Open Text Corporation · TSX:OTEX
Open Text — Q1 2025 Earnings Presentation
25 slides from Open Text's earnings presentation, Oct 31, 2024
Slide 1: OpenText Q1 F'25 Financial Results and F'25 Targets
OpenText Q1 F’25 Financial Results and F’25 Targets October 31, 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: Company Overview
Company Overview Fiscal 2024 Accomplishments Looking Ahead • Transformational customer wins including AI/Aviator • Extending our Information Management competitive advantage with Titanium X, Aviator, and Security • $5.77B in Total Revenues - +29% y/y growth • F’25: 2% to 5% Cloud Revenue Growth • $1
Slide 4: Q1 F'25 Financials
Q1 F’25 Financials OpenText Reported OpenText ex-AMC $ in millions except A-EPS Q1 F’25 Q1 F’24 % change $ in millions Q1 F’25 Q1 F’24 % change Cloud Revenue $457 $451 1.3% Cloud Revenue $457 $451 1.3% ARR Revenue(1) $1,053 $1,149 (8.4%) ARR Revenue(1) $1,053 $1,065 (1.1%) Total Revenue $1,269 $1,42
Slide 5: Q1 F'25 Customer Wins
Q1 F’25 Customer Wins IT Operations IT Operations Analytics Application Automation Business Network Cybersecurity Content Management Management Beyond ONE has acquired Alaska Airlines is a major Nippon Gases Deutschland, CHT Security, a subsidiary of EMA protects public and Linde plc is a global lea
Slide 6: Cash Flows and Debt Maturity Profile
Cash Flows and Debt Maturity Profile As of September 30, 2024 Cash (USD$M) OpenText Debt Maturity (USD$M) Additional Metrics Total Cash $1,000 Principal Outstanding $6.5B TTM Q1 F’25 (USD$M) Operating Cash Flows $843 Total Fixed Debt 66% $2,212 Cap Ex Investments $161 Weighted Average Interest Rate
Slide 7: Outlook
Outlook OpenText ©2024 All rights reserved 7
Slide 8: Looking Ahead
Looking Ahead Deliver Growth Programs Execute to Margin & FCF Opportunity Extending our Information Management competitive Opportunity advantage with Titanium X, Aviator and Security • Improve Cloud Gross Margin with continued scale • Business Optimization: right talent / right location Accelerate C
Slide 9: Q2 F'25 Quarterly Factors
Q2 F’25 Quarterly Factors Externalities Company Specific • Macroeconomic Expect Q2 Revenues: • Geopolitical • Total revenues of $1,290M to $1,340M • ARR(1) of $1,025M to $1,055M • Elections • Year-over-year comparable impacted by the divestiture of AMC and grants of certain IP rights in F’24 Expect
Slide 10: F'25 Targets
F’25 Targets(1) F’24 As Reported Primary Metrics F’24 As Reported F’25 Targets ex-AMC Cloud Revenue $1.82B $1.82B $1.85B to $1.90B Key Highlights Annual Recurring Revenue(2) $4.53B $4.25B $4.25B to $4.30B • Cloud Revenue Growth: - 2% to 5% Total Revenue(3) $5.77B $5.33B $5.3B to $5.4B • Total Revenu
Slide 11: F'25 Supporting Metrics
F’25 Supporting Metrics (1) Additional Metrics F’24 as Reported F’25 Targets(1) Enterprise Cloud Bookings(2) $701M / 25% Growth • Bookings drive Cloud revenue growth 33% Growth Gross Margin(3) 77.3% 76% to 77% • Renewal rate improvement driven by R&D(3) 14.3% 14% to 16% product innovation and best p
Slide 12: Return of Capital - Track Record and F'25 Targets
Return of Capital - Track Record and F’25 Targets (1) F’25 Target(2) $570+ F’25 Target $415 $417 • $570M+ in expected capital return(1) - Record year of capital return $330 - 37% y/y growth Share Buyback, $M Dividends, $M - Expect share buyback to exceed value of $300 $260 $150 dividends for first t
Slide 13: F'27 Aspirations
F’27 Aspirations (1) F’27 Aspirations Cloud Services and Subscriptions growth 7% to 9% Total Organic Revenue(2) growth 2% to 4% Total Revenue $5.7B to $5.9B A-EBITDA Margin %(3) 36% to 38% Free Cash Flows(3) $1.2B to $1.3B Supporting Metrics Enterprise Cloud Bookings(4) growth 20%+ Annual Recurring
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Slide 15: F'24 Financials
F’24 Financials OpenText Reported OpenText ex-AMC $ in millions except A-EPS F’24 F’23 % change $ in millions F’24 F’23 % change Cloud Revenue $1,821 $1,700 7% Cloud Revenue $1,821 $1,700 7% ARR Revenue(1) $4,534 $3,615 25% ARR Revenue(1) $4,250 $3,461 23% Total Revenue $5,770 $4,485 29% Total Reven
Slide 16: F'24 Annual Metrics
F’24 Annual Metrics Organic Growth(1) y/y % change F’24 Total Revenue % of Total As Reported F’24 F’23 Information Management Revenue Cloud 1.7% 1.5% Content Management 40% ARR(2) 0.6% (0.8%) Cybersecurity 20% Total 0.8% (2.0%) Business Network 10% In CC(3) IT Operations Management (ITOM) 10% Cloud
Slide 17: OpenText ex-AMC
(1),(2) OpenText ex-AMC F’24 Actual F’23 Actual $ in millions Q1 Q2 Q3 Q4 FY Q1 Q2 Q3 Q4 FY Cloud 451 450 455 465 1,821 405 409 435 452 1,700 Customer Support 614 612 606 599 2,430 311 310 518 622 1,760 License 129 248 158 161 696 60 105 117 195 477 Professional Services 99 94 95 95 384 67 64 90 100
Slide 18: 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 19: Summary of Quarterly Results with Constant Currency
Summary of Quarterly Results with Constant Currency Q1 FY'25 % Change (In millions U.S. dollars, except per share data) Q1 FY'25 Q1 FY'24 $ Change % Change in CC* in CC* Revenues: Cloud services and subscriptions $457.0 $451.0 $6.0 1.3 % $458.7 1.7 % Customer support 595.5 697.7 (102.2) (14.7) % 598
Slide 20: Reconciliation of Selected Non-GAAP Measures | Q1 FY'25
Reconciliation of Selected Non-GAAP Measures | Q1 FY'25 Three Months Ended September 30, 2024 Non-GAAP % GAAP % of of Total (In ‘000's U.S. dollars, except per share data) GAAP Total Revenue Adjustments FN Non-GAAP Revenue COST OF REVENUES Cloud services and subscriptions $ 175,257 $ (2,186) (1) $ 1
Slide 21: Reconciliation of Selected Non-GAAP Measures | Q1 FY'25
Reconciliation of Selected Non-GAAP Measures | Q1 FY’25 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 22: Reconciliation of Selected Non-GAAP Measures | Q1 FY'24
Reconciliation of Selected Non-GAAP Measures | Q1 FY’24 Three Months Ended September 30, 2023 Non-GAAP % GAAP % of of Total (In ‘000's U.S. dollars, except per share data) GAAP Total Revenue Adjustments FN Non-GAAP Revenue COST OF REVENUES Cloud services and subscriptions $ 171,412 $ (2,991) (1) $ 1
Slide 23: Reconciliation of Selected Non-GAAP Measures | Q1 FY'24
Reconciliation of Selected Non-GAAP Measures | Q1 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 24: Reconciliation of Adjusted EBITDA and Free Cash Flows
Reconciliation of Adjusted EBITDA and Free Cash Flows (In '000's U.S. dollars) Q1 FY'25 Q1 FY'24 GAAP-based net income, attributable to OpenText $ 84,368 $ 80,901 Add: Provision for income taxes 1,883 10,352 Interest and other related expense, net 84,282 141,764 Amortization of acquired technology-b
Slide 25: Reconciliation of Adjusted EBITDA and Free Cash Flows
Reconciliation of Adjusted EBITDA and Free Cash Flows (In '000's U.S. dollars) FY'15 FY'16 FY'17 FY'18 FY'19 FY'20 FY'21 FY'22 FY'23 FY'24 Adjusted EBITDA GAAP-based net income, attributable to OpenText $ 234,327 $ 284,477 $ 1,025,659 $ 242,224 $ 285,501 $ 234,225 $ 310,672 $ 397,090 $ 150,379 $ 465