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Investor Relations - Strategic Overview July 29, 2015
NASDAQ: OTEX TSX: OTC
OpenText Confidential. ©2015 All Rights Reserved. 2 2
Safe Harbor Statement
Certain statements in this presentation, including statements about the focus of Open Text Corporation (“OpenText” or “the Company”) in Fiscal 2016 on growth in earnings and
cash flows, creating value through investments in broader Enterprise Information Management (EIM) capabilities, distribution, the Company's presence in the cloud and in growth
markets, its financial conditions, results of operations and earnings, declaration of quarterly dividends, and other matters, may contain words such as "anticipates", "expects",
"intends", "plans", "believes", "seeks", "estimates", "may", "could", "would", and other similar language and are considered forward-looking statements or information under
applicable securities laws. In addition, any information or statements that refer to expectations, beliefs, plans, projections, objectives, performance or other characterizations of
future events or circumstances, including any underlying assumptions, are forward-looking, and based on our current expectations, forecasts and projections about the operating
environment, economies and markets in which we operate. Forward-looking statements reflect our current estimates, beliefs and assumptions, which are based on management's
perception of historic trends, current conditions and expected future developments, as well as other factors it believes are appropriate in the circumstances, such as certain
assumptions about the economy, as well as market, financial and operational assumptions. Management's estimates, beliefs and assumptions are inherently subject to significant
business, economic, competitive and other uncertainties and contingencies regarding future events and, as such, are subject to change. We can give no assurance that such
estimates, beliefs and assumptions will prove to be correct. Such forward-looking statements involve known and unknown risks, uncertainties and other factors and assumptions
that may cause the actual results, performance or achievements to differ materially. Such factors include, but are not limited to: (i) the future performance, financial and otherwise,
of OpenText; (ii) the ability of OpenText to bring new products and services to market and to increase sales; (iii) the strength of the Company's product development pipeline; (iv)
the Company's growth and profitability prospects; (v) the estimated size and growth prospects of the EIM market; (vi) the Company's competitive position in the EIM market and
its ability to take advantage of future opportunities in this market; (vii) the benefits of the Company's products and services to be realized by customers; (viii) the demand for the
Company's products and services and the extent of deployment of the Company's products and services in the EIM marketplace; and (ix) the Company's financial condition and
capital requirements. The risks and uncertainties that may affect forward-looking statements include, but are not limited to: (i) integration of acquisitions and related restructuring
efforts, including the quantum of restructuring charges and the timing thereof; (ii) the possibility that the Company may be unable to meet its future reporting requirements under
the Securities Exchange Act of 1934, as amended, and the rules promulgated thereunder; (iii) the risks associated with bringing new products and services to market; (iv)
fluctuations in currency exchange rates; (v) delays in the purchasing decisions of the Company's customers; (vi) the competition the Company faces in its industry and/or
marketplace; (vii) the final determination of litigation, tax audits and other legal proceedings; (viii) the possibility of technical, logistical or planning issues in connection with the
deployment of the Company's products or services; (ix) the continuous commitment of the Company's customers; and (x) demand for the Company's products. For additional
information with respect to risks and other factors which could occur, see the Company's Annual Report on Form 10-K, Quarterly Reports on Form 10-Q and other securities
filings with the Securities and Exchange Commission (SEC) and other securities regulators. Readers are cautioned not to place undue reliance upon any such forward-looking
statements, which speak only as of the date made. Unless otherwise required by applicable securities laws, the Company disclaims any intention or obligation to update or revise
any forward-looking statements, whether as a result of new information, future events or otherwise.
OpenText Confidential. ©2015 All Rights Reserved. 3 3
Connected
Business
Mobility
Cloud
Predictive
Analytics
New
Processes
A Millennial
Workforce
We are guiding customers through the Digital journey
OpenText Confidential. ©2015 All Rights Reserved. 4 4
Digital is changing businesses at an unprecedented speed
51% increase in
lead-to-sale
conversion rate
when an enterprise
cloud hosting
company mapped
out customer
journeys and
identified design
issues that were
preventing
conversions
A business services
company undertook
a digital
transformation
improving cross-sales
by 43% and growing
share by 21% using
customer data and
analytics
Percentage of
consumers that
want personalized
messaging that
reflects their needs
38% decrease in
product defects at
an enterprise software
company that was
facing a wave of
customer complaints
for its newly released
product
Of the world’s
information that has
ever existed was
created in the last
two years
43% 51% 38% 70% 90%
OpenText Confidential. ©2015 All Rights Reserved. 5 5
Evolution over time
Digital maturity
of the sector
HEALTH
PUBLIC SECTOR
RETAIL BANKING
RETAIL DISTRIBUTION
TOURISM
AGRICULTURE
CONSUMER GOODS
MEDIA
TECH AND TELECOM
Laggard
incumbents
die
Advanced
incumbents
and
established
“startups”
constitute
the new
normal
New trends
emerge
Innovative startups
create disruptive
business models
Early adopters
start embracing
the new models
Advanced
incumbents start
adapting to the new
model
Tipping
point
Mainstream
customers
adopt
Companies have no choice but to adopt to Digitization
to survive
OpenText Confidential. ©2015 All Rights Reserved. 6 6
We help customers better manage information to grow
faster and be more efficient in an increasingly digital world
ACCELERATE
Increase the speed of
information delivery
through integrated
systems
TRANSFORM
Consolidate and
upgrade information
and process platforms
SIMPLIFY
Reduce costs,
improve efficiencies
and increase
competitiveness
Help our customers become digital businesses by applying our simplify, transform and accelerate operating principles
to gain a competitive advantage and be more productive
Mission statement
OpenText Confidential. ©2015 All Rights Reserved. 7 7
OpenText EIM brings together the four core elements
needed to drive the digital transformation
Manage information flows
and drive engaging
experiences by
revolutionizing the way
information is created,
consumed, and stored
Enable businesses
to rapidly
understand and
automate complex
business
processes
Utilize
enterprise
data and big
data to
generate
insights
Facilitate efficient,
secure, and compliant
exchange of
information inside and
across organizations
Data and
information Information
Exchange
Business process
workflows
Analytics
OpenText Confidential. ©2015 All Rights Reserved. 8 8
Through EIM we are very well positioned to help customers
holistically with their digital journey
Discovery CEM ECM
Used by a majority of the top 10
companies in several industry verticals
(e.g., manufacturing, financial
services, pharma, governments)
Over a third of our EIM
customers are using the
BPM platform to manage
core processes
Analytics
Personalized insights
delivered to over 200
million users
Information Exchange
600,000 trading partners on
the IX platform
20 billion transactions p.a.
BPM
Data and
information Information
Exchange
Business process
workflows
Analytics
OpenText Confidential. ©2015 All Rights Reserved. 9 9
EIM is a $20B market and is growing at 7.4% Y/Y
Key markets
Emerging focus
Market $1.8B $2.6B $2.5B $5.4B $3.8B $4.0B
Growth 10.6% 10.2% 6.4% 6.2% 9.5% 4.4%
Discovery CEM BPM ECM Information
Exchange Analytics
Product
Suites ▪ Web Experience
▪ Customer
Communications
on Management
▪ Digital Asset
Management
▪ Social
▪ Content
Management
▪ Records
Management
▪ Archiving
▪ Collaboration
▪ EFSS
▪ Unified
Information
Access
▪ eDiscovery
▪ Classification
▪ EDI / B2B
▪ The Grid
▪ Fax Solutions
▪ Secure
Messaging
▪ MFT
▪ Big Data
Analytics
▪ Embedded
Analytics
▪ Predictive
Analytics
▪ These six pillars are essential to delivering Enterprise Information Management (EIM)
▪ Our emerging focus is on Analytics
▪ Business
Process
Management
▪ Dynamic Case
Management
▪ Capture
CY2014
Actuals
OpenText Confidential. ©2015 All Rights Reserved. 10 10
Assessment of OpenText leadership3, 2014-15
We lead in 6 Magic Quadrant/Wave evaluations…
Count
Where it
doesn’t
lead
overall,
OpenText
falls in
these
categories:
Recognized as leading in each of its markets
Company
is a leader
Company
participates
6
20 “GXS has an undiluted focus on
Integration Brokerage and is well-
known for its scalable, cross-
industry managed service practice”2
“OpenText has the broadest ECM
backbone for enterprise applications.”
“Specifically, it’s best for embedding
ECM within the lead (tier 1) application,
such as the sales order entry process…”1
Discovery CEM ECM IX Analytics
4
9
1
Challenger/
Strong
Performer
Visionary/
Contender
Niche/
Challenger
1 The Forrester Wave™: ECM Transactional Content Services, Q3 2015” by Craig Le Clair, July 15 2015
2 Gartner Magic Quadrant for Integration Brokerage April 2014 – Benoit J. Lheureux, Paolo Malinverno, Valentin T. Sribar
3 SOURCE: Gartner Magic Quadrants; Forrester Waves 2014-2015
OpenText Confidential. ©2015 All Rights Reserved. 11 11
…and showing leadership in key areas
1 SOURCE: Forrester Waves 2013-2015; not exhaustive
Forrester Wave Placements1
Enterprise Business
Intelligence Platforms,
Q1 ’15
Digital Asset Management
For Customer Experience,
Q1 ’14
Document Output For
Customer Communications
Management, Q1 ’14
ECM Transactional
Content Services, Q3 ’15
OpenText Confidential. ©2015 All Rights Reserved. 12 12
Cloud
Maintenance
License
Services
We have four different revenue streams
7-yr
CAGR
373605
151 204 257
252
238
221
364 405508
561657
658
707
732
219 230238
269
294
273
306
294
180167143
FY11
1,033
FY15 FY10
912
FY09 FY12
1,207
1,852
+14% p.a.
FY13
1,363
786
FY08
726
FY14
1,625
83.2%
(over last
2 yrs only)
4.3%
10.5%
6.4%
Total revenue
$M
24% 25% 28% 28% 31% 31% 29% 27%
Adjusted
Operating
Margin (AOM)1
1 Before taxes and interest expense. See reconciliation of Non-GAAP measures to GAAP measures at the end of the presentation
Our AOM continues to improve year-over-year, and is expected to
be 30-34% for FY16
OpenText Confidential. ©2015 All Rights Reserved. 13 13
Our license and maintenance revenues are driven by our
core EIM products
Discovery
Accelerate time
to value using
search and
content analytics
to identify and
govern valuable
content
BPM
Drive
productivity
and operational
excellence by
optimizing
processes with
highly adaptable
orchestration
ECM
Manage the
flow of
information
from capture
through
archiving and
disposition on a
state of the art
platform
CEM
Deliver a
consistent user
experience
across
multiple
channels by all
forms of
interactive
content
Information
Exchange
Facilitate
efficient,
secure, and
compliant
exchange of
information
inside and
outside of
organizations
Analytics
Generate
critical insights
by seamlessly
integrating into
OpenText
product suites
OpenText Confidential. ©2015 All Rights Reserved. 14 14
Our Services are a consistent revenue generator
OpenText Services
Professional Consulting
services
▪ Implementation
▪ Onboarding
▪ System design and
integration
▪ Managed services
▪ Operational modeling
▪ Governance assessment
Teaching and Learning
services
▪ Learning as a Service
▪ Distance learning
(eLearning and virtual
classroom)
▪ On-site classes
▪ Public classroom learning
▪ Training consulting
Information Outsourcing
services
▪ Data processing and
document management
business process services
▪ Paper to digital content
conversion
Our Services organization is a consistent performer, with best-in-
class margin.
OpenText Confidential. ©2015 All Rights Reserved. 15 15
Business Network
▪ Trading Grid
▪ On Demand Messaging
64,000 Customers
Applications as a Service
▪ SaaS
▪ Subscriptions
500+ Customers 800+ Customers
Managed Cloud services
▪ Managed applications
▪ Hosting services
Our Cloud business is comprised of 3 major components
Our business is augmented by our world class ability to acquire companies and
improve their margins (e.g., post-acquisition in 2014, GXS margins have improved from
approximately 50% to 60%)
OpenText Confidential. ©2015 All Rights Reserved. 16 16
$M
Our Cloud offerings are getting great traction
116
211
10
FY15 FY13 FY14 FY12
Capacity expansion
with existing customers
New customer sign-ups
Acquisitions
High retention rate
Cloud
Revenue N/A 180 373 605
Gross
Margin N/A 59% 62% 60%
Cloud growth drivers New MCV for Cloud
82%
FY16 MCV
bookings target:
$280-$320 million
OpenText Confidential. ©2015 All Rights Reserved. 17 17
Our leading indicators of performance in Cloud are
trending positively
FY15
819
FY14
745
Cloud contracts signed
Managed Cloud services
Active customers
Mid-90’s
Retention
New spending sampling
Proportion of
enterprise contracts
signed since launch
in Jan’15 are
new spend
90%
Number of FY15
Cloud MCV transactions over $500K Retention rate in Cloud business
83
10%
OpenText Confidential. ©2015 All Rights Reserved. 18 18
Our strategic intent is to take a “customer-paced”
approach to Cloud substitution
Protect
bottom line
and maximize
value
Make
demand based
capex investments
Maintain
dual focus
on license
and Cloud
Equally
incentivize
sales across
License and Cloud
Enable
customer choice
with balanced
pricing
Our strategic intent is to
capture new spend from
existing and new
customers.
In our target state,
we will continue to realize
significant license revenues,
along with Cloud.
OpenText Confidential. ©2015 All Rights Reserved. 19 19
Our hybrid strategy is working
Cloud revenue
License revenue Cloud revenue
New license revenue
294306273294
FY15 FY14 FY13 FY12
605
373
180
FY12 FY15 FY14 FY13
1 Before taxes and interest expense. See reconciliation of Non-GAAP measures to GAAP measures at the end of the presentation
31% 31% 29% 27%
$M
31% 31% 29% 27%
$M
Adjusted
Operating
Margin1
Consistent
Performance
Growth
OpenText Confidential. ©2015 All Rights Reserved. 20 20
Our financial trends for FY2015 are strong
1 See reconciliation of Non-GAAP measures to GAAP measures at the end of this presentation
2 Before taxes and interest expense
FY14 FY15 FY16 FY13 FY17
Non-GAAP EPS up
3% Y/Y
▪ Non-GAAP-based EPS was $3.46 compared to $3.37 Y/Y1
▪ GAAP-based EPS was $1.91 compared to $1.81 Y/Y
▪ Non-GAAP-based operating margin 31%2
▪ GAAP-based operating margin 19%2
▪ Non-GAAP tax rate: 18%
Operating Cash Flow up
25% Y/Y
▪ $523 M in operating cash flow, compared to $417 M Y/Y
▪ Cash and cash equivalents $700 M
▪ Total debt $1,588 M as of June 30, 2015
Total Revenue up
14% Y/Y
▪ Total revenue $1,852M million
▪ Cloud Revenue $605M up 62% Y/Y
▪ License Revenue $294M million
down 4% Y/Y
▪ 61 transactions over $1 million
▪ License revenue from new
accounts: 27%
▪ Partners contributed 39%
of license revenue
▪ Average Cloud MCV deal
size: $405K
▪ Average License deal size
: $312K
OpenText Confidential. ©2015 All Rights Reserved. 21 21
We have a track record of growth and value creation
3.463.37
2.79
2.302.04
1.561.26
1.02
FY11 FY08 FY10 FY09 FY13 FY15 FY12 FY14
Adjusted EPS ($)
7 yr CAGR 19%
523
417
319266
223214186166
FY11 FY10 FY09 FY08 FY15 FY12 FY14 FY13
Operating Cash Flow ($M)
7 yr CAGR 18%
573503
400330
285254198176
FY13 FY14 FY15 FY11 FY10 FY09 FY08 FY12
Adjusted Operating Income ($M)
7 yr CAGR 18% 425407
329
270237
179133
107
FY09 FY15 FY14 FY11 FY12 FY13 FY08 FY10
Adjusted Net Income ($M)
7 yr CAGR 22%
FY07 cash flow $111M, before the impact of special charges
FY07 Adjusted Net Income $74M FY07 Adjusted Operating Income $130M
FY07 adjusted EPS $0.73. All historical share data is presented on a post stock-split basis
OpenText Confidential. ©2015 All Rights Reserved. 22 22
Recurring revenue trend (includes Cloud, Services, and Maintenance)
74
76
78
80
82
84
76%
84%
FY13
81%
FY15 FY14
80%
FY12
Recurring Revenue %
Our recurring revenue has been consistently growing
OpenText Confidential. ©2015 All Rights Reserved. 23 23
We are diversified across geographies… FY15 – Geographic revenue distribution
Americas
$1,035M
56%*
Region
FY15 $M
% of bus.
APJ
$178M
10%*
EMEA
$638M
34%
*Percentages are rounded
up to add to 100%
OpenText Confidential. ©2015 All Rights Reserved. 24 24
We outperform our peers across key dimensions Revenue Operating Cash Flow
Free Cash Flow
0
50
100
150
200
CY2014 CY2011 CY2013 CY2012
0
50
100
150
200
250
CY2014 CY2013 CY2012 CY2011
0
50
100
150
200
250
CY2014 CY2013 CY2012 CY2011
OTEX Peer average1
Adjusted EPS
0
50
100
150
200
CY2013 CY2012 CY2011 CY2014
1 Peers include Software AG, PegaSystems, Progress Software, Intralinks, Epiq Systems, EMC, IBM, VMware, SAP, CA, Inc., Symantec, Microsoft, Oracle, Adobe, Citrix
SOURCE: CapitalIQ. Results were indexed to 100 for FY11 to show trend on a common basis
OpenText Confidential. ©2015 All Rights Reserved. 25 25
Intelligent Cloud growth yields top-line and operating margin growth
Path to 2020 with Target Model
50% Revenues from
the Cloud
>90% Recurring revenue
34 - 38%
Adjusted Operating Margin1
▪ Continued focus on
growing recurring
revenue profile
▪ Unwavering focus on
margin improvement to
maximize value
▪ Seven year revenue
growth CAGR of 14%
▪ Revenue growth lead by
acquisitions and
augmented by profitable
organic growth
▪ Accelerating growth
through acquisitions
2020
aspirations (includes
acquisitions)
2016
31 -36% Revenues from
the Cloud
Acquisitions & profitable organic growth
30 - 34% Adjusted
Operating Margin1
1 Before taxes and interest expense. See reconciliation of Non-GAAP measures to GAAP measures at the end of the presentation
OpenText Confidential. ©2015 All Rights Reserved. 26 26
Our business model is based on “Intelligent Growth,”
enabled by OTIGS™…
Acquire
Financial Performance
Customer and Partner
Loyalty
Innovation Talent
Development
Operational Excellence
OTIGSTM
Acquisitions are core to our strategy, and OTIGS has enabled us to acquire companies and
quickly integrate and optimize them
Acquired 50 companies, investing
over $3.8 billion capital
On-board acquisitions to our
operating model within 1 to 2 years
Extracted significant cost
synergies
Optimize
Integrate
OpenText Confidential. ©2015 All Rights Reserved. 27 27
…which has helped us accelerate our growth and value
creation
We are focused on “Intelligent
Growth” – our growth strategy is
to acquire solid EIM companies
that have recurring revenues,
integrate them with our suite of
EIM products and services, and
optimize their operations based
on our leadership, expertise
and experience, as well as, drive
profitable organic growth.
14% Revenue CAGR
over the last 7 years
Leadership
Growth
Value
Over $500 million
EBITDA
Leadership in six
marketings
OpenText Confidential. ©2015 All Rights Reserved. 28 28
Our track record is proven over the years
OpenText was
founded in 1991
We estimate ~$3 billion in gross acquisition
capacity over the next several years
OpenText Confidential. ©2015 All Rights Reserved. 29 29
We have several growth and margin improvement
initiatives in action
Focused push on cost optimization plans
▪ Increased automation in managed Cloud services
▪ Reduction in infrastructure costs via data center consolidation,
efficiencies of scale, and usage of open source software
Restructuring of the workforce
▪ On track to achieve financial benefits of restructuring
▪ Majority of actions complete
▪ Expected annualized cost savings of approximately $50 million in
FY2016
Ongoing transition from high to low cost locations globally
▪ 25% workforce in South Asia (India, Philippines)
▪ Trend to continue
Laser-like focus on expense management
New Digital systems being deployed
OpenText Confidential. ©2015 All Rights Reserved. 30 30
Revenue Type 2015 Target Model Fiscal 2015 Actuals Fiscal 2016 Target Model*
Annual Recurring Revenue (ARR) 80 - 84% 84% 82 - 86%
Product License 15 - 20 % 16% 14 - 18%
Cloud Services 28 - 33% 33% 31 - 36%
Product Maintenance 35 - 40% 40% 38 - 42%
Professional Services 10 - 15% 12% 8 - 13%
Non-GAAP Gross Margin
Product License 94 - 96% 96% 95 - 97%
Cloud Services 58 - 60% 61% 58 - 60%
Product Maintenance 85 - 87% 87% 86 - 88%
Professional Services 21 - 23% 22% 21 - 23%
Non-GAAP Gross Margin 69 - 72% 72% 70 - 72%
Non-GAAP Operating Expenses
Development 10 - 12% 10% 10 - 12%
Sales and Marketing 18 - 20% 19% 17 - 19%
General and Admin 7 - 8% 8% 7 - 8%
Depreciation 2 - 4% 3% 2 - 4%
Non-GAAP Ops Margin 28 - 32% 31% 30 - 34%
FY16 External Target Model*
*This target model is not guidance.
OpenText Confidential. ©2015 All Rights Reserved. 31 31
We have a comprehensive partner strategy that enables
accelerated delivery of our solutions
▪ 1,250 WW partners
▪ We are passionate about
Partner Success
▪ We are committed to
perfecting our Partner
program
▪ Our modus operandi: The
more you invest in us, the
more we will invest in you
1250
PARTNERS
PARTNER
INFLUENCE AE, ISR, Specialists
Direct Sales
Force
Strategic
Alliances
System
Integrators
VARs
Distributors
OEM
Technology
Alliances
▪ 39% license
revenue
▪ 25% cloud
services revenue
OpenText Confidential. ©2015 All Rights Reserved. 32 32
We have a world class management team
Mark J. Barrenechea
President and CEO
Our leaders have extensive industry experience and
deep expertise in scaling technology organizations
Gordon
Davies
Chief Legal
Officer
James
McGourlay
Global
Technical
Services
Adam
Howatson
Chief
Marketing
Officer
Lisa
Zangari
Chief Human
Resources
Officer
David
Jamieson
Chief
Information
Officer
Russ
Stuebing
Corporate
Development
John
Doolittle
Chief Financial
Officer
Muhi
Majzoub
Engineering
Gary
Weiss
Cloud
Services
Simon “Ted”
Harrison
Enterprise
Sales
George
Schulze
Information
Exchange Sales
Andy
Wild
Analytics Sales
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