Open Text Corporation · TSX:OTEX
Open Text — Investor Day (September 2012)
72 slides from Open Text's investor day presentation, Sep 6, 2012
Slide 1: Investor Briefing New York City, Palace Hotel
Investor Briefing New York City, Palace Hotel September 6th, 2012 Copyright © OpenText Corporation. All rights reserved.
Slide 2: Welcome
Welcome Greg Secord OpenText VP Investor Relations September 6th, 2012 Copyright © OpenText Corporation. All rights reserved.
Slide 3: 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 othe
Slide 4: Reminders/Upcoming Investor Events
Reminders/Upcoming Investor Events Reminder: This event is being recorded Presentation materials and replay information are available in the “Investors” section of www.opentext.com Upcoming Investor Events Deutsche Bank Access 2012 Technology Conference, September 11, 2012, Las Vegas, NV OpenText En
Slide 5: Investor Briefing: Mark J. Barrenechea, President & CEO
Investor Briefing New York City, Palace Hotel Mark J. Barrenechea OpenText President & CEO September 6th, 2012 Copyright © OpenText Corporation. All rights reserved.
Slide 6: Agenda
Agenda Speaker Time Mark J. Barrenechea 09:00 AM – 09:30 AM CEO Greg Corgan 09:30 AM – 10:00 AM EVP, Field Operations Muhi Majzoub 10:00 AM – 10:30 AM SVP, Engineering Paul McFeeters 10:30 AM – 11:00 AM CFO & CAO Mark J. Barrenechea 11:00 AM – 11:10 AM CEO Q&A 11:10 AM – 11:50 AM Break 11:50 AM – 12
Slide 7: What You Will Hear Today
What You Will Hear Today Expanded Market Opportunity - EIM Growth Plans: Revenue, License, Earnings Expanded Management Team Innovation Strategy Fiscal 2013 target model 7
Slide 8: Consistency and Growth
Consistency and Growth Non-GAAP EPS Revenue $5.00 1400 Service $4.50 1200 Customer Support $4.00 License 294 $3.50 1000 270 $3.00 800 238 $2.50 230 600 219 657 $2.00 183 561 400 508 $1.50 405 364 $1.00 288 200 204 257 $0.50 126 143 151 167 0 $- FY07 FY08 FY09 FY10 FY11 FY12 FY07 FY08 FY09 FY10 FY11
Slide 9: $2 Billion in Acquisitions
OPENTEXT $2 Billion in Acquisitions Za EASYLINK S ER Vic cE S§S S &Captaris § Global360. +~wecomme = StreamServe <C> [stein METASTORIN AZ VIGNETTE “fetummingie’ §=—_ 2S
Slide 10: Update on Priorities
Update on Priorities OpenText My Day 1 Observations Go Forward Priorities Expanded Opportunity & ECM EIM Addressable Market $5b TAM in 2012 $19b TAM in 2016 Strong Revenue, Consistency and Growth Earnings, Cash Flow Remains a Priority CAGRs below @ or above Organic License Growth Market Rates Market
Slide 11: Executive Team
Executive Team Paul McFeeters Greg Corgan Muhi Majzoub James McGourlay CFO & CAO WW Field Operations Engineering Customer Service Gordon Davies James Latham Steve Hunt Manny Sousa CLO CMO CIO Human Resources 11
Slide 12: Delivered a Solid Fiscal 2012
Delivered a Solid Fiscal 2012 OpenText delivered record performance in revenue, profit, earnings per share and Non-GAAP operating cash flow 13% $1.2 billion $293 million $4.60 Revenue License Up 17% percent Up 9% percent $4.07 $4.60 Non-GAAP Earnings $270 million $287 million Per Share Up 13% percen
Slide 13: 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 Hills, 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 14: Markets Evolve: The Platform
Markets Evolve: The Platform Developer Tools BI The Database Platform Application Server Security 100’s 4 Leaders 14
Slide 15: Markets Evolve: Applications
Markets Evolve: Applications HRMS CRM Business Financials Suite PLM Supply Chain MRP 100’s 3 Leaders 15
Slide 16: Markets Evolve: EIM
Markets Evolve: EIM FAX Discovery EDI Capture Enterprise ECM Information Management BPM IX CEM 100’s 16
Slide 17: Unstructured Enterprise Information
Unstructured Enterprise Information Unstructured Information Discover. Connect. Capture. Digitize Control Content Extract Value Provide Insight Build Apps Records Management ERP, CRM Portal Cases Classification SCM, PLM Social Contracts Metadata Email Search Customers Security Other Repositories Mob
Slide 18: OpenText Vision and Strategy
OpenText Vision and Strategy Enterprise Information Management Unleashing the Power of Information Mobile . Social . Cloud The Next Generation Enterprise Platform 18
Slide 19: Two Enterprise Information Pillars
Two Enterprise Information Pillars Emerging Mature EIM ERP Customer ECM, BPM, Employee FIN, HRMS, CEM, iX, Supplier OM, CRM, Assets Discovery Products PLM … Unstructured Structured Information Information $19b TAM 2016 $33b TAM 2016 10% CAGR 7% CAGR 19
Slide 20: EIM Today
EIM Today Lack of Standards Data Fragmentation Islands Custom Process Fragmentation of Data Applications ERP, Email, Paper, Contracts, Cases, DBMS, File Systems, Quality, Compliance, Bespoke Applications Desktops, SharePoint Assets, … Data Vulnerability Costly Important Varying Data Too Many Point S
Slide 21: EIM Tomorrow
EIM Tomorrow Vertical Stacks Information Integration Applications Contracts, Cases, Quality… Process Integration Standard Business Flows Tools & BI Standards and Consistency… Packaged Applications Information Governance & Middleware Data Integration Security Suite Providers Information Stores EIM, E
Slide 22: Enterprise Information Management (EIM)
Enterprise Information Management (EIM) TAM: $13 billion 2012, $19 billion 2016.* 10% CAGR** Customer win: Emergency Medicine Physicians ECM BPM CEM Information Exchange Discovery 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% G
Slide 23: Product Priorities
Product Priorities Data & Process Functional Applications Integration Excellence Information Reference Records Management, Contracts, Cases, Model, Middleware, Archiving, Social Compliance, Assets, … Connectors & Communities, Process Collectors, and Tools Modeling, Scanning, … Built on an Integrated
Slide 24: How We Look at the Market
How We Look at the Market Competitive Grid How we win ECM BPM CEM iX Discovery OpenText ✔ ✔ ✔ ✔ ✔ Category leader IBM - - - ✔ ✔ EIM leader HP ✔ - - - ✔ MicroSoft ✔ - - - - Expertise EMC ✔ - - - - Oracle ✔ - ✔ - - Customer references Adobe - - - - ✔ Proven ROI Pega - ✔ - - - Tibco - ✔ - - - Singular
Slide 25: Growth Drivers
Growth Drivers Distribution EIM New Markets Expansion Product Cycle Cloud Services Acquisitions 25
Slide 26: Unleashing the Power of Information
Unleashing the Power of Information
Slide 27: Investor Briefing: Greg Corgan, EVP Worldwide Field Operations
Investor Briefing New York City, Palace Hotel Greg Corgan OpenText EVP Worldwide Field Operations September 6th, 2012 Copyright © OpenText Corporation. All rights reserved.
Slide 28: Greg Corgan
Greg Corgan 24 Years with IBM 2 Startups EVP Worldwide Sales at CA Technologies EVP Worldwide Field Operations at Infor 28
Slide 29: First Principles
First Principles Grow World-Class Customer License Selling Success Revenue Organization 29
Slide 30: Delivering Success in Fiscal 2013
Delivering Success in Fiscal 2013 Cross sell and up sell into customer base Greater discipline in deal structure & discounting Emerging market expansion SAP Partner program Sales force expansion 30
Slide 31: Update on Priorities
Update on Priorities OpenText My Day 1 Observations Go Forward Priorities Leadership Solid Management Team Build out their teams Customers Strong Customer Base Expand and optimize coverage Drive Harder Partners Outstanding SAP Relationship Leverage more productively Build additional relationships Hi
Slide 32: Field Organization
Field Organization Steve Best Ted Harrison Graham Pullen Gary Weiss America Sales EMEA Sales APJ Sales iX & Portfolio Sales Walter Kohler Patrick Barnert Brad Keller Professional Services Partners WW Sales Operations 32
Slide 33: Update on Priorities
Update on Priorities OpenText My Day 1 Observations Go Forward Priorities Leadership Solid Management Team Build out their teams Customers Strong Customer Base Expand and optimize coverage Drive Harder Partners Outstanding SAP Relationship Leverage more productively Build additional relationships Hi
Slide 34: Account Segmentation Model
Account Segmentation Model • Top historical and potential future revenue producers • 1 to 10 per “Key Account” AE Key Accounts • Focus on building relationships and getting deeper and wider • Highest level of support (Value Engr, SC’s, etc.) • Next band of accounts based on historical and potential
Slide 35: Selling Areas (Americas)
Selling Areas (Americas) Americas Canada East USA West USA Public Sector Latin America ( expanding) 35
Slide 36: Selling Areas (EMEA)
Selling Areas (EMEA) EMEA UK Northern Europe Southern Europe DACH Emerging ( expanding) 36
Slide 37: Selling Areas (APJ)
Selling Areas (APJ) EMEA ANZ South East Asia Japan India ( expanding) China ( expanding) 37
Slide 38: Growth and Opportunity
Distribution Model Strategic Alliances Growth and Opportunity System Integrators SI / FSI VARs Distributors OEM Technology Alliances 38
Slide 39: Professional Services at OpenText
Professional Services at OpenText MISSION FACTS Help our customers derive value Global Presence from their OpenText investment FY12 Revenue 257.2M in a fast, cost-effective and FY12 Margin 20.3% predictable way. COMPLETE OFFERING FUTURE / INITIATIVES Strategy Consulting EIM Strategy Focus Design / B
Slide 40: Leaders Buy From Leaders
Leaders Buy From Leaders Analyst Ratings: Enterprise Content Management (October 2011) Analyst Ratings: Business Process Analyst Tools (December 2011) OPENTEXT Analyst Ratings: Web Content Management (November 2011) 4 abtty to erect | oe Gartner OreNTeXt OreNTeXt OreNTeXt Analyst Ratings: Analyst Ra
Slide 41: Unleashing the Power of Information
Unleashing the Power of Information
Slide 42: Investor Briefing: Muhi S. Majzoub, SVP Engineering
Investor Briefing New York City, Palace Hotel Muhi S. Majzoub SVP, Engineering September 6th, 2012 Copyright © OpenText Corporation. All rights reserved.
Slide 43: Background
Background Oracle building business and internet applications Oracle.com, Oracle Store, Oracle Applications CA Technologies managing the Application Management Division and the Catalyst Platform/Common Components NorthgateArinso as Chief of Products building Payroll and Human Resources 43
Slide 44: OpenText Vision and Strategy
OpenText Vision and Strategy Enterprise Information Management Unleashing the Power of Information Mobile . Social . Cloud The Next Generation Enterprise Platform 44
Slide 45: EIM Evolution
EIM Evolution Lack of Standards Vertical Stacks Applications Contracts, Cases, Quality… Islands Custom of Data Applications Tools & BI Standards and Consistency… Middleware Important Data Integration Varying Data Formats Objects Information Stores EIM, ERP 45
Slide 46: Product Priorities
Product Priorities Data & Process Functional Applications Integration Excellence Information Reference Records Management, Contracts, Cases, Model, Middleware, Archiving, Social Compliance, Assets, … Connectors & Communities, Process Collectors, and Tools Modeling, Scanning, … Built on an Integrated
Slide 47: Applications
Applications SAP: Employee, Receipts and Vendor Management Oracle: Archiving, Records Management Contract Management Asset Management Case Management Digital Asset Management Copyright © Open Text Corporation. All rights reserved. 47
Slide 48: Data and Process Integration
Data and Process Integration Process Data Copyright © Open Text Corporation. All rights reserved. 48
Slide 49: Functional Excellence
Functional Excellence ECM CEM Data Sovereignty Digital Asset Management Globalization Social Communities Cloud and Mobile Cloud and Mobile BPM Information Exchange EIM Integration Capture and Archiving Process Modeling InfoFusion Cloud and Mobile Cloud Discovery Semantic Search Analytics 49
Slide 50: Information Flows
Information Flows ECM BPM CEM IX Discover Create Publish Measure Adjust Consume Initiate Assess Collaborate Process Optimize Capture Classify Manage Discover Archive 50
Slide 51: EIM - In The Cloud
EIM - In The Cloud 2 Billion Transaction per year 25,000 Customers 1.5 Million Users Information Exchange EasyLink, FDDG Data & Process Services ECM & BPM Social Services CEM Platform Services Managed Hosting COPYRIGHT © 2012 OPEN TEXT CORPORATION. ALL RIGHTS RESERVED. 51
Slide 52: Social Communities & Tempo In The Cloud
Social Communities & Tempo In The Cloud End of calendar year 52
Slide 53: InfoFusion
Brietling - InfoFusion . | al fo F U S | 6) Nn € > © A (O htps://infotusion.breiting-oi.com English (U Filter by: SelectAll 21 ain 2012 Bost Bat \ PB Feet ceparments> Qualty Contl>..¥ Purp Maistnance Content Serv tenance Hikers FileNet Qualty Control sn 2012 Best Bet Filenet > Departments > Paysical
Slide 54: Innovation Cycles Increasing
Innovation Cycles Increasing BPM Focus FY 13 Q1 BPM Release 9.0 BPM Mobile 2.0 Provision 9.0 Enterprise Connect 10.2.2 Mobile. Social. Cloud. FY 13 Q2 Tempo in the Cloud Achieve in the Cloud WAVE Mobile Platform 3.8 Social Communities in the Cloud 54
Slide 55: Summary EIM
Summary Predictable Quality Innovation Product & Cycle Performance EIM Data Store Services Analytics Applications Social Mobile Cloud Integration 55
Slide 56: Unleashing the Power of Information
Unleashing the Power of Information
Slide 57: Investor Briefing: Paul McFeeters, CFO and CAO
Investor Briefing New York City, Palace Hotel Paul McFeeters OpenText CFO and CAO September 6th, 2012 Copyright © OpenText Corporation. All rights reserved.
Slide 58: FY13 External Target Model
FY13 External Target Model* Fiscal 2012 Target Fiscal 2013 Target Revenue Type Fiscal 2012 Actual Model Model As a % of revenue Product License 24.3% 25-30% 20 - 25% Cloud Services 0.6% 0% 11 - 14% Product Maintenance 53.8% 52-57% 44 - 48% Professional Services 21.3% 18-23% 17 - 22% Non-GAAP Gross M
Slide 59: License Revenue Seasonality
License Revenue Seasonality (guideline – not guidance) Q4 to Q1 – down 10-20% Q1 to Q2 – up 20-30% Q2 to Q3 – down 5-10% Q3 to Q4 – up 20-30% 59
Slide 60: Support Revenue – historical metrics
Support Revenue – historical metrics Renewal rate 91 – 93% inclusive of Price increase First year maintenance mandatory 20% Deferred customer support revenue June 30, 2012 $287m, $274m recognizable in fiscal 2013 60
Slide 61: Sample Support Revenue Calculation
Sample Support Revenue Calculation – using FY ‘11 as a base for FY ‘12 - example Calculation Revenue Q4 F11 support revenue $ 151 Annualized revenue (4 x Q4) (a) 604 Current deferred revenue (b) $ 255 6/30/11 Support to be renewed (a) - (b) = (c) 349 Renewal rate (d) 92% Renewed support (c) x (d) =
Slide 62: Tax rate – Cash taxes
Tax rate – Cash taxes 2011 Effective Rate on Adjusted Earnings – 14% Cash Taxes on Operations – 5%-7% 2012 Effective Rate on Adjusted Earnings – 14% Cash Taxes on Operations – 5%-7% 2013 Effective Rate on Adjusted Earnings – 14% Cash Taxes on Operations – 5%-7% 62
Slide 63: Taxes on Business Reorganization and Acquisition Transfers of IP
Taxes on Business Reorganization and Acquisition Transfers of IP Open Text also expects to pay cash taxes based on continuing to align ownership and management of our Intellectual Property in Luxembourg. The amount depends on the fair value and tax attributes (cost basis)of the acquired assets and t
Slide 64: Debt Capacity
Debt Capacity Loan Leverage Ratio Covenant Pro-forma EBITDA $115.7 F12 F11 F10 $361 $301 $248 $87.5 $88.6 3.0 3.0 3.0 3.0 3.0 3.0 3.0 3.0 3.0 $83.0 $74.1 $72.3 $74.6 $73.6 $66.5 1.8 1.8 1.7 1.2 1.2 1.1 1.0 1.0 1.1 TTM Pro-Forma EBITDA Loan Leverage Ratio Headroom Loan Interest Coverage EBITDA Headro
Slide 65: Debt Capacity
Debt Capacity F12 EBITDA $361m Loan Covenants - 3 X Debt/EBITDA & 3 X Interest June 2012 cash balance $560m, EasyLink cash cost $315m Debt capacity: TTM EBITDA $ 361 Loan covenant 3.0 1,083 Current debt 608 Additional capacity $ 475 65
Slide 66: History of Growing Non-GAAP EPS and Adjusted Operating Cash Flow
History of Growing Non-GAAP EPS and Adjusted Operating Cash Flow** Non-GAAP EPS $5.00 $4.00 6 Year CAGR 28.7%* $3.00 $2.00 $1.00 $- FY07 FY08 FY09 FY10 FY11 FY12 $69M $108M $134M $179M $238M $270M $1.46 $2.03 $2.51 $3.12 $4.07 $4.60 Operating Cash Flow ** 350 $6.00 300 250 6 Year CAGR 29.5% * $4.00
Slide 67: OpenText – Key Financial Metrics
OpenText – Key Financial Metrics Predictability of Results Strong Earnings & Cash Flow Acquisition capacity 67
Slide 68: Investor Briefing: Wrap Up
Investor Briefing New York City, Palace Hotel Mark J. Barrenechea OpenText President & CEO Wrap Up September 6th, 2012 Copyright © OpenText Corporation. All rights reserved.
Slide 69: Two Key Observations
Two Key Observations 80% of Enterprise More unstructured data is unstructured. data will be The other 20% lives generated this year, in ERP systems. then in all previous years combined. “Investigating the 80% “ – Seth Grimes, BridgePoint “Technology Trends You Can’t Ignore” - Gartner 69
Slide 70: Summary
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 70
Slide 71: Unleashing the Power of Information
Unleashing the Power of Information
Slide 72: 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