OF REVENUES Cloud services and subscriptions $ 73,150 $ (211) (1) $ 72,939 Customer support 27,349 (270) (1
Slide 47: Reconciliation of Selected Non-GAAP Measures | Q2 F17
Reconciliation of Selected Non-GAAP Measures | Q2 F17 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 amo
Slide 48: Reconciliation of Selected Non-GAAP Measures | Q3 F16
Reconciliation of Selected Non-GAAP Measures | Q3 F16 Three Months Ended March 31, 2016 (in ‘000s USD) GAAP % of Non-GAAP % of GAAP Total Adjustments FN Non- GAAP Total Revenue Revenue COST OF REVENUES Cloud services and subscriptions $ 61,298 $ (202) (1) $ 61,096 Customer support 22,427 (215) (1) 2
Slide 49: Reconciliation of Selected Non-GAAP Measures | Q3 F16
Reconciliation of Selected Non-GAAP Measures | Q3 F16 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 amo
Slide 50: Reconciliation of Selected Non-GAAP Measures | Fiscal 2016 YTD
Reconciliation of Selected Non-GAAP Measures | Fiscal 2016 YTD Nine Months Ended March 31, 2016 (in ‘000s USD) GAAP % of Non-GAAP % of GAAP Total Adjustments FN Non- GAAP Total Revenue Revenue COST OF REVENUES Cloud services and subscriptions $ 179,132 $ (641) (1) $ 178,491 Customer support 64,624 (
Slide 51: Reconciliation of Selected Non-GAAP Measures | Fiscal 2016 YTD
Reconciliation of Selected Non-GAAP Measures | Fiscal 2016 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 exclusi