Open Text Corporation · TSX:OTEX
Open Text — Q2 FY2013 Earnings Presentation
51 slides from Open Text's earnings presentation, Jan 24, 2013
Slide 1: Unleashing the Power of Information
Unleashing the Power of Information I N V E S TO R P R E S E N TAT I O N FY13-Q2 | January 24, 2013
Slide 2: Safe Harbor Statement
Safe Harbor Statement Certain statements in this presentation constitute forward-looking statements or forward-looking information within the meaning of applicable securities laws (“forward-looking statements”). Such forward-looking statements involve known and unknown risks, uncertainties and other
Slide 3: Scale and Momentum
Scale and Momentum (NASDAQ: OTEX, TSX: OTC) $1.2B+ global revenue EIM $13B market* (ECM, BPM, CEM, iX, Discovery) #1 in ECM** 5,116 employees 20 years of proven innovation 31 country offices, 141 countries supported *as per notes on slide 11 **as per Gartner Group COPYRIGHT © 2012 OPEN TEXT CORPORAT
Slide 4: Global Business
Global Business Fiscal 2012 Stockholm, SE EMEA HQ Grasbrunn, DE WW HQ Reading, UK Waterloo, ON Paris, FR Bellevue, WA Ottawa, ON San Francisco, Richmond Hill, ON CA Tokyo, JN New York, NY Tucson, AZ Washington, DC Atlanta, GA Austin, TX Hong Kong Mumbai IN Hyderabad, IN Singapore APJ HQ Sydney, AU S
Slide 5: Investment Highlights
Investment Highlights Demonstrated earnings power and operational discipline TTM operating cash flow of $312.9* million Large recurring maintenance revenues Growth opportunities: geographies, verticals and partners Market share gains over IBM and EMC The OpenText cloud services continue
Slide 6: Growth Drivers
Growth Drivers Distribution EIM New Markets Expansion Product Cycle Cloud Services Acquisitions 6
Slide 7: OpenText is Focused on the Deep Web
OpenText is Focused on the Deep Web The Public Web Only 4% of Web content (~8 billion pages) is available via search engines like Google 7.9 Zettabytes The Deep Web Approximately 96% of digital content is on Deep Web sites inside the firewall COPYRIGHT © 2012 OPEN TEXT CORPORATION. ALL RIGHTS RESERV
Slide 8: Why Customers Buy
Why Customers Buy Governance, litigation and regulatory compliance Security threats Process improvement Unstructured information consolidation and leverage Multi-channel leverage and communication Information leads business transformations Mobile, social, cloud COPYRIGHT © 2012 OPEN TE
Slide 9: Why OpenText Will Lead the EIM Market
Why OpenText Will Lead the EIM Market 1. Market Evolution The market evolving from ECM to Enterprise Information Management (EIM) 2. Well Positioned OpenText is well positioned in EIM with market leading product offerings and industry expertise 3. Trusted Vendor A world class customer base and stron
Slide 10: Enterprise Information Management: $13 Billion Opportunity
Enterprise Information Management $13 Billion Opportunity, 10% Growth* Customer win: Emergency Medicine Physicians ECM BPM CEM Information Discovery Exchange 2012 2012 2012 2012 2012 $4.6B Market $2.6B Market $1.35B Market $3.2B Market $1.4B Market 7.2% Growth 7.9% Growth 14% Growth 11.4% Growth 14%
Slide 11: Enterprise Information Management: $13 Billion Opportunity
Enterprise Information Management $13 Billion Opportunity, 10% Growth Customer win: Emergency Medicine Physicians ECM BPM CEM Information Discovery Exchange Content Management Business Process Web Content Fax & Document Search Management Management Distribution Legacy Semantic Navigation Decommissio
Slide 12: OpenText Cloud Services
OpenText Cloud Services 2 Billion Transactions a year 1.5 Million Users 25,000 Customers Enterprise, Social, Secure COPYRIGHT © 2012 OPEN TEXT CORPORATION. ALL RIGHTS RESERVED. 12
Slide 13: OpenText Cloud Services: Enterprise Information Management in the Cloud
OpenText Cloud Services Enterprise Information Management In The Cloud Information Exchange EasyLink, FDDG Data & Process Services ECM & BPM Social Services CEM Platform Services Managed Hosting COPYRIGHT © 2012 OPEN TEXT CORPORATION. ALL RIGHTS RESERVED. 13
Slide 14: OpenText Cloud Services
OpenText Cloud Services OpenText Cloud Services OpenText Tempo: and Applications: Brings secure file sharing EasyLink: Fax, EDI, SMS, Voice and synchronization across eDOCS organizations Web Site Management Shares information across teams OpenText Video Services and with business partners OpenText M
Slide 15: About EasyLink
About EasyLink Headquarters in Atlanta, GA with ~500 employees Information Exchange: $3.2B market, 11.4% CAGR* Proven Cloud-based offerings: Fax (production, desktop, broadcast) and Messaging (email, telex, notifications, EDI) $40 million quarterly revenue run rate Revenue splits: 58% Amer
Slide 16: Leaders Buy From Leaders
Leaders Buy From Leaders Enterprise Forrester WaveTM: Content Enterprise Management, Content October 2012 Management, Q4 ’11 Business Process Forrester WaveTM: Management Digital Asset Suites, October Management For 2011 Customer Experience, Q2 ’12 COPYRIGHT © 2012 OPEN TEXT CORPORATION. ALL RIGHTS
Slide 17: Growth and Opportunity
Distribution Model Direct Sales Force AE, ISR, Specialists Growth and Opportunity Strategic Alliances System Integrators SI / FSI VARs Distributors OEM Technology Alliances 17
Slide 18: Corporate Growth Strategy Alignment
Corporate Growth Strategy Alignment ECM BPM CEM iX Discovery Cloud Services Product Development Market Expansion Strategic Acquisitions Integrate existing New software through Products common platform. INFO FUSION Industries Alliances Additional Opportunities Install Base Sales Force Expansion Share
Slide 19: Growth Drivers
Growth Drivers Sales force expansion Market expansion: Latin America, Emerging Europe, APJ Partner channel expansion New products New Cloud Services offering Competitive market share gains Install-base upsell / cross-sell Industries: Public Sector, Defense, Healthcare, Life Sciences
Slide 20: History of Growing Revenue Y/Y: 7 Fiscal Years
History of Growing Revenue Y/Y in $M: 7 Fiscal Years 1400 Service Customer Support License 1200 7 Year CAGR 16.5%* 293.7 1000 269.2 800 238.1 229.8 600 219 656.6 182.5 560.5 507.5 400 122.5 405.3 363.6 287.6 200 183.9 257.2 166.5 203.6 125.6 142.8 150.5 103.2 0 FY06 FY07 FY08 FY09 FY10 FY11 FY12 $40
Slide 21: History of Growing Non-GAAP EPS Y/Y: 7 Fiscal Years
History of Growing Non-GAAP EPS Y/Y: 7 Fiscal Years $5.00 $4.50 7 Year CAGR 29.6%* $4.00 $3.50 $3.00 $2.50 $2.00 $1.50 $1.00 $0.50 $- FY06 FY07 FY08 FY09 FY10 FY11 FY12 $1.01 $1.46 $2.03 $2.51 $3.12 $4.07 $4.60 *FY05 non-GAAP EPS $0.75 COPYRIGHT © 2012 OPEN TEXT CORPORATION. ALL RIGHTS RESERVED. 21
Slide 22: Q2 FY13 Overview (Y/Y)
Q2 FY13 Overview (Y/Y) OpenText delivered: Record revenue, non-GAAP-based adjusted net income & non-GAAP-based adjusted earnings per share* 13.7% $1.58 $352.2 million $76.1 million Revenue License Up 9.6 percent Down 15.1 percent $1.39 $1.58 Non-GAAP-based Adjusted Earnings $93.3 million $70 million
Slide 23: FY13 – Q2 Financial Highlights
FY13 – Q2 Financial Highlights Total Revenue Up 10% Y/Y Non-GAAP EPS Up 14% Y/Y Total revenue $352.2 million up 10% Y/Y Non-GAAP-based EPS was $1.58 compared to $1.39 Y/Y* Cloud services revenue of $46.2 million continues to perform well GAAP–based EPS was $1.04 compared to $0.81 Y/Y Reven
Slide 24: FY13 – Q2 Revenue Breakdown
FY13 – Q2 Revenue Breakdown Total Revenue by Geography License Revenue by Industry 11% Americas 7% 1% Financial 53% EMEA 19% Services 36% Asia Pac 7% Technology 8% Basic Materials Public Sector 9% 18% Healthcare Total Revenue Mix Consumer Goods Industrial Goods 10% 11% Utilities 18% 22% 10% License
Slide 25: FY13 External Target Model
FY13 External Target Model* Revenue Type Fiscal 2013 Target Model As a % of revenue Product License 20 - 25% Cloud Services 11 - 14% Customer Support 44 - 48% Professional Services 17 - 22% Non-GAAP Gross Margin Product License 92 - 94% Cloud Services 58 - 60% Customer Support 83 - 85% Professional
Slide 26: Diverse Customer Base
Diverse Customer Base GOVERNMENT ENERGY PHARMACEUTICAL FINANCIAL TRANSPORTATION MANUFACTURING LEGAL MEDIA FOOD INSURANCE COPYRIGHT © 2012 OPEN TEXT CORPORATION. ALL RIGHTS RESERVED. 26
Slide 27: Customer Win | Husch Blackwell
Customer Win | Husch Blackwell Husch Blackwell, a global law firm, purchased the Unlimited Enterprise License Agreement and will be deploying OpenText solutions including EIM apps such as Tempo Box across their business to create a fully connected enterprise. 27
Slide 28: Customer Win | LG&E and KU Services Company
Customer Win | LG&E and KU Services Company LG&E and KU Services Company recently selected OpenText’s ECM solutions for replacing legacy imaging and document management applications. LG&E & KU Services Company will be working with OpenText Global Services to begin implementing OpenText ECM for a var
Slide 29: Customer Win | Sprint
Customer Win | Sprint Sprint expanded their existing relationship with OpenText by investing in Web Experience Management, a CEM category offering. 29
Slide 30: Customer Win | Mitsubishi
Customer Win | Mitsubishi Mitsubishi Electric Information Systems purchased a Content Lifecycle Management solution to securely manage their engineering documents. The project is meant to help Mitsubishi Electric Information Systems achieve compliance, increase productivity and lower their TCO. 30
Slide 31: Customer Win | Lincolnshire County Council
Customer Win | Lincolnshire County Council The Lincolnshire County Council, like all Public Sector organisations in the UK, is experiencing a challenging economic climate. At the same time the CIO is tasked with maintaining and improving service delivery through the use of technology. LCC has signed
Slide 32: Customer Win | Howard County Maryland
Customer Win | Howard County Maryland Howard County Maryland has invested into Enterprise Content Management and Discovery solutions. The county wide implementation will provide county employees with a central, comprehensive archive, and records management system for electronic documents currently r
Slide 33: Customer Win | Defense Logistics Agency
Customer Win | Defense Logistics Agency The major logistics component of the United States Department of Defense (Defense Logistics Agency – DLA) has standardized on OpenText ECM solutions; additionally DLA has selected OpenText to meet the FIAR Mandate (Audit Readiness for the Dept of Defense) to m
Slide 34: Summary
Summary 1. Compelling investment thesis 2. EIM: Large, growing and relevant market 3. 7 years consistent growth: 29.6% CAGR: non-GAAP EPS 24.6% CAGR: Cash Flow from Operations 16.5% CAGR: Revenue COPYRIGHT © 2012 OPEN TEXT CORPORATION. ALL RIGHTS RESERVED. 34
Slide 35: Summary: EIM Growth, Leadership, Consistency
Summary EIM Growth Leadership $19B TAM 2016. Revenue. License. Company. Products. 10% CAGR. EPS. CF. Customers. Consistency Doubled the company in six years. Year over Year execution. Acquisitions 35
Slide 36: Unleashing the Power of Information
Unleashing the Power of Information
Slide 37: References
References • ECM, BPM: Gartner Forecast Enterprise Software Markets, 2009-2016 1Q12 Update • InfoExchange: Research and Markets, Computer-based Fax Markets, 2010-2015 • Gartner Enterprise Software Markets, 2009-2016 • 1Q12 Update, Davidson Consulting, Fax Server Industry Forecast, 2011-2016 • CEM: G
Slide 38: Summary of Quarterly Results
Summary of Quarterly Results % Change % Change Q2 FY13 Q1 FY13 Q2 FY12 (Q/Q) (Y/Y) Revenue (million) $352.2 $326.2 $321.5 8.0% 9.6% GAAP gross margin 65.2% 63.0% 67.1% 220 bps (190) bps GAAP operating income 19.1% 12.3% 17.2% 680 bps 190 bps margin GAAP EPS, diluted $1.04 $0.33 $0.81 215.2% 28.4% No
Slide 39: Summary of Year To Date Results
Summary of Year To Date Results % Change Q2 FY13 Q1 FY13 Q2 FY12 (Y/Y) Revenue (million) $678.4 $326.2 $609.5 11.3% GAAP gross margin 64.1% 63.0% 66.0% (190) bps GAAP operating income 15.8% 12.3% 13.5% 230 bps margin GAAP EPS, diluted $1.37 $0.33 $1.41 (2.8%) Non-GAAP gross margin * 71.1% 70.4% 73.0
Slide 40: Summary of Quarterly Revenue Results
Summary of Quarterly Revenue Results* % Change % Change In millions Q2 FY13 Q1 FY13 Q2 FY12 (Q/Q) (Y/Y) License $76.1 $55.7 $89.7 36.8% (15.1%) Cloud services 46.2 44.9 N/A 2.8% N/A Customer support 164.7 162.1 165.4 1.6% (0.4%) Professional service and other 65.2 63.5 66.4 2.7% (1.7%) Total $352.2
Slide 41: Summary of Year To Date Revenue Results
Summary of Year To Date Revenue Results* % Change In millions Q2 FY13 Q1 FY13 Q2 FY12 (Y/Y) License $131.8 $55.7 $154.7 (14.8%) Cloud services 91.0 44.9 N/A N/A Customer support 326.8 162.1 327.4 (0.2%) Professional service and other 128.8 63.5 127.4 1.1% Total $678.4 $326.2 $609.5 11.3% * Individua
Slide 42: Reconciliation of Selected Non-GAAP Measures | Q2 FY13
Reconciliation of Selected Non-GAAP Measures | Q2 FY13 (in ‘000s USD) Three months ended December 31, 2012 GAAP Adjustments FN Non- GAAP COST OF REVENUES Cloud services 18,261 (30) 1 18,231 Customer support 28,277 (107) 1 28,170 Professional service and other 47,664 (188) 1 47,476 Amortization of ac
Slide 43: Reconciliation of Selected Non-GAAP Measures | Q2 FY13
Reconciliation of Selected Non-GAAP Measures | Q2 FY13 FOOTNOTES 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 1 results Adjustment relates to the exclusion of amo
Slide 44: Reconciliation of Selected Non-GAAP Measures | Q2 FY13 YTD
Reconciliation of Selected Non-GAAP Measures | Q2 FY13 YTD (in ‘000s USD) Six months ended December 31, 2012 GAAP Adjustments FN Non- GAAP COST OF REVENUES Cloud Services 36,544 (30) 1 36,514 Customer support 54,100 (145) 1 53,955 Professional service and other 96,246 (365) 1 95,881 Amortization of
Slide 45: Reconciliation of Selected Non-GAAP Measures | Q2 FY13 YTD
Reconciliation of Selected Non-GAAP Measures | Q2 FY13 YTD FOOTNOTES 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 1 results Adjustment relates to the exclusion of
Slide 46: Reconciliation of Selected Non-GAAP Measures | Q1 FY13
Reconciliation of Selected Non-GAAP Measures | Q1 FY13 (in ‘000s USD) Three months ended September 30, 2012 GAAP Adjustments FN Non- GAAP COST OF REVENUES Customer support 25,823 (38) 1 25,785 Professional service and other 48,582 (177) 1 48,405 Amortization of acquired technology-based intangibles
Slide 47: Reconciliation of Selected Non-GAAP Measures | Q1 FY13
Reconciliation of Selected Non-GAAP Measures | Q1 FY13 FOOTNOTES 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 1 results Adjustment relates to the exclusion of amo
Slide 48: Reconciliation of Selected Non-GAAP Measures | Q2 FY12
Reconciliation of Selected Non-GAAP Measures | Q2 FY12 (in ‘000s USD) Three months ended December 31, 2011 GAAP Adjustments FN Non- GAAP COST OF REVENUES Customer support $28,468 ($34) 1 $28,434 Professional service and other 50,604 (106) 1 50,498 Amortization of acquired technology-based intangible
Slide 49: Reconciliation of Selected Non-GAAP Measures | Q2 FY12
Reconciliation of Selected Non-GAAP Measures | Q2 FY12 FOOTNOTES 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 1 results Adjustment relates to the exclusion of amo
Slide 50: Reconciliation of Selected Non-GAAP Measures | Q2 FY12 YTD
Reconciliation of Selected Non-GAAP Measures | Q2 FY12 YTD (in ‘000s USD) Six months ended December 31, 2011 GAAP Adjustments FN Non- GAAP COST OF REVENUES Customer support $ 54,737 $ (58) 1 $ 54,679 Professional service and other 100,955 (205) 1 100,750 Amortization of acquired technology-based int
Slide 51: Reconciliation of Selected Non-GAAP Measures | Q2 FY12 YTD
Reconciliation of Selected Non-GAAP Measures | Q2 FY12 YTD FOOTNOTES 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 1 results Adjustment relates to the exclusion of