Open Text Corporation · TSX:OTEX
Open Text — Morgan Stanley Technology, Media & Telecom Conference 2019
39 slides from Open Text's conference presentation, Feb 25, 2019
Slide 1: Investor Presentation
Investor Presentation NASDAQ: OTEX | TSX: OTEX February 2019
Slide 2: Safe Harbor Statement
Safe Harbor Statement Certain statements in this presentation, including statements about the focus of Open Text Corporation (“OpenText” or “the Company”) in our fiscal year ending June 30, 2019 (Fiscal 2019) on growth in earnings and cash flows, creating value through investments in broader Enterpr
Slide 3: The Intelligent & Connected Enterprise
The Intelligent & Connected Enterprise OpenText Confidential. ©2019 All Rights Reserved. 3
Slide 4: OpenText Leadership
OpenText Leadership Gartner Magic Quadrant for IDC MarketScape: Multi-Enterprise Content Services Platforms Supply Chain Commerce Networks 2018 OpenText OpenText Source: Gartner, October 2018 Source: IDC, 2018 1. Gartner Magic Quadrant for Content Services Platforms, Karen Hobert, Michael Woodbridge
Slide 5: The Information Company
NASDAQ, TSX: OTEX A TSX-60 Company The EIM market leader for enterprise software and cloud solutions enabling enterprises to create connected and intelligent organizations • Market Leader in EIM (1) • 120,000 Customers • 100 Million End Users The Information Fiscal 2018 Results: Company • Revenues o
Slide 6: 20-Year Total Shareholder Return
1100% 1300% 1500% 100% 300% 500% 700% 900% -100% 12/31/1998 6/30/1999 12/31/1999 6/30/2000 12/31/2000 6/30/2001 12/31/2001 20 Year OTEX v. NASDAQ 6/30/2002 12/31/2002 6/30/2003 12/31/2003 6/30/2004 OTEX 1,072% 12/31/2004 1. Source: NASDAQ (December 31, 2018) 6/30/2005 12/31/2005 6/30/2006 12/31/2006
Slide 7: OpenText Path is Unique: we integrate and innovate
OpenText Path is Unique: we integrate and innovate NIRV Center Artesia Nstein Acquired Select CEM and CCM Assets from HP InfoDesign Bluebird Systems IXOS Software eMotion Burntsand ANXeBusiness, Liaison SoftCore Information BRS/Search Query Server Vista Plus Spicer Corp New Generation Consultants LL
Slide 8: Productivity Leader with Upper Quartile Metrics
Productivity Leader with Upper Quartile Metrics ARR(1) Adj. EBITDA & Margin(2),(3) Operating Cash Flows(3) ($US M) ($US M) ($US M) $2,061 $1,020 $708 191% 169% 214% 36.2% $351 $263 $657 29.1% FY’12 FY’18 FY’12 FY’18 FY’12 FY’18 ARR Adj. EBITDA(2) OCF 214% Growth 191% Growth 169% Growth 1. ARR – Annu
Slide 9: Six Years of Significant, Sustainable, Profitable Growth
Six Years of Significant, Sustainable, Profitable Growth Total Revenue ARR(1) Cloud Customer Support ($US M) ($US M) ($US M) ($US M) $2,815 $2,061 $829 $1,233 133% 88% 214% $657 $1,207 $657 $0 FY’12 FY’18 FY’12 FY’18 FY’12 FY’18 FY’12 FY’18 License Operating Cash Flows(2),(3) Adj. EBITDA & Margin(2)
Slide 10: Our Vision: The Intelligent and Connected Enterprise
Our Vision: The Intelligent and Connected Enterprise Customer experience Content services Employee engagement Security Intelligent information core EIM EIM Supplier efficiency Business Network applications Automation & AI, platforms APIs & data management Asset utilization IoT, data integration Prod
Slide 11: $100 Billion Strategic Opportunity
$100 Billion Strategic Opportunity The Information Company SAAS Enterprise Information Management Mid-Market Managed Content Experts Services AI Business CEM IoT Security ECM Network BPM Discovery Cloud + MORE Search $5B $15B $30B $50B ( $100B 1) 1. Source: Industry Analyst reports for EIM technolog
Slide 12: An enterprise-ready cloud with an enterprise-ready culture
An enterprise-ready cloud with an enterprise-ready culture OpenText Confidential. ©2019 All Rights Reserved. 12
Slide 13: The OpenText Cloud: our greatest opportunity today.
The OpenText Cloud: our greatest opportunity today. ~ $1Billion Run Rate in Annual Cloud Revenues(1) • 100 million end users of OpenText software • 1 Exabyte under management, 60 million ID’s • 1.4 million trading partners • 60,000 OpenText Cloud customers • 2,000 Private Cloud customers • 99.99% Av
Slide 14: Completing the Need: OpenText Cloud
Completing the Need: OpenText Cloud Private Cloud Public SaaS On Premise Managed Services Cloud Release 16 Release 16 OT2 Business Network OpenText Confidential. ©2019 All Rights Reserved. 14
Slide 15: The OpenText Cloud
The OpenText Cloud Off Cloud Business Network Private Cloud EIM as a Service Subscription Subscription Subscription Subscription or or Perpetual License VAN A2A Perpetual License SaaS Applications ODM IoT Optimize Assist B2B IAM Anywhere! The Developer or Managed Services Network Managed Services Se
Slide 16: The OpenText Cloud: Global Scale
The OpenText Cloud: Global Scale 4 NOCs (T1/T2) | 30 Data Centers | 30 Satellite POPs US West EU California France Nevada (3) Germany (7) Israel US East Netherlands (5) Georgia (2) UK (2) Illinois (2) Iowa Asia Pacific Michigan (2) Australia (3) New Jersey India (3) New York Japan (4) Ohio (3) Malay
Slide 17: Total Growth
Total Growth Acquisitions Organic Customer & Partner Success Annual Recurring Revenue • EIM Market leader and expanded portfolio to include Security, AI and IoT • Focus on select verticals: FinServ, Life Sciences, Manufacturing, Auto, Healthcare, Government OpenText Confidential. ©2019 All Rights Re
Slide 18: A Total Growth Strategy
A Total Growth Strategy $3,000 Enterprise Content Division 15% CAGR $2,500 $2,815M HP CCM Assets Total Revenue ($ M) HP CEM Assets $2,000 $1,500 $1,207M $1,000 $500 $0 FY 2012 FY 2013 FY 2014 FY 2015 FY 2016 FY 2017 FY 2018 OpenText Confidential. ©2019 All Rights Reserved. 18
Slide 19: FY'18 Revenue Breakdown
FY’18 Revenue Breakdown Total Revenue by ARR by Industry Total Revenue Mix Geography 3% 11% 16% 10% 5% 7% 26% 9% 33% 57% 9% 29% 44% 19% 11% 11% Financial Services License Americas Consumer goods Cloud services & Subscriptions Technology EMEA Public sector Customer Support APJ Healthcare Professional
Slide 20: Drivers for Organic Growth
Drivers for Organic Growth Competitive Replacement Partner Expansion Install Base • Market Leadership: Stronger • Ecosystem • Point solutions to suite: Roadmap, Breadth of Capability, Developing digital transformation • System Integrators Suite vs. Point, Expertise plans • OEM resellers • Paths to V
Slide 21: Leadership in Key Verticals
Leadership in Key Verticals Utilities/Energy Public Sector Manufacturing Automotive Consumer Goods Technology Finance/Insurance Healthcare Transportation Services OpenText Confidential. ©2019 All Rights Reserved. 21
Slide 22: Strategic Account Coverage
Strategic Account Coverage OpenText Content Suite HP Documentum Covisint Guidance ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ AT&T ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ OpenText Confidential. ©2019 All Rights Reserved. 22
Slide 23: Strategic Account Coverage
Strategic Account Coverage OpenText Content Suite HP Documentum Covisint Guidance ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ OpenText Confidential. ©2019 All Rights Reserved. 23
Slide 24: OpenText Partner Program
OpenText Partner Program Ecosystem Strategic Alliances Channel Partners OpenText Confidential. ©2019 All Rights Reserved. 24
Slide 25: Strategic Acquisitions Strategy
Strategic Acquisitions Strategy • Evaluate businesses within the context of “The Information Company” strategy • Fill functional white spaces, vertical capacities and key geographic expansion opportunities • We value recurring revenues, paths to higher margin and strong cash flows What We Target: •
Slide 26: History of Successful Acquisitions
(1) History of Successful Acquisitions • $5.1 billion of capital deployed since 2012 for acquisitions • 17 completed acquisitions over 7 years • Average revenue multiple of 2.1x 2012 2014 2016 2018 2019 revenue • Share price appreciation(2) of 2013 2015 2017 192% • $708M OCF in FY’18 (3) • 17.5% ROI
Slide 27: FY2019 Acquisitions
FY2019 Acquisitions Date • December 17, 2018 Purchase Price • US$311 million, all-cash, approx. $100M in TTM revenue Rationale • Extends OpenText Business Network & Cloud leadership • Provides cloud-based integration and data management solutions Revenue • Expect first year revenues to be down 15%-2
Slide 28: Capital Deployment, Dividends & Balance Sheet Strength
Capital Deployment, Dividends & Balance Sheet Strength Capital Deployed by Fiscal Year Dividends Paid & Declared (US$M) - $5.6B since 2008 $0.16 (US$/share, adjusted for stock splits) $2,500 FY’18 ROIC 17.5% $0.152 $0.15 $2,105 $2,000 $0.14 $0.132 $0.13 (3) +103% $1,500 $0.12 $0.115 $1,252 $0.11 $1,
Slide 29: The OpenText Business System
The OpenText Business System Acquisitions, Organic, Distribution. Optimize, Scale, Customer & Partner Success. Total Market Leadership Emphasis on recurring revenues. Growth Integration. The Information Customer driven innovation. Onboarding. Strategic Operational Tools, Systems, Methods. Acquisitio
Slide 30: Long Term Model - 2021 Adjusted EBITDA Targets
Long Term Model - 2021 Adjusted EBITDA Targets FY’19 Model FY’21 Target Bridge from FY’19 to FY’21 • Improve Cloud margin by optimization, offshore, and platform consolidation • ARR: One renewals organization, AI and automation • Optimize OpenText Business System 36% - 38% 38% - 40% • Utilize Center
Slide 31: Long Term Model – Operating Cash Flow Targets
Long Term Model – Operating Cash Flow Targets (1) (2) OpenText Business System OCF Gets Us There Total Growth: $1B • Acquisitions $708M • Organic Growth • Partner Distribution Efficiency: • People and Programs FY’18 Exiting FY’21 • Digital Automation • AI Operating Cash Flows $1 Billion 1. Aspiratio
Slide 32: FY'19 Target Model
FY’19 Target Model * This model is not guidance Fiscal 2018 Results Fiscal 2018 Model Fiscal 2019 Model* Revenue Type: Annual Recurring Revenue (ARR) 73.2% 71% - 75% 72% - 76% License 15.5% 15% - 19% 13% - 17% Cloud Services and Subscriptions 29.4% 26% - 30% 28% - 32% Customer Support 43.8% 41% - 47
Slide 33: Experienced Management Team
Experienced Management Team Mark J. Madhu Muhi Gordon Simon “Ted” James Barrenechea Ranganathan Majzoub Davies Harrison McGourlay CEO & CTO EVP, CFO EVP, EVP, CLO & EVP, Sales EVP, Engineering Corporate Customer Development Operations Savinay Prentiss Paul David Patricia E. Brian Berry Donohue Dugga
Slide 34: Global Operations and Distribution
Global Operations and Distribution San Mateo, CA Gaithersburg, MD Melbourne, AU Bangalore, India Reading, UK Singapore Waterloo, ON Total Americas(2) EMEA APJ Total Employees United States Canada Europe, Middle East, Africa APJ # of Employees(1): 12,800 3,700 1,700 2,500 4,700 Total Revenue United S
Slide 35: Appendix
opentext” Appendix
Slide 36: Return on Invested Capital (ROIC)
Return on Invested Capital (ROIC) F17 F18 Adj. Operating Income (after-tax) ROIC 17.5% ROIC = (OT Calculation) (Debt + Equity – Cash – Deferred Tax) (in US$M) Non-GAAP based income from operations(1),(2) $933 • We measure our ROIC annually. It is defined as Adjusted Tax Rate (%) 14% our non-GAAP net
Slide 37: Organic Revenue Growth
Organic Revenue Growth • We grew organically in FY’18 • 5.5% as reported in USD in US$ ‘000s FY’18 FY’18 in • 2.5% in CC (unless indicated otherwise) CC(1) Total revenues $2,815,241 $2,742,672 • We report our organic revenue growth on an annual basis Less: • Organic revenue growth is calculated by R
Slide 38: Use of Non-GAAP Financial Measures
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 have a stand
Slide 39: OpenText Confidential. ©2019 All Rights Reserved.
OpenText Confidential. ©2019 All Rights Reserved. 39
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