Slide 1: OpenText Investor Presentation
OpenText Investor Presentation May 2, 2024 NASDAQ: OTEX | TSX: OTEX
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: May 2024 Update
May 2024 Update Sale of AMC Introducing Return of Capital Per Share(3) • Reflects AMC divestiture, completed May 1, 2024 • Targeting 50% of TTM FCF returned to shareholders(4) • $2B Debt reduction expected on May 6 - Announced a $250M share buyback • Return to capital allocation flexibility - Expect
Slide 4: We Lead The Information Management Software Industry
1 We Lead The Information Management Software Industry 2 We Are Transforming For Cloud, Security and AI Growth 3 We Are Essential to AI 4 Building Shareholder Value 5 Introducing Return of Capital per Share © 2024 Open Text 4
Slide 5: We Make the Software that Manages the World's Largest Information Repositories
We Make the Software that Manages Some of the World’s Largest Information Repositories 120k 98 31M 1M of 100 world's largest companies are our Connected trading Enterprise Customers Public cloud users customers partners $12T 290 1T 1B In annual commerce Petabytes of data Pages of content Pages proce
Slide 6: Our Software is at the Center of Global Information Flow
Our Software is at the Center of Global Information Flow Enterprise Resource Customer Data Sets Planning Customer Relationship Analytics Management Human Resource Insights Information System Other Information 3rd Party Large Systems Language Models OpenText is at the center of connected ecosystems,
Slide 7: We Do What No Other Software Company Can
We Do What No Other Software Company Can Information Automation and Content Management Automation and Content Management Any Type of Data Large Trusted Data Sets Connectors Engines • Documents 100s of Connectors • Video / Voice / Images 1 Trillion pages managed Governance and 1 Billion pages process
Slide 8: We Are Better Positioned Than Our Competitors
We Are Better Positioned Than Our Competitors(1) We have been named a LEADER in every product category Content Cloud Experience Cloud AI Cloud IT Operations Business Network Cloud Application Development Management Security Cloud (1) See Slide Notes © 2024 Open Text 8
Slide 9: We Lead The Information Management Software Industry
1 We Lead The Information Management Software Industry 2 We Are Transforming For Cloud, Security and AI Growth 3 We Are Essential to AI 4 Building Shareholder Value 5 Introducing Return of Capital per Share © 2024 Open Text 9
Slide 10: Investments Expand Our Addressable Market
Investments Expand Our Addressable Market Product Expansion Drives Growth Total Addressable Market Titanium X: Next Generation Autonomous Cloud (1) Cloud Embeds AI and Security in all major offerings “Let the Machines Do The Work” $200B+ Faster Growth Titanium: Standardizes OpenText as a Cloud-first
Slide 11: Expanding into the Cloud to Accelerate Growth
Expanding into the Cloud to Accelerate Growth Titanium X Completes cloud journey, embeds AI and security 2025 OpenText Enterprise Cloud Bookings(1) Titanium 2022 Public 18% 3Q F’24 y/y growth Carbonite Acquisition initiates public Cloud Editions 2020 Cloud Industry Cloud Revenue CAGR (CY2022 to CY20
Slide 12: We Meet Customers' Highest IT Spending Priorities
We Meet Customers’ Highest IT Spending Priorities IT Spending Priorities (% change in spending in 2024) Cyber/information security 80% Business intelligence/data analysis 78% Cloud platforms 73% Artificial intelligence/machine learning 73% Source: Gartner CIO Survey, October 2023. © 2024 Open Text 1
Slide 13: Customer Use Case: Public Cloud SaaS
Customer Use Case: Public Cloud SaaS OpenText deploys solutions and customer information securely into the public Cloud Customer Products & Services | Service Management Automation X (SMAX) in the Public Cloud | Universal Discovery in the Public Cloud Challenge Solution • Zurich Airport needed a sol
Slide 14: We Lead The Information Management Software Industry
1 We Lead The Information Management Software Industry 2 We Are Transforming For Cloud, Security and AI Growth 3 We Are Essential to AI 4 Building Shareholder Value 5 Introducing Return of Capital per Share © 2024 Open Text 14
Slide 15: Customers are Testing AI to Increase Value and Improve Productivity
Customers are Testing AI to Increase Value and Improve Productivity Potential Increase in Productivity Operational area from Generative AI** 96% Customer Care 30-45% of companies are using, Product Development 32% testing, or considering AI* Software Engineering 31% 88% Marketing 12% of leaders say
Slide 16: Information Management is Essential for AI Disruption
Information Management is Essential for AI Disruption OpenText is the trusted partner for global organizations that generate Information Trusted Third-Party massive volumes of Automation Data Learning Models documents and & Algorithms transactions © 2024 Open Text 16
Slide 17: We are Positioned to Win Business AI in the Enterprise
We are Positioned to Win Business AI in the Enterprise Automation and a Data Platform are Prerequisites For an AI Strategy Information Automation Large Trusted Data Sets AI & Analytics Engines LLMs OpenText AviatorTM 3rd Party Pluggable LLMs 1 Trillion pages managed Structured DevOps OpenText’s Cont
Slide 18: OpenText AI Products are Available Today
OpenText AI Products are Available Today Aviator squadron is fully available TM Content Business Network Experience • Business AI for the Enterprise Aviator Aviator Aviator • Your data and your Intellectual Property • Bring your own language model ITOM Search IoT • Available in: Aviator Aviator Avia
Slide 19: Customer Use Case: Aviator for Software Engineering
Customer Use Case: Aviator for Software Engineering TM Customer Products & Services DevOps Aviator Challenge Solution • A leading South African retailer • OpenText DevOps Aviator's results highly correlated with manual testing depended on manual testing of new • Added 20% coverage to PickNPay's test
Slide 20: We Lead The Information Management Software Industry
1 We Lead The Information Management Software Industry 2 We Are Transforming For Cloud, Security and AI Growth 3 We Are Essential to AI 4 Building Shareholder Value 5 Introducing Return of Capital per Share © 2024 Open Text 20
Slide 21: Building Shareholder Value: Our Four Point Strategy
Building Shareholder Value: Our Four Point Strategy • Live the OpenText Business System 1 - Relentless focus on execution 2• Accelerate Cloud Growth - Competitive differentiation in Information Management Annual - Grow consumption in Private Cloud, SaaS, Security and AI - Market coverage expansion i
Slide 22: OpenText Business System
OpenText Business An OpenTexter Always … System Puts customers first Customers talk, we listen. Be the trusted advisor. Customer value and engagement is in every conversation. Innovates • Help customers transform through We debate, align and act. We focus on customer driven value and Information Man
Slide 23: Accelerate Cloud Growth
Accelerate Cloud Growth Competitive Differentiation in Information Management Increase Investment Expand Market Coverage Accelerate Cloud Growth $1,000 Titanium X 9% 7% to 9% Titanium Next Generation Organic 14% to 16% 8% Cloud Revenue Autonomous Cloud, Organic Cloud Revenue Growth in CC of revenue
Slide 24: Powerful Free Cash Flows
(1) Powerful Free Cash Flows F’27E • Margin expansion $1.2B to $1.3B • A technology-enabled business through Data, Automation and AI 20%+ FCF as a percent of Revenue Lower interest charges F’24E Lower special charges $725M to $800M ~13% FCF as a percent of Revenue Completed Micro Focus integration (
Slide 25: Disciplined Capital Allocation
Disciplined Capital Allocation OpenText Capital Allocation Strategy(1) OpenText Cloud M&A Framework Primary Additional Domain Cloud Information Management, high recurring revenues Dividend and Cloud • Cast a wide net across Information Management in the End Market Cloud Buyback M&A Alignment • Estab
Slide 26: Our Total Growth Approach
Our Total Growth Approach Medium-Term Long-Term F’27 Aspirations Aspirations (Y/Y Growth in Constant Currency) Mid-Single Digit Total Revenue Growth 20%+ 7% to 9% 2% to 4% Cloud Organic Total Organic 2% to 4% 1% to 2% Enterprise Revenue Organic M&A Revenue Cloud Bookings Growth(2) Revenue(2) Revenue
Slide 27: Strategic Investment for a Stronger Future
Strategic Investment for a Stronger Future F’22 to F’27 After the Acquisition of Micro Focus and Divestiture of AMC More than Double the Total Addressable Market (TAM) Micro Focus Added Leading Products TAM(1) $92B $200B+ for New Strategic Buying Groups • Enterprise Security (CISO) Prior to Micro F’
Slide 28: We Lead The Information Management Software Industry
1 We Lead The Information Management Software Industry 2 We Are Transforming For Cloud, Security and AI Growth 3 We Are Essential to AI 4 Building Shareholder Value 5 Introducing Return of Capital per Share © 2024 Open Text 28
Slide 29: Introducing Return of Capital per Share
(1) Introducing Return of Capital per Share $2.2B Return to Shareholders Guiding Principles F’25 Target including $362M of share buybacks(2) Dividend Track Record ($M) • Primary Capital: 50% of TTM FCF towards dividends and buybacks(5) $450M to $500M of Dividends and Buybacks in F’25(5) • Grow our R
Slide 30: Track Record of Return of Capital to Shareholders
$1,200 85% (1) Track Record of Return of Capital (ROC) to Shareholders 75% $1,000 65% Return of Capital as % of Free Cash Flows $800 55% Share Buyback 47% Dividends, $M 45% 41% 40% $600 36% 34% $250m share 35% buyback 24% $415 $400 20% 21% 21% 25% 20% $330 $178 $119 $260 15% ROC as % (2) of FCF $200
Slide 31: Quarterly Highlights
Quarterly Highlights © 2024 Open Text 31
Slide 32: AMC Divestiture Highlights
AMC Divestiture Highlights Application Modernization & Form 8-K filing (May 1, 2024) Additional Information Connectivity (AMC) Divestiture AMC Group Transaction Details 6 months ended 12/31/23 • F’23: $225M revenues (Form 8-K filing) Revenue $264M • Closed 5/1/2024 • F’25 and beyond: No AMC revenues
Slide 33: Q3 F'24 Summary
Q3 F’24 Summary Total Cloud Annual Recurring Revenues Revenues Revenues(2) Enterprise $1.45B $455M $1.15B +16% Y/Y +4% Y/Y +13% Y/Y Cloud Bookings(1) $165M +53% Y/Y Renewal Rate(4) Annual Recurring A-EBITDA Margin(3) Revenues(2) Cloud 32.0% 92% 79% Off-Cloud +27% Y/Y % of revenues (in A-EBITDA $) 95
Slide 34: Q3 F'24 Customer Wins
Q3 F’24 Customer Wins Analytics & AI Application Automation Application Automation Content Management Content Management IT Operations Management Insurance provider and German multinational science Advanced technology-led German multinational Top 10 UK producing oil and UK-based managed service subs
Slide 35: Cash Flows and Pro Forma Debt Maturity Profile
Cash Flows and Pro Forma Debt Maturity Profile Pro Forma OpenText Debt Maturity (USD$M)(2) As of Pro forma Cash (USD$M) (as of 03/31/2024) (expected May 6, 2024) March 31, May 6, 2024 2024 Total Cash $1,125 Principal Outstanding $8.5B ~$6.5B TTM Q3 F’24 (USD$M) Debt reduction expected Micro Total Fo
Slide 36: Outlook
Outlook © 2024 Open Text 36
Slide 37: Q4 F'24 Quarterly Factors
Q4 F’24 Quarterly Factors Externalities Company Specific Expect Q4 Y/Y Revenues in constant currency: • Geopolitical • Total revenues of $1,385M to $1,435M • Lower GDP growth • ARR(1) of $1,075M to $1,115M • Inflation • FX slight headwind Reflects AMC Divestiture of May 1, 2024 • Models should refle
Slide 38: F'24 Target Model
(1) F’24 Target Model Including AMC through May 1, 2024 Updated F’24 Highlights in CC(2) Revenue % of F’24 Revenue Enterprise Cloud Bookings(3) growth 33% to 38% Cloud Services and Subscriptions 31% to 33% Total Revenue $ $5.745B to $5.795B Customer Support 45% to 47% (4) ARR 77% to 79% Total Organi
Slide 39: F'25 Preliminary Targets and F'27 Aspirations
(1) F’25 Preliminary Targets and F’27 Aspirations F’25 Preliminary F’27 Aspirations Total Revenue in CC(2) $5.3B to $5.4B Total Revenue in CC(2) $5.7B to $5.9B A-EBITDA Margin(3) 32% to 33% A-EBITDA Margin(3) 36% to 38% Free Cash Flows* (FCF)(3),(4) $575M to $650M Free Cash Flows (FCF)(3),(4) $1.2B
Slide 40: Slide Notes
Slide Notes Throughout this presentation, certain numbers are approximate and may not foot due to rounding Slide 25 ------------------------------------------------------------------------------------------------------- Slide 30 -----------------------------------------------------------------------
Slide 41: Slide Notes
Slide Notes Slide 38 ------------------------------------------------------------------------------------------------------- (1) Projected as of May 2, 2024; this model is not guidance. (2) Constant currency for this purpose is defined as the current period reported revenues/expenses/earnings repres
Slide 42: OpenText
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Slide 43: 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 44: 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 45: Summary of Year to Date Results with Constant Currency
Summary of Year to Date 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 ta
Slide 46: Reconciliation of Selected Non-GAAP Measures | Q3 FY'24
Reconciliation of Selected Non-GAAP Measures | Q3 FY'24 © 2024 Open Text 46
Slide 47: Reconciliation of Selected Non-GAAP Measures | Q3 FY'24
Reconciliation of Selected Non-GAAP Measures | Q3 FY'24 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 48: Reconciliation of Selected Non-GAAP Measures | FY'24 YTD
Reconciliation of Selected Non-GAAP Measures | FY’24 YTD © 2024 Open Text 48
Slide 49: Reconciliation of Selected Non-GAAP Measures | FY'24 YTD
Reconciliation of Selected Non-GAAP Measures | FY’24 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 50: Reconciliation of Selected Non-GAAP Measures | Q3 FY'23
Reconciliation of Selected Non-GAAP Measures | Q3 FY'23 © 2024 Open Text 50
Slide 51: Reconciliation of Selected Non-GAAP Measures | Q3 FY'23
Reconciliation of Selected Non-GAAP Measures | Q3 FY'23 © 2024 Open Text 51
Slide 52: Reconciliation of Selected Non-GAAP Measures | FY'23 YTD
Reconciliation of Selected Non-GAAP Measures | FY’23 YTD © 2024 Open Text 52
Slide 53: Reconciliation of Selected Non-GAAP Measures | FY'23 YTD
Reconciliation of Selected Non-GAAP Measures | FY’23 YTD © 2024 Open Text 53
Slide 54: Reconciliation of Adjusted EBITDA and Free Cash Flows
Reconciliation of Adjusted EBITDA and Free Cash Flows © 2024 Open Text 54
Slide 55: Reconciliation of Adjusted EBITDA and Free Cash Flows
Reconciliation of Adjusted EBITDA and Free Cash Flows © 2024 Open Text 55
Slide 56: OpenText
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