Slide 1: OpenText Investor Presentation
OpenText Investor Presentation February 1, 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: Our Business
Our Business © 2024 Open Text 3
Slide 4: OpenText Snapshot
OpenText Snapshot Global Leader in Information Management Information Management opentext.ai Targets & Aspirations Total Addressable Market (TAM)(1) Updated Proven Information Management TAM (1) technology In Constant Currency(2) F’24 Targets F’26 Aspirations Content innovation (Before AMC Divestitu
Slide 5: OpenText: We Power and Protect Information
OpenText: We Power and Protect Information The Most Comprehensive Information Management Platform Content Management AI & Analytics Business We make information more: Network ✓ Accessible ✓ Useful Public Public Internet Internet ✓ Valuable ✓ Secure Application Cybersecurity Automation IT Operations
Slide 6: Information Management is Essential for AI Disruption
Information Management is Essential for AI Disruption Automation and a Data Platform are Prerequisites for an AI Strategy Information Trusted Learning Models Automation Data & Algorithms © 2024 Open Text 6
Slide 7: Information Automation: Our Competitive Advantage
Information Automation: Our Competitive Advantage Customers Trust OpenText to Power and Protect their Data Data of Any Type Automation and Connectors Content Management Engines Large Data Sets 100s of Connectors Structured / Unstructured Governance and Retention Human / Machine Large trusted custome
Slide 8: We are Positioned to Win Business AI
We are Positioned to Win Business AI Automation and a Data Platform are Prerequisites for an AI Strategy Data of Any Type Organized for Insight and Information Advantage Automation and 100s Customer Data Sets AI & Analytics Engines Insights LLMs OpenText Aviators of connectors 100s of connectors Vis
Slide 9: Trusted Data
Trusted Data We Manage Some of the World’s Largest Data Sets Ingest All Data Types Manage Large Data Sets • Documents Vertica: 96 Trillion rows across multi-nodes • Video/ Voice/ Images • Collaboration Content: 1 Trillion Pages managed • Records Content: 1 Billion Pages processed a day • Archives •
Slide 10: OpenText Aviator Offerings
OpenText Aviator Offerings Business AI Embedded Into Our Business Clouds DevOps IT Operations Content Cybersecurity Experience Value Edge Virtual SMAX Virtual Agent Core Content ArcSight Intelligence Exstream Content Assistant for: for: with: Threat Hunter with: Assistant for: • Delivery insights •
Slide 11: How We Create Value
How We Create Value © 2024 Open Text 11
Slide 12: Total Growth Model: Cloud and ARR growth
Total Growth Model: Cloud and ARR growth F’26 Aspirations in Constant Currency 15%+ Enterprise Cloud Bookings(1) Growth Cloud Organic Revenue Growth(2) Future Total 77% to 7% to 9% + M&A = Growth 79% ARR as % of Total ARR Growth(3) Revenues 2% to 4% + Margin Expansion + Dividend + Future Share Buyba
Slide 13: OpenText Business System
OpenText Business System Expand Our Competitive Advantage: It’s Who We Are and How We Do What We Do Our Shared Purpose in Information Management To Elevate Every Person and Every Organization to Gain the Information Advantage Our System OpenText Fundamentals Growth is • Market leadership • Operation
Slide 14: How We Create Value
How We Create Value Growth Driven by Product Innovation and Go-to-Market Execution 1 Expand Our Competitive Advantage in Information Management 2 3 4 Growth Growth Profitability Capital Allocation • Expand customer consumption • Realize higher profits and cash • Return value to shareholders flows fr
Slide 15: Expand Our Competitive Advantage: Investments in Innovation
Expand Our Competitive Advantage in Information Management Investments in Innovation Driving Cloud and ARR Organic Growth Growing Innovation Investment Organic Growth(1) F’26 Aspirations $1,000 16% Cloud Organic 5% 7% to 9% R&D (as % of Revenues) $900 15% Growth in CC(2) R&D (USD$ millions) $800 Org
Slide 16: Investments in AI & Automation Increases Opportunity for Growth
Expand Our Competitive Advantage in Information Management Investments in AI & Automation Increases Opportunity for Growth 80% of Our Investments are in Cloud Technologies Platform for OpenText Cloud Offerings Cloudification of OpenText AI, Security and Cloudification of Micro Focus Cloud Editions T
Slide 17: Strategic Growth Initiatives
Strategic Growth Initiatives Expand Customer Consumption and Unlock New Value in SaaS and AI Content Business Application IT Operations AI & Analytics Cybersecurity Management Network Automation Management Complete Customer deployment choice: Off-cloud, Private cloud, Public cloud, API cloud Integra
Slide 18: Growth: Top Drivers by Business and Leading Products
Growth: Top Drivers by Business and Leading Products Expand Customer Consumption and Unlock New Value in SaaS and AI Business Application IT Operations Content Management AI & Analytics Cybersecurity Network Automation Management Enterprise (Visibility, Planning GreenOps IDOL AI-driven software deli
Slide 19: Growth: Through Expanded Go-To-Market
Growth: Through Expanded Go-To-Market TM OpenText L.O.V.E. Model Our Approach to Engaging Customers and Partners Our large Strategic Partners inclusive of SAP, Top Microsoft, Google, AWS, Accenture and more Strategic Accounts 250 Strategic Partners Enterprise Accounts G10K • MSP • Strategic Service
Slide 20: Return Value to Shareholders via Capital Allocation
Return Value to Shareholders via Capital Allocation Approximately $2.2B Returned to Shareholders Since F’13 (1) Dividends Paid (US$M) Historical Share Buybacks (US$M) Dividend Program $273 $260 • 20% of TTM Free Cash Flows(4) $238 $360M+ $211 $189 $169 Future Share $146 Cumulative F’13 to F’23 $121
Slide 21: Financial Results
Financial Results © 2024 Open Text 21
Slide 22: Q2 F’24 Summary
Q2 F’24 Summary Total Cloud Annual Revenues Revenues Recurring Revenues(1) $1.53B $450M $1.15B +71% Y/Y +10% Y/Y +58% Y/Y TTM Renewal Rate(3) Annual Recurring A-EBITDA Margin(2) Revenues(1) Cloud 36.9% 93% 75% +66% Y/Y Off-Cloud % of revenues (in A-EBITDA $) 95% (1), (2), (3) See Slide Notes © 2024
Slide 23: Q2 F’24 and TTM Financial Highlights
Q2 F’24 and TTM Financial Highlights (with Y/Y comparisons) (1) Q2 Enterprise Cloud Bookings of $236M; TTM of $628M Q2 F’24 TTM for period ended Q2 F’24 $1.53B 71.0% $5.70B 61.2% Total Revenues (2) Total Revenues $1.51B in CC 68.2% in CC $5.70B in CC 61.3% in CC ARR(3) $1.15B 58.0% ARR $4.46B 52.8%
Slide 24: Q2 F’24 Customer Wins
Q2 F’24 Customer Wins Analytics & AI Analytics & AI Content Management Cybersecurity Cybersecurity IT Operations Management Mobile virtual network Improves people’s lives German manufacturer of Leading manufacturer of Denmark's leading consumer Major American cargo airline operator in UAE, Saudi thr
Slide 25: Cash Flows and Balance Sheet
Cash Flows and Balance Sheet Debt Maturity Profile (USD$M)(1) (as of 12/31/23) Cash (USD$M) (as of 12/31/2023) Planned Debt Reduction of at least $175M/quarter Acquisition Term Loan Total Cash $1,003 Term Loan B Senior Secured Notes Reflects $175M TTM Q2 F’24 (USD$M) Senior Notes Micro Focus Transac
Slide 26: Renewals and Customer Organization
Renewals and Customer Organization(1) Centralized & Highly-Focused Information Management Renewals Organization >$4.5B 75% 90% 160K 600 Q2 Annualized Recurring ARR as a percent of Q2 Customer Support Agreements Renewal Professionals Revenues(2) Total Revenues Non-GAAP Margins(3) Bring Micro Focus to
Slide 27: AMC Divestiture
AMC Divestiture © 2024 Open Text 27
Slide 28: Application Modernization and Connectivity Divestiture
Application Modernization and Connectivity Divestiture Pro Forma as of Fiscal Year Ended June 30, 2023(1) Revenue (License and Customer Support, Off-Cloud) Sale Price and Closing Conditions $500M Transaction Details A-EBITDA Employees • $2.275B all-cash purchase price $275M ~750 • $2.0B of net proce
Slide 29: Pro Forma Debt Profile & Maturity
Pro Forma Debt Profile & Maturity As of Pro Forma OpenText Debt Maturity (USD$M)(3) Pro Forma(1) 12/31/2023 Principal Outstanding $8.7B ~$6.8B $1,000 Total Fixed Debt (Fixed Debt weighted average 49% ~63% interest rate of 4.7%) $2,084 Weighted Average Interest Rate 6.3% ~5.95% $933 $1,000 $900 $850
Slide 30: Significant Value Creation
Significant Value Creation F’22 to F’26 After the Acquisition of Micro Focus and Divestiture of AMC More than Double the Total Addressable Market (TAM) Micro Focus Added Leading Products Total Addressable for New Strategic Buying Groups $92B $200B+ Market(1) • Enterprise Security (CISO) Prior to Mic
Slide 31: Outlook
Outlook © 2024 Open Text 31
Slide 32: Q3 F’24 Quarterly Factors
Q3 F’24 Quarterly Factors Externalities Company Specific • Geopolitical Expect Q3 Y/Y Revenues in constant currency: • Recession risk • Total revenues of $1.40B to $1.45B • Inflation • ARR(1) of $1.13B to $1.16B • FX constant Expect Q3 Y/Y A-EBITDA(2) in constant currency: • Margin 32% and 33% • FX
Slide 33: F’24 Target Model
F’24 Target Model(1) Updated F’23 Reported F’24E in CC(2) F’23 USD$M unless stated otherwise F’24E in CC(2) Reported USD$M % of Rev % of Revenues Y/Y Growth $528 Ent. Cloud Bookings(3) and Growth Y/Y% 25% to 30% $1,700 37.9% Cloud Services and Subscriptions 30% to 32% 6% to 8% 1.2% Organic CC Growth
Slide 34: Micro Focus Anniversary: Commitments and Delivery
Micro Focus Anniversary: Commitments and Delivery(1) Leverage Proven OpenText Business System to Drive Accretive Integration of Micro Focus (MF) On or Ahead of Plan on Every Commitment Day 1 Commitments Year 1 Achievements Looking Ahead Accelerate MF cloud growth Record MF cloud bookings in Q2 F’24
Slide 35: OpenText – Micro Focus Financial Integration Framework
OpenText – Micro Focus Financial Integration Framework(1) As of 12/31/23 2H F’24 F’25 Micro Focus - One Year Post Close Annualized Vendor • Micro Focus integration ahead of plan consolidation, Savings $370M Actioned strategic • Facilities restructuring plan is final $400M procurement • Global entity
Slide 36: F’26 Aspirations (in Constant Currency)
F’26 Aspirations (in Constant Currency) Including AMC Excluding AMC(1) Subject to close, excluding future synergies and Cloud/AI growth (estimated, pro forma) opportunities. Further update expected upon closing. Enterprise Cloud Bookings Growth(1),(2) 15%+ 15%+ Expanded Consumption, Cloud and AI Clo
Slide 37: Our 2030 Pledge: OpenText Zero-In
Our 2030 Pledge: OpenText Zero-In • Committed to climate innovation 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 r
Slide 38: Executive Leadership Team (ELT)
Executive Leadership Team (ELT) Sales & Demand Products & Customers Corporate Operations Ted James Prentiss Muhi Paul Madhu Shannon Michael Harrison McGourlay Donohue Majzoub Duggan Ranganathan Bell Acedo EVP, Enterprise EVP, International EVP, Cybersecurity EVP, Chief EVP, Chief EVP, CFO EVP, Chief
Slide 39: Slide Notes
Slide Notes Throughout this presentation, certain numbers are approximate and may not foot due to rounding Slide 22 ------------------------------------------------------------------------------------------------------- Slide 29 -----------------------------------------------------------------------
Slide 40: Slide Notes (Cont.)
Slide Notes (Cont.) Slide 34 ------------------------------------------------------------------------------------------------------- (1) Projected as of February 1, 2024; this model is not guidance. (2) Organic growth is calculated by removing the revenue contribution from newly acquired companies f
Slide 41: opentext
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Slide 42: 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 43: 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 44: 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 45: Reconciliation of Selected Non-GAAP Measures | Q2 FY'24
Reconciliation of Selected Non-GAAP Measures | Q2 FY'24 © 2024 Open Text 45
Slide 46: Reconciliation of Selected Non-GAAP Measures | Q2 FY'24
Reconciliation of Selected Non-GAAP Measures | Q2 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 47: Reconciliation of Selected Non-GAAP Measures | FY’24 YTD
Reconciliation of Selected Non-GAAP Measures | FY’24 YTD © 2024 Open Text 47
Slide 48: 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 49: Reconciliation of Selected Non-GAAP Measures | Q2 FY'23
Reconciliation of Selected Non-GAAP Measures | Q2 FY'23 © 2024 Open Text 49
Slide 50: Reconciliation of Selected Non-GAAP Measures | Q2 FY'23
Reconciliation of Selected Non-GAAP Measures | Q2 FY'23 © 2024 Open Text 50
Slide 51: Reconciliation of Selected Non-GAAP Measures | FY’23 YTD
Reconciliation of Selected Non-GAAP Measures | FY’23 YTD © 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 Adjusted EBITDA and Free Cash Flows
Reconciliation of Adjusted EBITDA and Free Cash Flows © 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: opentext
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