OTEX - Earnings call transcript Q1 2020

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Operator

Thank you for standing by. This is the conference operator. Welcome to the OpenText Corporation First Quarter Fiscal 2020 Conference Call. [Operator Instructions]

I would now like to turn the conference over to Harry Blount, Senior Vice President, Investor Relations. ahead. go Please

Harry Blount

and operator, everyone. Thank good you afternoon

the Chief Technology today Vice and Madhu OpenText and is and Officer President Ranganathan. Officer, Financial Executive Chief Chief Officer, Executive On our call Mark Barrenechea; J.

where which remarks, today. call Investor and available have direct a supplement This approximately we shortly prepared some I last website section have will followed of like question-and-answer prepared will a by with our minutes, presentations the moment would two investors Relations that be our XX thereafter. to session. a replay investors.opentext.com, posted take We to will remarks

First, quarterly OpenText and second Business strategic on seven. factors results, specific Presentation, Financial titled information includes and quarterly and financials page number our the overview titled Results, to XXXX updated QX our FY our Investor notably,

management Technology X and NASDAQ Bernstein with Technology New XX out San X Media Markets in reach to and look and Europe, Conference on XX XX for on Credit Conference is The to December US London, association Conference TIMT meet Canada, York, additional on Francisco. December and RBC Conference IR to team Morgan in held the Scottsdale, in the November in Innovation X we me The information. on Barclays free Conference in Global the Investor Stanley Please in Suisse November also TD New December Technology November Summit or throughout Toronto, November and December, the and feel Telecom XX Capital in following pleased the with the York, investors In the conferences. Securities and Technology attending on forward to OpenText on

OpenText call, Please the this Harbor of course our I'll of statements the that now the conference proceed make that contain forward-looking during And may to information. performance statement. relating note future of Safe with we reading

While today. differ in projection from forward-looking statements conclusion, the made forward-looking current could judgment, results materially represent actual forecast statements our these a or

drawing in such any were factors material applied statement. Certain assumptions and

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

call discussions financial found other financial public certain comparable conference our any GAAP directly addition, on our include non-GAAP measures most measures to of may their website. available which may are filings non-GAAP In reconciliations be materials and of measures, our within

And the call with that, hand to Mark. over I'll

Mark Barrenechea

afternoon everyone, Thank and you, Harry. to A for thank call. today's joining good you

participated month additional to your we Annual last for in Conference New who me Investor asked vision listened, you York start those OpenText stronger in the with Let strategic plans operational team an and presented and appreciate feedback, leadership and our We City. OpenText. thank our for,

and is our our day delivery. Our planning trust customers, gives and is confidence us operational and strategy every that it with earned our

retain talent hire, hybrid help and strategy diverse, customer deliver cloud information the continued the Day, best, companies the purpose-driven and in This a relentless focus laid textbook of is year-over-year is excellence. announcing led perspective definition continuation team's and cloud and growth efficiency best We of out most Information experiences, during of workforce. develop advantage, platform Investor clear a on of long-term strong to consecutive by commitment the The be durable. year-over-year inclusive Enterprise quarters for for consecutive constant-currency, leading double-digit are their XXth results a our growth. quarter to the operational Management, we growth and today QX and our that XXth unlock continuous our is excellence

Enterprise In strategic Management today's a digital mission Information platform enterprise critical era, customers. and is for

revenue margin margin acquisitions, value recurring innovation, We playbook That a EBITDA, products, coverage, includes disciplined Investor and also and creation with structure out cash that future customer accretive during innovation, sales gains expansion playbook approach capacity strong reinvested flows, above to dividends. strategic includes and for Day. customer-driven growth, growth; capital laid XX% adjusted made

single-digit XX% low growth, In EBITDA billion for growth of and addition single-digit of to that constant fiscal to professional margin, billion customer business with EBITDA additive flows. business value operating plus and we year-over-year XXXX growth, XX% a optimization high services support year-over-year continuing and XXXX our fiscal creation playbook, profile to -- $X cloud purpose-driven view revenues, adjusted strategy cash and presented continued constant for our included constant organic M&A and low license longer-term to aspirations expand $X.X margin, single-digit to

of team The The start an annually. numbers. annual view fiscal highest is QX history. OpenText we it I'm business, with in our to company's revenues you we $XXX business X% and XXXX, pleased million delivered revenues view ask annually, growth. the And and constant-currency approximate to Total the with year

We revenues, also X% cloud million the by Annual year-over-year, had driven up up recurring $XXX revenues our representing of $XXX XX% revenues within significantly positive which organic XX% quarter. increased year-over-year. million, were growth by of total

up year-over-year. $XX was Customer [ph] X% was up to constant million, support million, X% to $XXX was license CS

X% up trailing are up are dollars to XX million. EBITDA $XXX X% and to month million cash $XXX flows adjusted Our

X.X Cloud. of that has to the over digital and to partnership largest million upon Identity the some has one the the clubs, now key of expansion, Club selecting a since Group into XXXX after May multichannel Department manage recently all OpenText AAA their on Let create used The Cloud. OpenText environments and Having members support of represents notifications, Benefit depended AAA growth AAA, XX in expanded with further customer Management UK has million identities year, to and Access in Work OpenText Auto and is spend last OpenText the wins me successfully for modernized a quarter. now within OpenText the UK the software Extreme System. Extreme decade, Pensions moment DWP The over

one, provide seamlessly to I'd and and Deutsche and their like OpenText transform highlight and and is to for complex services and the data German ability visualizations financial Magellan, selected multinational all businesses. the lending graphs Bank, company to Investment tables charts compelling a Third Bank diagrams to

I consulting solutions Extended leading their new for Jitsugyo with and to firm offering approval 'd like marketing a pharmaceutical Daiichi ECM OpenText ability creation and just review combine trials. business Japan due services, unit, customer SAP manage selected of to to manufacturing, their that its complexity highlight and which effectively pharmaceutical

dominant with the support in its Media distribute, multimedia also manage, a for resonating poor and providing security areas the in like of themes cloud network the ability to mobile lastly, is OpenText strategy Red high-level And connectivity, Cross, to with and International a a retrieve the once capture, I'd expand are with to in here, our workforce hybrid little Management store, the archive Switzerland its assets But selected shift very the cloud Committee customers, Geneva, on based bit. XX-year cloud within that is enterprise migration confidential while assets. and hybrid software,

our mean consume to providing hybrid as focusing cloud, license need and anywhere both about subscription, running somebody to it's on anyway. By anywhere, it customers. our consume all for First, we or integrated, that customers it's like consume and this and customers run allowing consume we by and need, and on choice Run completes else's say; anywhere, anyway. to completing cloud. off-cloud, anyway, I about is the cloud. the is off-cloud 'd mean By Combined,

EIM by or services Second, called consumer the platform managed OTX. managed offering compelling enterprise-class by Cloud and it's and our the and consumption. for At customers World OpenText direct agnostic, our third-party OpenText, Day, solutions and seamless mated by EIM Editions about a is user themselves. in Enterprise generation the we modernization, the managed cloud latest software or API Additions a Investor detailed experience, available is Cloud next CE to OTX platform customer

CE delivery approach. We're this QX on-track the year. to OTX a and of cloud-first in is fiscal

We modern into world's cloud company, the a servicing to information largest governments. need the have and transitioned enterprises successfully

Let company is QX a strong the is and for QX. QX quarter historically remarks me turn our my outlook favorable. to

macro uncertainty, a we in have and material spending due related Europe trade not the prudent to to regarding seen China steps especially any factors, our slowdown tensions. impacts environments to While manufacturing we due taken to to have due Brexit UK, due business in customer

is XX% the business profits revenues are States. located our solid. US United in and of Our looking Over

an caused dollar also this US The short-term OpenText fiscal FX the FX of in to revenue to that more challenge. the revenues other has QX, Madhu negative a FX an headwind. a impact currencies total XXXX. and recent expect most revenue a $XX very is fiscal revenue recall I'd XXXX, remains will just like and now impact million get this revenue was and In in million not negative strong a fiscal detail, QX challenge, compared to XXXX, into $XX industry This we $XX million. impact was in negative specific that a

QX color. additional some add financial me Let

within high QX have we expecting EBITDA these negative quarter. this customers complete to infrastructure complete Liaison integration revenue flat includes the a sequentially, digit and are two increase adjusted $XX as of the Catalyst we'll dollars, operating Low-to-single of revenue FX We expense impact. acquisitions million of sequentially, and employees, QX the growth, and single-digit integration

in quarter for presented second these investor is see, QX a OpenText outlook strong is quarterly materials. of and Again, the will the You our section factors quarter items favorable. our for seasonally

the with you to before call like turn Madhu. a leave thoughts to I'd key few over I

of year-over-year our our and continuation in company, strongest history long-term and point strong We execution, to OpenText quarter durable the and revenue of constant-currency. delivered planning growth revenue our data business. nature results First, of are QX the of in the the a consecutive another the XXth long-term QX

by in the recurring X% currency, Second, X%. adjusted expanded we growth constant places. in dollars growth XX% places EBITDA in our This all the right the and all revenues, is Cloud, in with had right in OpenText growth growth

a to quarter approximately our million revolver, we growth supporting month total we strengthen. -- cash XX our strategy. ended is approximately X%, balance billion in the sheet undrawn had $X Third, continues up $XXX and OCF Trailing with

and ready company continued times. customers, globally. Our hybrid EIM States debt all the trailing capture to adjusted our positioned in scenarios. the EBITDA XX United $X.X our net and of to billion, adjusted just is leaves at the well X.X numbers adoption debt is is share The dollars billion that cloud two by we're EBITDA Fourth, month for $X.X dividing ratio, net our both

share gaining We're on content services in earnings. hedging FX with to We are OTX, and additions the our leader cloud volatility structure market balanced that networks. cost on upcoming our business and reduces focused natural in

sheet We are and strategic acquirer is and disciplined balance strong. patient our a

durable XXXX We times. executing are we long-term fiscal while up last aspirations, to outlined delivering to short-term of month. both that Day, is OpenText our targets at just Investor and our in confident in XXXX fiscal down

Ranganathan, the to my to turn Officer. Financial over With call Madhu? pleasure that, it's Madhu OpenText's Chief

Madhu Ranganathan

today. and hello, Mark you all you for us Thank thank and joining

first focus the expense prior management balance operational prior on all reflects sheet revenue it to XXXX, similar our foreign our of of the impact references fiscal of the of the and and performance, streams of and you And same our across Also the earnings. period quarter to release, will build details my exchange first was turning our see meaningful. Our reminder, strength. fiscal quarterly and FX, to as millions the be quarter In in continuing in entire the press strong fiscal the XXXX, to compared a will again quarters, USD results, impact in during year. our once P&L,

a per per share, on last X.X%, $X.XX the share, a So, up On revenues was a let for impact to during the There was share constant-currency per million $X.XX quarter up for earnings. year. from and earnings X.X% the revenues the period for revenue up total FX million quarter, earnings $XXX.X quarter me basis. $XXX.X were the GAAP start share same per million, $XX

and as the me technology of reasons; income. depreciation second, accounting outline revenues well higher purposes, quarter, completion for the first required period charges, all, this assets of interest as let And and and amortization of higher lower certain restructuring

an Our up due to was lower This of $XX tax year-over-year, in quarter. XXX%. led provision reversals also the million during increase certain to net income

was $X.XX year basis. let last was $X.XX for constant-currency details share me on XX% quarter diluted The And, from Non-GAAP $X.XX of geographic with share quarter services, XX%, annual recurring goods, services, $X.XX share technology, the up XX%, up earnings APJ per sector vertical and our XX%. results. consumer split contributed are total EMEA healthcare our and a other on per the for same share now business financial basis, public you first The of of revenue. of all the revenues period in main sectors a per Americas

for percent cloud-based or as annual to last increased revenues similar the a $XXX.X inclusive constant-currency for Our quarter the year, of contribution seasonal were X.X% up of Catalyst revenues Liaison recurring first up and and on recurring million from basis. and our quarter, Annual strength $XXX.X revenues X.X% XX% total a our quarter million, reflecting acquisition.

$XXX.X were $XXX.X a XX% on particularly X.X% for $XXX.X up revenues were support X.X% up basis. cloud strong up the quarter, on million at quarter of Our million, constant-currency million XX% revenues or up constant-currency in Customer a basis. $XXX.X, the

up Our was customer support slightly rate XX%. to renewal approximately

for X.X% up license was on Our revenues $XX.X X.X% quarter up the basis. of constant-currency million $XX.X million, a

revenues up quarter, X.X% X.X% professional for $XX.X XX.X%, the were million services constant-currency Our on down a or basis.

to margins; points for GAAP year. gross last the compared Turning up period XX.X%, basis to was margin same quarter XXX

our margin adjusted primarily Liaison to quarter basis XX in Catalyst quarter, up was XX.X% QX was Catalyst. integration the on last from down gross for from same Cloud in quarter, year. margin last support margin reflecting of reflecting XX.X% and points year, Liaison. the the during adjusted impact and and our margin down Customer Our period and QX to XX.X%, Also, was last for year activities basis, during compared an due XX.X% dilutive XX%

Our was during license XX% the margin QX last quarter, year. in up XX% from

Our last QX in year. during margin up was services the professional from XX.X% quarter, XX.X%

$XXX.X remains $XXX.X constant-currency was to Services or Professional this million quarter, higher million, business for goal X.X% Our a EBITDA Adjusted on up margins. basis. up the X% optimize year-over-year

in XX.X%, well to margin to as QX basis Catalyst compared XX.X% seasonality was acquisitions. and of year, Liaison EBITDA continuing down and Adjusted the integration points XX reflect as last

as million a up income reasons period in of increase was when Our discussing GAAP year, result in mentioned primarily I for from quarter earlier, last the net again $XX.X GAAP the EPS. year-over-year same the the $XX.X million,

on was constant-currency year Our the quarter in X.X% adjusted a from or net X.X% up income $XXX.X million, million, basis. last $XXX.X up

XXXX annual our fiscal an the margin at look continue XX%. basis. reminder, on model important EBITDA to range It a to for is As is target adjusted to margins XX%

primary to quarter; will generated million I were the Turning year. here. outline $XXX to for operating reasons, million last cash There we the two period flows in compared $XXX same which

license receivable QX, of QX versus AR cash operating QX strong in fiscal $XX And in fiscal stronger million. in $XXX we given in opening quarter strong performance annual accounts Our lower and X% XXXX and QX the QX saw in or XXXX collections QX, even resulted both million XXXX during by XXXX. flows FY

XXXX we to carried addition, fiscal higher QX In we acquired as Liaison expenses into during QX XXXX. and Catalyst XXXX, compared

the XX with days efficient at two than to days, operating lower same Our year, fiscal framework is compared XXXX. by more QX quarter last DSOs

to OCF achieving are on framework. We XXXX, track fiscal flows to grow cash automation $X into fiscal operating continue in and on billion efficiencies remain working based human we XXXX, our billion apply and in capital of $X.X as focused to

year-end to quarter compared $X higher. Turning with we XX ended sheet; to X% or $XXX approximately in on million the balance cash, of fiscal billion June

X and was ratio strongest time. ratio our at leverage and two well in net consolidated external covenant Our X.Xx remains years, level within

and as our we vigorously In process continues our The matter, phase. IRS of remains in terms resolve position. appeals ongoing defend our the we IRS standard are strong,

credit the from our million, mentioned $XXX we up to our have earnings with the growth OpenText's and XXXX, revolver, This from maturity our strategy. aligned to revolving amendment capacity support amended increase to five-year the size is $XXX facility capacity release, ensures as to ample and with million On total restate XXXX. in

Canadian universal of Canadian September release renewing effective Under will is you shelf press On our shelf in a note the renewal our timing. shelf and but we previous months, in are that course ordinary for part as prospectus our shelf, expired XXXX. XX also prospectus rules,

last a with since the aligning OpenText shelf. renewing with our Canadian billion August capacity during filing simply under XXXX. growth are $X.X again, We And

dividend dividend XXXX. we per of Today on XX, payable share announced December a $X.XXXX quarterly to Turning program. our

reminder, As distributing XX operating of our is our XX% rate on flows. based a trailing approximately dividend months cash

fiscal model and Turning aspirations. operating XXXX to long-term target

Our fiscal XXXX target model unchanged. remains

remains XX% of included is model investor this with remain track flow reinvested our $X long-term meeting our the future aspirations. website. to XXXX our including long-term for reminder, XX% presentation sales product, a our growth, IR capacity aspirations $X.X We range, coverage. fiscal posted the fiscal cash into to billion XXXX As in margins business above during on QX EBITDA, to and operating back adjusted on billion

the anticipate for as highlights financial to summarize would on well reiterate me QX. and let I quarterly business fiscal X slide Mark's commentary, refer So, and back that quarterly upcoming we you website. in factors our IR as our

we As to FX QX million headwind fiscal was look today, are our $XX approximately geographic currency know the annual expect headwind the that in business, revenues XXXX. components million. $XX also we and at rates QX well where We're we million FX foreign as to headwind be as also in $XX for expecting FX of

expenses be Catalyst QX to low to mid-single-digits adjusted and our up, to integration expect Liaison. of the year-over-year We flat be as compared dollars in complete and in operating we QX to EBITDA,

in to in strong seasonally focused QX line our QX our So, progress long-term expectations came summary, a continue and and targets. results on with XXXX and fiscal remain we into

execute have balance We growth pleased against with our how are further strengthened our sheet we total to strategy. very

you, finally, team to and and thank the deeply for their And like I'd confidence value shareholders, greatly we whose committed OpenText efforts. our trust

I would your now Operator? the for like call to questions. turn

Operator

Barclays. [Operator first Instructions] you. Raimo comes from Lenschow of Our Thank question

Raimo Lenschow

you're a I of good And license really have two terms and performance, numbers number Hi, bit you one good. of congratulations especially talked really end Could the about looks outside in to little in follow-up? moment. overall bit demand -- the great then uneven a questions. start. QX, you what little the Mark towards seeing this talk a I quarter, at US, have the

Mark Barrenechea

QX year calendar question. the it's thanks the right strong us. XX quarter it's for And October, -- end end our seasonally and Yes, in to of our mean, the I is for We're QX. of days

to into and QX, my are Europe headline, issues new just and into I in plant, we you're US in strategy if which basically a The for in -- -- German have China strong coming themselves chronicled your we manufacturing, in way your things, feel most migrating if point is I despite pretty Most fair another will, at the China, have the year is on similar amount ending this a you seasonally capacity, The and said our fueling normal is remarks, you've a quarter companies companies well of think location. confidence. of as with servicing confident see set of and manufacturing pipeline there well more Asia-Pacific. demand, of I for sort you're prepared Now, strong. you think in

if I'd as say, cost, know supply a landed chain. like to And can't you you don't your plan

So, I now. think their most landed right folks know costs

more than I think we've XX bit it going to confidence ago, defined it's a gotten gives days us that -- along able the been what's our -- strategy and So, more defined, the into world's and that build QX. was

Raimo Lenschow

lot a the okay. That's the like there decision last like us couple around out should M&A days capacity the Perfect, you look helpful. And was noise driving all about have, making. what's micro with of you your that criteria What there. really but for? stuff talked are again really strategy of and remind Can also then you maybe that we

Mark Barrenechea

Yes.

our the me any and team. speculation. uniquely this is the but the because it's let uncertainty, and think and address provide of there rumor important clarity So, very very and you is don't position, first to respond in kind can that We rumor always well did we expect we if of that from me I case, which part, speculation,

it rule, in thing, so to team as So, press did that from me can clarity, but you to provide and rumors the it respond we expect we release. always sort don't and our important, a and was of

undrawn strong changing cash that XX look our basis. self-funding cash, of value our back with of to and in deck M&A EBITDA net you our of on we've sheet our and the million trailing debt-to-adjusted In playbook, used cash billion we our compared our flows, slide ratio over a shows generated is times nothing been strategy. our first Look, revolver, like have amazingly four $XXX balance month could M&A X.X X the of for months, in value and covenants terms of is playbook. investor XX of I last that a if self-funded $XXX just available million have nature a

in volatile to a and not and get fiscal is we're sheet and much and strategic capital. going value deploy valuations strong. our fiscal expect changing deals a in in patient The capital and We're remain better patient equity balance in allocators And and we'll we're this strategic market, decline playbook as position. XXXX be -- of done. I buyers do But, year

Raimo Lenschow

you. perfect. Okay, Thank

Operator

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

Richard Tse

you. to and Investor laid XXXX, I in a At of think recent the then your out you base bunch thank XX,XXX. wallet Day, objectives share penetration Global for Yes, the increasing

of performance going share either forward, today be the to those objectives? or going in to So, are you on able metrics terms

Mark Barrenechea

the consideration. Richard, question. under take thanks that We'll for

can I an think Global and at a annual least, think, good I the least more bit it's on a provide we XX,XXX. ask basis, insight into

So, about leave it. and we'll that think us with

Richard Tse

give great. to standpoint? with you of better the is the what are us valuations like today, acquisition then respect I maybe from And sense environment the analyst. that Okay, the guess a Can from question last previous

Mark Barrenechea

side Yes. bent, it to and way. -- is I'll back valuations, where curve side month turning I of felt back the just in still sort it the some valuations of of on New made the feels over curve in had we're peaked the that York, if comments just and the, as we're last re-emphasize just

our more but push progressing. stages very on I -- data pretty interest -- negative into of to top deals of still up remains pretty the side to on rates think and pipeline we've right, funnel if it putting to or I other peak not money the tracked some you shows Our disciplined Counter people feels active on volume banks, that, OpenText engage putting data activity the the a is mean work basis inexpensive, like very of valuations. money will, and in

Richard Tse

in single-digit your a prepared think referred it revenue, you going QX I Okay. sequential. quarterly to comments in you And be is one on basis, increase and that just to or clarification, QX think I said

implies, year-to-year. I presentation, it your of sort in you clarify that? think Can it's

Mark Barrenechea

that are Yes. My sequential. right is Yes, QX they're comments team? -- sequential to QX.

Richard Tse

Thank right. you. all Okay,

Operator

Jester of Research. Our question Citi comes from next Daniel

Daniel Jester

for question. Thanks taking my

sticking willingness transaction Just terms in the have larger do to of of a you into should historically? revolver, M&A of maybe the than of read desire your a that bit with anything the theme upsizing we or little

Mark Barrenechea

Thanks as that here. the question. Mark commensurate for at us with Daniel, renewing, and transactions is it, in the anything year small all wouldn't and the with in I'd made small, like at shelf usually our off that playbook I we just No, medium the are for the kind read but into we market our are to we of changing of as more opportunities it our say -- large, into size. historical wouldn't good are -- of larger looking bit there I just deal kick need or revolver a sizes, size, store if -- of so, the timing read the the shelf, and market strategic

most invested We continue capital. company the at important return a it's the yields right value our as the things, got At be right to on two it's right playbook, metric. return of end if measured by the line Relic the think we is day, that price the of

Daniel Jester

we're that Catalyst, Thank the Liaison XX bit a comments follow you. The as months to that it sequentially, and up past out some be or months XX those just And then of of margins something acquisition. you called margins. of might a headwind on integration on on

just little of see we're a over quarter should incremental bit the there, couple is about So, and of next us going frame last to Thanks. help maybe the quarters? this that cost how we thinking maybe be where

Mark Barrenechea

these insightful and with thanks last they question. This vendors our the integrate -- are disaster and us one they with Liaison with businesses, and redundancy, cloud servers cost come vendors Catalyst, systems large structure. storage, both come one infrastructure, from environment, networking of from to is structure third-party a migrating recovery, for to cost they Yes, quarter David, businesses and come

is that quarter work. this all So, of last the

Liaison end complete by the be with and of will we So, December. Catalyst

So, [ph], see last of we're this in and the we're little be quarterly expense will that the going we'll that complete, on and to factors is expense, quarter well in work our quarter have where a that's that track. but

As takes to there an in out acquirer, to months to of Many within some get XX we XX months. synergies XX get that months point acquirers, it to get other XX rapidly synergies. set to months. We

with and structure and Catalyst Liaison of starting be January. we'll cost integration the the end we'll new by then December, on be done in So,

Daniel Jester

Great, thank you much. very

Operator

Thank you.

Our next question comes Capital of from Thanos BMO Markets. Moschopoulos

Thanos Moschopoulos

Hi, afternoon. have the happen sequential Madhu for would revenue on FX you that had good quarter? the to impact

Madhu Ranganathan

impact, yes QX. out We in $XX approximately called million I sequential The do.

Thanos Moschopoulos

impact. thought that I FX I Sorry, FX rates QX the relative that year-over-year was rates. -- a talking Was impact am about to QX

Madhu Ranganathan

impact, is million. it around year-over-year It is sequential Understood. impact and $X the think I

Thanos Moschopoulos

I'm doing math any then sequentially I And adjusted secondly, if $X QX million. the example? bit messaging, cloud little a on an correctly. that? there for with seasonality transaction And at respect FX it look if your basis volumes Is color BXB revenue, some I think on may have to dipped

Mark Barrenechea

currency In recurring cloud revenues think total reported currency, at year-over-year I'll Thanos, X%. constant that. in at and up Yes, I look as up take revenues XX% and I recurring ARR XX%

put it you well, just in little in that you created there, if a put So, a FX there little you as variance mix will. sequentially,

So, target of this the mix seasonality. year, to we're for on and target sequential nature cloud. for on growth targets objectives wouldn't point growth to for our just point our in FX I would we're I but the -- cloud

Thanos Moschopoulos

this provide Can pricing as color price proportion increase, at Okay. point? might And months what customer maintenance started you the to significant the you of new ago. finally, several implementing be any maintenance base then on the

Mark Barrenechea

percent, forward. get rate what on now new won't into going business that Yes, all but new I is

new So, maintenance hitting the and -- we're contracts. roughly -- cycle, of of to through on kind business, about is side, kind this one-year the renewal you other we're side on get of have all one get now

that also as getting because our XX/X, contracts price. increased new and price the we you're has we've that for it, and customers digital added we position and renewal services, new position, being all defend all our access built into getting So, you're negotiate defend

the those services So, favorable, that the and finding additional new increase, but it's just reaction has actually capabilities we're not charges. very for been price

good So, of coming we're a really benefit quarters. in in position see that the to the

Madhu Ranganathan

this And chime and stand in, I just Madhu; corrected. is Thanos,

So, look rates we you $X.X impact million. question, I year-over-year negative when was at shared, prior was comparison which that to the the and quarter rate your believe not

Thanos Moschopoulos

million. $X.X

great. line. Okay, I'll the you. Thank pass

Madhu Ranganathan

you. Thank

Operator

from question of next Steep Our Paul Capital. comes Scotia

Paul Steep

maybe some bit Can as quarters relates, six a the more the actively has guess Mark, -- of there it or quarters. we've to doing here, you cloud of bit either around the as or some line? little shift you focused it what about discussion little for revenues I maintenance Great the move been talk seven evening. transition towards could line or of static you're seen presumably higher to a talk cloud, maybe sort maintenance to

Mark Barrenechea

for Yes, interested thank flipping maintenance not cloud. that. you to in We're

we're in So, new we're interested revenues. not substituting revenue, in interested

into customers they're than understand constant to subscribe and a it the So to do maintenance we strategy you a decade-long it. a of choice, In the license provide deployment must our was buy new customers that's continue we long-term that and quarter cloud; don't up to currency, in guidance, reflective -- nor additive X.X% to technology more of effective I to X.X%, made making flip that allow couple maintenance customers cost right? revenue. highlighted choice our rather is of

XXs, was XX%. maintenance, and again, up So, by renewal also look X.X% in it rate, up the at we're low

It's than own seeing you're strategy that got and better the maintenance numbers. long-term, technology renewal all got you're rate, -- to the our the you to going aligned way you're if maintenance you to a our going if grow is reflected that's subscription. to a So, in go the confidence,

Paul Steep

thinking should SaaS-based about thought focus the One deals? we of maybe How on Great, Thanks a How higher on M&A. maybe towards just shift be looking is the terms you mix legacy clarification, would quick have pipeline of of cloud-based deals versus guys. more thanks. the business. newer in

Mark Barrenechea

the we recurring Interesting of question. end At revenues, day, right. like the

that two and come -- can in forms. So

EasyLink, cloud the ANX, GXS, to revenue, cloud-based with are PS were you to Catalyst, companies. us look maintenance XX, look all pure We're the you businesses Covisint, But, were Those if of as a well. look capability most -- these some just So, Liaison, or recurring acquisitions our cloud. were building our of at history, recurring at all if first be years the XX consolidator. And Hightail, starting very these off-cloud.

Liaison, And Just I we that is use Catalyst, of -- regarded think we're unique able Hightail for the at a EasyLink, we and business -- things long-term going opportunity again to $X our differentiator whether infrastructure changes phenomenal, a got team asset, revenue, the price own, a it's as from is right be that's it's a run of and at rate, or I operate cloud to being nothing consolidator am the an historically ANX, are this [indiscernible]; marketplace. to to feel having billion really with capability able to off-cloud Covisint, be in we one us. to our Paul, building be recurring right company, view this And highlight, cloud it's as return. the cloud to SaaS-based private highlight right have the this as the we of this have been consolidator. GXS,

Paul Steep

Thank you.

Operator

[Operator comes Instructions] Price question CIBC. Stephanie Our from of next

Stephanie Price

Good afternoon.

Summit XX-City the talk Cloud the I clients thinking could about this you feedback to on the the hoping OpenText fall. summit on move now? holding is OpenText was offerings uptake a the right are a cloud bit how and and Cloud So, about

Mark Barrenechea

the cost about modernizing out, destination we're about got cloud we're major Yes. which going that, expo, focus your Migrating the code cloud of innovation. is is a Thanks, to to agility, city about it, platform. the platform is Stephanie. not and right Yes, for it's speed, Summit and a name doing next we tour innovation, a

the at that they migration focus big and to cloud, Cloud. modernization running are off meat a base our installed of Summit the of Cloud OpenText targeting in kind is So, of

the with collaboration modern in capture cloud, cloud, the for in cloud. cloud, network, So, clients SaaS looking Core, OTX either integration, recent our modernization their installed video now at for our management new in SAP with live base in in join support the going Microsoft, Google, business private a outline to things the like path to Cloud or announcement record cloud, and to the to in the services, workloads, plus in additions, and come Content cloud, Hightail, we're integration in us cloud migration support E-signature, SAP at we're Federated cloud Services, archive the new our Summit

Summit cloud. kind go into response three of our terms maps Cloud is we're go next getting the XX-City into Tour to the of off really cloud So, attendance, journey and the to clear months. four from to phenomenal, provide And meant to installed these Continent months base in Four it's up the coming over

Stephanie Price

was minute business, for side And a how the target hoping it about you about could thanks. channel. the the And talk that think you you focus little and I a Great, on the of on I growth as GXXK? wanted bit partner then, to

Mark Barrenechea

I'm could you that Steph, please. repeat Sorry, sorry.

Stephanie Price

growth you GXXK? Sorry, asking the on that of about the as and channel, I partner side the think target was about how the you business,

Mark Barrenechea

Force really V, emphasize they [ph], like relationship, [ph], you are or Yes, V to bring then we and what clients, industry, channel the we set this, relationship I SME, kind company to are the We Iron healthy have really -- and don't us have industry more not it's multiple with about there you. called and Capital it's are and into a close have if our there an of -- of value-added who who or these volume a kind get it Value a can got relationships. part, an layers remains to is and of it's of partners but a value, about, where strong industries. they know kind channel mid-sized partners are A to have clients

who then relationships top, have You global developing Cerner, like Cannon IP top about there relationship focused hyperscalers you the dozen have OEM demand we're -- then as new build system are can. just a on and way the then them. on implementers, And to as they of up trying technology, our have McKesson, where of on with and we out much for lastly,

be like platform. the as want close capability we to can demand them, and they as real key both Google Cloud on well provide So, capability to

-- those for in volume, value, really look So, but at for our channel partner don't we're not areas.

Stephanie Price

Okay, great, thanks very much.

Madhu Ranganathan

Thank you.

Operator

Thank you.

of Our next Capital RBC Markets. question comes from Paul Treiber

Paul Treiber

particularly Thanks positive were growth very growth call out? you'd quarter. organic to like any growth afternoon. core to quarter Among that nice this and to see It that stronger were products, good organic a this organic contributors much your ones there is --

Mark Barrenechea

towards value-added have Paul, network would I'd off-cloud are certainly in have ODM chains leadership really that question. our supply content thanks and value-added for thanks part around also, towards and core we've up. and to cloud services how right. look as we look modernized the of our volumes I and the for scale, joining moving the network been in call and point businesses where locations, I platform both

networks. I So, of in side the content business core kind of services kind look towards of network of our and business the

Paul Treiber

or elaborate build in And earlier rollout business pipeline then, are additionally, year, the cloud just also the ahead announcement provide -- seeing license you tracking interest new could and announced related you how also of the and partnership side, the to partnership the then after cloud that this regards -- SAP on customer you how of to on side at its SAP, the that's products? expanded

Mark Barrenechea

the I on have yes. you I sure question, positive hear your And just didn't make think is asked, growth? wrong did Yes. answer And we previous to Paul, organic you

had I just So, so your to within the have question we sure I quarter. heard answered positive make growth positive QX, make want organic We sure and right, did I organic it. growth in

Paul Treiber

No.

that You growth I quarter? was drove what asking positive the organic right. this heard

Mark Barrenechea

have growth within asked, wanted Yes, I had growth. to did growth to we you the positive positive organic said quarter. was good or if curious you positive see -- I reinforce, we just it was

us relation SAP In had products SAP. relationship the that change and at SAP, new platform you. go, with relationships it thank team. with the have all services this for SAP way throughout and I've said along their generation leadership a in and our but great going come in have next we to work relationships relationships always they've that their endure. is we cloud content great. And selected So, endures. And leadership, SAP has

So, they remain a strategic partnership.

disruption, great, it just remains their going installed in no some as the fact migration on recent the to pace changes continue reinforce of with our we hyperscalers, the partnership their plan based to in with Our base because other great product. news, it's to leadership see and

as So, possible. all we see that

Paul Treiber

line. the hear. I'll pass to Good Okay.

Mark Barrenechea

Paul. Thanks, Appreciate Okay. it.

Operator

session. concludes I closing for to will question-and-answer This Mr. Barrenechea hand now the call the remarks. back over

Mark Barrenechea

joining been our soon. which and today, you. and I'd I'm and constant we with year-over-year consecutive call like everyone growth right. I All for the we'll one it's for and to sort business, quarters where Investor durable call to nature today, is of using Thanks the in joining like XX going word, end of of and Thank currency. speak durable thank Day look started the

Operator

call. conference today's concludes This

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

Open Text (OTEX) 31 Oct 192020 Q1 Earnings call transcript