Slide 1: OpenText Investor Presentation
OpenText Investor Presentation August 3, 2023 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: Strategic Overview
OpenText Strategic Overview © 2023 Open Text 3
Slide 4: OpenText Snapshot
OpenText Snapshot The Global Leader in Information Management Information Management TAM opentext.ai Targets & Aspirations In Constant F’24 F’26 Total Currency(2) Targets Aspirations Information Management Addressable Market(1) Proven Key technology Process Enterprise Cloud Content Management $47B B
Slide 5: History of Value Creation
History of Value Creation Market Expansion and Value Creation Our Mission: 2023 We power and protect information 2023 opentext.ai Micro Focus 2021 Our Purpose: Zix: a top Microsoft SMB/C 2022 Titanium partner To elevate every person and every organization Value Creation 2019 to gain the information
Slide 6: OpenText Business System
OpenText Business System Our Competitive Advantage: It’s Who We Are and How We Do What We Do Our Shared Purpose To elevate every person and every organization to gain the information advantage Our System OpenText Fundamentals • Market leadership • Operational excellence Customers talk, we listen Gro
Slide 7: Core Value Drivers Expanded: Running the OpenText Playbook
Core Value Drivers Expanded: Running the OpenText Playbook Total Organic Total Revenue Growth Cloud Growth Revenue + Growth Acquisitions + Gross Margin Margin Expansion + Reinvest R&D R&D Strong Free Cash Flows for + Innovation + Growth S&M S&M Capital Allocation Debt < 3x (1) + G&A Improve Acquisit
Slide 8: Track Record of Total Revenue Growth
Track Record of Total Revenue Growth Expected Rapid Growth and Increased Predictability Total and Estimated Revenue Growth $6.2 $5.85 to to $6.4 $5.95 In $Billions Revenue Growth $4.5 • Track record of double-digit total revenue 13% growth F’11 to F’23 CAGR $3.5 $3.4 $3.1 • Accelerate cloud growth $
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 36% 40% to In $Billions 38% A-EBITDA Growth 36% to 32.5% to 38% • Targeting Upper-quartile A-EBITDA 33.5% profitability 14% F’11 to F’23 CAGR $1.5 • A proven OpenText Business System
Slide 10: Track Record of Strong Free Cash Flows
Track Record of Strong Free Cash Flows Expected Acceleration in Free Cash Flows (1) Estimated Free Cash Flows $1.5B+ 20%+ Aspiration FCF as % In $Millions of Revenue FCF Growth 11% F’11 to F’23 CAGR Cloud Acquisition Investment integration • Target upper quartile FCF $800 to $882 $889 $900 $812 $812
Slide 11: Track Record of Shareholder Returns
Track Record of Shareholder Returns Dividend Program (~20% of TTM Free Cash Flows)(1)(2) Approximately $2.2B returned to shareholders since F’13 (3) Dividends Paid and Shares Repurchased (US$M) $177.0 Shares Repurchased Dividends $119.1 31% CAGR(4) F’13 to F’23 $65.5 $259.5 $273.1(5) $237.7 $210.7 $
Slide 12: Q4 and Fiscal 2023 Highlights
OpenText Q4 and Fiscal 2023 Highlights © 2023 Open Text 12
Slide 13: Q4 and Fiscal 2023 Financial Highlights
Q4 and Fiscal 2023 Financial Highlights (with Y/Y comparisons) Q4 Enterprise Cloud Bookings of $164M; F’23 of $528M (1) Q4 F’23 For full year F’23 $1.49B 65.2% $4.48B 28.4% Total Revenues (2) Total Revenues $1.50B in CC 66.5% in CC $4.62B in CC 32.2% in CC ARR(3) $1.16B 56.4% ARR $3.62B 26.2% 78% of
Slide 14: Q4 F'23 Customer Wins
Q4 F’23 Customer Wins Cybersecurity Cybersecurity Content Content An agency of U.S. Department of The eCommerce division of DHL in the One of the largest U.S. commercial Renesas (Renaissance Semiconductor for Homeland Security. Its mission is to help Benelux. DHL is the world’s leading property and
Slide 15: Q4 F'23 Customer Wins
Q4 F’23 Customer Wins Application Automation Analytics & AI Business Network Experience A European leading provider of banking A leading Polish insurance group, offering Designs and manufactures advanced The largest for-profit managed health care and financial services, operates in 70 life and non-l
Slide 16: Cash Flows and Balance Sheet
Cash Flows and Balance Sheet Targeted Cash (USD$B) (as of 06/30/2023) Net Leverage Ratio(1) Net Leverage Ratio(1) Expected quarterly debt reduction of $175M+ Total Cash $1.2B 3.5x 3.5x 3.3x TTM Q4 F’23 (USD$M) < 3.0x 3.0x 2.0x 2.1x 2.0x 1.9x Operating Cash Flows $779 Micro Focus Transaction Close Le
Slide 17: Introducing: Annual Business Performance
Introducing: Annual Business Performance Market Leadership and Continued Share Gains Through Organic Growth and M&A High Value Businesses Global Scale and Customer Proximity (F’23 Actual) Total % of Total Information Management Addressable Revenue(1) Market(2) OpenText leverages a common set of tech
Slide 18: Y/Y Organic Growth
(1) Annual Organic Revenue Growth Y/Y Organic Growth % Increasing Cloud Organic Growth in CC F’26 Aspiration 4% in CC(2) F’21 F’22 F’23 7% to 9% Cloud 1.8% 3.6% 3.9% Cloud Organic Growth Y/Y Organic Growth ARR 0.5% 2.3% 2.3% 3% in CC(2) (2) Total (2.1%) 1.7% 1.2% in CC as Reported F’21 F’22 F’23 F’2
Slide 19: OpenText Outlook
OpenText Outlook © 2023 Open Text 19
Slide 20: F'24 Model and F'26 Target Model Aspirations
F’24 F’26 Target Model Aspirations (in constant currency) Medium-Term (1) (1) F’23 F’23 Reported F’24E in CC(2) Reported F’24E in CC(2) $528 Ent. Cloud Bookings(3) (USD$M) and Growth Y/Y% 15%+ USD$M % of Rev % of revenue Y/Y Growth 1.2% Organic CC(2) Growth(4) Y/Y% 1% to 2% $1,700 37.9% Cloud Servic
Slide 21: Q1 F'24 Quarterly Factors
Q1 F’24 Quarterly Factors Externalities Company Specific Reflecting Q1 Seasonality: Recession risk Inflation Expect Q1 Y/Y Revenue in constant currency: Geopolitical Total revenues of $1.36B to $1.41B ARR(1) of $1.09B to $1.13B FX revenue tailwind of approximately $5M to $10M Y/Y Expect Q1 Y/Y A-EBI
Slide 22: OpenText – Micro Focus Financial Integration Framework
OpenText – Micro Focus Financial Integration Framework (1) Updated Savings 2H F’23 1H F’24 2H F’24 1H F’25 2H F’25 F’26 Workforce Adj. EBITDA reductions and Facilities Cost Savings ~$260M(3) Consolidation (~$28M) FCF $400M Actioned A-EBITDA(2) Amounts represent Vendor consolidation, strategic annual
Slide 23: Rapid Deleveraging Program
Rapid Deleveraging Program Total Debt Consolidated Net Leverage Ratio (1) Track Record of Rapid Deleveraging (as of 6/30/23) • Micro Focus on OpenText Operating Model $9.1B 5.7 yrs Principal Weighted • Full benefit of cost savings and systems Outstanding Ave Maturity 3.5x < 3.0xby end of F’25 • inte
Slide 24: F'26 Aspirations in Constant Currency
F’26 Aspirations in Constant Currency (1) Enterprise Cloud Bookings Growth(2) 15%+ Cloud Editions (CE), Cloud Expansion, Industry Expansion, AI, Titanium X Total Organic Revenue Growth(3) 2% to 4% Micro Focus expected to return to organic growth in F’24 Total Revenue ~$6.2B to $6.4B Market share gai
Slide 25: We Expect To Double FCF with our F'26 Aspirations
We Expect To Double FCF with our F’26 Aspirations (1) Key Drivers 30%+ $1.5B+ CAGR%(3) F’23 to F’26 • Expanding organic growth with cloud growing fastest $800M Acquisition integration • New demand areas such as AI and new workloads to $900M • Micro Focus on OpenText Operating Model and full $655M be
Slide 26: Our Business
Our Business © 2023 Open Text 26
Slide 27: The Cognitive Era: the Next Era of Computing
The Cognitive Era: the Next Era of Computing The Internet changed everything…with AI, everything must change • Information and AI driven • Seamless shifts between physical & digital (“Phygital”) • The A levels: automation, algorithms, applications, augmented reality • More human: workforce is fluid
Slide 28: OpenText: We Power and Protect Information
OpenText: We Power and Protect Information The most comprehensive Information Management platform The OpenText Cloud and the Internet of Clouds OpenText Infrastructure Eco-Systems addresses Applications Services Public Public strategic Internet INFORMATION CORE Internet Mainframes Standards business
Slide 29: OpenText: Well-Positioned for the Cognitive Era
OpenText: Well-Positioned for the Cognitive Era Decades of Operational Data in the OpenText Information Core Magellan Data types: • BI data visualization • Text mining Vertica • Fast and slow • Advanced data • High-performance • Human and machine exploration and ETL analytics • Structured and unstru
Slide 30: Strategic Growth Priorities
Strategic Growth Priorities OpenText: The platform of platforms for Information Management Application Business IT Operations Win Our Markets Content Cybersecurity Automation Network Management Analytics and AI Extend OpenText Private Cloud to Micro Focus Customers Prioritizing largest products firs
Slide 31: Introducing OpenText Aviator
Introducing OpenText Aviator OpenText Content Aviator Embrace the next era of software user experience OpenText Business Network Aviator Revolutionize the internet of clouds via connectivity OpenText IT Operations Management (ITOM) Aviator Refine all Level 1 business support (IT, HR, Sales) OpenText
Slide 32: Top Growth Drivers and Leading Products by Business
Top Growth Drivers and Leading Products by Business Leverage Products and Capabilities for Continued Growth Business Clouds Application Business IT Operations Content Cybersecurity Analytics & AI Automation Network Mgmt. Smarter Information Smarter Security Smarter Applications Smarter Connections S
Slide 33: Titanium X: Next Evolution of Information Management
Titanium X: Next Evolution of Information Management $2.5B Investment in Innovation and Cloud Operations by end of F’25 Titanium X Priorities Titanium X Releases Accelerating Micro Focus to the Cloud New Information Management Capabilities Release 23.2 – Now Available! • Climate & Sustainability cap
Slide 34: Our Structured Go To Market Approach
Our Structured Go To Market Approach OpenText L.O.V.E.TM Model Our Approach to Engaging Customers Engaging Through Partners Top 10 Large Sale Partners Top SAP, Microsoft, AWS, Google, Accenture and more Strategic Accounts 250 Strategic Partners Enterprise Accounts G10K MSP System Strategic MSSP Serv
Slide 35: Our 2030 Pledge: OpenText Zero-In
Our 2030 Pledge: OpenText Zero-In • Committed to climate innovation 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 r
Slide 36: We are Committed to Climate Innovation
We are Committed to Climate Innovation • Information Management: CO2 budget, forecasts • CMDB: Automatically collect CO2 actuals for IT / OT assets Digitized e-commerce transactions with EDI to Report (UCMDB), using climatiq.io, boavista.com automate supply chain operations • Governance and Green Le
Slide 37: Executive Leadership Team
Executive Leadership Team Products & Sales & Demand Operations Customers Ted James Muhi Madhu Doug Brian Harrison McGourlay Majzoub Ranganathan Parker Sweeney EVP, Enterprise EVP, International EVP, Chief EVP, CFO EVP, Corporate EVP, CHRO Sales Sales Product Officer Development Prentiss Paul Paul Mi
Slide 38: Slide Notes
Slide Notes Throughout this presentation, certain numbers may not foot due to rounding Slide 13 ------------------------------------------------------------------------------------------------------- Slide 21 -------------------------------------------------------------------------------------------
Slide 39: opentext
opentext
Slide 40: 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 41: 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 42: 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 43: Reconciliation of Selected Non-GAAP Measures | Q4 FY'23
Reconciliation of Selected Non-GAAP Measures | Q4 FY'23 © 2023 Open Text 43
Slide 44: Reconciliation of Selected Non-GAAP Measures | Q4 FY'23
Reconciliation of Selected Non-GAAP Measures | Q4 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 45: Reconciliation of Selected Non-GAAP Measures | FY'23
Reconciliation of Selected Non-GAAP Measures | FY'23 © 2023 Open Text 45
Slide 46: Reconciliation of Selected Non-GAAP Measures | FY'23
Reconciliation of Selected Non-GAAP Measures | 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 amor
Slide 47: Reconciliation of Selected Non-GAAP Measures | Q4 FY'22
Reconciliation of Selected Non-GAAP Measures | Q4 FY'22 © 2023 Open Text 47
Slide 48: Reconciliation of Selected Non-GAAP Measures | Q4 FY'22
Reconciliation of Selected Non-GAAP Measures | Q4 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 49: Reconciliation of Selected Non-GAAP Measures | FY'22
Reconciliation of Selected Non-GAAP Measures | FY'22 © 2023 Open Text 49
Slide 50: Reconciliation of Selected Non-GAAP Measures | FY'22
Reconciliation of Selected Non-GAAP Measures | 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 amor
Slide 51: Reconciliation of Adjusted EBITDA and Free Cash Flows
Reconciliation of Adjusted EBITDA and Free Cash Flows © 2023 Open Text 51
Slide 52: Reconciliation of Adjusted EBITDA and Free Cash Flows
Reconciliation of Adjusted EBITDA and Free Cash Flows © 2023 Open Text 52
Slide 53: opentext
opentext