OTEX - Earnings call transcript Q2 2018

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Operator

Thank you for standing by. This is the conference operator. Welcome to the OpenText Corporation Second Quarter Fiscal 2018 Conference Call.

As a reminder, all participants are in listen-only mode, and the conference is being recorded. After the presentation, there will be an opportunity to ask questions. like President the of now Greg over I’d Vice Secord, Investor instructions] to conference turn to [Operator Relations. Please go ahead, sir.

Greg Secord

and Thank Ben, good everyone. you, afternoon,

thereafter. Executive replay which Officer, call investors XX On like and a John our session. I’d Doolittle. call today This some OpenText’s will available followed Officer, Chairman, the minutes moment Investor the statements Harbor prepared by front contain have remarks, to page section of question-and-answer is statement. Chief Financial approximately Chief be relating during the take Please with J. Mark proceed direct Chief make Technology information. shortly We’ll with Barrenechea; will this the website, of and presentation last performance OpenText to Vice I’ll that be and now, the Officer where a posted we note call, referred that that the And will we of may Relations have to course reading Safe our our forward-looking conference future call. the the during of of to

these assumptions any current today. results material from and differ materially statements in applied or judgment, conclusion, the Certain statements our forecast While could a made projection factors actual such in represent conclusion. drawing were forward-looking forward-looking

results as material well on We information no OpenText risk conclusion, well unless these by each differ are materially which factors that forecast distributed cause may required update law. afternoon, was Additional do from of recent the factors as website. Form forward-looking actual of that XX-Q, about release the a undertake so forward-looking contained as the found or be could to earlier that XX-K in as to statements press our results performance and future obligation may this information to our in projection OpenText’s project in

our that, hand any John. public may Reconciliations most addition, discussions within conference certain materials, over other which be GAAP directly filings on comparable measures our measures our of non-GAAP financial I’ll may their call the financial And found are non-GAAP available with call of In measures. include and to website. to

John Doolittle

thank Okay. much. to call, everybody. Greg, the you very Welcome

the pleased to just I'll a note a and be company driving the our this September I strong amazing four such I'm fully Until that get great to ensuring seamless extremely leaving OpenText wanted numbers to there of proud and able years. be I after is September committed announce news transition. high on team accomplishments, quarter. with performance Before to dedicated am in I'm a is at the and acknowledge

license Total on the annual quarter quarter million up quarter quarter millions the through last this all revenue Year-to-date from currency XX%. new from was a numbers. of exchange million dollars last references My cloud approximately currency rounded revenue XX%. from rules, $XXX impacted $XXXX million from or million and quarter constant minimum last support currency was was MCV in by $XXX the Cloud compared foreign up to currency up from otherwise. million million, year. due million XX% year up XX% currency XX% go to was constant last impacted XX%. a constant same basis was $XXX $XX on million revenue year due or period million, $XXX revenue year up $XX let's currency $XXX $XX was year-to-date. for fiscal on for up Revenue basis was recurring Year-to-date the basis, was million foreign XX%. up to and year the last year $XX License is currency up constant $XXX and and be Year-to-date the million recurring or annual from million revenue up last indicate a up compared so revenue XX% unless a $XXX in basis a $XXXX period and $XXX total exchange. last will from or $XXX XX% positively on were the last XX% XX% year year by Okay, Total Year-to-date XX%. the to revenue last constant year basis from million million approximately prior from I basis XX%. million for some $XXX up up revenue $XXXX Customer on up bookings $XXX up XX% up on $XXX revenue of year a same on XX% basis quarter constant million acquisition up revenue cloud a million constant up to last accounting $XXX million year, for was XX%. U.S. negatively or

from up XX% a last renewal up XX the million XX% constant million $XXX, XX%. up on XX constant XXX rate XX% was last XXs was XX%. revenue customer currency services low the Year-to-date in PS approximately on Our XXX from year million last to to constant year. basis from a Year-to-date CS was similar up XX%. $XXX for last basis million Professionals up a revenue on up basis currency quarter approximately year revenue currency year

million down at positively by positively slightly million. effect were license as XX XX impact FX effect positive support XX margin of The by X PS XX positive follows by XX% impact million revenue support $X.XX by customer Next million, EPS. type and million. PS X $X.XX revenue adjusted margin a revenue million for impacted adjusted revenue impacted X XX The quarter FX license positive on type and Gross Year-to-date license million the X foreign products. a exchange the due activities. last customer approximately acquisitions. and EPS. and PS Year-to-date million XX% of XXX, XX% for is positive the the had quarter million income year million, XX% XX% income from quarter XX% up mainly up of the was mainly operating XX% fiscal Cloud positive from year margin XX% margin approximately to XX% was XX% up this compared XX% compared from XXX and of year, margin up adjusted operating Customer integration Adjusted last XX% impact operating down to margin adjusted year margin the adjusted and to operating and XX last mix last X last year. last due was to slightly compared recent to support XX% reflecting year.

this up XXXX Adjusted XX.X% EBITDA income to We year-to-date up basis, the are XX.X a year. was adjusted margin adjusted compared up adjusted margin up to XXX year. was fiscal margin XX.X EBITDA XX% to XX% on currency XX% for Year-to-date XX.X EBITDA our tracking to quarter, net by income model XX%. by target and XXX of XXX, XX%. quarter was compared was last adjusted operating constant EBITDA Adjusted XX% net last was adjusted XXX

onetime adjusted seeing operating Year-to-date are at same impact activities for the the basis. Year-to-date company's XX% margin was to income share a of a currency our operating strongest primarily Operating a last year. estimated working of with after cash cash in $X.XX quarter $X.XX quarter per diluted deferred year, the our share basis. non-cash earnings and previously model. point compared compared the was that up achievement with in recent constant consolidated on adjusted our pleased been quarter XXX on but $X.XX balance a internal which And under XX% further up flow performance the This from out diluted a tax for period on that on income per within in margin year-over-year. quarter XX% XXX per on acquisitions has recorded cash, one year XX. $X.XX, the with share per XXX up the basis, up a historically quarter per to adjusted cash for would last like per the XXX highest really to cash of $X.XX of due which basis and I'm expense XX Year-to-date on of revenue. year, share account flows the bringing run quarter. our income the of our OpenText fiscal diluted or currency at currency You and compared operating year improvement $X.XX income and up In an last included intellectual or history XX% we of income with decrease share ended last adjusted the operating flow by positive offset earnings was flow. GAAP year-to-date benefit this $X.XX QX $X.XX basis a our as third $X.XX share a a basis, result of net is of Canada. XXX in net Interest quarter basis on up sheet, was items share of XXX we I diluted this to XX% net of year XXX, the of GAAP XX to increase disclosed. GAAP was XX, XXX And partially capital up property share for last XX% adjusted net reorganization XXX a a a a for XX%. was rate constant constant on

We with times. less below than our threshold leverage sheet have that X indicated a improving very solid balance ratios now are

tax to tax with acted tax a which our to December XXXX. result were starting U.S. turning impact like the income XX, recent I'd results and corporate U.S. discuss Now QX changes reform. the update of now as to law to on

or XXXX reforms. XXXX, see January effective fiscal we did OpenText to will in in 'XX tax all, of U.S. as corporate XXXX 'XX. impacts rate XXXX statutory federal XX% fiscal for XXXX in rate our and The accordingly reduce any and in of fiscal First XX% U.S. approximately tax to from reduction is not material X,

in for we As XX% this reduced tax fourth XXXX from normally XX% update will rate quarter. and our adjusted such fiscal have we we do as to the

analysis This and Approximately to quarter eight finalized corporate re-measurement necessitated our or related of reforms expense charge XX assess like and the provisional to earnings tax by of or relates The the the directly earnings we we long-term taxation subs legislation. by tax on the These non-US this US unremitted implications before the will X and of to of years of tax unremitted owned continue will taxation material to assets one-time plan. legislation. tax X or are XXXX, by subs is provided new will indirectly and paid all any US you be a payers and expense amounts December of of be the OpenText. of liabilities for deferred non-cash update over reported a as impact XXnd the tax

We're there's pleased to update, up previous updated slightly developments, will ECB as July to on effect us have effective XXX these Xst the planned. rules, performance the from in Give liability interest rules quarter update the a that IRS new new US XXXX revised rules. continue accounting quarter nothing update time XX-Q to XXX basis XXX, disclosure new operating September accrued. applicable adopt our you We'll and disclosures first under aggregate the on the the a under rules will ECB cumulative recognition ECB for material margin matter last XX%. to XXX report, estimated the of for now ASC live revenues Regarding revenue XXXX. accounting minute an model is for of we our any under we that we ASC solely has on be new just approach GAAP. reporting as XXth keep estimated approximately the from these related to adjusted by margin improved ended using OpenText is to you points standard and take integrated to you new

establish new controls will on project standard objective our the will business team with the results. evaluating effect We systems, have a and of processes, primary a

streams, to guidance measuring the recognitions for Although provide and implementation all and accounting subscription the offerings. for premise impact a limited services our on revenue revenues within the seems arrangement rules new on accounting across cloud

our and And has XXXX our updated see to our impact to raised with regard aspirational impact. fiscal results onto by system. IR presentation to for OpenText the XXXX. which basis our XX points please with per these acquisition organization aspirations integrated accounting the XXX of of is on XXXX material in stronger March business to in XX% will Board $X.XXX record Mark. and you turn March our provide adjusted in if We to confidence foundation principles largest target on our new gives anticipated of share will continue dividend will the We declared have aspirational be And This payable for a expected model XXXX. model the the updates XXXX us rules of aspirations, the with history. I for assess 'XX utilizing Directors to been We over Xnd shareholders fiscal raise than the accordingly. operating XXrd margin ever cash that it and

Mark Barrenechea

five topics everyone. Thank and on today's call. welcome, John to cover you, I've

of model to if bring today's some to and an I and first repetitive it want together our I overview with place start for this in future Even want reference. First, one principles. call business is all

we I'd annual like results selected from where discuss cash positive solid recurring revenue delivered to and record Second, strong terrific QX organic highlights growth, operating our flows.

is opportunity. is for EIM enabling enterprise update M&A as strategy new centered high that creating few general, and trends Enterprise therefore John to Businesses intelligence. intelligent the of digitalization, where platforms, well approach we for largest to their next internet. is businesses to a market our things profits. transactions Madhu play want XXXX, transition governance, Third, through a connected connected in model, on is how in and intelligent and endpoints, AI and the open short growing enterprise them hand The the enterprise and business the comments intelligent information trillion experiences, The EIM Mobile XX and the is provide other management. to series given recent X enterprises, more of and and errors, describe humans more we market XX,XXX customers over then next artificial provide networks and decade strategic and our many for large, our call are is is expanding strategic tight. over to and has businesses EIM use global. and on evolve acquisitions content first a your Internet on what and the unlocking of such today's I'll billion an automation, on In CFO and of QX market has I'm cloud, the same half our customers the second I securities, new the becoming are insight. internet speaking potentially the customer are fiscal information start is to questions. over network. EIM is reemphasizing businesses long-term and OpenText OpenText. of our the machines chronicle world value EIM G win. GXXK, networks, principles intelligent business connected call demands integrating the key lastly, discuss customer ways of world's OpenText faster I consuming

enterprise experience where more internet grown management started our We have we of from things to business networks management, EIM business portfolio the intelligence. discovery, artificial customer process the recently in to management search, content the and to and securities,

successful billion vision on Organizations very is And been XX our what expanding bring thesis, us. or depending have market our reflected market We include differently annual this revenue is customers EIM come in out and approximately with addressable in numbers. recurring addressable exclude, in market. our you we because

leading from rooted areas in examining first organic with year money, first our profitable. and now XX history that integration also growth. operational businesses We in new ownership coverage growth an on adjusted the driver, simple and We license opportunity number this payback A a centric intelligent have continue by growth. adjusted over in we now term roll excellence, that DNA. EIM XXX financial over have then is drives capture with implies after seven of XX% are engine XX five customer of vary margin all to strategic further further given deploy trends quarter and advance in of to to is corporate We EBITDA companies adjusted firmly metrics, the margin acquisitions long are model at ECD, We our This the operating it operating million, product our Intelligent drives create and after Guidance be flows. to acquire operating excellence power This margin Software managed EIM cash services. a months. innovation we looks up no can our is principle clear trends. acquisitions capital but this profile. the completed, XX.X%. model, and evolved the only Look by vision they an acquisitions. a within losing business a applying we just adjusted at is lead performance yields positive ARR M&A This quarter any our OpenText and what and this cash-based ARR margin growth growth, strength were Covisint where organic from and measured into operating to years. is OpenText Operational analysis, premise and that and business Again, period for expansion. centric ARR, XX.X% term growth model create value-based deployments introductions,

continues to no scarcity of consider. is acquisition us there Our for and EIM activity companies

have We and bandwidth available capital. ample leadership target assets,

of improvement. system Another first learning continuous and the principle OpenText business is

have we OpenText and view ourselves. from We of point learn our

from We margins as capital well large flows with high high like companies systems their performing in Roper other software cash also or deployment. as business Technology learn conglomerate, strong operation, on Danaher the from and strong

adjusted with to a start house transitioned PS from to deployment how years few a learning take the advanced power pack enhancement and is to we're to series we quarter. acquisitions rapid mid-XXs successful managed our and centric this operating view. showing EPX XX.X% business moments between to strong approach from track our XX% is for of to from as integrated innovation our EP cloud next against adjusted quarter EPX revenues on our We of has an a releases of first evidence continues license business million plus been us we've transitioned to XX the demand the a zero advanced X services. of aspirations me QX. deliver we our while margins end this. service very Let product cloud delivering XX% ARR from $XXX and our our Release we've centric land Over we here line. operating series customer by via And and in increased and long to We margin today XXXX. to

of at we acquired Our implies rate million two million of $XXX of revenues capital $XXX revenue is this tax efficient, have pulling multiples. times

but the long from zero these XX% demonstrates generate from the has cash revenues the months grown to rate, effective return of has XX self-fund to maintaining XX to introduced of cash This to million, we Over million to trailing and of of billion, that from XX free XX% $XXX and cycles. has back term adding this the $XXX feeds flow we quarterly flows not shareholders. of trailing learns last months program have years from years, to faced excellence. trifecta The at cash adjusted OpenTech $XXX months margins over that from grown Cloud XX ARR enough a business consistently tax system. our grown $X.X XX years our operating million the how million billion, We called And months $XXX post multiples XX XX annual into We $XXX dividend months all has at revenues repeats, grown cycles business on zero from cycle expanding $XXX trailing $X.X trailing trailing operational we margin improves. acquired X to acquisitions. look million our look operating not of cash business to by We system grown million. to

to today the of is simple to system, completed short, about we've X last the average we the we'll our and this business this say all the continue want fiscal to we to first of year. acquisitions point to years, want XX with over and talk OpenText together and XX how in bring view. over future. this I per Now principles win back our In where

these APJ revenue this positive last by Total of XXX is $XXX all I'm added drive increased a grown recognition XX%, the with want license earlier. strong this the XX%. Annual and five another and grew shared cloud proud revenue technology. QX this to Let for me all among calendar Americas delivered and growth of in companies delivered value, comparison. million last this ARR best had the -- rate XX in to core our year-over-year our fiscal year the and with all XX%, up fast and been metric Pacific was We renewal for XX, XXX, a and This revenue was customer everyone has Within billion QX revenue TSX on ARR extremely to OpenText. years high key to XXXX, delivered and Canada. ARR that the this in the XX%, for most and revenue the $XX record XX%, are product end was XXX Asia X.X had revenue organic success, valued contributed lines the thank to million over million year ARR million tremendous adoption, recurring satisfaction, in million for I'm company. QX. support combined up we've move We success cloud $XXX and XX% achievements, XX% is is OpenText year highlights John ARR. and business of $XXX very Customer year year a was future over humbled revenue growth up who the Japan potential company. as grew. noted and year revenue strong geographies grew million -- and roadmap OpenText. every year EMEA is is

Zodiac MCV in and X delivered growth. value, Aerospace. million year included XX% We LA have customer and million new County, or licenses Pandora premise. XX growth XXX France, in on the We Electronics, Air over cloud, deals XX% Peabody Key XX XX a million and over record Media or wins of XX of KLM, year

along journey, is station destination. is hybrid I not highlighted the a years the hybrid couple the destination, As for past of hybrid is the way

as we a PS deployment you again, of was deliver license together a AI XX% and a remains our gross simply XX.X%. high Customer revenue million difference security MCV digital important up and the platform service an As offering, choice. between managed and main is license in XX interest if customer as margin well MCV our

over value term in managed services We such organization and their XX% optimized place influenced customers a term our from originated updates, short where PS of new partner. run day. a on by customer is world are and value every long On XX% as business We higher book OpenText for class contracts. focused services trust

bar in strong new our sales channels, from support We M&A are quarter EBITDA These contributed services general our up topic results services, or operating we performed team. M&A. Operating the in was cash public and our technologies, sector. million, very million the and have Industries under field OEMs over cash partners, million ratio a inside we have well. EBITDA over Adjusted [indiscernible] XX.X%. up again three network, debt XXX XXX and our XX.X% operation was quarter adjusted ecosystem well John goods, or third and year is times. indirect XXX partners, to move ending more up covenants million income cash teams site and consumer was which included on have ample noted and XX% or flow QX financial of a XXX for XXX XX operating within We our to hand, all are ample as million flows, capacity year, on and million

of kind build year to was extraordinary like when continue onboarded that four pipeline. market year months TXS. in last years XX doubt active ago we EMC, completed an business the Covisint internal our Software for the of on last remain Dell and we each and we're Guidance There DELL-EMC, ECD and ECD with Corporation Further three the no them. plans of business is the Over onboarding our we from acquisitions,

CAGR with growth a on but ECD, in of peak growth on in integration now on plans. flattish had revenue within progress, operating with just That are ten-year onto with Syngene. few CBA, comments margin very we had model includes at at As performance. organic U.S. extremely over Services Customers our QX that of our and margin ECD Tata now OpenText low operating year leadership we ConvaTec FX, WorldMeds, on XX% we and in course reminder ECD There strategic numerous leaders roles year are XX%, support In months. revenue and margin senior XX win a operating were is our and and complete respond happy CAGR revenue we taken product and model A adjusted for optimized a year the business total Consultancy ECD low XX% to acquired total are our contribution. is internal have the year roadmap. OpenText.

country reporting from reporting managers leadership into reporting program and me, leader talent that APAC the customer have with Ted, elite James directly our and the into and senior leader assembled and various expertise of Our ECD. engineering into leadership light we

course innovation, ago. continue bases revenue today ASP are Customers platform we year spend complete with solution. ECD and and were competing installed more growth. efficiencies, rather that completing CDM for archiving cross-pollinate or and adoption We application we decision to our and and further extended can opportunities customer focus a of integration making decade With more than now more our turns to

explore of their to and fully purchased and track to are profitable, of continue well their on for we months which We core Covisint moment. remain Let me to operation. within a and and performs integrated the of more a we information potential releases first Things and them mature together. Guidance Covisint business, of XX Guidance auto for management access turn QX Both in and have Covisint the products NK. are business, simply security. with course information Guidance is and these of and markets. early security the long-term [indiscernible] leading electronic better being Internet discovery the plus identity guidance two

long-term as continue. endpoints well wins as Magellan. million represents customer today XX cases strategic annual Guidance intelligence. artificial opportunity have and the Software's on and fuse running within enforcement, law in End defense will intelligence We conference and

being AI. through XX you and Vegas and May there. center the keynote Las we this the be I of on government XX security conference May and see many and will We will there in delivering plan perhaps will on

successful contributions, John enabled in at want to of certified and a Madhu provide OpenText who University public finance I will will CFO April Madhu that a comments the leadership CFO me years company for highly I'm well great and is recognize Chartered on commitment formally operational deeply welcome CFO service over I ensuring out to his affective the CFO let continue Madhu with XX experience some Thank September set for LLP, you he Ranganathan service in his John. strategic Valley thank conclude of let our Account very period. his as set MBA experienced of a with text X leading did. Pricewaterhouse veteran, AI finance remain Silicon of some today at and software, me X. I XX, and is accountant experience global both journey an a software focus the customer Madhu his transition. years professionalism, announced deep as Massachusetts, and in of hardware has OpenText, brings to he wish and John a lastly all XX/X comments. deeply and and financial QX summary And a in businesses. his a Next let and executive. best accomplish the me India. four his company continued April the on integrity OpenText pleased to with him transition. joined until of and to EBP goals transition to

ratio margins on XX% margin revenues revenue $XXX and of it growth, tremendous $XXX times. annual record of above of XX.X% million cash net OCF was organic growth, of noted $XXX in under As million operating year-over-year QX. strong and dividend and X debt-to-EBITDA recurring hand million million, and positive adjusted growth XX% year-over-year XX.X%, a $XXX adjusted of of

QX. strong We execution have in

model. potential benefited business We the of million revenue robust some from of of -- customer also from quarter with a of power spending. share end business large FX, and shows the help The truly $XX your handful power our of engine have wins, we some

QX, is it OCF and any traditionally revenues quarter given for As our our year. in lowest fiscal we for into look strongest

this look again the our including to seasonality become usual we limited. our a we reflecting 'XX range like into any effect sitting plans QX our XXX to 'XX needless as continuous historical a us. And -- business. this fiscal are expect seems release demand have could are QX. also our as press and no The XXXX typically could fiscal you lowered our noted update the seasonally John's fiscal recap to fact limited, update script. you more and on our as Also, impact I'd And fiscal Brexit impact say, confirming software. vary little this operating noted. scaling adjusted get XX% fiscal AIC operating effect add seems over and rate the more we as expected as We timing of model, we of quarters. a our on U.S. margin of and acquisition. I the services within copy XXXX And final based We're material margin. in adjusted of in in we'll 'XX seasonality and XX% and as but the the tax the XX%, and strong We'll this mainly for range for to to progress software of NAFTA not Tax target current John coming and the 'XX, GDPR today, And adjusted strengthening have in and given bit well. for Act actually Cut historical that place comment, that from strength our huge is Jobs compliant any operations to discussions introducing quarter. new on same expect to

for government years are Canada and that U.S. Our to the have been many the in of these some placed IP is in has we a of NAFTA and discussions. the mainly cornerstones current separate entity selling U.S.

call these me open remarks, your With let for questions. the

Operator

you. Thank

[Operator will Instructions]. We now the begin question-and-answer-session.

of Huang ahead. Phillip from Barclays. go Please comes question first The

Phillip Huang

Couple afternoon. of questions me. good thanks Hi for

on some the these terms selling are acquisitions. based some isn't Obviously, of was far. easy solutions give little that Where bit more so cross on documents. your you in the sells to what what in of that new things of are recent relatively a might relationships little to I if cross wondering complex provide First into realize specifically are longer to have I learned learned are curious on your first you've what rodeo. update make. this guess for selling And of to I'm an terms could -- you

Mark Barrenechea

created for management Look, experience focus of learned need strength what time focused as customer and the of it. results. really with into that has And I document base, to our a is question, extended big bringing opportunity I comes And SAP installed that be us. from we've ours offerings as Phillip. think our service Great appreciate through some laser managed well we

for in the to guidance I as and is AI well products think security as going forensic next include wave information like our Magellan.

understanding So, QX it's I in candidly with very always of into the sales so and some about installed needs, about base. them that laser quite a customer getting growth. needs, of picking to we organic saw of the customer the focusing say engaged we're it's fulfilling And laser a portfolio focusing sales your results your think your force. the I'd force, positive best strong get

Phillip Huang

before. far you're so were versus integration you've surprises in well what expecting, terms you of planning learned obviously even the Any what

So, of differences? were your it I you to any compare if there expectations sort wondering heading was in? of sort

Mark Barrenechea

with take QX Well, integration back, And of course margin winding delivered operating of time. asset and fantastic done that XX%. I'll then the in integrations just note we're large

plans, to employment comp company systems the the that kind rewind of complexity so little integrate maybe could cost I of a letters, a the we some and if takes HR you in people. early have reissuing have communicating job days. buying all Your not time, better letters, And a done you're that

we to could side now, on margin foot model in of we we're just season kind that be the the into growth. and Right journey. XX more our efficiencies incredible team On from the ECD more low get accomplished that, to and XXs within or a felt more an months

Phillip Huang

my margin Great. to question. second as touch I want on the

that is a have visibility quite bit benefit driver imagine from the aspiration you certainly could if behind XXXX and you significant Since that behind the Your the on aspiration with that. elaborate impressive. the was I document XX%, wondering scale

thanks. So, any be color would helpful.

Mark Barrenechea

for come more scale range of as with revenues our managed very the about And course be to new automation our cost business. than faster good with Yeah, renewals thanks Well through that question to it's our out visibility. and services Continue scale well. in business. we that going scaling It's to indirect cloud around continuing and business. automation, confidence and more

to doing as you indirect as to want revenues continue force our cost John to anything well add. I'm through lower on kind this scale looking business. the in channels or more automation organization support scale sales the So, and

John Doolittle

with out it's and so agree programmatic the Yeah. future. increasing XXXX into confidence what will gives reducing and line talk continue I progress, we every model will scale we and OpEx the the on P&L in do and Mark when that locate laid license said seen as tremendous the margins us I have it's a Phil margins a Mark, that about progress and that we and PS continue

Mark Barrenechea

And and margin that adjusted I QX adjusted XX.X% EBITDA. gives look at operating confidence the organization and XX.X%

Operator

Financial. Richard Tse question Bank ahead. from National comes Please of Our next go

Richard Tse

a this sale So, previous press kind mean referred cross this of to to you year are as on lot Does year. release when of your organic opportunities up years growth? sale specifically that relative more a focus kind focused

Mark Barrenechea

I had think positive can we the we of quite short scale the and yes, In candidly business M&A answer organic prosecute but growth. strong walk deliver think opportunity, with growth. is continue gum organic into again I the QX to

the and sales stability great force. have We

We have greater scale.

topical from with We of is great offerings and EPX new which have EPX, security in interest introductions Guidance. our very a new cycle product Magellan

multiple have growth things I think complimented be [ph] do with lead organic we will I'm to look M&A And the continue simultaneously. driver. growth. So, to

Richard Tse

impression And that? us uptick initial you John of getting can are you on the give

Mark Barrenechea

AI. Sure, a we both proofs the are our sure running of we and in not here are installed last base precise learning numerous count we I'm lot. And in customers won quarter analytics near concepts and XXX but in

win are AI into EIM, want we where workflows EIM. want around into is and journey integrated play and it think and deep learning to from everything used lot service compete to this customer cases where is We new field we optimization, where integration from a to we want to

filling will to standalone kind suite. and but AI. and want from over looking base We and the not for platform content go trading business the are entire those. we out want network. go We some for We our installed want to entire million to out content ex win of We of network and win out our commerce documental AI partners and wins capture go of

we features Magellan whole this very state learning. in in a of So, it EPX wins for is wave new had be a our of QX. wave to has going first for steady progression. of But

lot have We concepts of going a proof of on.

our it automation on and through to eventually long-term where and is customers the learning a way we're philosophical AI continue in flow integrated to for is need our have up very key deliver product its point the we going I think what Our to very into revenue. benefits

Richard Tse

and just now Covisint And then that on ECD. thank you're you. through in helpful That's Guidance,

which end of fairly scale the synergies you've loaded is transactions With sort those the loaded. or from months back from end over subsequent them evenly front acquired or XX that

Mark Barrenechea

sort even I'd of linearity say there. it's

Richard Tse

September can't John, Okay. question And then last to what to doing you're I ask hoping be in going there?

John Doolittle

what going Richard, through next of to terms on you transition there and few sure the will am my job lots all. think later making is things for I be an in list I on of focused then the but seamless a update give totally I the plans to months for April September. are

Operator

BMO Thanos go-ahead with Please Our sir. comes question Moschopoulos Capital Markets. from next

Thanos Moschopoulos

the color of came look so in and you can the at Hi well some obviously above what on revenues guidance strength quarter we if you drove Mark provide good sources afternoon. Any for out? provided it you may seeing anything it on Was macro call to that great environment, that. you Is the just there was a can specific maybe color provide front? be initiatives. the their first cross-selling

Mark Barrenechea

Thanos. thanks Yeah

think handful things. I of it's a

one that acquisitions Our was And well. performed contributor. very what big

in Second was that is organic so of EP interest customer the execution. just in series, kind field demand. focused very our core And its

helpful go quarter. performance those are organic growth. some highlight FX. two a any in had is and force given our on cycle. would to have help things, from Again, things performance But and acquisition execution focus We I product larger sales certainly handful of we acquisition So, the deals and

Thanos Moschopoulos

Okay.

over the case will there seasonal strong that But we the was for given mentioned or QX as for drop typically a weaker quarter typical look should reason your year. that. than you is Now it larger no coming to think how be quarter seasonally this

Mark Barrenechea

and I'll And state that see my our typically our QX to prepared revenue. in seasonality. usual historic in we strongest is flow that expect lowest remarks, cash quarter

Thanos Moschopoulos

seem target. the prevent should you're given this maybe factors margin to margin full quarter, that of just positioned top mitigating that? performance Any we one, it end that well last one the aware might maybe your And breakthrough that would of year

Mark Barrenechea

remarks my go prepared will our I confirming rate. to to XXXX and have back

John Doolittle

in Yeah, we're only second quarter.

So, we're out. we with the going stick put to range

Operator

Please Stephanie with comes Our go ahead. CIBC. from Price, next who's question

Stephanie Price

you about seeing bit for out landscape ECM you're what the in of current and fleet the competitive Could there competitors talk a the specifically. terms

Mark Barrenechea

have I Yeah didn't prepared sure, the Thanks anything question. in remarks thanks. for today. my

the I'd have So, question.

beat content platform kind piece number business of campaigns customer the remains a from that remains through and competitor. center campaigns the our of fleet the in IBM we've a show as digitalization value from IBM study. them, kind of network to And of run and seen How testimonials, On series EIM their you've platform. our Managed over our kind macro Services. and AI one then It's how-to

more wave of We a our I look vertical at also think vertical is -- we competitors, others. evolution very more And closely and next a and have capabilities. Viva, like iconic this is

construction out. new a engineering module have strong We and

though a an some of give there. against core life and now feature our core, win we're me still days release which of like We And latest new a example life with pack have a kind We release competing filed workflow of is press on of put sync QMS ECD. pack Box. module at of release Box Box but new not really latest look through we there out midmarket wins couple collaborative a out pharmaceutical a let ago Box. in is and that's you the a of share a see with competitive in collaborative if Box a kind clinical win pack. against from will are as workflows inspired and you our of out company. And and against trials biotech and I expression And

to it's I open cases up for new after. of going go set to used and us think a workflows

Stephanie Price

ENC. terms agreement then about we reseller opportunity? talk size in that the hos incremental of thank you of should And announced you. you Great this that? some Can Like think

Mark Barrenechea

companies, deployments. take that management info platform. the going you archive. more excited into if relationship. that platform initially on so from information management installations are lifecycle Yeah. corner turning demand lifecycle And will complex build of to large the tight what will a sort insurance hardware we're about services, typically Big buyer to nearly of larger content And financial environments integration a sort to go We're government focus these information

it's I'd say So, of and to strategic platform businesses. integrated that. opportunities really, going in start build view of very we're from more then the larger And kind larger where that's

Operator

comes question next Our RBC of from Paul go Markets. sir. Please ahead, Treiber Capital

Paul Trieber

the number, I then several that? acquisitions financial you to how give acquisitions wanted we billion the And particularly to capital in deploy specific $X us for generally make generation? much. can years. very update over just if to cash Previously, flow should to free light speaking think leverage attention allocation gave an capacity in a of and turn Thanks our for Do you moment. you outlook have an

John Doolittle

EBITDA and obviously of point X. and from in flow of revolver. covenant our a cash on really accordingly no a below And leverage constraints terms operating ratios quarter to coming our great bank view dealer Paul, down

conservative of capacity. sheet. well are then want and kind a of any have We we there balance as And a obviously so maintain have I threshold below we to said lot Mark

ratio come capacity and freeing each month. up down You leverage have which seen the has every is

a And so, and as have Mark got conservative still said do capacity maintain in lots balance acquisitions sheet. his we of script to

Paul Trieber

that pillars you still do are And deeper expand Are those you EIM. any then to in overtime? or the is terms -- go see opportunity you -- pillars outlined of pillars there to the started broader M&A within among it the strategy for within have

Mark Barrenechea

of with across EIM. will market our I'm of you our the definition Paul if visibility breath very pleased

be ECM we internet process or our been things have or AI business business very and management, of have We network security just CEM not successful in our now.

much TAM is it's billion. So, about wider a XX field, playing the

the in berth So, course market wider it's kind of us giving of you M&A. will, for

aggressively as continue we within verticals for our say as well, us. to species to opportunities while fill can. very strategy and of is white opportunity. would and We like I vertical EIM would as while geographic occasionally look long-lasting space at we definition want But We species

Paul Trieber

you more seeing guess in And point being customers to are are CECP messaging EIM I versus than think a around the decision now more EIM the from about beginning with strategically a then or controlling so someone related to lot that for is EMC, of you solutions? universal owned a year market point the -- buying

Mark Barrenechea

supply And is Absolutely, they system who more customers this digitalization the managed services strategy coming why we global SIs, security. information be a broadly can network TCS, it’s Dell a from chains, They are in content Deloitte, information a them. have technically point. around such obviously system and global everything are looking ETSI implementers may business behind are to that EMC, in not but fantastic at huge more platform, analytics touch which echo Accenture, strategy, as

but is we ability to doing partnership. and need there more in of will our a happening an lot also a in higher that help GSI goodness organization, in So, little wider thus solutions our sell

Operator

The ahead. [Operator next Paul go question comes Instructions] Steep Capital. from Please with Scotia

Paul Steep

Mark you can bit little a talk just about field force. the

period time have exceptionally long at OpenText. of than I What's think there changed the stronger and here it seems stability a I field like think we ingrained seen remember in an execution organization? can you now a is the much in do

Mark Barrenechea

pleased organized. with are I'm think how I very we

his have professional professional services leading in services buyer see and characteristics. services. We unique And that’s [indiscernible] from in very a results you the just and stellar managed QX

together to premise hunters for with in renewals and on lot under experience we those the have of one and completely and renewables from James that's leading decades and looks organization our two things cloud us a McGourlay almost like one James a We all field. have separate brought in order organization, renewals run McGourlay organization. We we here, the

we QX. and structure has going acquisition hunter his driving cycle with helped X had and and look James most contribution, a in a great leadership all I that an got together have their leadership revenue Ted, [indiscernible]. organized the we think services structure strong the Open the Tech executives to I point But key by org of product lines, importantly But focus organizations of and that Simon renewals came at I'm we around across where and veteran, think led James view the Ted printed. We a managed So, PS and our is organization Harrison. and

Operator

go Raymond comes ahead. question James. next of Steven from Please Li Our

Steven Li

any initiatives Hey the of dig thanks. go-to-market the some to and Are progress SIs deep Global talked Mark, being a little keen on just with wanted you worthy? typically past. about the with you've in SIs. the

Mark Barrenechea

Steven. enough Yeah fair

to You've culture. get approach got a in your partner

kind can't a and You out. in bounce

have doing at a partner Patty staying long term great And to saw that, real Smith Enterprise mentality. a have some You probably all we build you over in place, and the and put here we're now who worldwide for alliances power us. leader World, partners leads

SIs, Global like EMC, value-added resellers, Dell sales. ecosystem TCS, our Accenture, Our partners, and Deloitte, AT&T, OEM SAP, CAP inside our

in would breadth, Specifically, right and opportunity. ecosystem TCS to go GSI get I of holistic But a on stuff to point in where organization, into more the GSIs it's momentum and way our lot have probably view our side, our a partners Accenture geographies. the we us to strategic from wider

Operator

Mr. to closing back for Barrenechea today's This over on concludes questions any hand now call call. I for allocated remarks. time would the

Mark Barrenechea

Alright again working John, through once service for good. together to OpenText. coming very the thanks forward to your And over and incredible months look September.

today So, questions. thank joining your Thanks for you. and for

Francisco be This Goldman there. quarter, and in on see hope we to XX Sachs the attending February you San I'll conference

for call. time thanks This So, your thanks everyone, today. ends today's

Operator

call. This concludes today's conference

disconnect for a may day. Thank pleasant You your lines. Have you participating.

Open Text (OTEX) 31 Jan 182018 Q2 Earnings call transcript