Slide 1: Investor Presentation
Investor Presentation NASDAQ: OTEX | TSX: OTEX May 4, 2022
Slide 2: Safe Harbor and IP Statement
Safe Harbor and IP Statement This presentation contains forward-looking statements. These forward-looking statements are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 and other applicable securities laws of the United States and Canada. All state
Slide 3: Q3 Fiscal 2022 Financial Results
Q3 Fiscal 2022 Financial Results OpenText ©2022 All rights reserved 3
Slide 4: Q3 Fiscal 2022 Financial Highlights
Q3 Fiscal 2022 Financial Highlights with Y/Y comparisons Reflects continued investments in talent, innovation and go-to-market to drive organic growth Q3 FY’22 Trailing Twelve Months (TTM) Ending Q3 FY’22 5.9% 5.0% Total Revenues $882.3M Total Revenues $3.48B 8.0% in CC(1) 4.2% in CC $734.5M 6.2% $2
Slide 5: Q3 FY'22 Customer Wins
Q3 FY’22 Customer Wins Business Content Network Services Booz Allen Hamilton is an American management and Ecopetrol is the leading petroleum company in Columbia and a information technology consulting firm Fortune Global 500 company Products: OpenText PLM Managed Services Products: OpenText Extende
Slide 6: Q4 FY'22 Quarterly Factors
Q4 FY’22 Quarterly Factors Externalities Company Specific(1) • Expect Q4 Y/Y: • FX revenue headwind of $25M to $30M • Geopolitical (Russia) • Continued pandemic effects (China) • Total revenue constant to slightly up • Inflation, supply chain and labor shortages • ARR up low mid single-digit • Inter
Slide 7: FY'22 OpenText Total Growth Strategy
FY’22 OpenText Total Growth Strategy(1) FY’21 Actual(1) FY’22 Prior(2) FY’22 New(3) $1,407.4 Cloud 8% - 10% 8% - 10% $1,334.1 Customer Support Constant Constant $2,741.5 ARR Low mid single-digit Low mid single-digit $384.7 License Constant Down low mid single-digit $259.9 Professional Services Mid s
Slide 8: FY'22 Target Model
FY’22 Target Model Fiscal 2021 Actuals Fiscal 2022 Model(3,4) Revenue Type: Cloud Services and Subscriptions 41.6% 42% - 44% Customer Support 39.4% 37% - 39% Annual Recurring Revenue (ARR) 81.0% 81% - 83% License 11.4% 9% - 11% Professional Services and Other 7.7% 7% - 9% Non-GAAP Gross Margin: Clou
Slide 9: FY'24 Medium-Term Aspirations
FY’24 Medium-Term Aspirations(1) Organic Growth(2) 2% - 4% Strategic GROW with OpenText programs ARR 85% Growth in cloud as a percent of total % of Total Revenue Mid-90s Customer Support renewals and cloud subscriptions A-EBITDA(3) 38% - 40% Improved margin through growth, scale and automation (marg
Slide 10: Our Longer-Term Aspirations In Information Management
Our Longer-Term Aspirations In Information Management Longer-Term Aspirations in Every Cloud in Free Cash Up to 4% Organic Growth Plus M&A Flows(1) 1. Represents estimated cumulative FCF. Please refer to “Use of Non-GAAP Financial Measures” at the end of this presentation and “Reconciliation of sele
Slide 11: Strong Cash Flows and Balance Sheet
Strong Cash Flows and Balance Sheet Current Liquidity (US$) Trended Consolidated Net Leverage Ratio(2) Total Cash & Committed $2.38B Zix Acquisition Liquidity(1) Closing 2.3x 2.0x 2.0x 1.9x 1.8x TTM Q3 FY’22 (US$M) 1.6x 1.6x 1.5x 1.4x Operating Cash Flows $1,026 Less: CapEx $82 Q3 FY'20 Q4 FY'20 Q1
Slide 12: Strategy
Strategy OpenText ©2022 All rights reserved 12
Slide 13: OpenText in a Snapshot
OpenText in a Snapshot (NASDAQ/TSX:OTEX) Leader in Content Management 40 of top 50 Supply Chains Leader in Business Network 75K Enterprise Customers $92B Total Addressable Market(1) 818K SMB Customers Direct Distribution Digital 3,000+ 23,000+ OpenText field facing MSPs Digital professionals Zone 1.
Slide 14: Information Management Market Segmentation
Information Management Market Segmentation Small Medium Mid-Market Large CY’22 Market Size $B Business Business Enterprise Enterprise TAM(1) CY’22-25 CAGR % <100 employees 100-499 employees 500-999 employees 1000+ employees Content $4.3B $4.1B $2.6B $13.0B $24.0B Services 10% 11% 11% 11% 11% Market
Slide 15: The OpenText Cloud
The OpenText Cloud Cloud Editions Run Anywhere | Off-Cloud | Private-Cloud | Public Cloud | API-Cloud Public cloud Private-cloud Off-cloud API-cloud 11 million subscribers 3,000+ customers 75,000+ customers 1 Trillion calls/year OpenText ©2022 All rights reserved 15
Slide 16: OpenText Cloud is Leading the Market
OpenText Cloud is Leading the Market Market Market Leader Leader Master Modern Digitize the IDC MarketScape: Forrester Wave™: Work Content Platforms, Supply Chain Worldwide Multi-Enterprise Supply Chain Commerce Q2 2021 Networks, 2021 Market Market Leader Leader Power Modern IDC MarketScape: Be Cybe
Slide 17: The World's Leading Companies Trust OpenText
The World’s Leading Companies Trust OpenText As our top customers accelerate to digital, we accelerate with them Consumer Life Sciences Financial Technology Manufacturing Telecom Goods 10 of 8 of 10 of 10 of 10 of 8 of top 10 top 10 top 10 top 10 top 10 top 10 OpenText Summit Program: Our 100 larges
Slide 18: How We Create Value
How We Create Value Model Value Creation Total Revenue • Organic growth Growth Total Revenue 12% Total Revenue • Acquired growth Growth CAGR (FY’13 to FY’21) • High recurring revenues • Upper quartile A-EBITDA margin 39% A-EBITDA Profitability Value • Growing free cash flows margin (FY’21)(1) Capita
Slide 19: Total Growth Strategy
Total Growth Strategy • Growing sales breadth and depth • Product innovation GROW Information • 83% ARR(1) • 94% Customer support renewals(2) Management • 93% Cloud renewals(2) • Drives organic growth • Gain market share ACQUIRE • High free cash flow returns RETAIN 1. ARR as a percentage of Total Re
Slide 20: Our Strategic Priorities are Clear
Our Strategic Priorities are Clear GROW top customers and Full Global 10K coverage by Cross-sell / upsell across top supply chain accounts end of CY’23 product portfolios Technology Ultimate Cloud: 4 ways to Best-in-class operational investments (internal) & consume cloud by support to accelerate au
Slide 21: Investing For Organic Growth
Investing For Organic Growth Non-GAAP R&D(1,2) - Investing in Innovation FY’22 Model: Research & Development $450 $400 12%-14% ($ and in % of Total Revenues)(1),(2) 12.2% 12.2% $350 11.7% $ in millions $300 11.3% 11.0% $250 12.0% R&D% $200 $412 $426 $365 of Total Revenues $150 $317 $317 $274 $100 $5
Slide 22: How We Go-to-Market and Our Progress
How We Go-to-Market and Our Progress • New cloud platform & innovations across 5 clouds Large OpenText • Full G10K covered by end of CY’23 Enterprise Direct Sales • Summit program growth: top customers & ecosystems Global Accounts 1000+ employees Enterprise Accounts • Competitive replacements Corpor
Slide 23: Partners: A Force Multiplier
Partners: A Force Multiplier • Top cloud & • Public cloud • Leading partnership off-cloud partner partnership with SMB/C • Highest growth • Joint GTM with cloud Workspace New Partnerships • OpenText’s largest • Deepen • ServiceNow cloud platform relationship with • Infor joint GTM planning • AT&T •
Slide 24: SMB At Scale: Positioned for Faster Growth
SMB At Scale: Positioned for Faster Growth Scaled SMB Presence in 2 Years Major Partnerships $36B TAM(1) ~8% CAGR Major Enhanced Enhanced New More End-point Stronger anti- Commerce Products, Product ransomware consumer protection experience- Experience Partners and Releases efficacy protection (NCE)
Slide 25: Foundation for Growth – SMB Powerhouse
Foundation for Growth – SMB Powerhouse Carbonite (including Webroot & Brightcloud), Zix (including AppRiver) 23,000 1,881 818K 147 MSPs VARs Businesses Supported OEMs +26% this FY +38% this FY +12% this FY 17 New last FY +14% Products & Solutions Ecosystem Talent Cyber Resilience • 23,000 MSPs • 17
Slide 26: Powerful Renewal Engine
Powerful Renewal Engine Acceleration Into the Cloud Enables an Expansion Focus Centralized & Highly-Focused Increase in ARR(1) Over Information Mgmt. Renewals Organization Past 10 years $2.7B 125K FY’21 Annual Agreements Recurring Revenue(1) 318% $2.7B (2) 425 90%+ $657M Renewal FY’21 Customer Profe
Slide 27: Sustainable Growth Through Retention and Upgrades
Sustainable Growth Through Retention and Upgrades Annual Recurring Revenue Renewal Rate(1) (ARR) (US$M) $2,742 105% $1,337 Cloud Customer Support 93% 94% FY'15 FY'21 Customer satisfaction is a foundation for growth 1. For the quarter ended March 31, 2022. Excludes Carbonite and Zix. OpenText ©2022 A
Slide 28: Growth Through M&A
Growth Through M&A M&A Strategy Key Drivers High adjacency within Information Management Expands market presence, customer base, technology position Contributes to organic growth On operating model in 12 months Free Cash Flows, returns-based, 5-7 year payback OpenText ©2022 All rights reserved 28
Slide 29: M&A Aligned with TAM Segmentation
M&A Aligned with TAM Segmentation TAM(1) Potential Acquirable CY’22 Market Size ($B) CY’22-’25 CAGR % M&A Targets Revenue Content $24B >200 >$5B Services 11% Large fragmented markets with no scarcity of assets Business $22B >400 >$3B Network 9% >$20B Leading with market Digital $25B of M&A segmentat
Slide 30: Scalable, High-Velocity, Frictionless Business Model
Scalable, High-Velocity, Frictionless Business Model Digitization and Automation: • Automate DevOps New Customer Engagement Model: • Automate routine R&D • Pre-sales – demand creation automation Cloud Products Built For: • Self-sell – upsell, cross-sell • Self-service • Post-sales – renewal automati
Slide 31: Strong Track Record of Financial Performance
Strong Track Record of Financial Performance Annual Recurring Total Revenues Cloud Revenue A-EBITDA(1) Free Cash Flows(1) Revenue (US$M) (US$M) (US$M) (US$M) (US$M) $1,407 $1,315 $812 $2,742 $3,386 83% 105% 133% 111% 82% $445 $1,852 $1,337 $624 $605 FY'15 FY'21 FY'15 FY'21 FY'15 FY'21 FY'15 FY'21 FY
Slide 32: Proven Track Record of Growth
Proven Track Record of Growth Total Revenue Growth in CC (US$M)(1) $3,305 $3,147 $2,922 $2,743 $2,318 $1,936 $1,904 19.2% 2.8% 27.0% 19.7% 3.8% 9.7% 6.3% FY'15 FY'16 FY '17 FY'18 FY'19 FY'20 FY'21 7 Consecutive Years of Y/Y Growth in CC(1) 1. CC: Constant currency for this purpose is defined as the
Slide 33: Proven Durable Business Model
Proven Durable Business Model Growing ARR and Upper Quartile Margin(1),(2) 81.0% ARR FY’22 Model: % of Total Revenues 81% - 83% 54.4% (1) A-EBITDA 38.8% 38.8% FY’22 Model: Margin 35.5% - 36.5% 29.1% 11.4% License 24.3% % of Total FY’22 Model: Revenues 9% - 11% FY'12 FY'13 FY'14 FY'15 FY'16 FY'17 FY'
Slide 34: Proven Track Record of Value Creation
Proven Track Record of Value Creation We run a disciplined Free Cash Flows(1) return business FY’19 FY’20 FY’21 A-EBITDA and FCF Trends(1) $1,350 FCF/Revenue(2) 28.3% 28.4% 24.0% $1,250 FY’21 FCF $1,150 includes FCF/Avg Total Assets(3) 10.4% 9.7% 8.2% $1,050 $299.6M USD in millions $950 IRS FCF/Avg
Slide 35: Strong Track Record of Shareholder Returns
Strong Track Record of Shareholder Returns Dividends Paid and Shares Repurchased (US$M) Target Capital Allocation Strategy(1) Dividends and Shares Repurchased Available for anti-dilutive Dividends corporate purposes share buyback $119.1 Dividends Paid (7-year CAGR(2)): 16% ~ 33% $65.5 TTM $210.7 Fre
Slide 36: Sustainability is an OpenText Core Value
Sustainability is an OpenText Core Value We are committing to zero waste from operations “We are empowering our business ecosystem, helping them transition to be more sustainable” Zero “We will halve our greenhouse gas Waste emissions by and reach net zero by 2050” Advancing Equality, Diversity “Ded
Slide 37: Corporate Citizenship Reflects our Culture
Corporate Citizenship Reflects our Culture Progress We’ve Made: 2nd Corporate Citizenship Report published Canada’s • Adopted GRI sustainability reporting Most Admired standards Corporate Cultures • New ED&I department, mandate and initiatives Canada’s Top • Enhanced Human Rights Statement Employers
Slide 38: We Strive To Do The Right Thing
We Strive To Do The Right Thing Our Customers Our Communities Rapid Radiology and OpenText Accelerate Diagnostic OpenText Donates US OpenText Provides 4 Results to Help Improve Patient Care $1M to Global Food Million Meals for 58 Jun 25, 2020 Banks Communities in 21 Dec 11, 2020 Countries Worldwide
Slide 39: OpenText Products Enhance Global Sustainability
OpenText Products Enhance Global Sustainability Paperless Workflows Ethical Supply Chain Data Privacy and Protection Digitizes 26 billion Paper reduction saves 5.1 Paper reduction saves GHG transactions per year million trees emissions of 725,000 tonnes of CO2e OpenText ©2022 All rights reserved 39
Slide 40: Deeply Talented and Experienced Leadership Team
Deeply Talented and Experienced Leadership Team Mark J. Madhu Muhi Ted James Prentiss Kristina Barrenechea Ranganathan Majzoub Harrison McGourlay Donohue Lengyel CEO & CTO EVP, CFO EVP, EVP, EVP, EVP, SMB/C Sales EVP, Menlo Park, CA Menlo Park, CA Chief Product Officer Enterprise Sales International
Slide 41: Thank you
Thank you twitter.com/opentext linkedin.com/company/opentext opentext.com
Slide 42: Appendix
Appendix OpenText ©2022 All rights reserved 42
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 Q3 FY'22 % Change (In millions U.S. dollars, except per share data) Q3 FY'22 Q3 FY'21 $ Change % Change in CC* in CC* Revenues: Cloud services and subscriptions $401.9 $355.8 $46.1 13.0 % $406.6 14.3 % Customer support 332.5 335.9 (3.4) (1.0) % 341
Slide 45: Summary of Year to Date Results with Constant Currency
Summary of Year to Date Results with Constant Currency FY'22 YTD in % Change (In millions U.S. dollars, except per share data) FY'22 YTD FY'21 YTD $ Change % Change CC* in CC* Revenues: Cloud services and subscriptions $1,123.4 $1,047.3 $76.1 7.3 % $1,124.8 7.4 % Customer support 1,002.6 999.8 2.8 0
Slide 46: Reconciliation of Selected Non-GAAP Measures | Q3 FY'22
Reconciliation of Selected Non-GAAP Measures | Q3 FY'22 Three Months Ended March 31, 2022 (In ‘000's U.S. dollars, except per share data) Non-GAAP % GAAP % of GAAP Adjustments FN Non-GAAP of Total Total Revenue Revenue COST OF REVENUES Cloud services and subscriptions $ 136,020 $ (1,268) (1) $ 134,7
Slide 47: Reconciliation of Selected Non-GAAP Measures | Q3 FY'22
Reconciliation of Selected Non-GAAP Measures | Q3 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 48: Reconciliation of Selected Non-GAAP Measures | FY'22 YTD
Reconciliation of Selected Non-GAAP Measures | FY'22 YTD Nine months ended March 31, 2022 (In ‘000's U.S. dollars, except per share data) Non-GAAP % GAAP % of GAAP Adjustments FN Non-GAAP of Total Total Revenue Revenue COST OF REVENUES Cloud services and subscriptions $ 377,928 $ (3,072) (1) $ 374,8
Slide 49: 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 50: Reconciliation of Selected Non-GAAP Measures | Q3 FY'21
Reconciliation of Selected Non-GAAP Measures | Q3 FY'21 Three Months Ended March 31, 2021 (In ‘000's U.S. dollars, except per share data) Non-GAAP % GAAP % of GAAP Adjustments FN Non-GAAP of Total Total Revenue Revenue COST OF REVENUES Cloud services and subscriptions $ 123,729 $ (505) (1) $ 123,224
Slide 51: Reconciliation of Selected Non-GAAP Measures | Q3 FY'21
Reconciliation of Selected Non-GAAP Measures | Q3 FY'21 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 52: Reconciliation of Selected Non-GAAP Measures | FY'21 YTD
Reconciliation of Selected Non-GAAP Measures | FY'21 YTD Nine Months Ended March 31, 2021 (In ‘000's U.S. dollars, except per share data) Non-GAAP % GAAP % of GAAP Adjustments FN Non-GAAP of Total Total Revenue Revenue COST OF REVENUES Cloud services and subscriptions $ 354,235 $ (2,484) (1) $ 351,7
Slide 53: Reconciliation of Selected Non-GAAP Measures | FY'21 YTD
Reconciliation of Selected Non-GAAP Measures | FY'21 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 54: Reconciliation of Adjusted EBITDA and Free Cash Flows
Reconciliation of Adjusted EBITDA and Free Cash Flows (In '000's U.S. dollars) Q3 FY'22 Q3 FY'21 FY'22 YTD FY'21 YTD GAAP-based net income, attributable to OpenText $ 74,681 $ 91,490 $ 294,894 $ 129,389 Add: Provision for income taxes 41,041 31,818 123,757 342,121 Interest and other related expense,
Slide 55: Reconciliation of Adjusted EBITDA and Free Cash Flows
Reconciliation of Adjusted EBITDA and Free Cash Flows (In '000's U.S. dollars) FY'12 FY'13 FY'14 FY'15 FY'16 FY'17 FY'18 FY'19 FY'20 FY'21 Adjusted EBITDA GAAP-based net income, attributable to OpenText $ 125,174 $ 148,520 $ 218,125 $ 234,327 $ 284,477 $ 1,025,659 $ 242,224 $ 285,501 $ 234,225 $ 310