Slide 1: Investor Presentation
Investor Presentation NASDAQ: OTEX | TSX: OTEX November 5, 2020
Slide 2: Safe Harbor Statement
Safe Harbor Statement This presentation may contain 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 created under the Securities Act of 1933, as amended (the Securities Act), and
Slide 3: Q1 Fiscal 2021 Financial Results
Q1 Fiscal 2021 Financial Results OpenText Confidential. ©2020 All Rights Reserved. 3
Slide 4: Q1 Fiscal 2021 Financial Highlights
Q1 Fiscal 2021 Financial Highlights With Y/Y Comparisons Q1 FY’21 Trailing Twelve Months (TTM) Ending Q1 FY’21 15.4% 11.0% Total Revenues $804.0M Total Revenues $3.22B 14.5% in CC 11.7% in CC $670.4M $2.55B 22.0% 16.9% ARR(1) 83.4% ARR(1) 79.4% 21.4% in CC 17.6% in CC of Total Revenue of Total Reven
Slide 5: Q1 FY'21 Revenue Breakdown
Q1 FY’21 Revenue Breakdown Total Revenue by Total Revenue Mix ARR by Industry (1) Geography 3% 8% 9% 5% 7% 23% 9% 9% 42% 28% 9% 63% 18% 41% 11% 15% Financial Services Cloud Services & Subscriptions Consumer goods Americas Customer Support Technology EMEA Public Sector License Healthcare Professional
Slide 6: Q1 F'21 Customer Wins
Q1 F’21 Customer Wins Business Content Network Services Sephora is a leader in prestige omni-retail, with The European Centre for Medium-Range Weather more than 500 stores across the Americas, plus Forecasts (ECMWF) provides world-leading, numerical over 600 locations inside JCPenney. weather predic
Slide 7: FY'21 OpenText Total Growth Strategy
FY’21 OpenText Total Growth Strategy (1) FY’20 Actual(2) Prior Y/Y Expected % Growth New Y/Y Expected % Growth $1,157.7 Cloud Low double-digit Mid double-digit $1,275.6 Customer Support Constant Low single-digit $2,433.3 ARR Mid-single digit High single-digit $402.9 License Decline Decline $273.6 Pr
Slide 8: FY'21 Target Model
FY’21 Target Model Fiscal 2020 Results Prior Fiscal 2021 Model(3) New Fiscal 2021 Model(3) Revenue Type: Cloud Services and Subscriptions 37.2% 41% - 43% 41% - 43% Customer Support 41.0% 38% - 42% 38% - 42% Annual Recurring Revenue (ARR) 78.2% 80% - 82% 81% - 83% License 13.0% 10% - 13% 9% - 12% Pro
Slide 9: Q2 FY'21 Quarterly Factors
Q2 FY’21 Quarterly Factors (1) Externalities Company Specific • COVID-19 health, financial and societal crisis Expect Q2 q/q: • Industry and supply chain disruption • Total Revenue constant • Global geopolitical including post-US elections • Favorable FX up to $3M • Volatile macro environment • Annu
Slide 10: FY'23 Aspirations
FY’23 Aspirations A-EBITDA Free Margin Cash Flow 38%-40% $0.9B-$1.0B We plan to invest any profit above 40% A-EBITDA into growth initiatives OpenText Confidential. ©2020 All Rights Reserved. 10
Slide 11: Strong Cash Flow and Balance Sheet
Strong Cash Flow and Balance Sheet Cash Generated for Trended Consolidated Net Leverage Ratio(1) Total Shareholder Return TTM Q1 FY’21 (US$ M) Operating Cash Flows $1,051 2.61x Carbonite Acquisition Closing 2.30x 2.28x 2.25x Less: CapEx $69 2.01x 2.04x 1.86x 1.89x 1.82x Free Cash Flows $982 1.72x 1.
Slide 12: Strong Liquidity and Cash Position
Strong Liquidity and Cash Position Total cash & short-term investments at $1.846B (Sept. 30, ‘20)(2) Current Liquidity (US$ M) CashA-EBITDA BalanceMarginTrend (1)(2) Total Available & Committed $1,996 2,000 1,846 Liquidity(1)(2) 1,800 1,693 1,600 1,453 1,400 Millions USD 1,200 941 999 1,000 788 765
Slide 13: Strategy
Strategy OpenText Confidential. ©2020 All Rights Reserved. 13
Slide 14: The world runs on information
The world runs on information From the debate on truth, to a global pandemic response, to a modern civil rights movement, the fact is, information is more important than ever.
Slide 15: OpenText: The Information Management Leader
OpenText: The Information Management Leader About OpenText Value Creation Playbook The Market Leader in Information Management market Organic Growth • Business Network + Accretive Acquisitions Innovation • Content Services + • Cyber Resilience Cloud Growth Reinvest + • Digital Experience ARR Growth
Slide 16: The OpenText Business System
The OpenText Business System Total Growth Systems, Tools, ROIC Information Management Methods Customer Integration Driven Innovation Strategic Operational Acquisitions Excellence OpenText The Information Company Best Teams Diligence ARR, Win A-EBITDA $, Capital Investment, FCF Dividends, Value Share
Slide 17: Proven Durable Business Model
Proven Durable Business Model (1),(2) Growing ARR and Expanding Margin A-EBITDA Margin(1)(2) 80.0% 78.2% ARR 72.2% 73.9% 73.6% 73.2% 75.1% 70.0% FY’21 Model: % of Total 81%-83% 66.5% Revenues 60.0% 61.5% 54.2% 54.4% 50.0% (1) FY’21 Model: A-EBITDA 36.9% 40.0% 37%-38% Margin 29.7% 30.0% 20.0% 26.1% L
Slide 18: Driving Shareholder Returns
Driving Shareholder Returns Continued • Cloud Migration Investment • Cyber-Resilience - Bundle, Cross-Sell, Integrate in Growth • Accelerated sales coverage and product innovation Initiatives Capital • High-teens ROIC(1) Efficiency • Self-funding M&A model Business • FY’20 78.2% ARR Predictability •
Slide 19: Demand Drivers
Demand Drivers 1 2 3 4 5 Global Supply Direct to Digital Work From Security Chain Consumer Acceleration Anywhere (Cloud and Edge) Restructuring (Contactless and Direct) OpenText Confidential. ©2020 All Rights Reserved. 19
Slide 20: Leadership in Information Management
Leadership in Information Management Total Revenue Growth in CC 9.7% 3,000 3.8% 19.7% 6 2,500 2,000 19.0% 2.8% 27.0% Consecutive 1,500 Years of Y/Y 1,000 Growth 500 0 FY'15 FY'16 FY'17 FY'18 FY'19 FY'20 89 of the world’s largest 100 companies are OpenText customers OpenText Confidential. ©2020 All R
Slide 21: Nestlé Using OpenText's Business Network
Nestlé Using OpenText’s Business Network Information helps Nestlé optimize supply chain operations “Nestlé has leveraged the OpenText Business Network for almost a decade to help optimize our supply chain operations from an IT standpoint. Like many other companies, Nestlé is working through the COVI
Slide 22: Agility Using OpenText's Content Services
Agility Using OpenText’s Content Services Information makes Agility more responsive. “Visibility into supply has been critical to helping us navigate the disruption brought by the COVID-19 pandemic. OpenText has helped us optimize customer service, allowing us to focus on getting goods to market.” D
Slide 23: Switch Using OpenText's Cyber Resilience
Switch Using OpenText’s Cyber Resilience Information accelerates digital transformation at Switch “The OpenText solution has helped us categorize, streamline, de-duplicate, thread, and then prioritize the data in a way that would not otherwise be possible. OpenText has helped us deliver 50% faster t
Slide 24: RBC Using OpenText's Digital Experience
RBC Using OpenText’s Digital Experience Information enables compelling digital experiences at RBC “We chose OpenText to deliver compelling digital experiences for our customers and employees and AWS is a central plank of our cloud infrastructure. It is great to see these companies working together t
Slide 25: Total Growth Strategy
Total Growth Strategy • 83% ARR(1) Retain • 94% Customer Support renewals(2) Information • Growing Sales Breadth and Depth Management Grow • Product Innovation • Accretive Acquisitions Acquire • On Operating Model in 12 Months 1. ARR as a percentage of Total Revenues for the quarter ended September
Slide 26: Retain: Our World Class Customer Base
Retain: Our World Class Customer Base Retain Annual Recurring Revenue Q1 FY’2021 Key Metrics (US$ M) Renewal Rates(1): $2,554 Cloud: Mid 90%’s 136% Off Cloud CS: 94% $1,080 91% Customer Support Gross FY'14 Margin Q1 FY'21 TTM 1. Excludes Carbonite. OpenText Confidential. ©2020 All Rights Reserved. 2
Slide 27: FY'21 Key Growth Initiatives
FY’21 Key Growth Initiatives Grow 1 Accelerate Product Innovation 2 Continued Migration to OpenText Clouds Growth Initiatives 3 Broaden and Deepen Sales Coverage 4 Leverage Cyber Resilience OpenText Confidential. ©2020 All Rights Reserved. 27
Slide 28: Accelerate Product Innovation
Accelerate Product Innovation Grow Business Network Content Experience OpenText • Modern cloud-based microservices architecture Clouds • Simplified sales and customer engagement • Improved speed of customer deployment Security & Developer Protection • Seamless upgrade Product Releases Every 90 Days
Slide 29: Continued Migration to the OpenText Clouds
Continued Migration to the OpenText Clouds Grow Experience Developer Cloud is our largest revenue Business Network contributor Content Security & Protection All OpenText software launched as a Service with APIs OpenText Confidential. ©2020 All Rights Reserved. 29
Slide 30: Broaden & Deepen Sales Coverage
Broaden & Deepen Sales Coverage Grow Enterprise Solutions SMB & Consumer Solutions Direct Strategic Partners Channel Partners Online & Retail 2,000+ Field Facing 16,000+ 7M+ Professionals Partners Consumers Double coverage of Global 10K Grow the number of partners GOAL from 40% to 80% in next 3 year
Slide 31: Leverage Cyber Resilience
Leverage Cyber Resilience Grow Unified Endpoint Bundle: Carbonite & Cross-Sell: to our Grow: RMM and MSP Platform 21.2 Webroot offerings Enterprise Customers Partners(1) (April ’21) 1. RMM – Remote Monitoring and Management, MSP – Managed Service Provider. OpenText Confidential. ©2020 All Rights Res
Slide 32: Acquire: Our M&A Criteria
Acquire: Our M&A Criteria Acquire Leadership in Value for Mission Key Markets Customers Critical Information Management Financially Large Install Strong Compelling Base & Cross- IP Portfolio Sell Opportunities Solid Track Record of Free Cash Flows and High-Teens ROIC(1) 1. Please see OpenText Q4 F’2
Slide 33: Track Record of Shareholder Returns
Track Record of Shareholder Returns Dividends Paid(1) (US$ million) $188.7 $168.9 Q1 FY21 Dividend +153% $145.6 increase of 15% to $120.6 20.08 cents per common share(2) $99.3 $87.6 $74.7 + Share Repurchase Plan(3) FY'14 FY'15 FY'16 FY'17 FY'18 FY'19 FY'20 Over $1 Billion in Dividends since FY13(1)
Slide 34: Executive Leadership Team (ELT)
Executive Leadership Team (ELT) Mark J. Madhu Muhi Gordon Ted James Craig Barrenechea Ranganathan Majzoub Davies Harrison McGourlay Stilwell CEO and CTO EVP, EVP, EVP, EVP, EVP, EVP, CFO Chief Product Officer CLO & Corporate Sales Customer Operations SMB & Consumer Sales Development Savinay Lou Pren
Slide 35: Information Makes Us More
Information Makes Us More Information fuels knowledge. When we know more, only then can we understand, achieve, do and be more. OpenText Confidential. ©2020 All Rights Reserved. 35
Slide 36: 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 sta
Slide 37: Summary of Quarterly Results with Constant Currency
Summary of Quarterly Results with Constant Currency % Change (in millions, except per share data) Q1 FY21 Q1 FY20 $ Change % Change Q1 FY21 in CC* in CC* Revenues: Cloud services and subscriptions $341.0 $237.3 $103.7 43.7 % $340.2 43.4 % Customer support 329.4 312.3 17.1 5.5 % 327.1 4.8 % Total ann
Slide 38: Reconciliation of Selected Non-GAAP Measures | Q1 F21
Reconciliation of Selected Non-GAAP Measures | Q1 F21 Three Months Ended September 30, 2020 GAAP % of Total Non-GAAP % of (in ‘000s USD, except per share data) GAAP Revenue Adjustments FN Non-GAAP Total Revenue COST OF REVENUES Cloud services and subscriptions $ 112,624 $ (836) (1) $ 111,788 Custome
Slide 39: Reconciliation of Selected Non-GAAP Measures | Q1 F21
Reconciliation of Selected Non-GAAP Measures | Q1 F21 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. 2 Adjustment relates to the exclusion of a
Slide 40: Reconciliation of Selected Non-GAAP Measures | Q1 F20
Reconciliation of Selected Non-GAAP Measures | Q1 F20 Three Months Ended September 30, 2019 (in ‘000s USD, except per share data) GAAP % of Total Non-GAAP % of GAAP Revenue Adjustments FN Non - GAAP Total Revenue COST OF REVENUES Cloud services and subscriptions $ 102,162 $ (383) (1) $ 101,779 Custo
Slide 41: Reconciliation of Selected Non-GAAP Measures | Q1 F20
Reconciliation of Selected Non-GAAP Measures | Q1 F20 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. 2 Adjustment relates to the exclusion of a
Slide 42: Reconciliation of Adjusted EBITDA and Free Cash Flows
Reconciliation of Adjusted EBITDA and Free Cash Flows (in '000s USD) Q1 FY21 Q1 FY20 GAAP-based net income attributable to OpenText $ 103,376 $ 74,401 Add: Provision for (recovery of) income taxes 42,744 23,091 Interest and other related expense, net 39,089 32,210 Amortization of acquired technology
Slide 43: Reconciliation of Adjusted EBITDA | F11-F20
Reconciliation of Adjusted EBITDA | F11-F20 (in '000s USD) FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY19 FY20 GAAP-based net income attributable to OpenText $ 123,203 $ 125,174 $ 148,520 $ 218,125 $ 234,327 $ 284,477 $ 1,025,659 $ 242,224 $ 285,501 $ 234,225 Add: Provision for (recovery of) income ta
Slide 44: Thank you
Thank you twitter.com/opentext linkedin.com/company/opentext opentext.com