Open Text Corporation · TSX:OTEX

Open Text — Q3 2023 Earnings Presentation

57 slides from Open Text's earnings presentation, May 4, 2023

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 4: OpenText Snapshot
OpenText Snapshot Including Micro Focus(1) Large, Strategic and Growing: $200B+ Information Management Market(2) Who We Are Targets & Aspirations Human One of the World’s Centric New Updated Rules F’24 F’26 Largest Software and Digital Work In Constant Currency(3) F’23 New (Preliminary) (Aspirations
Slide 5: Our History of Value Creation
Our History of Value Creation Market expansion and value creation 2023 Our Mission: Micro Focus Expands Digital We power and protect information Transformation Capabilities 2021 Our Purpose: Zix: a top 2022 Microsoft To elevate every person and every organization to SMB/C Titanium gain the informati
Slide 6: OpenText Business System
OpenText Business System Our Competitive Advantage: It’s Who We Are, and How We Do What We Do Core Value Drivers Customers talk, we listen Growth is inclusive and sustainable • Total revenue growth Shareholders • A-EBITDA $/FCF • Return on Invested Capital (ROIC) Innovation defines our future We com
Slide 7: How We Create Value: Running the OpenText Playbook
How We Create Value: Running the OpenText Playbook Revenue Growth Organic Revenue Cloud growth + + Growth Acquisitions Margin Expansion Gross Margin + Strong Free Cash Flows Reinvest R&D R&D + for + (1) Growth S&M Capital Allocation (e.g. Dividends) S&M + G&A Acquisitions Improve Automation = Cost +
Slide 8: Track Record of Total Revenue Growth
Track Record of Total Revenue Growth Expected Rapid Growth and Increased Predictability (2) Total Revenues and Estimated Growth ~$6.2 to $6.4 +33% to 35% Targeted revenue Expected growth In $Billions Revenue Growth Updated +30% to 32% 11.7% Expected growth F’11 to F’22 CAGR • Track record of double-
Slide 9: Track Record of A-EBITDA Expansion
Track Record of A-EBITDA Expansion Upper Quartile A-EBITDA Margins (1) A-EBITDA Dollars and Estimated Margins 38% to 40% Targeted A-EBITDA Margin 36% to In $Billions 38% A-EBITDA Growth 36% to 38% Expected A-EBITDA Margin 32.5% to 13.8% 33.5% 32.5% to 33.5% • Culture of upper-quartile F’11 to F’22 C
Slide 10: Track Record of Free Cash Flows (FCF) Expansion
Track Record of Free Cash Flows (FCF) Expansion Expected Acceleration in Free Cash Flows (1) Estimated Free Cash Flows $1.5B+ 20%+ Target FCF as % In $Millions of Revenue FCF Growth Updated 15.2% F’11 to F’22 CAGR • Track record of Cloud Acquisition Investment integration $882 $889 $800 to $900 uppe
Slide 12: Q3 Fiscal 2023 Financial Highlights
Q3 Fiscal 2023 Financial Highlights (with Y/Y comparisons) (1) Q3 Enterprise Cloud Bookings of $108M; Q3 TTM of $511M Q3 F’23 Trailing Twelve Months (TTM) Ending Q3 F’23 $1.24B 41.1% $3.90B 11.8% Total Revenues Total Revenues $1.28B in CC 44.9% in CC(2) $4.05B in CC 16.2% in CC ARR(3) $1.01B 37.7% A
Slide 13: Q3 F’23 Customer Wins
Q3 F’23 Customer Wins Micro Focus product win Micro Focus product win Content Management Experience Cybersecurity Application Deliver & Quality The Wienerberger Group is a leading Conduent, provides mission-critical Carrefour is a French group and a leading California Employment Development provider
Slide 14: Strong Cash Flows and Balance Sheet
Strong Cash Flows and Balance Sheet Pro forma Cash (USD$B) (as of 03/31/23) Net Leverage Ratio(1) Net Leverage Ratio(1) Expected quarterly debt reduction of $175M+ Total Cash $1.4B 3.3x TTM Q3 F’23 (USD$M) < 3.0x 2.0x 2.0x 2.1x 2.0x 1.9x Operating Cash Flows $916 Micro Focus Transaction Close Less:
Slide 16: Financial Targets and Aspirations
Financial Targets and Aspirations Continued investment in growth initiatives Driven by 15%+ Enterprise Cloud Bookings(1) Growth (Y/Y) Updated Financial Target Preliminary Financial Target 3 Year Aspirations (in constant currency) Inclusive of Micro Focus F’23 F’24* F’26* Organic Growth (%Y/Y)(2) 1%
Slide 17: Q4 F’23 Quarterly Factors
DRAFT Q4 F’23 Quarterly Factors Externalities Company Specific Expect Q4 Y/Y Revenue in constant currency: • Recession risk • Total revenues of $1.46B to $1.51B • Inflation • OpenText constant or better(1) • Strength of US dollar • ARR(2)(3) of $1.12B to $1.16B • Geopolitical • OpenText constant or
Slide 18: F’23 Total Revenue Growth & Bookings Strategy
F’23 Total Revenue Growth & Bookings Strategy Y/Y Expected Growth in Constant Currency(3) F’22 Actual(1) F’23 Updated (Including Micro Focus) $482 Enterprise Cloud Bookings(2) 15%+ $1,535 Cloud Revenue 12% to 12% to 14% 14% $1,331 Customer Support Revenue 46% to 48% $2,866 ARR(4) 27% to 29% $358 Lic
Slide 19: F’23 Target Model Ranges
F’23 Target Model Ranges Constant Currency F’22 F’23 Actuals Updated (4) Revenue Type (% of Total Revenue): 43.9% Cloud Services and Subscriptions 37% - 39% 38.1% Customer Support 41% - 43% 82.0% Annual Recurring Revenue (ARR)(1) 79% - 81% 10.3% License 11% - 13% 7.7% Professional Services and Other
Slide 20: F’26 Medium-Term Aspirations
F’26 Medium-Term Aspirations(1) (in constant currency) Enterprise Cloud Bookings Growth(2) 15%+ Cloud Editions (CE), private cloud expertise, APIs, Titanium X Organic Revenue Growth(3) 2% to 4% Micro Focus returns to organic growth in F’25 and beyond Cloud Organic Revenue Growth(3) 7% to 9% Continue
Slide 21: OpenText-Micro Focus Financial Integration Framework
OpenText-Micro Focus Financial Integration Framework (1)(2)(3) 2H F’23 1H F’24 2H F’24 1H F’25 2H F’25 F’26 Adj. EBITDA Workforce reductions (~$240M) FCF Cost Savings A-EBITDA $400M Facilities consolidation (~$23M) Amounts represent annualized savings Vendor consolidation, strategic procurement, (~$
Slide 22: Rapid Eight Full Quarter Deleveraging Program
Rapid Eight Full Quarter Deleveraging Program Planned Debt Reduction of $175M Per Quarter (1) Total Debt 10 consecutive years of Consolidated Net Leverage Ratio(2) (as of 3/31/23) increased dividends paid(3) $9.3B 5.9 yrs $1.5B returned to Shareholders from F’13 to F’23 YTD Weighted Total Debt Avg.
Slide 23: Integration Execution Framework
Integration Execution Framework OpenText Continues Strong Execution 1st 6 months 2nd 6 months 3rd 6 months F’25+ Pre-Acquisition Post– Acquisition Execution Evolution (As of Dec. 31, 2022) Micro Focus generates Total growth Engage customers on vision Begin uplift Micro Focus Continue Micro Focus upl
Slide 25: Businesses Are Facing Urgent Need to Transform
Businesses Are Facing Urgent Need to Transform Current Business Platforms Business 2030 Every company we work with is facing an … driving an urgent need to increasingly complex and hybrid environment… Digitally Transform their business Total Enterprise Reinvention Human-centric Work & Workplaces Tod
Slide 26: $200B+ Information Management Market
$200B+ Information Management Market CY’22 Worldwide Information Management Market (1) Strategic Importance of Micro Focus • Expands strategic presence in key Information Management Market Size CAGR% markets ($ in billions) 2022-26 Analytics & AI $4B Positive • Broadens and deepens digital transform
Slide 27: Leadership In Information Management
(1) Leadership In Information Management Content Content Business Network Experience Analytics and AI Updated Forrester Wave™: Content Platforms, IDC MarketScape: Worldwide Cloud Content Services, IDC MarketScape: Multi-Enterprise IDC MarketScape: Worldwide Customer Forrester Wave™: Document-Orienta
Slide 28: Leading Information Management Capabilities
Leading Information Management Capabilities Leverage Products and Capabilities for Continued Growth Digital Operations Analytics & AI Application Automation Business Network Content & Experience Cybersecurity Management Unstructured Data & Mainframe Dev Tools, Secure AppDev & Optimizing IT Operation
Slide 29: Intelligent Information Core
Intelligent Information Core The acquisition of Micro Focus extended OpenText’s market leading Content capabilities to data of all types: • Fast and slow • Human and machine • Structured and unstructured Transaction Vertica Acquisition OpenText securely, responsibly and intelligently Synergies organ
Slide 30: The OpenText Cloud: New End-to-End Capabilities
The OpenText Cloud: New End-to-End Capabilities For observability, efficiency, resiliency, auto-scaling Four Nines OpenText Migrate New Contractually Guaranteed Data ingress / egress Data Protection, Disaster OpenText Voltage New Recovery, Replication encryption / tokenization Anthos or Native Conta
Slide 31: The OpenText Cloud and the Internet of Clouds
The OpenText Cloud and the Internet of Clouds Interconnected and runs over the public internet Survey of 1,500 Global Enterprise Industry Eco-Systems Amazon, Walmart, Respondents(1)(2) Automotive, GS1, … Infrastructure Use Multi-cloud AWS, Azure, Hundreds of Services infrastructure providers 98% Goo
Slide 32: Solving IM’s Most Complex Problems
Solving IM’s Most Complex Problems Information Sprawl End to End Service Management Change Management Vendor Event Management Management Self-serve Incident portal Management Request Management Problem Catalog /Service Management Management IT Services Service Level FinOps Cost Management Governance
Slide 33: Market Leadership in Cybersecurity
Market Leadership in Cybersecurity Market leading products across all attack vectors Identity and Access Management Endpoint Protection Application Security Email Encryption Social Engineering Prevention Remediate Discover and Recover and Classify SIEM and XDR Implement Assess Unsupervised Machine L
Slide 34: OpenText Drives Digital Transformations
OpenText Drives Digital Transformations Information Management unlocks Digital Transformations, AI and Strategic Business Insights Intelligent Analytics & AI Content Management Application Delivery & Quality Any Data Cybersecurity Connected Application Modernization Any Application Any Device Any La
Slide 35: Titanium Delivered: Introducing Titanium X
Titanium Delivered: Introducing Titanium X The next evolution of market changing Information Management innovation Titanium Delivered Introducing Titanium X Titanium X Priorities ✓ Public Cloud / SaaS Content Management New Information Management Capabilities Content, workflow, collaboration, case,
Slide 36: Strategic Growth Priorities
Strategic Growth Priorities OpenText: The platform of platforms for Information Management Analytics and Application Business Content and Digital Operations Win Each Market AI Automation Network Experience Cybersecurity Management Extend OpenText Private Cloud to Micro Focus Customers Prioritizing l
Slide 37: Accelerate the Cloud and Protect Customer Investment
Accelerate the Cloud and Protect Customer Investment Successful Track Record of Expand Capabilities into Looking Ahead Enhancing Acquired Products Accelerating Cloud Growth… Aligning Micro Focus to OpenText Cloud and Off-Cloud Growth $1,800 (in USD$M) Align Micro Focus to OpenText’s $1,600 90-day pr
Slide 38: Multiple Paths to Return Micro Focus to Organic Growth
Multiple Paths to Return Micro Focus to Organic Growth Bring Micro Focus Renewals Offering OpenText Private Cloud Enhancing to OpenText Standards to Micro Focus Customers… Micro Focus Products… Public Cloud Public Cloud Deployment Options Deployment Options Customer Support Private Cloud OpenText Pr
Slide 39: Rapid Innovation and Integration of Micro Focus products
Rapid Innovation and Integration of Micro Focus products Micro Focus products on 90-day release cycle starting with Cloud Editions 23.4 F’23 Innovation Acceleration Cloud Edition Acceleration • AI Powered DevOps and Value Stream Mapping (VSM) Cloud Platform DevOps Cloud • Quality & Testing 2030 • Pr
Slide 40: OpenText Zero-In: Our 2030 Pledge
OpenText Zero-In: Our 2030 Pledge • Help our customers digitize 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 roles
Slide 41: Climate Innovation
Climate Innovation • Information Management: CO2 budget, forecasts Digitized e-commerce transactions with EDI to • CMDB: Automatically collect CO2 actuals for IT / OT assets Report (UCMDB), using climatiq.io, boavista.com automate supply chain operations • Governance and Green Ledger: Inform and opt
Slide 42: Executive Leadership Team
Executive Leadership Team Sales & Demand Products, Strategy, Customers Operations Ted James Prentiss Muhi Paul Tony Madhu Doug Brian Harrison McGourlay Donohue Majzoub Duggan Kong Ranganathan Parker Sweeney EVP, Enterprise EVP, International EVP, EVP, Chief EVP, Chief SVP, Corporate EVP, CFO EVP, Co
Slide 43: Thank You
opentext’ Thank You
Slide 44: Return on Invested Capital (ROIC)
Return on Invested Capital (ROIC) FY’20 FY’21 FY’22 Adj. Operating Income (after-tax) ROIC = ROIC 17.6% 19.0% 18.1% (OTEX Calculation) (Debt + Equity – Cash – Deferred Tax) (in US$M) Non-GAAP based income from operations $1,059 $1,230 $1,177 • We measure our ROIC annually. It is defined as our Adjus
Slide 45: 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 46: 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 47: 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 49: Reconciliation of Selected Non-GAAP Measures | Q3 FY'23
Reconciliation of Selected Non-GAAP Measures | Q3 FY'23 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 51: Reconciliation of Selected Non-GAAP Measures | FY'23 YTD
Reconciliation of Selected Non-GAAP Measures | FY'23 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 53: 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 55: 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

Open Text — Q3 2023 Earnings Presentation on 6ix

Open Text — Q3 2023 Earnings Presentation

Slide 1: Investor Presentation

Slide 2: Safe Harbor and IP Statement

Slide 3: OpenText Strategic Overview

Slide 4: OpenText Snapshot

Slide 5: Our History of Value Creation

Slide 6: OpenText Business System

Slide 7: How We Create Value: Running the OpenText Playbook

Slide 8: Track Record of Total Revenue Growth

Slide 9: Track Record of A-EBITDA Expansion

Slide 10: Track Record of Free Cash Flows (FCF) Expansion

Slide 11: Q3 Fiscal 2023 Highlights

Slide 12: Q3 Fiscal 2023 Financial Highlights

Slide 13: Q3 F’23 Customer Wins

Slide 14: Strong Cash Flows and Balance Sheet

Slide 15: Outlook

Slide 16: Financial Targets and Aspirations

Slide 17: Q4 F’23 Quarterly Factors

Slide 18: F’23 Total Revenue Growth & Bookings Strategy

Slide 19: F’23 Target Model Ranges

Slide 20: F’26 Medium-Term Aspirations

Slide 21: OpenText-Micro Focus Financial Integration Framework

Slide 22: Rapid Eight Full Quarter Deleveraging Program

Slide 23: Integration Execution Framework

Slide 24: Our Business

Slide 25: Businesses Are Facing Urgent Need to Transform

Slide 26: $200B+ Information Management Market

Slide 27: Leadership In Information Management

Slide 28: Leading Information Management Capabilities

Slide 29: Intelligent Information Core

Slide 30: The OpenText Cloud: New End-to-End Capabilities

Slide 31: The OpenText Cloud and the Internet of Clouds

Slide 32: Solving IM’s Most Complex Problems

Slide 33: Market Leadership in Cybersecurity

Slide 34: OpenText Drives Digital Transformations

Slide 35: Titanium Delivered: Introducing Titanium X

Slide 36: Strategic Growth Priorities

Slide 37: Accelerate the Cloud and Protect Customer Investment

Slide 38: Multiple Paths to Return Micro Focus to Organic Growth

Slide 39: Rapid Innovation and Integration of Micro Focus products

Slide 40: OpenText Zero-In: Our 2030 Pledge

Slide 41: Climate Innovation

Slide 42: Executive Leadership Team

Slide 43: Thank You

Slide 44: Return on Invested Capital (ROIC)

Slide 45: Appendix A: Use of Non-GAAP Financial Measures

Slide 46: Summary of Quarterly Results with Constant Currency

Slide 47: Summary of Year to Date Results with Constant Currency

Slide 48: Reconciliation of Selected Non-GAAP Measures | Q3 FY'23

Slide 49: Reconciliation of Selected Non-GAAP Measures | Q3 FY'23

Slide 50: Reconciliation of Selected Non-GAAP Measures | FY'23 YTD

Slide 51: Reconciliation of Selected Non-GAAP Measures | FY'23 YTD

Slide 52: Reconciliation of Selected Non-GAAP Measures | Q3 FY'22

Slide 53: Reconciliation of Selected Non-GAAP Measures | Q3 FY'22

Slide 54: Reconciliation of Selected Non-GAAP Measures | FY'22 YTD

Slide 55: Reconciliation of Selected Non-GAAP Measures | FY'22 YTD

Slide 56: Reconciliation of Adjusted EBITDA and Free Cash Flows

Slide 57: Reconciliation of Adjusted EBITDA and Free Cash Flows