Open Text Corp Corporate Analyst Meeting

Sep 06, 2019 PM UTC 查看原文
OTEX.TO - Open Text Corp
Open Text Corp Corporate Analyst Meeting
Sep 06, 2019 / 12:30PM GMT 

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Corporate Participants
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   *  Christopher James McGourlay
      Open Text Corporation - EVP of Customer Operations
   *  Gordon Allan Davies
      Open Text Corporation - Executive VP, Chief Legal & Corporate Development Officer, Chief Compliance Officer & Secretary
   *  Harry Blount
      Open Text Corporation - SVP of IR
   *  Madhu Ranganathan
      Open Text Corporation - Executive VP & CFO
   *  Mark J. Barrenechea
      Open Text Corporation - Vice Chairman, CEO & CTO
   *  Muhi S. Majzoub
      Open Text Corporation - EVP of Engineering
   *  Simon David Harrison
      Open Text Corporation - EVP of Worldwide Sales

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Conference Call Participants
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   *  Daniel William Jester
      Citigroup Inc, Research Division - VP
   *  Raimo Lenschow
      Barclays Bank PLC, Research Division - MD & Analyst

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Presentation
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 Harry Blount,  Open Text Corporation - SVP of IR   [1]
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 Good morning, you guys are going to hear an exciting -- have an exciting time here at OpenText 2019 Investor Day. Welcome. We're very excited to have you all here with us today. And this morning you will hear presentations from Mark J. Barrenechea, OpenText Chief Executive Officer and Chief Technology Officer as well as the other members of the OpenText executive team. This meeting is being webcast and the slides are available on our website at investors.opentext.com.

 A replay of today's meeting will also be available on our website, shortly after conclusion of the meeting. The meeting today will last a total of approximately 3 hours with a 10-minute break at around 10 a.m. There will also be a 15 minute Q&A session with all presenters from OpenText available at the end for remarks and questions. Please kindly hold your questions until the Q&A session at the end.

 And now I'll proceed with the reading of our Safe Harbor statement. Please note during the course of today's meeting, we may make statements relating to the future performance of OpenText that contain forward-looking information. While these forward-looking statements represent our current judgment, actual results could differ materially from a conclusion, forecast or projection in the forward-looking statements today.

 Certain material factors and assumptions were applied in drawing any such conclusion. Additional information about the material factors that could cause actual results to differ materially from a conclusion forecast or projection in the forward-looking information as well as the risk factors that may project future performance results of OpenText are contained in OpenText's recent forms 10-K and 10-Q as well as our press releases and on our website. We undertake no obligation to update these forward-looking statements unless required to do so by law.

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

 And with that, I'm very pleased to hand over the meeting to Mark Barrenechea, who'll tell you much more about the OpenText story. Mark?

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 Mark J. Barrenechea,  Open Text Corporation - Vice Chairman, CEO & CTO   [2]
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 Thank you. Good morning, everyone. How is everyone doing? Good. Thanks for taking time out of your schedules and travel and being with us here in New York this morning.

 We had a celebratory day yesterday in opening the NASDAQ and -- so it's an important moment to step back and look at your history over 27 years from $10 million in revenue to $2.9 billion and be able to open the markets in the morning. So we couldn't have done that without you, so thank you for all that support. And we're pleased to be here today to talk a bit more about the future.

 And I'm going to start with -- about OpenText and kick right off into our value creation playbook. You know us as a leader in Enterprise Information Management. We have a marquee ecosystem in the enterprise. We're -- we are an enterprise software company. We're not mid-market company, we're not a consumer company. We're an enterprise company. You'll hear that term a lot today. And we have a marquee ecosystem in the enterprise, 74,000 customers. Obviously, we get out of its customers and divisions and a lot of other things. 60 million identities, 40 million end points, 2 million trading partners in our wide horizontal EIM platform.

 We're a large-scale enterprise software business. Our fiscal '19 results in constant currency, $2.9 billion up 3.8 % year-over-year. A large recurring revenue base, $2.2 billion and annual recurring revenues, up 3.8% year-over-year. Our cloud revenues from 0 to $908 million over 7 years, up 10.8% year-over-year.

 And we set out to be a productivity leader as a company. As a capital allocator, which you'll hear me speak about today, we feel it's very important as stewards of our shareholders cash as we put it to work we need to be meet a high ROIC. Well, we need a strong payback, and we need to put that capital to work in an efficient engine. And I'm going to speak about that efficiency, upper quartile, how -- where we're setting the bar, where we don't think we need to be the #1 company in software but among the top 10 companies in software. And how we're going to reinvest over a certain thresholds of EBITDA. That'll be part of my discussion today. But we delivered 38.4% adjusted EBITDA, up from the mid-20s just 10 years ago. And $876 million in operating cash flows, up 23.8% year-over-year. As I look at our value creation playbook, it's about growing recurring revenues. It's about continuing to expand margin. It's about strong cash flow. It's about accretive acquisitions.

 Alongside that, continuing to innovate, Muhi's going to spend a fair amount of time today on that; reinvestment for growth, which Ted is going to talk about; and disciplined capital structure in dividends, which Madhu will speak about today as well.

 We set out on our dividend policy to return capital and return value every year, and we set as a metric, a 20% of trailing 12-month cash flows. And since our dividend -- since the inception of our dividend, we've grown our dividend both in its absolute quantum as well as the rate of the dividend every year year-over-year for the last 5 years because as we grow cash flows, we grow the return back to investors.

 I put on the bottom here a very important point, which is the Rule of 40. And the Rule of 40 has gotten a lot of attention over the last few years to say, how do you value a SaaS company? And so the Rule of 40 says, give me your SaaS growth, your growth plus your margin and get above 40. I think the Rule of 40 is right, but addition is associative. It's associative property, right? So if it's growth plus profit equals value, right? You can shift the -- swap the variables and still get the same value. So I think the Rule of 40 is right, of growth plus margin. But I think it's profitable growth.

 And in fiscal '19, with our growth rate of 3.8% and our 38.4% EBITDA, reaching 42.4% in the Rule of 40. We'll continue to operate above the Rule of 40. We just do it the OpenText way, which is extremely high, a profit contribution in the associative arithmetic. So I wanted to put the Rule of 40 up here because I do believe in the formula. And we just think that it's not just growth plus profits, we think it's growth and a lot of profits to get you to the 40% to equal value

 Our strategy, which you'll hear throughout the morning, it's about helping companies unlock their information advantage. We have an opportunity, and you look back through time where we went from mainframe to client server, that was once in a 20-year opportunity. Client server to internet, once in a 20-year opportunity. Internet to the cloud is a once in a 20-year opportunity. And as more data gets -- as more data gets created, more data gets centralized, companies don't need more processes, right? We're in a post-ERP era.

 This is about getting not more process advantage, it's about getting the information advantage up for companies and how do you gain insight into your data to build a stronger, better company. So we think we're in a great position to help companies gain the information advantage, that's part of our strategy.

 Two is to be the leading platform for Enterprise Information Management. You're going to hear it today, it's still a very young market. We're 27 years old as a company, it's still a young market. IBM is over 100 years old, Oracle's over 50 years old. This is still a very young market. Our strategy is to deliver the best Hybrid Cloud and customer experiences. We see the world as hybrid. It's not 100% cloud, it's not 100% off-cloud. We continue to see the world as hybrid. Emphasis on cloud but hybrid.

 We work in regulated industries. We work in industries that have -- much of their differentiation is bespoke or customized and deeply integrated. And so they -- we work in a lot of industries that want the benefits of cloud but are going to continue to run off-cloud to gain their value. And in that perspective, it remains a hybrid world. It's not all cloud, it's not all off-cloud. It's hybrid cloud but the emphasis, cloud.

 Part of our strategy is a relentless, purposeful word, relentless focus on operational excellence and efficiency. We're a well-run company. You see it in our operating parameters, and Madhu is going to spend a fair amount of time on this today. And then the anchor part of our -- the centering part of our strategy is to continue to hire, develop, retain the best and most diverse and inclusive talent in the world. So I just want to lay out our strategy right up front. Also our ambitions. When we look at our ambitions. I want to continue to emphasize, we're young. And it's still early in our journey, and I'm not -- we won't use age against IBM to quote a politician. But we are still young in our journey, and it's exciting in that youthfulness of continuing to grow and expand.

 We started as a search company then an on-premise Enterprise Content Management company. We created a category. Enterprise Information Management, just like the ERP was created as a category. We created the category. This is a big, large, rolling marquee category. And we spend a little time, we have a new presentation on total addressable market to give a bit more detail on the $100 billion TAM. But along the journey, we have analysts now covering this as a segment. You go back, the ERP wasn't a thing. ERP is now a thing. EIM wasn't a thing, it's now a market.

 The next journey is a pure -- is a hybrid cloud wide horizontal platform. We're a wide horizontal platform for information management in the enterprise. But this journey continues into a full vertical SaaS cloud over time. This journey continues into a full vertical SaaS cloud and for us, full market leadership. We have market leadership, you'll hear today in content services, in business network. We have scale in those markets. We have leadership positions in those markets. And the other markets, we don't have the scale yet but we're investing to win, right? These bullets have a point on the slide, is that we're investing to win.

 We have leadership in content services and business network. We have tenant properties in security, analytics, EIM cloud and vertical applications. We're investing to win in all these markets. So as we grow and mature and through our journey, we'll look to be in the top 3, then top 2 and then the market leader in each of these categories. It's part of our strategy. So these are our ambitions.

 So what you'll hear today? I think you'll have 4 takeaways from today, 4 takeaways. First, is the mission-critical nature of Enterprise Information Management. It's more important that enterprise resource planning. We speak to customers and they say, what, my ERP system can go down but my EIM system can't. Because we're so integral into the running of the global 10,000. And this is a once in 20-year shift. I'm -- I guess we're -- maybe maturity and a little wisdom may be of a bit of the benefit. I mean I grew up on the mainframe. My first language was 360 BAL, basic assembly language but the transition from the mainframe to the Internet was an opportunity in the market. Internet client server. Client server to Internet was an opportunity in the market. Internet to cloud is a once-in-a-20-year opportunity. And you're going to hear an expression from Ted, we call it our 3M strategy. 3M's, Migrate, Modernize and then Monetize in the shift to the cloud. Migrate, modernize, monetize. And it really is a once-in-a-20-year opportunity to come into -- to look into marquee installed base and apply that 3M strategy.

 Second thing you're going to hear today, and I'm to emphasize at there is one word for today, it's durable. One word. There's one thing and one word, it's durable. I'm going to spend time and have a section on talking about us as a durable business, stronger growth driven by our business system and that relentless focus on efficiency and excellence. But if there's one thing and one word, and this is a CEO emphasizing the one word, it's durable.

 Third thing you'll hear today is how we're building and evolving into a stronger company through our TAM and through account expansion. And the fourth thing, the team looks to convey today is how we're going to run our playbook for a total growth and longer-term value creation.

 So I want to start up front and provide an overview of the things that you'll hear today from myself and the leadership team.

 So let me start with #1. And talk about the mission-critical nature of EIM. Let me start with the big trends that intersect with OpenText that shape our thinking and then form our action, and these are those trends.

 One is hybrid cloud. API economy, the ability to be able to bring our great capabilities and our business network as part of wider use cases inside the enterprise. Third thing shaping us is workforces are nomadic. I'll call them nomadic workforces today. When I -- if I wind the clock back 20 years, teams were highly centralized by your -- either your team was completely centralized or the majority of your team was completely centralized. And it's kind of shifted toward maybe half your team is in one place, and now it's shifted to where the majority of your team if not all your teams or nomads. And this is a big shift. Because how do you work together? How do you collaborate? How do you share information? How do you keep versions? How do you do projects? And so that -- when we talk about the new way to work or the new nature of work, what's -- a lot that's being driven is not necessarily from regulations and compliance, but it's the fact that the workforce is highly nomadic. Big economy driving a nomadic workforce as well. So I like to express it as a nomadic workforce.

 Extreme mobility, drive for information insight, information security and privacy is going to be with us. GDPR is just a start, it's going to come to North America, it's already coming to California. We see a mash pot. A mash-up of compliance, regulation, GDPR, chief information security officers, privacy data rights, all coming together as a very large theme. In this mobility, the edge is a smart edge, it's very empowered. It's all about customer experience. If you don't like the app and I can't get something, I'm going to delete it and move on. And then of course, a steady drumbeat of regulations and compliance. So there are very strong trends that favor OpenText and some -- they're not just episodic events, they're long-lasting trends for the business.

 Mission-critical nature of EIM. OpenText runs at the center of the enterprise. We hear a lot from our customers that we're the glue that holds the enterprise together. We're the place where all their ERP, CRM, MRP, supply chain planning, HR applications, it all comes together. They can't integrate all the ERP systems and all the billing systems except with content. So we're the glue that sits in the middle for enterprise apps, the platform and the network. So whether you're running a supply chain from SAP, ERP from Oracle, Workday HR, Salesforce HRM, where do you keep the 10 million documents associated with employees and all that information and processing? Where do you keep all the asset information? Where do you keep all your supplier and customer, all this unstructured data? We're the glue, we're the platform. We sit at the center of being the integration point across -- inside the ERP. Well, we also integrate outside the ERP -- outside of the 4 walls through trading partners, our customer suppliers and vendors.

 So we want to try create a graphic to share with you, to show you that how we sit at the center, both inside an organization and outside the 4 walls of an organization and our Enterprise Information Management.

 More bits of components, we talked about earlier is content services. We're #1 in content services. We have the Forrester Wave on your right, Gartner Magic Quadrant on your left, and this is an exciting market because content services is reinventing itself, right? We're on a path to digitize everything, to make everything machine-readable. Not everything is machine-readable today, perhaps half of an enterprise is machine-readable. Voice, facial recognition, every business process, make it machine-readable. Make it embeddable in everything that you do. Bring it together across -- I'll get to information sprawl in a moment.

 So content services is cool again. It's in the center of reinventing business processes as everything becomes machine-readable. It's not just about PDS and PowerPoint and Word documents and Excel, it is about creating a new language for invoices, a new language for sales orders, a new language for forecasting, a new language for trading partners. How do you -- the nomadic workforce bring all that content together, facial recognition, voice to text et cetera, make it all machine-readable.

 So we're the market leader, it's a big area of our investment and the segment is reinventing itself. We're the leader in business networks as well inside of Enterprise Information Management. Liaison, a recent addition, has just really created these new app-to-app capabilities. Part of the reasons we're excited about the business network is our ability to go not just from a transactional platform like we had a TXS, but now to go up through app-to-app integration. With information sprawl, you need to integrate to more applications. Liaison brings us a library of over 10,000 prepackaged connectors. How do you have SAP talk to DocuSign and do that securely? And it's not just one version of each of those. How do you have Oracle talk to Workday? It's not just one version of each of those. So it's the ability to connect system to system, to secure it and reliably deliver that transaction. That's an exciting part of growth for us in the business network.

 Second place -- second area in the business network that we're looking to leverage from our #1 position is that supply chain manufacturers today are looking to build ethical supply chain. The circular economy is driving the supply chain.

 It started from being able to track the efficacy of a mineral or component part but now it's the whole circular economy through the supply chain. Muhi will speak about what we had code named internally project Emerald of our ability now to have ethical scores for component parts. The ability to meet requirements in an ethical supply chain and have that be part of our business network.

 I want to touch base on the mission-critical nature of EIM. My -- first point I wanted to make today is that there is an important challenge. There's a problem that has arisen in the enterprise, and we're uniquely positioned. Of all the aspects of the trends, there's really one that I want to highlight and that's information sprawl.

 Companies over the last few years have just -- it's like having a, best to say it's like a zoo and all your animals just escaped, with rhinos and giraffes running down the street. Those are your systems, those are your data. And how do you manage that sprawl of data outside the enterprise? We talk to CIOs and they have 30, 40, 50, some have 100 third-party systems. It's 10 p.m, where is your data?

 So how many systems, can you even find them? What level of standard of security are they? You keep pushing your employee identities out to all these systems, you push it out 100x across these. So our business network with our Identity and Access Management platform can solve information sprawl. We can have a consolidated place, find all your systems outside your firewall. We can manage the identity and security across all those systems real-time and in one place. So this is a big trend for us and a driver for our growth in the coming years. We do the same thing inside the firewall as well. We've done it for a long time in our business. And we can do all this through APIs as well. So information sprawl is a very important concept challenge that we can solve.

 The mission-critical nature of EIM. The most trusted companies trust OpenText. BMW, we're a proud partner with BMW, and we run their electronic invoicing platform globally. And I don't know how companies know -- I don't know how companies can plan when they don't know the landed cost of a good. You talk about tariffs and pricing and these things that happen around the world. But as a manufacturer, how do you actually plan your production if you don't know the landed cost of an item? The answer is, you can't.

 So our platform is helping customers, both in their planning and invoicing. So I look at BMW, we're providing electronic invoicing, taxation, shipping, notifications, specific tax regulatory requirements in 40 countries around the world digitally for their production fleet. We're a proud partner.

 Nestle, the most trusted companies trust OpenText. We run the vast majority of their supply chain through our business network. European Central Bank. The ECB, we've been their off-cloud partner for a near decade, where the entire ECB runs on our content platform and collaboration. We won the next generation for OpenText core to now work with all their member banks in a public SaaS platform integrated hybrid back. So we've been a proud partner, and we will continue to be a proud partner in the future.

 [A SNRF] premise for preventative maintenance. Citibank, we're the platform. We have billions of objects in a single repository of our communications and compliance. We're proud to be the partner with Government of Canada for the government's digitalization project to have a digital folder for every citizen. We're doubly proud as being Canadians as well to partner with the Government of Canada. Serious Fraud Office, we are their platform for electronic discovery, machine learning and AI. And General Motors, we're the platform for identity in their connected cars.

 Mission-critical nature, mission-critical customers, most trusted companies trust OpenText. I wanted to spend a moment and just proudly highlight that mission-critical nature.

 I'd like to get to my second point this morning of the 4 things I wanted to talk about and that's a durable business. OpenText is a durable business, strong results. So I thought I would start with the definition of durable if I'm going to use the word. Something that is durable is strong and lasts a long time without breaking or becoming weaker. The synonyms I really like: long-lasting, long-lived, mission-critical, resistant, secure, stout, long et cetera. So when I look at applying this one word to OpenText, EIM is mission-critical to the enterprise regardless of the economic environment. We are a mission-critical. We're the center of the enterprise regardless of an up or down economy, give strong recurring revenues, cash flow and profitability. We are a capital allocator. Gordon is going to be speaking today, and we have substantial opportunities at lower valuations in a downmarket, which provides significant investor protection.

 We have a global structure. We built a global structure as an enterprise software company. So whether we develop or acquire technology, we have a vast system to go out and distribute our technology across. And we take a hybrid approach so customers have choice on how they want to deploy. We provide choice, it's not just one way. We provide choice and that gives our products a very long-lasting value. And we have enduring organic growth with our well-made EIM platform. So we're a durable company.

 And if you'll allow me a CEO moment, I brought a football. So I'm going to do my Vince Lombardi moment. This is a football, ladies and gentlemen, this is a football. Ladies and gentlemen, this is OpenText. I'll hold up my football, there you go. So this is OpenText, we're a durable business. Mission-critical nature, regardless of the economic environment, strong recurring revenues, cash flow profitability. We are a capital allocator, and we will have substantial opportunity and lower values in a down market that provides protection and upside to our investors. We've built a global structure. This marquee infrastructure, this marquee sales franchise. As a $2.9 billion enterprise company to distribute acquired and develop technology, we give customer choice to a hybrid approach.

 And we grew organically in fiscal '18 at 2.5%. We had positive organic growth last year. Albeit for some isolated issues, we were still positive organic growth last fiscal year, and we expect to grow low single-digit organically this year. We're a durable business. We're also a durable business, and thank you for allowing me to hold up a football. So my Vince Lombardi moment, if you like Vince Lombardi. I like Vince Lombardi.

 Second reason we're durable is our TAM. This is a large and growing addressable market. We're not in a small market, we're in a large market. It's a $100-billion total addressable market. We've broken this out into 5 key areas.

 The first is ECM business collaboration file, sync and share, roughly a $30 billion market. And the key-value statement is supporting that new way to work, that we spoke a little bit about. We've mapped up some products to that market segment, the market area.

 Second market area, about a $25 billion market. It's a business network supply chain, Internet of things and on-demand messaging. This is our band, the network. The $25 billion TAM, customer value, digital supply chain, application integration. We think the addressable part of artificial intelligence, machine learning and other advanced technology is about a $10 billion TAM today for OpenText. Security's about a $10 billion TAM of things that incorporate information security, governance, compliance and end point management. And then the fifth area is vertical applications. This is part of our ambitions to grow into -- to develop and acquire technologies. To grow into this market, and we see it roughly as a $25 billion market. We're looking to build and to acquire the next generation of content-based applications, whether it be contracts, case management, whether it be by industry and legal tech, engineering, construction, biosciences et cetera. And we will talk about some of our new projects in the vertical applications space.

 A durable business. We look at our results over the last 5 years. We've grown recurring revenues from just -- let's call it, $1 billion to $2.1 billion over the last 5 years up 100%. Our renewal rates, cloud in the mid-90s and off-cloud low 90s. James is going to talk about the future of how we look to grow from a renewal rate to an expansion rate, and James will emphasize part of that.

 Our adjusted EBITDA margin from low 30s to high 30s, up 530 basis points over 5 years from $538 billion of adjusted EBITDA dollars to $1.1 billion. And then our operating cash flows, cash is queen in an organization, and we've grown our cash flows from $417 million to $876 million over this 5-year period. And these are results of our business systems and the durability of our business.

 Third point I wanted to talk about today is building and evolving into a stronger, better OpenText. We're still young in our journey, and I've always loved the Snapple expression. The best things on earth get better. So the best -- well-run companies need to keep getting better. So as we look in the coming years, how do we build a stronger, better OpenText? You always have to keep raising the bar on yourselves and then making it to that bar and then go raise the bar again. I think the best-run leadership teams set high bars, they go achieve those bars and they say, are you going to higher bar above that?

 So if we look at our top priorities for Fiscal '20 and, again, in the spirit of the one thing, I'm picking one thing in each area. In innovation for us this fiscal year is about 20.2. I have just a few comments on that, Muhi will walk through the detail of it.

 So innovation, top priority for the year. Expand the EIM opportunity, G10K. We are 40% covered today in the global 10,000, which means we're 60% uncovered. And at the extreme of that statement, it says we don't see 60% of the opportunity. Because we don't have account coverage. We come back with partners. We try to cover that. We wait by the fax machine for that other 60%. It's pure opportunity as we grow and mature into a stronger, better OpenText. It's to get full account coverage in the G10K and participate and more opportunity. Third priority, growth. And that growth is coming in the cloud, right? As we talk about our expectations of high single-digit growth in the cloud. Fourth priority is to deploy capital and continue to do that in upper teens ROIC. And then our fifth priority for the year is productivity advancement. And we increased our EBITDA margin range for the year to -- it's a fairly narrow range but 38% to 39%. Those are our top 5 priorities for the year. Let me spend a moment expanding on each one of those.

 20.2, if I look at what's important in our upcoming release called 20.2 -- OpenText 20.2. In the past, we've had many sort of point products, recently, we sort of got in product family integration. 20.2 provides a variety of things. One is, it's a cloud-first approach. We will approach our customers in our installed base, that once-in-a-20-year opportunity in a cloud-first approach. So Migrate, Modernize and then Monetize for both -- for all parties in 20.2.

 Second -- the next point of that is getting to module 2, 3 and 4, will be that much easier because it's an integrated platform, right? Getting to module 2, 3, 4 will be that much easier. That provides a straighter path to more adoption of our technology.

 Third thing is, we will enter the services market, the micro-services market. And these are -- I don't like the term micro-services because micro sounds small. These are big services. Capture services. Send me a 1 million documents today in a travel process or invoice process, and I'll return you the met data, right? Send me 1 million PDFs, and I'll send you back everything that's machine-readable for you to insert into your biller or your ERP system. That's a powerful process.

 We're going to leverage our electronic signature platform as another use case. Today, your archiving, right? You have your records retention, compliance and archive all on-premise. In 20.2, we have a new archive service layer, microservice, where you can literally take something on-premise for new APIs and it points you right out to the cloud and everything is being archived in the cloud. You can literally just snip off the on-prem piece, change nothing except all the data flows out to the OpenText cloud.

 Those are examples of the powerful services, electronic signature and compliance platform, intelligent capture, archive and there are about a dozen services and that will be new in 20.2. And you'll never update it again as part of a cloud-first. We'll take on the ability to do all the upgrading. So as a priority for us this year is to bring 20.2 to market as we weren't born in cloud but we're reborn in cloud, and 20.2 is that reborn and native piece of our technology. And Muhi will get into detail on that.

 Second piece is the Global 10,000. This is our market. I want to hold the football up again, right? This is our market, the Global 10,000. This is our key opportunity, this is a strategic theater for enterprise software and clouds. The numbers and circles on the Slide is OpenText analysis. We've gone out and studied the 10,000. It's -- we run our systems, of course, but it's 10,000. You put this in Excel. We've studied the 10,000 and this is the end state.

 It's what the end state looks for us in the global 10,000. We're not there today, right? We're only about 40% covered but when we get to 100% covered, 34% of those accounts would be North America, 387 accounts in Latin America, 2,300 in Europe, 106 on the African continent and Central Europe to Russia and Middle East about 500, China just under 1,000 accounts, Asia Pacific more widely plus Japan about 1,000 accounts, in Japan, 1,200 accounts.

 This is our strategic theater of operations to be able to cover the world's largest enterprises and governments, and you'll hear a plan from Ted to go double our coverage over the next 3 years. To go from 40% up to 80% as part of our ambitious view of coverage. Our straightest line for organic growth is account coverage, right? One thing, it's account coverage. It's the straightest line, right? The 60% of the world's opportunity we don't see direct and to go double that coverage is our straightest line to growth.

 Bear with me, I'm going to go straight to this slide. Total growth strategy, fiscal '20. I wanted to lay out our growth profile for fiscal '20. I know we do spend a little more time on this. If we look at our total growth over the last 5 years, we've been -- our cumulative average growth rate over these 5 years is 12%. This is acquired growth and organic growth over this 5-year period, $1.6 billion to $2.9 billion over this 5-year period.

 Our fiscal '20 profile and this is a recap from our earnings call on an individual slide is we expect license to be constant dollars year-over-year. We're going to sell a lot of license this year while we expect the business to be constant year-over-year and license is still an important part of our business. As clients deploy hybrid, and we're going to sell a lot of license where we expect the business to be constant in dollars year-over-year.

 We're expecting our cloud to grow high single digit with the innovations and trends that we've talked about. We're looking at customer support to be constant to low single-digit growth. Our professional services business constant dollars year-over-year, and we're already optimized for margins, and I'll speak to margin in a couple of slides here. M&A to be added revenues in -- when we add that all up together, it's low single-digit organic growth plus additive M&A revenues. So that's the business profile that we're looking for in fiscal '20.

 Our business system starts with total growth. So we talk about total growth as a company. And total growth to us is 3 things. It's retain, it's grow, it's acquire. Total growth, retain, grow, acquire.

 Retain, right? High recurring revenues, which is 75% of our revenues, durable, increasing customer intimacy and value creation and 90% plus renewal rates. James will talk about retain.

 Grow, you're going to hear Muhi lay out places where we're accelerating our innovation. If you look out over the next 5 years, we'll be investing $2 billion in R&D organically over the next 5 years. Scale our leadership positions and content services and business network and going deeper coverage from the global 10,000. And then acquire $100 billion TAM, increase pipeline development and to leverage our business system for value creation. And then Gordon is going to speak this afternoon about acquire.

 So on retain, we have opportunity, right? Even though we're operating at a 75% a part of our business as recurring revenues, cloud renewal rates to the mid-90s, off-cloud in the low 90s, our key metrics in support -- we hit 90% margin in fiscal '19 and 95% customer satisfaction rate. This is a steady consumable stream of revenue for the business. Right? Steady consumable stream for the business.

 We've set as a new standard in the business what we call Prime Protect, which is our value advantage here. Right? It's 24/7 global support, its product and service updates and as part of that subscription, annual subscription if you will, you're getting security updates, you're not just getting patches but you're also getting all our new versions. So we've raised the bar on what base support is to include security. All product updates, 24/7 support, around the world, one support package, which we call Prime Protect.

 We put price increases in effect this year. It takes a few quarters to work through the system. It takes a cycle of renewals to work through the system, and we'll expect a positive impact of those price increases in fiscal '21.

 And one of the great opportunities we have to improve the business, we have to keep raising the bar, to keep improving the efficiency and to keep improving the performance is through artificial intelligence, machine learning, and I won't take James' thunder. He's going to talk about that.

 On total growth. Retain, grow, acquire. Let me touch base on the acquire piece for a moment. I'd like to make a very important point that we hit a milestone in fiscal '19 in our approach to capital allocation as a capital allocator. Our M&A is now self-funding off the income statement.

 If we look at our OCF, in fiscal '19, $876 million, less $10 million of principal, less $64 million of CapEx, less our dividend of $169 million, less cash flows available of $633 million. Roughly, a 2x multiple of revenue. I just saw the CEO map, ROIC's the most important. But if you're looking at buying in our value of playbook at 2x revenue, that available cash allows you to fund $300 million -- $310 million -- $315 million of M&A in a capital allocation formula. That's self-funded M&A. And it's greater than 10% M&A growth per year if you could deploy that capital. So that's a major milestone for the business to have our M&A being a self-funding category.

 We -- M&A is a core competency of the business. We've built our teams. We run our playbook. We're always learning. We have an internal team of experts that range from sourcing to deal execution, financial modeling and integration. We look to companies that are leaders and have sustainable competitive advantage in their segment who can benefit from being part of our scale and our distribution.

 Our business, we look forward to be CapEx-light. M&A is now self-funded. We deployed $4.8 billion in over the last 5 years, and we delivered 18.7% of ROIC in fiscal '19 as well.

 Where we want to be in ROIC? Upper teens is exactly where we want to be. We don't feel we need to raise the bar or rather sustain the bar at ROIC.

 As we delivered -- we're always looking at capital allocation approaches, and I'm strongly getting questions on buyback, but I'll try to address it right here. The Board always looks at a buyback and as we continue to deliver upper-teens ROIC, the best way to invest a dollar, if we can continue to get these high teens ROIC, is through M&A to get the most value versus buying a dollar of stock at these levels.

 Building and evolving into a stronger OpenText. Let me talk about investing in the future. This is a key point. Something we talked about on the earnings call, and something that is new.

 If you look on the left-hand side of the slide, total software companies. We went out to Bloomberg. We just booted up Excel, interactive Excel that talks out to the Bloomberg APIs. We took out the field-adjusted EBITDA for all public software companies. The next track from the Bloomberg service is a quartile ranking of adjusted EBITDA.

 The lowest quartile of public companies have negative margin; second quartile, negative, just slightly profitable; third quartile is 10% to 24% adjusted EBITDA; and the upper quartile is 24% to 44%. There is not a better software company in the world above 44%. The best-run software company delivers 44%, that's Oracle. We delivered 38.4% last year. There is only 4 companies in the 40s, for software companies. We're in the top 10.

 So and as we look at our progress, we're a capital allocator. We want to deploy that capital not just at a high teens ROIC. We write a check. We want it back in about a 5-year period. We want to deploy that asset into an efficient machine.

 The center column is the efficient machine. As you can see from 33% to 38%, a $1.1 billion in adjusted EBITDA dollars. So you ask yourself where do you go in the future, right? Do you want to be in the top 10 or the top 4 out of the software universe? We think it's good enough to be in the top 10 best-run companies.

 So we have pass to get into the 40s. Look at our software line, we operate at 97% margin on the software line. Then we get another 100, 200 bps on the software line by eliminating third parties through time. Absolutely, we can in the coming years.

 We acquire a company. They have third-party technology. We take that technology out. We get more efficient. So is there room there? Absolutely.

 Our cloud is operating in the high 50s today for gross margin. But can we improve our cloud business? Yes. We've talked about over time, getting our cloud business into the mid-60s.

 And as its scale grows, margins improve by potentially 20% in the coming years. That's a great contributor.

 PS already optimized, right? So it's already where -- it's at its theoretical peak. We performed better than the world's largest PS companies as a PS organization.

 And then you have our renewable business that delivered 90% last year. Can it keep getting better? Of course, it can. Can it get another 25 or 50 bps a year? Yes, it can over time. So we have a path to get above 40%. We made a decision, we don't need to get above 40%. What we deliver above 40%, we're going to reinvest back into the business for growth.

 Right, so we're going to keep getting more efficient, want to keep doing the things we need to do, when we think our peak is around 40%. And then what would otherwise be gained at 40%, we'll reinvest back into the business.

 And where would we reinvest? Go back to the one thing: coverage. The Global 10,000, right? We're going to go cover the market that we're in. This is a football, right? We're going to go from 40% coverage to 50% to 60% to 70%, up to 80% in the coming years, and it's about coverage. It's a low-degree, low-risk operational play to get more accounts.

 For example, we don't cover an account in Europe, Allianz. We don't cover them, right? Our next AE, we will cover Allianz, just as an example. And our value proposition in other insurance firms, right, and providers will be just as relevant to those new accounts that we cover.

 So this is a very important points, we talked about it on the earnings call, but we wanted to bring it to life in a single slide as crisply as we could as part of our morning here.

 Fourth point, running the OpenText playbook, and then I will get into my summary of remarks. I'm hitting the wrong button, sorry.

 Running the OpenText playbook, right? So we started with a mission-critical nature. durable business, building and evolving into a better OpenText and my fourth section for this morning is running the OpenText playbook for total growth and long-term value creation.

 We have a business system, and we call it the OpenText business system. It keeps getting stronger and better, but this is a formal system that we run.

 We've taken inspiration from some of the largest conglomerates and the largest businesses in the world. We've taken our own due diligence and experience and created our business system that we've been running for a variety of years. It starts with total growth and customer-driven innovation. It goes into operating excellence in our systems and our tools and our methods.

 Now this is a team sport. It's not an individual tennis match. This is the best teams win. And that flows into our key metrics of recurring revenue, adjusted EBITDA dollars in OCF. Those metrics reflect our value orientation as a business, right? You're going to hear every executive speak this morning on a commitment to value, it's that value orientation, and to our discipline in capital allocation approach. And that allocation approach includes our dividend, our capital and our talent.

 We apply due diligence approach into a return on invested capital for strategic acquisitions, and there's one keyword for how -- for our method on acquisitions and that's integration. We integrate, integrate, integrate. And then we innovate, innovate, innovate. Those are the things. We don't want run 100 independent companies when we acquire, all right? We're not a public private equity firm. We are a capital allocator, but we're building technology -- horizontal information platform. So the integration of sales force. The integration of the systems. And we spent a lot of time on our due diligence to make sure we have a path to execute well, and I think you've seen that in our results.

 This is our competitive advantage. It's who we are and how we work. And you've seen that business system at work, right? If we just look back over last 5 or 6 years, we've put forth a $4.8 billion of capital to work and delivered an 18.7% ROIC in fiscal '19. So this little fishbone is just a nice visual founded out of University of Waterloo, went public on the NASDAQ in 1996.

 And then we shortened the time line, just starting from 2014 of -- the bottom part is the business network and the other, the top part is content management. GSX got us into the business network, actuate -- and Gordon's going to do a couple of -- [3] case studies for you this afternoon. Got us into analytics, guidance got us into security business. Liaison, top 3 player where MuleSoft plays for business integration and app-to-app. And then of course the 2 HP groups or CM -- CEM and CCM software, [graph mind] got us into electronic discovery. Dell EMC brought us from #2 to #1 in content services. TELUS, a nice tuck-in for us for electronic discovery. And then of course we joined the TSX 60 just in 2017, proudly part of that membership, and then we have 20.2 coming in later this year. This is our business system at work and it is who we are and how we work.

 We've also assembled, and it's one of the proudest things of my career is, the best team in software. We work hard, we play hard, and I couldn't be more excited about the team that we have. This is a team sport, and Ted Harrison will be speaking later today running worldwide sales; Muhi Majzoub leading engineering; James, our customer operations; Madhu, our CFO and operations; Gordon, Corporate Development and our Chief Legal Officer.

 Apprentice, we have a newly formed portfolio group. Gordon's going to talk about small, medium and large acquisition categories. Apprentice is leading up the effort to get to more predictability and more capital allocated in the small group. Patty our Chief Marketing Officer, Paul Duggan just -- if there's anyone who's a walking quant, is part cyborg, it's Paul, Revenue Operations; James -- David Jameson, our Chief Information Officer; Brian who has joined us recently as Chief HR Officer; and then Savinay Berry who joined us from ECD, who's running cloud service delivery. It is a world-class team, best is software and a very, very proud moment for me.

 Committed to value. I've asked each executive to talk about their commitment to value, and here's my commitment, all right? I talked about five things this morning. It's that mission-critical nature of EIM. It's a durable business. This is a durable business of high recurring revenues. Best question will get the football today. Building and evolving into a stronger, better OpenText and running our playbook. Keep strengthening our playbook in the coming years.

 And that value creation playbook is recurring revenues, margin expansion, strong cash flows and accretive acquisition that supports innovation, that reinvestment for growth that we highlighted above the 40% and capital structure and dividends.

 And we have been beating the Rule of 40. We beat the Rule of 40 last year. We'll beat the Rule of 40 again. And addition is associative. And as the market swings, and you're looking for a company beating the Rule of 40, we beat it the right way with profitable growth.

 So thank you, and I will hand the platform over to Ted Harrison. Ted?

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 Simon David Harrison,  Open Text Corporation - EVP of Worldwide Sales   [3]
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 Thank you, Mark. Thank you very much. Well, good morning, ladies and gentlemen. It's a privilege to talk to you this morning. My name's Ted Harrison and I head up our worldwide sales organization for OpenText. I'm very proud to be able to talk to you about my sales organization, how we grow in OT.

 I've been with OpenText for 19 years, just to introduce myself to you. So I may have seen a few of you here last year at the same event. I started off -- I came through an acquisition. I think it's important to know OpenText is an organization rife with opportunity for those of you who joined us both as volunteers and through our acquisitions.

 I started off in the U.K. or the country formerly known as the U.K., I don't know what we're going to call it after Brexit. And I ran professional services for a while in OpenText. And then I moved into sales, I ran sales for Northern Europe and then for all of EMEA and now I run worldwide sales and I'm based in California. I've been living in San Mateo, California for the last 4 years. And so I can just about accept that this is a football, although it seems like an odd shape to me.

 And I'm going to talk to you today about these themes: customers are our true competitive advantage. After 27 years in the business and probably millions of man-hours of experience of leading our customers through digital transformation, our customers are our single and greatest advantage. Huge number of customers, and OpenText thrives in mission-critical environments for some of the largest organizations on earth.

 And I'm going to explain to you today how we organize around this opportunity, how we will expand our G10K customers through increased coverage, we'll talk about the plan, as Mark highlighted, to double our coverage from the current 40% of the G10K.

 I'll talk to you about how we develop our base and overall. We look in our systems, we've got 74,000 individual customer organizations consuming products and services from OpenText and deriving value from those interactions. We scale, the fourth multiplier through meaningful partnerships, and I'll give you highlights of a few of those and something new.

 So this is a football. Here is our opportunity and it's expanding our coverage in G10K. It's leveraging our positions already in our installed base, and it's scaling out for meaningful partnerships. But something new, which is our 3M strategy, servicing a customer demand to Migrate, Modernize and Monetize into the OpenText cloud, kind of a 20-year event, just like Mark says, like client server movement or like Y2K. We've seen this huge customer demand to move into our Managed Services and into the OpenText cloud. And I'll explain a little bit about that as we go along.

 So this is what I've got for you today, ladies and gentlemen. Let us start with a little bit more about what I mean by customers being our ultimate advantage.

 It's not just our pedigree of 27 years or the experience we have in the organization of leading through digital transformation, although it is that. It's not just the size of our organization, the largest customers in the world trust OpenText and our credibility and our permanency in the industry. And -- but it is the fact that when our customers invest in OpenText, they're investing over a period of decades and not for a point solution.

 They will often invest to begin with in a specific business case, but they'll invest in that business case informed by turning on many more business cases as they go along. And it has to be a decade-long decision to invest in the kind of solutions that we provide, and because BMW have turned over their e-invoicing as a managed service to OpenText for the specific geographical requirements about how they transact from one country to another. And if you're going to hand over that kind of trust to an organization, this has to be a decade-long decision. Nestle has one of the -- if not the largest and most complex supply chains in the world, which is managed by the OpenText Managed Services in the OpenText Cloud.

 And just one more example from these logos, we're adding new G10K customers all the time at one of our recent new logos added in as Google, very proud to have -- big in the Bay Area myself to have this top technology organization who trusted OpenText with their worldwide partner experience with our experience management systems. And I'll explain to that -- to you a little bit later on in the case study.

 So what we're finding is, our customers invest for the long term. They satisfy an immediate business case where they need a set of integrated suites not point solutions so that they can turn on new business cases as we move along. And you'll see later on an example of a customer who's moved around all of these different sets of integrated suites and has started at the top there in security and then moved into eDiscovery and then overthrew our content services and has put in together long chains of intertwined processes that are managed by our integrated suites.

 So customers are our ultimate advantage, and this is how we serve those. We have 2,000 field-facing sales professionals servicing our customers. We serve those customers. We listen to those customers. What we learn together in our partnerships with our customers, we can then bring that wisdom and insight to other organizations and help to lead through digital transformation.

 Our focus, the bulk of our investment and focus, is on the largest organizations in the world, the G10K, the largest global organizations and not just in the private sector but in the public sector as well, of course. And that's where I'm very proud to have a large enterprise selling team.

 This is enterprise sales, as Mark said earlier on. This is high touch. This is a human being who we've loaded up with our kind of franchise model of the wisdom and insight of all of our organizations. A human being sat at the table with a CIO of one of these very large organizations, guiding them through their digital transformation and information strategy over the next 10 years.

 And there isn't a shortcut for this. This is what we mean by coverage. We need to equip our enterprise sales force with the capability to do that as we expand. We cover about 40% of our customers with this high touch enterprise relationship today. We will increase that, it means there's 60% of opportunity for us. I'll talk about that in a moment. And I'm just proud to have this large set of enterprise account executives servicing these customers. It's like the gem in the crown of OpenText. But there are many other types of roles associated with this as well.

 So we segment our customers. Our largest customers by size, by use of our software and solutions, we call our global accounts and we have specific global account managers who will marshal multiple teams of sales professionals around the world across the geos, across all of the products so that we've got one point of contact at an executive level with our largest customers.

 The bottom of the triangle, it's a volume play. Getting our messages out and our solutions to as many people as possible through inside sales representatives, through our meaningful partnerships. It's a force multiplier into new geographies with different domain expertise. And they're supported by teams of solution consultants in presales by value engineers. Very important, these are the individuals who are trained to make the business case with the customer and business development managers and ADRs, our account development representatives, are constantly hitting the phone, talking to targeted customers around new conversations about OpenText and new things that we've learned and new innovations that they can offer.

 So is the OpenText go-to-market model. This services the opportunity. And -- but I'm going to talk to you about growth today specifically, and our opportunity to grow can be summed up in these 4 broad categories. We are going to open up new G10K customers and we're going to increase our coverage. We have a plan over 3 years to double our coverage from where it is today.

 We're going to develop our installed base, which is our strength, 27 years of experience, 74,000 named customers, only lightly penetrated with the solutions that we're able to offer them. All of them setting off on this journey where they start in one place and then they expand.

 And we're going to extend our reach above our plans for G10K coverage, to more about G10K through partners as a force multiplier and also to those smaller companies below that line. And then this once-in-a-20-year-opportunity for us to Migrate, Modernize and Monetize into the OpenText Cloud as more and more demand we see from our customers and our prospects to move in to these services and into the OT cloud. So I'm going to talk to you about each of these small topics and then I'll sum up after that.

 First, the G10K coverage model. You've seen this slide from Mark. Knowing where our target customers are, reducing it down to 10,000 or maybe 12,000 with the public sector entities that we target, reducing it down to a finite list gives us a precise tool for planning. A precise plan about how we can expand across -- there are 10,000 companies here across these locations, we're 40% covered. We've got 60% of the opportunity to go.

 Mark gave an example, in Europe we don't cover Alliance, Alliance right now, one of the largest -- prolific in financial services and insurance. But it's an uncovered account right now. For U.S. example, whilst we cover their largest competitor, we don't currently cover Macy's, just by way of an example. So there's some huge organizations out there, which we're expanding and growing in and towards.

 And this expansion is a low-risk path to grow. It's a well-trodden path. What we've learned from the 40% of deep coverage that we have today, it's easily repeatable as we expand the sales force to our playbook, to our franchise model, if you like. It's very repeatable. It's the straightest line towards growth for us. And if nothing else, this is the key to unlocking growth year-on-year and consistency inside OpenText.

 But then, we've got our existing installed base as well. So point number two from our heads-up slide is about how we develop inside our installed base. Customers invest in OpenText for an initial, we have to prove our initial business case, but they invest with strategic intent. They do not want point solutions, they want integrated suites. They want to go from one business case to another to another to another. And you'll see examples of this when I cover my customer case that -- it's like ERP. It's like the ERP story 20 years ago where a customer I met HR solution for example, and then they would go an integrated suite inside the ERP. But you very rarely meet an ERP customer now who is 100% all on the same ERP system. And it's the same story with OpenText. We're expanding out. We provide that runway for our customers as they invest in business case after business case.

 So I think our huge installed base, which is only -- we are, on average, 10% penetrated with our solutions. Having a new conversation every day with that customer, to different buying senses, different lines of business and our account-based marketing approach allows us to cross-sell and up-sell for our second of the 4 major growth vectors that we have in OT.

 The third is partner, it's the force multiplier, of course. We divide up our partners into these broad categories, ecosystem, large players like SAP and Salesforce, which we have world-beating partnerships with. And the global SI, it's the top 7 system integrators, ladies and gentleman, that we have deep relationships with including the Deloitte quote, which you see below, which is about how the combination of OpenText and Deloitte provides a unique value to customers together that we couldn't see independently.

 Our managed partners are those smaller partner organizations who have specific reach into geographies that we don't have or they have specific domain expertise or perhaps they have mastery in a particular vertical or a set of vertical value propositions. I develop a community who's constantly building new applications, using AppWorks and our open services and OEM, which is a burgeoning area for our business where organizations want [to enable] our technology inside their own IP and to give additional value to their own customers.

 Just a few examples of recent partner announcements, very recent partner announcements, to give you an idea of the meaningful partnerships that we have. SAP trusted OpenText in an industry-famous relationship for the last decade for enterprise information management for their off-cloud. And they announced in May 2019, this year, that the next decade with a big push to S4/HANA in the cloud is going to be with OpenText as well. They're going to trust enterprise information management, [our whole enterprise] solutions, over the next decade in the cloud. And we're very proud to join them in the cloud, which is one of the biggest events for SAP themselves, as it is for us.

 Google announced just a month or 2 ago that we will -- that we are their enterprise information management service for the Google Cloud.

 And we have partnerships like Mastercard. You'll hear a bit about this in some other presentations as well. They joined with OpenText in our supplier portal to provide a seamless service for automotive manufacturing organizations, including being able to factor trade, the millions of dollars of trade that we push across our cloud.

 And talking of the cloud, let me introduce you to the OpenText cloud briefly, ladies and gentlemen. We divide up -- the OpenText is not a mono one -- amorphous service, it's a collection of high-value services for our customers at great scale. Our trading grid, for example, has over 2 million trading partners, and organizations like my example Nestle, the largest, most complex supply chain in the world, trusts our trading grid to support their systems.

 Our Managed Services, I have a slide about in the next slide, so I'm going to come to that in a moment. Security identity, 60 million identities managed in our cloud. 40 million end points secured. VAN, our Value Added Network, has trillions of dollars of transactions passing to and from organizations every year and on-demand messaging, our ODM service, provides a unified messaging platform for some of the largest organizations in the world.

 And our SaaS application, we have -- in our SaaS applications, we have vertical apps, we have our e-signature and we have our business collaboration file sync and share. Let me just zoom in a little bit to the Managed Services.

 And this is the Migrate, Monetize -- Modernize and Monetize, our 3M strategy. A huge demand from our customers, burgeoning demand. This is like a 20-year opportunity as they shift workloads. We love Managed Services. We absolutely love it. Some workloads are moving to our SaaS applications, and we'll give you an example of that in just a moment. But for many of our customers, it's their competitive advantage is bound up in their customizations and the configurations and the way that they've got their systems in house and the integrations that they have added to their systems. We can take that and lift it up and we can get that customer all of the benefits of the cloud, lower total cost of ownership, 409's best-in-class uptime, highly secure. Never have to worry about upgrading again. We -- you can take all of those benefits up in the cloud without using any of the critical IP and competitive differentiation that they have with their current systems.

 These are hybrid workloads. You'll see an example in a moment where we've taken a customer, we've got workloads in our SaaS applications. We've also got them in our Managed Services. This is about Migrate, Modernize and Monetize. And that's a whirlwind tour through our 3 sections there. We saw developing the installed base, we saw adding new G10K customers for growth. We saw partners as a force multiplier. And we saw Migrate, Modernize and Monetize and a couple of customer examples to just to fill this in.

 Pacific Life, great customer, existing customer growth for OpenText and talked to us about moving to the OpenText Cloud. They saw high value in some of ours SaaS applications, but they wanted to maintain their differentiated and unique solution that they had off-cloud as well. We took them into the OpenText Cloud. They moved, they migrated. They went to the very latest version, which is a platform for innovation. There is the modernize for you, modern performance, delightful use of interface and user experience.

 They used our SaaS applications but they didn't just move our data. So as a trusted customer, partner, with OpenText for their off-cloud solutions, they took that out and gave it to us for our Managed Services. In the process, not only did they modernize the system that we were providing for them, but they used this as a consolidation event. And this is very common. And so they decommissioned a very fragmented enterprise information management structure inside their own organization and they moved all of it into one platform in the OpenText Cloud, including several of our competitors, so for example IBM. They decommissioned and migrated out of that into one platform. A great example of Migrate, Modernize, Monetize.

 This is a top 10 global bank. This is a long-term customer, which I know well, and they started off -- this is an example of how a customer starts with one business case and then starts to move out into our integrated suite. This customer started with our security and end point management with over 500,000 end points managed by our security solution. Those same agents, the security can be used for collection. And they use us for eDiscovery of that collected information. It's only a short step to total regulated content management inside the organization, they're extensive uses of our Documentum in this organization.

 And most recently, they're investing quite heavily in new business cases with us. They have automated the process of onboarding new customers in KYC, Know Your Customer. They've added Capture from OpenText. But not just Capture but our artificial intelligence Magellan as well. They apply Magellan to the capture process to derive better information and a faster onboarding process for their customers. But they also apply Magellan after the onboarding process so that they can run for reporting and audit around their customer information. But our AI automatically redacts personal information in these reports and gives them great value through that whilst keeping them working very quickly and yet in a highly regulated environment.

 Final example, I'm very proud to add Google as a new logo this year. They've entrusted OpenText and [R&D] with that partner experience, an experience which delights their global partners using our web content management system team site. It's beautiful but it's also highly functional. One of the key drivers here was our deep integration with Salesforce.com. And it's a good example of our meaningful partnerships in our ecosystem and using our state-of-the-art user experience technology but deeply integrated in the cloud with Salesforce.com. I am very proud to welcome Google to our list of customers.

 Okay. So a whirlwind tour. I hope you stayed with me, ladies and gentlemen. Let me just recap. Our customers are our ultimate advantage. And we -- I told you today about how people develop our installed base. We're only partly penetrated in an enviable and I would go as far as to say unassailable position in terms of our customer base in the market. It's a heck of a competitive differentiator and a blocker for any new entrants.

 And I've told you about how we plan over 3 years to double our coverage across the G10K. Huge opportunity for us. More opportunity out there than there is coverage that we've already realized, from around 40%, we've got 60% ahead of us. Our partners is the force multiplier, and our 3M strategy around Migrate, Modernize and Monetize, it's like -- it's a 20-year event, as Mark said, it's like Y2K. It's like client-server. I mean -- I think we've all been watching the tech industry long enough to see that there are these big events and the shift to the cloud is a big event for us and for our partners.

 And lastly, and certainly not least, ladies and gentlemen, I'm very proud of my team and our work in an organization as one of the largest high touch enterprise sales teams, true enterprise sales team in the industry. And our model, the OpenText Way, our franchise, if you like, our way of having a playbook as set of account-based marketing principles, a way of educating with the wisdom and insight that we've gained over the last 27 years into a repeatable sales model, which we're going to land in a new set of accounts or a new geography with consistency and is fundamental to our growth model.

 Thank you very much for listening to these sales messages, ladies and gentlemen. I'll see you for the questions later on today. I like to introduce Muhi Majzoub, our EVP of Engineering. Muhi, welcome to the stage, there.

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 Muhi S. Majzoub,  Open Text Corporation - EVP of Engineering   [4]
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 Good morning, and thank you for being with us today. So we'll spend the next 30 years (sic) [minutes] diving deeper into product and innovation. So let me tell you a little bit about myself. I've been with OpenText 7-plus years but around Silicon Valley for 30-years plus. Many years at Oracle, many years at CA and a couple of startup experiences.

 If you look and build on the message that Mark shared with you earlier this morning, very important you understand and few takeaways. One is OpenText has a cloud-first strategy in everything we do, all our innovation. And as we walk through the deck, I'll share with you a lot more.

 Second, we are leaders and very proud of what we have achieved in content services in the business network. That's big part of our heritage and where the company started. But it's so important to understand why we are leaders. We are leaders because of 3 things. One, the breadth of our solution and the strength of our product offering adds a lot of value to our 74,000 customers. Two, the integrations we have done as OpenText grew through acquisitions, we integrated the solutions to add more value to our customers. It's the second value that we add to customers today. And three, we created EIM, and from day 1 in EIM, we communicated via a hybrid company, meaning we give the choice to our customers to choose if their data needs off-cloud, on-prem, the data goes fully SaaS or Managed Services in the OpenText Cloud or any hyperscaler or they could pick and choose certain workloads to the run in the cloud and keep certain workload close to heart in their own data centers.

 Few years ago, we announced OT2 as our future innovation for SaaS, and I'll share with you a lot of the successes that we have with OT2 in some of the innovations that we have delivered. But if you look at the product advantage, and you look at the history of OpenText, started as a search engine company. Moved into ECM and document management. Moved into the business network with the GSX acquisition and EasyLink. And in the past 7 years have matured to bring artificial intelligence, machine learning, eDiscovery Analytics, IoT, identity management and security and end point security and forensics. It's important you understand that when we, 6 years ago, created the term EIM, every one of the acquisitions that followed came in to add value and to fill new innovations in EIM. And through the integrations we have done across all of our products, we are able to take the business network, fax or on-demand messaging and integrate into machine learning. We are able to take our content services and document management and integrate to any there a source that is relevant to you, whether it's an ERP system like SAP or Oracle E-business Suite, whether it's a CRM system, Salesforce, whether it's an HCM system, success factor or Workday, all of these integrations allow our customers to protect their content and their information all in one place. Secure, scalable and provide you all the data compliance and regulatory needs plus the analysis and insight that you require from your data. And the future for us is continuing to build on OT2, continuing to deliver vertical applications that integrates into EIM and add more value.

 We are very proud that the industry, our customers, our technology analysts, have responded very well. The areas that we focus in, we are leaders. We compete well because of our product richness, because of the integration, because we give customers the choice to deploy anyway they like that meets their need depending on where their journey is.

 Example -- 10 examples of leadership positions that you see in content services, business network, media management, eDiscovery, text mining and AppWorks. Everything we do in engineering is based on adding value to our customers. Every person day we invest into development or research is to add value. A few examples.

 Taking content services and document management and being able to deliver federated compliance, meaning your content can sit on a file system running in your data center, they could sit in a document and they could sit in OT2, core collaboration in content suite and we're able to give you the compliance and federation. We're able to give you record retention policy regardless where their information sits.

 Taking our business network and integrating our business network into content sources like Veritas or D&B and be able to extract knowledge of certification and ethical supply chain. And from within our trading grid, giving our customers the ability to review every one of their suppliers and make sure that they achieve the ethical supply chain certification that they require. Taking our Cordys and IoT and IAM and delivering identity access management for the 9 million GM customers that require OnStar services in their vehicle. Securing the identity of the user, the human, the car, the machine or the device, if you will, and the application, OnStar. Being able to do all of that innovation within our EIM solution. Being able to deliver workload in the cloud that you could take subset of your content from content suite or Documentum or media management and putting them to share with a third party supplier, with a law firm that is helping you on a case and be able to do all the compliance and electronic signature needed and I'll give you more detail on that.

 And at the end, having the right platform that is modern, that is secure, that is scalable, that could deliver this innovation, whether it's a vertical application for life sciences, a case management app, a collaboration file sync and share and intelligent machine learning app, delivering all of that securely in the cloud.

 How do we invest at OpenText today? 60% of my investment in R&D goes into innovating on top of Our existing strong platform. Again, it ties back to adding value to our customers in everything we do. These are platforms like the business network, fax on demand, Content Suite, Documentum, Media Management and dozens of other leadership position platforms that we have.

 30% goes into new innovation to take IoT to the next level, to take our security guidance, forensic analysis, hardware imaging solution to the next level, to deliver new applications that are SaaS-running on top of OT2.

 10% of our investment, we invest into looking forward, understanding where technology that today is being tested will be in 3 years or 5 years. Things like Blockchain, things that involve IoT and new sensor devices, things that involve security and where we believe the needs for securing the information we have need to be in 3 years and 5 years.

 We have 3,500-plus strong engineers globally. But there are a few data points that are important. In the last 8 years, we've quadrupled the engineering organization and the R&D investment at OpenText. We have a 1,000-plus patents, and we have a solid program to encourage our engineers and our scientists to continue to submit working with our legal department and our patents team to continue to grow our IP in patents.

 And we run a very lean organization that runs today 11% to 13% in expense. And what's important in that data point is we are a lean organization because we have mature development processes that understand how we communicate with our customers, extract the requirements they need in their solutions and how we build it. We built it once and we integrated many across our portfolio when these capabilities or functionality are needed across different systems.

 You've heard a lot about the OpenText Cloud, we are very proud of our innovations in the cloud. From scalability to security, we power billions of transaction, 22-plus billion transaction flows through over business network every 12 months. 74,000 customers have trusted OpenText, 3,000 of these customers have taken solutions, as Ted highlighted, like Content Suite or Documentum and asked OpenText to put it in the OpenText Cloud and run it for them.

 We are very proud of our achievement in security and what we have done in Identity Access Management, to continue to power and secure the identity of human applications and systems/devices.

 And at Enterprise World, we announced Release 16 for OpenText, was the strongest release we have delivered that is integrated and very feature-rich. And with our cloud-first strategy, we announced in July of this year at Enterprise World in Toronto that all our product will be cloud-enabled and will come to Release CE. So Release 16 will move to the next generation, which is Release -- OpenText CE. That means it runs anywhere, of course, the OpenText Cloud is our first choice. But we could run in any of the hyperscaler, Amazon, Microsoft Azure or Google. It is containerized, Docker-enabled and Kubernetes-enabled for automated deployment, making the value return to investment to our customers much faster in how they deploy and how they manage the Oracle software going forward in their data center or how our OpenText Cloud services delivery team can manage it in the OpenText data center or our customers can manage it in a hyperscaler.

 Of course, customers still have the choice to run Release CE in their own data center, managed by their teams, by their IT organization. It is all about continuing to deliver to the commitment to customers that they have a choice to run our solution any way they want.

 With the strength of Release 16, it's important you know and understand how bright the future is for OpenText from a technology and a platform perspective. So if you look in the center of the screen here, these are all the platforms that we run today. And they provide certain capabilities.

 But now look at what OT2 will wrap the strength of our platform with. We took all of our platforms and developed services, microservices that, as Mark highlighted, microservices sounds very small. We deliver content services. We deliver intelligent capture services. We deliver authentication services. Those sit on top of the OT2 platform that is modern and scalable, powered by tools that are available on the open source, that have been used in many technology companies like Hadoop, Spark, Cassandra, HTML5, JavaScript, these are -- allow us to build scalable platform in our cloud. Then we integrate machine learning and AI and analytics on top of it and now we have a platform I could build hundreds of vertical applications.

 In July of this year, we announced 6 new applications that were delivered in the last 12 months within OpenText. We allowed -- delivered Extended ECM for SuccessFactors, running in a Native-SaaS multitenant offering to our SAP customers. We delivered experience insight for our Media customers and Exstream. We delivered Core Signature. We delivered Quality Center. We delivered Contact Center and many other applications that run and leverage one and many of these services.

 If you look at the past and walk with us through the journey. In the past, we had many products, some were organically built at OpenText, some came through acquisition. With Release 16, we brought these products together and started integrating. We delivered hundreds of integrations and touch points across all of our platforms.

 In April of 2020, we will deliver the first release of CE, with a cloud-first strategy. Every one of our product will be container-enabled through Docker, will be Kubernetes-enabled through automated deployment. And with integration to OT2 through these catalog of services, we are able to deliver the future generation of OpenText applications that could be vertically needed for the legal space, for life sciences and many other or could be specific to content services, machine learning analytics or any other part of our portfolio.

 I'll give you 2 customer examples, and I hope to highlight one thing, is the innovations we are building are adding value to customers. And they are adding value to customers very quickly. I'll start with Kohler.

 We acquired Hightail in January of this year. In under 90 days, our innovation machine delivered the first integration to Hightail, with Media Management running off cloud or as a managed services where customers that are running our Media Management solution can come to our cloud and can integrate subset of their content and share it with third-party. We demonstrated that solution and that integration to Kohler and that was a use case that for many years they've been looking to achieve to share content with their partners and suppliers.

 European Central Bank is a similar use case, a user of our Content Suite solution that needed to collaborate with 160-plus banking affiliates in Europe, are using the 2-way sync between Content Suite and core collaboration to share a subset of their information in the cloud, secure, audited, compliant with 2-factor authentication with encryption at rest and in transit with all the compliance that they require for their business. These are 2 examples of many use cases where customers are choosing the hybrid approach to leverage our innovation.

 I'll have a little bit deeper into the product content services. 2 years ago when we acquired Documentum, we committed to modernizing and improving the Documentum platform. And Documentum is flourishing at OpenText. We have built-in UI. We have built mobile application. We created Extended ECM for SAP for Documentum. All of these innovations, we're delivering on customer demands and customer commitments that we made a year ago, 2 years ago, 1.5 years ago.

 In the business network, Mark highlighted project Emerald, and this is very important for us. Project Emerald brings ethical supply chain to our 60,000 customers in the trading group, allowing a customer to look at the list of their partners and suppliers and then through integration to D&B and Veritas, we're able to extract and bring into the trading grid all the certification for ethical supply chain and make it visible to customers in real-time in the trading grid. Many other integrations, building a portal for our fax and notification and SMS solution, integrating into machine learning, integration into core and integration into analytics for insights for the trading grid.

 Magellan, is a growing area for us, but it's a young area for us. Magellan is less than 4 years young at OpenText. And many advancements and innovations are happening, but I'll highlight a few: being able to bring self-service capability to data scientists, where they could build algorithms, leveraging tools like R and Scala and Python without having to write physical programming code. They can write English languages that gets translated behind the scene and then developed into algorithm to leverage the Magellan text mining engine, the Magellan predictive intelligence engine.

 And security, we are looking to grow how we support the landscape. So today EnCase security supports the Windows platform. We are looking to expand into supporting the iOS devices, the Mac OS, the iOS smartphone, Apple phone, the iPads all of these will come in. We're integrating our security solution to deliver capabilities through Magellan where we provide you security dashboard as you see in the screen on the slide, that allow a security officer or a security team within a company complete visibility into abnormal behaviors in their end points into data and be able to trap and produce alerts and notification to a security team.

 Enterprise World in July of this year, many announcements were made, one of which is OpenText CE and bringing all of our solutions to the cloud, running in a Docker container and with Kubernetes automation. We announced the SAP partnership for content services in the cloud. And this is very important. I know Ted touched on that, that we have done -- our partnership with SAP is 15-plus years.

 SAP went out for a year process and evaluated cloud vendor, Native-SaaS multitenant cloud solutions. Box, Dropbox, Alfresco. They looked at FileNet if they have anything to offer in the cloud. And they selected OpenText as their content services for every one of their cloud applications. Every one of their cloud application that have content services, workloads or needs to upload a document and protect it and save it, they will leverage the content services from OpenText in OT2. They will leverage over machine learning for intelligent capture, will leverage it for invoicing, for expense receipt and to many other areas.

 Our announcement with Google is equally important. We offer Google content services in the cloud and enterprise services that today Google cannot offer themselves. We can leverage services from Google like translation. Where if I am in my Brava viewer, looking at a document that came from Spain but unfortunately, I don't speak Spanish, I could quickly leverage Google translation in real-time to translate that document to English. And I could store both version of the document and attach it to a record in a contract or in a case management. These are capabilities that will add value to many of our customers as they use these solutions.

 And let me summarize a little bit where we are. Again, we are a cloud-first company. Everything we deliver and everything we work on is based on customer value, customer demands. We value the relationship that we have with our customers through many of the interfaces, events like Enterprise World, customer advisory board where we get to bring 100-plus customers or 50-plus customers in different locations in the world and learn about their vision for our solutions and our product.

 We have a compelling roadmap that we deliver to, and we have the credibility that when we make commitment every year when we stand in -- on stage at Enterprise World, we make certain commitment to new products, to new applications. And then the next year when we are back on stage in front of these customers, we deliver to this commitment and we produce customer examples that have taken innovations from an acquisition or an integration that happened in 90 days and we have customers using it 120 days later. And we're very, very proud of that.

 And we have built in OT2 a platform for a solid Native-SaaS applications, and the goal is to deliver 3 to 5 applications every year going forward. These applications can be vertical-related. Life sciences is very important to us. So we plan to build many of the life science's needs. We are already working on regulatory compliance and partnering with large pharmaceutical companies like J&J and Merck. We are working on more advancement to our Core Signature to integrate into contract management, to integrate into case management and other solutions. We're working on more AI, workload for the cloud and look forward to sharing some of these with you in future events like Enterprise World or other opportunities like this.

 Thank you very much.

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 Harry Blount,  Open Text Corporation - SVP of IR   [5]
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 Okay. We are going to take a 10-minute break. We will resume promptly at 10:30. For those of you on the webcast, you'll be hearing music until we resume. The first presentation after the break will be from Gordon Davies who is going to talk about our corporate development pipeline. Thank you.

 (Break)

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 Harry Blount,  Open Text Corporation - SVP of IR   [6]
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 Who is going to win the football. All right, everybody. Hopefully, we'll be flipping the webcast back over momentarily. All set. Okay. Welcome back, everybody, to the second half of open Tech's Investor Day presentations. You'll be hearing 3 more executive presentations, followed by a question-and-answer period for the entire executive team.

 Our next speaker will be Gordon Davies, who is our Executive Vice President, Chief Legal Officer and heads up our corporate development. And also I want to draw your attention for those of you here in the room, that as you leave, we have a copy of Mark Barrenechea's book on the Intelligent and Connected Enterprise that you are welcome to have as a complementary copy.

 So with that, I'm going to turn it over to Gordon, who will tell us more about our M&A strategy.

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 Gordon Allan Davies,  Open Text Corporation - Executive VP, Chief Legal & Corporate Development Officer, Chief Compliance Officer & Secretary   [7]
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 Okay. Thanks very much. Welcome back from the break, everyone. It's a pleasure to be able to speak with you. I am going to talk about 3 themes, today, in my presentation: the first is growth, the second is expertise and the third is financial discipline. Those 3 things, as part of our total growth strategy, make up the M&A advantage.

 From a growth perspective, M&A is the largest contributor to our total growth strategy. It's part of our core competency, and it's part of our DNA. Although we're on a young journey, OpenText has had over 50 acquisitions in its young life.

 Corporate Development expertise. We have a robust corporate development team that covers all aspects of building from a full pipeline of strategic opportunities through execution and then acquisition and very importantly, through integration.

 And then finally, through financial expertise. We're disciplined by value [bars,] and our key metric is ROIC. You've heard that from Mark, you'll hear that from Madhu, and you'll hear that from me a few times.

 First, about the team and the expertise. We have a dedicated team of M&A professionals that actually exceed over 25 individuals, who lead or are responsible for the full life cycle that I talked to you about.

 In terms of expertise, I gave up counting, actually, the number of years of experiences we have with this team. But it goes into the tens, if not hundreds, hundreds of years. Fairly highly skilled leaders. They're very valuable contacts in the industry and very knowledgeable in terms of how to run a deal. We add to that expertise in technology and within go-to-market as well. And the importance of that is twofold: one is to ensure we do effective due diligence, and the second is to ensure we do effective integration.

 Thirdly, and this is where the financial discipline comes in, we have a robust financial modeling team. Deep understanding expertise comes out of that group. They build sound business cases, and again, that helps us in our financial discipline but also helps us in terms of due diligence and ultimately, in integration.

 And then integration excellence. I'll talk about that a little bit more in this presentation as well. We have deep institutional knowledge within that group. There is a team of 6 people just within the M&A group itself who do integration on a full-time basis and bring that expertise to the table.

 Our acquisition criteria, as Mark has said and I'll repeat again, we must meet hour high teens ROIC. That is always the key in every single deal. Mark touched on our revenue multiples that we sometimes see in our deal, and you can look historically and see revenue multiples that typically have a landing area between 2 and 3x. The constant will always be when you look at those acquisitions is that we deliver on high teens ROIC. The other thing we deliver on is getting those businesses to our target margin. We have a solid track record of ensuring that we can bring these acquisitions within a 12-month period on to the OpenText operating system and business model.

 There's 4 things that we focus on, and that's -- that will hold true whether it's a small- or medium- or large-size acquisition. One is the leadership position, looking for recognized leaders in key market segments to assist us in growing the business. The second, market penetration. Deepening relationships with our existing customers. Muhi and Ted have touched upon that in particular, both the importance of deepening our relationship with existing customers through products or through acquisition -- through growth internally or through acquisitions.

 The third is the value for OpenText customers, enhancing our product offerings and capabilities. I've a got a case study or 2 at the very back end, which will demonstrate that.

 And the fourth, which is always the thing that you're looking at, is whether you should build versus buy. Looking at our new capabilities, looking at the product the customers are asking us for and making an assessment as to whether we should build that internally or whether we should buy. And within that -- the context of this acquisition criteria as well, we've tried to bring additional focus. And Mark talked about that a little bit when he noted in his executive team, that we've got Prentiss Donohue now, who's leading the OPG team, which is the OpenText Portfolio Group.

 That group we have brought together, and I brought together as well the expertise within the corporate development and M&A team as well, it's going to enhance our focus on the smaller acquisitions. And that's going to bring to us a focus in an area which we're able to grow on. But I think also very importantly, what that's going to enable us to do is to implement our playbook in that area and get more predictability where we can operate and where we are going in the OPG model. So very excited about that.

 Acquisition strategy. Two things I want to talk about there: one is what we target, unlocking the value; and then demonstrate, once again, the importance of the OpenText Business System.

 As Mark said, we evaluate our businesses within the context of the information company, within the EIM strategy. Within that context, we're going to look to fill white spaces. We're going to look at vertical capacities and capabilities. And we're also going to look at opportunities geographically in order to extend our footprint around the world.

 We value recurring revenues. James is going to talk about that a little bit. And as I've indicated before, we need to see a path to the higher margins. We need to see us to be able to get on the acquisition, get on to our system within 12 months and we need to see strong cash flows.

 In order to do that, there are certain things that you need to see within a potential acquisition. Strong leadership teams is perhaps an obvious, and we focus very much on culture and on leadership within those acquisitions. Disciplined engineering is another example as our distribution models.

 And then finally, and Mark highlighted this as well, very importantly, when we're looking at a potential acquisition, we're looking for acquisitions that are going to benefit from the OpenText Business System and OpenText's continuing scale. You'll see example of that in one of our case studies, as well perhaps Documentum as one of our great examples.

 Within that OpenText Business System, as I've mentioned before, we've got a dedicated in-house team sourcing the integration. We have very clear and consistent business model, so we apply in every single context. We have clear cash-based returns, and ROIC is king.

 Cost synergies are -- is something else that we absolutely focus on, turning free cash flow and driving more value for our revenue synergies.

 And then the last part that I'll talk about, which is a combined thought, is really the onboarding. The onboarding is really all about integration, and it was mentioned when I was introduced also the Chief Legal Officer. And perhaps, a lawyer would tell you that the most important thing when you're doing an acquisition is the purchase agreement, which is negotiated in quite some detail right down to the last semicolon. But in fact, what delivers success in an acquisition is integration. And integration is a maniacal focus for us.

 Talking a little bit about the current acquisition environment. Internally, we're certainly seeing a robust amount of work happening in the corporate dev, M&A space. Deals are being sourced from a multitude of different sources, be it internal and external. We're certainly benefiting from all of the relationships that our employees and our corporate development people have. But we're also seeing it externally in terms with relationships we have with investment bankers and others that you would recognize.

 We have a very active outreach program and a robust funnel. And I think funnel is the right analogy as there really is a process that we have a to go through. And I'll talk about the diligence a little bit of taking that robust funnel and narrowing it down through our diligence and our financial model to look at acquisitions that will actually be able to benefit from the OpenText model and achieve the objectives that we set out in terms of delivering products to our customers. And then again, focusing on the integration excellence.

 Externally, we're actually seeing an uptick this year in terms of M&A volume versus 2018. And I think part of our financial discipline, our remaining diligent, our being patient, our being confident in our business model, is paying off. And you're seeing valuations now declining and some are becoming much more attractive. And so we see very positive signs from that perspective.

 Diligence, so I'll talk about that a little bit more, given it's important within M&A. As I mentioned, we've got a very robust due diligence process and a lot of expertise in order to carry that out. And I've already made the point as well about the integration efforts and what we need to do within the first 12 months.

 The corp dev team owns integration right through to getting that over to the business model, which is an important part of our objective. We do not turn it over to the business day 1. We work in partnership with them. We get them to the business model before it 100% goes over to the business side.

 But the expertise doesn't just exist within the M&A group. As I mentioned, it's been not a long journey, a young journey for OpenText. But we've got a lot of muscle memory in doing over 50 acquisitions. And you see that within legal, within HR. You see it in marketing, sales, professional services. You see it in engineering and importantly, you see that in finance and tax as well. So the purpose of this slide is really just to demonstrate to you the muscle memory that exists within the -- within OpenText.

 Our approach to integration excellence. The accelerated 12-month time-to-value model, I will put up against anyone in the industry and I'll argue that it's one of the fastest in the industry as well. We go to full integration. Full integration is incredibly important to the acquired business within OpenText, and we have a robust change management process, focusing, I would say, day 1, but I'll actually say before we actually close on employees, customers and vendors.

 And importantly, we had to ensure this part of the integration that we maintain an important governance model that exists within OpenText and continues to exist with our acquired entities as well. We very much run an integrated management model and have quite a formal approach as you would hopefully expect in terms of integration committees, steering committees and things like that.

 But the point I would make, at the bottom of the slide, is that we hold everyone accountable to that business case as well. So when you're going through the integration model, it's also an accountability model, and you're also seeing metrics that are being put out there to ensure that everybody is driving the same objective. Those metrics are proven and those -- and they're repeatable as well.

 I like this slide. It's a little different than the slides that Mark used in terms of acquisitions. Just to give you a little bit of the breadth of the different areas, and I've included a few more of the acquisitions as well and the different areas within EIM information company space. Very proud of the capital deployment. In my area of focus, almost $5 billion since 2014. The number of transactions we've completed within that period of time. And again, if you go and measure ROIC, you'll see a consistent delivery of high teens ROIC.

 Track record of success. So Documentum is one that I mentioned before. A very -- quite a large transaction. And when we acquired it in 2017, you look at Documentum, they were #3 in content management, shrinking business, losing share, declining single digits year-over-year with low teens margin. And they were not investing in their products, their products were stale.

 Today, content services, Documentum is part of OpenText in content services. We are #1. Our margins are on the corporate model, and that business is growing. We've managed within our target to improve margins from low teens through the OpenText operating model.

 Another example of success is a recent one that Ted actually talked about, which is Covisint, which is cloud-based identity and access management, a leader in ENB, with particularly relating to connected vehicle and Information of Things technologies.

 From our integration perspective and what we've focused on is cost optimization as well, bringing that business from negative margins to the mid-20s adjusted EBITDA. And we did that, again, within the first 4 quarters following closing.

 And the evidence, I think, of bringing it in and the success that we can bring to companies like Covisint, is indeed the recently announced partnership with MasterCard that Ted described.

 And then finally, Liaison, which is -- which I think is a great example of marketing and product capabilities bringing to OpenText. The Alloy platform is very focused to us, but also we -- from a product perspective, but it also -- we enhanced our verticals. Healthcare, life sciences, manufacturing, automotive, I think, was an important component of that acquisition as well.

 So in summary, if I circle back to what I first talked about, there's is really 3 key things that we focus on within M&A and Corporate Development. The first is growth. M&A again, the largest contributor to our total growth strategy. It's a core competency. It's part of our DNA. Secondly, it's expertise. And I'll highlight integration excellence because it is the key differentiator in any transaction. And third, financial discipline. Track record of success, high teens ROIC is our key metric. We've got a large market. We've got ample assets, and we've got the financial capacity to execute them. Thank you.

 And with that, I'm going to turn it over to James McGourlay, who is EVP Customer Operations.

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 Christopher James McGourlay,  Open Text Corporation - EVP of Customer Operations   [8]
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 Thanks, Gordon. Thanks for joining us today, So I just want to give you a bit of an overview of exactly what Customer Operations is before I jump into the actual deck. So Customer Operations at OpenText is pretty much everything post sale. So Ted and team go and get the new customers or Gordon goes in and gets the acquired customers and then hand -- they hand them over to our team.

 We've 3,300 people spread across the globe. And we focus on everything from professional services, our global technical support services obviously our annual recurring revenue, which I'm going to talk about today and our overall customer experience.

 So I'll just jump right in. And then obviously, Mark's already touched on this chart about the -- our annual recurring revenue, growing it from $1 billion in FY '14 up to $2.156 billion in FY '19. So great growth in the annual recurring revenue obviously a big chunk of OpenText's overall revenue. And it receives a great deal of attention from the team.

 And I want to talk about how we do that as we go through the presentation today. We've got market-leading renewal and margin rates. We'll touch on those in a second. And I already talked about our global organization of 3,300 people focused on making sure that we retain our customers.

 A focus on providing expertise. So technical expertise, professional consulting through our professional services organization, compelling product updates. Muhi talked a lot about the product updates off the top. A great advantage to us as we're going out and selling our Prime Protect program is the fact that we're bringing along that entire engineering effort that Muhi and team are putting in.

 Security services. So I'm sure you're all aware, today, the focus on security is front and center in every operation, and we believe that is part our service as well. And then compelling customer experiences and organization improvements. I'll touch on that as we go through.

 I mean I think the big message here is this is not an or situation, right? So we're not focused on annual recurring revenues and margins only. We're focused on our customer experience, making sure that we have great performances in our organization, at the same time, we're delivering great experiences to our customers. So high margin, but great experiences for our customers as well. And I think that goes across the entire organization. But I've got it on my slides, so I'm going to touch on it.

 So key financial metrics. So in the cloud, our renewal rates are in the mid-90s, 58% gross margin. And as we talked about, we've got a lot of opportunities to improve that margin as we go forward, right, incremental improvement over that margin over the next few years and onwards. We'll continue to see that growth to mid-60s long term.

 Efficient investment in CapEx. I mean we're making sure that we're efficiently investing in the operation on our cloud side to continue to improve. And that's also helping drive obviously our margin as well as opportunity to grow usage. I'm going to talk a bit about how we grow usage as part of the renewal process as we go through the presentation here. So on both the cloud and on the off-cloud side.

 I've talked about customer support. Our renewal rates, in the low 90s and our margins are 90%. As Mark talked about earlier, we've got an opportunity to continue to improve those margins and continue a bit of expansion there through things like AI, investing in AI and self-service and moving our customers more to self-service, taking advantage of the AI capabilities, taking advantage of features that Muhi's building into the products to make on onboarding easier. And those things will help with our margin as we go ahead here.

 And our -- obviously, best-in-class renewal rates at 90%, and we're still moving forward with improvements there as you'll see in a few moments.

 So the value advantage, customer support programs. So we talked about our Prime Protect program. Our Prime Protect program essentially gives the customers -- our enterprise customers an enterprise-class cloud support program, 24/7 availability. We're providing security updates. We're pulling those patches and those updates forward, the security updates. And we're also giving them access to all future versions of the software, and that's the key feature.

 As Muhi's team continues to iterate through and develop and release on a regular basis, we're able to help our customers update the latest version very quickly, very easily through our Prime Protect program. You can see the features. And they're loyal to the CORE program, which allows our customers access to CORE for full renewal, on time. They get access to CORE for an equal number -- sorry, for a number of users for their user space. So we're very proud of our Core Protect program. We'll stand it up against any in the industry -- sorry, our Prime Protect program. We'll stand it up against any in the industry, and we're sure that we've got the value and the features as you've seen by our renewal rates that brings our customers back year-over-year, again.

 Right. So the OpenText Cloud advantage. Obviously, Mark talked about the growth in the cloud as we started out. In FY '14, $373.4 million -- I'm sorry, in FY '19, $907.8 million. And the reason I laugh is we're having a debate about actual numbers. And Ted went to the specificity that you would expect. Muhi didn't go to it, and I just went there on...

 So we've gone from roughly $375 million to $910 million over that period.

 So how do we do it, right? So how do we -- how did we do that? How did we make that growth? And how do we make that sticky? And what's the value advantage that we bring to our customers in the cloud? Well, it's quite simple, right? Who better to run OpenText software than OpenText.

 We'll give you 1 SLA. We'll give you 99.9% uptime. We'll make that the security is in there, right? And these are things that flow through to our customers and resonates with our customers. It's simplicity, it's security, right? It's availability. Those are all things that we have -- we bring with the cloud advantage from OpenText.

 And when you look at the Managed Services that we bring obviously the help desk, our storage, our ability to expand that storage rapidly, manage backups, monitoring, right? So we've got a team of people that sits and monitors all of our cloud systems as you would expect, but customers don't have to worry about that. They just know that we're going to be monitoring. We're going to be proactive on any of these issues. We have security. We -- have storage is getting full, all the mundane stuff that customers really don't want to take care of. What they want to do is accomplish their business goals.

 And the OpenText Cloud allows them to accomplish their business goals without worrying about the mundane stuff that goes on in the background, like who is poking around my system. That's all taken care of by OpenText, by a team of dedicated professionals. And change of management and hardware procurement, all that type of stuff, we'll take that away and let you focus on delivering in your business. Let you focus on -- if you're a bank, they can ensure that the cash transfers are on time. All that stuff that you can do, using the OpenText Cloud.

 So our customer management model. So we talked about our $2 billion in annual recurring revenue. How do we do it? Well, we use a model that's fairly common and you may have seen it out there before, land, adopt, expand, renew.

 And this is really taking us from right from the start of a customer life cycle, whether it's through Ted's sales team going out and selling a new license or selling a new service into our customer or in another case, if Gordon's acquisition team, we talked about the acquisitions earlier and about how we make sure that we get them onboarded on to our model within 12 months. Well, that holds true for any of our recurring revenue as well.

 We'll bring those customers in, we'll get them on to our systems. We'll get them into the OpenText way of doing things, using our OpenText Business Systems to bring them in. And so it's our starting point. This is our starting point. We get the customers in the OpenText, we -- they've started using our applications, or they've come along via acquisition, right? So getting them on board, making customer success plans for these customers.

 How are you going to be successful? I talked earlier about delivering business value. How are you going to deliver that business value out to your end users? So we work with our customers, build out those plans. We've got our Professional Services team that will help onboard new customers. If you're a cloud customer, if you're coming on to the business network, how do you onboard your trading partners quickly? How do you make sure that your workflows are proper, if you're a software customer, for example? How do you -- how are you making sure that your data management plan is in place? How are you making sure that you're actually going to drive user adoption, right? How are you going to be successful? Now that's all done through our Professional Services organization.

 Adopt, right? So new product plays, making sure that when you go on -- you purchase your application or you purchase your service that you're actually using it and enable to deploy it into your user base, your customer base. Make sure that you get that value again.

 So we have adoption services through our Learning Services organization, or we can work with customers to build out that adoption plan. We can monitor and help our customers move along through adoption. Really consistent communication with our customers and help them doing consistent communication outwards as well.

 One of the things that Ted mentioned briefly and I'll mention briefly again is account-based marketing, right? So helping accounts, helping them, helping our customers market inside of their own user base is really a key thing for us. It's a great benefit that we're rolling out more and more. It really does help with that adoption, helps with that understanding of the capabilities that we have.

 Expand. Build on the delivered value. So we've gone out. You've adopted the software.

 You've adopted the service, you got your trading partners on board, and there's lots of transactions flowing through the system. What's next, right? What's the next business application that you're going to move to. Are you going to expand usage on our cloud, do we need more storage? Do we need more volume? What do you need? How are we going to move that ahead? So our customer managers work closely with our customers all the way through this process to help drive new opportunities.

 And you'll see a couple of things that come out of this expand. You'll get small opportunities that we get out of that - that we manage through our customers -- our customer management team, a small opportunity, additional usage, small professional services engagement that goes into the customer and maybe a small additional feature, that type of thing. And then we'll also generate leads that we pass up through to Ted's organization for a larger transaction. So a whole new use case, for example, and I know we talked about -- Ted talked about some of the customers earning. We have seen cases for our customers, sitting down and working through with our customer management team, working through on our PBR with the customer. And they'll come and say by the way, we've got this project here, we want to do labeling of a specific product or we want to do customer experience management effectively. And that gets passed over to Ted's organization, starts a whole new opportunity.

 So really, there's a couple of different ways that you can see expansion coming out of here. And then renewal, right. So our renewals are generally process-based. Right? We've got a very rigid process that we use for our renewals process to make sure that we get our renewals in on time before expiry. And it's managed through automation and whatnot. And obviously, managing, reducing churn and early renewals, all those things are the benefits of this renewal process. But when you take this all together. And when you put that line across the middle. So you've got a systematic process, right?

 So we do have, as was mentioned, the OpenText business model. We have the OpenText business model for renewals. So when we go -- we do an acquisition, we're pulling all those acquired customers into the OpenText processes. We're able to do that within a very short period of time, and we do aim to be completely through the process by that first renewal term of all the customers. AI-based risk. So as you look at this, I mean if you were to think -- we've got 74,000 customers in the cloud. If we're to apply this model on a person-based basis to all of these customers. That's very expensive. As you noticed, we're not a -- we're a very efficient organization. So we're not running with extra head count. AI is our secret sauce here. AI is what allows us to look out -- look at our customers, make predictions on which customers are at risk? Where do we have opportunities and then direct our resources internally, according to that. So it's a great opportunity for us, and we'll continue to expand the use of AI through our renewals process as part of this land, adopt, expand and renew. And it really does go all the way across the process. And then automation, I talked about briefly off the top there. It's -- we're continuing to automate as we go through.

 We're continuing to automate in the renewals process, we're continuing to automate in various other parts and processes here in the communication. We can pick high-touch customers, low-touch customers, what goes to automation, what goes to AI? And then what is handled by a human, so -- but all the way through the model here.

 Here we go. So customer satisfaction, NPS performance. As I talked about earlier, we're an AND organization, right? So we're highly efficient. We've got a great model for generating return on our investment. And at the same time, we're focused on that customer experience.

 And you can see that 95% customer satisfaction is great score for an enterprise software company. We continue to improve our NPS score, tracking it year-over-year. And as we're going out and the feedback loop with the customer is very important, so that NPS is actually a relationship survey that we do once a year.

 The customer satisfaction is based on our transactions with the customers at each point. So we're getting our score back quickly. It's very flexible. We combine these 2 things together, and really look at it as a trend and where we're going.

 And you can look at the things that customers are telling us back as part of the survey, the highest quality, faster resolution times, mutual collaboration, ease of sales, and best professional services delivery, deliver on time, on budget, of course, right? I mean so these things are all related to help us do business quicker, right?

 Help us get through this process as fast as possible, help us -- help us deliver business value back to our end users. You said -- Mark says, occasionally to us, it's we've never gone faster as a business, right? Business today moves at a huge -- hugely faster pace than it did 5, 6 years ago. But it'll never go slower, right? We will never go this slow again. We're going to be continuously improving.

 And that's what customers are calling us through our surveys here, right? We need to go faster. We need to be able to move ahead, and that's what we're doing. We're building our organization. Our 3,300 people is focused on making sure that our customers are able to move through and deliver business value quicker, which ultimately helps us build and expand on our renewal rates and our margins. So where is this work?

 So here's an example, Michelin, we all know the Michelin Man. Obviously, headquartered in France, Michelin operates in 107 -- 170 countries, 100,000 employees, 67 production plants in 17 different countries and an immense supply chain. Michelin is part of our business network, customer base. And look, in order to minimize risk -- supply chain risk and move production -- improve production, minimize costs, they worked with us over the years. And Michelin has been a long-term customer with OpenText.

 And as a trading grid customer, you -- lots of traffic across the trading grid, integration platforms in Michelin's international operations. You can see the list of products there. So over the last -- in last 6 months, we worked with Michelin on renewing their contract -- their business network contract. And we're able to expand the contract, expand the volume that we're getting through with Michelin, expanded the products that are in place, moving active intelligence and active invoices in professional services and additional services that were sold on top of the existing contract. That was all based on our customer management model in conjunction with working with Ted's team as we expanded that program. So a great success story for us there.

 And Salt River Project. Salt River project is a utility in the Phoenix area, delivering services to over 2 million people in the Phoenix area, a classic content management problem. Content was managed in disparate systems. Labor-intensive compliance processes. And when you are a utility you're dealing with electricity, you've got employees in the field, you need to be sure that you've got the right document, the right version and all that type of thing. So they turned to OpenText to help them to build and modernize their content management products.

 And they're using OpenText Content Suite, Extended ECM for SAP and OpenText Professional Services and OpenText is providing a managed service on-premise for Salt River project. So really an extensive list of products, continue to expand, continue to expand the usage and driving annual recurring revenue for us.

 So commitment to value from the OpenText Customer operations teams. As I said, 3,300 employees across the organization, professional services, global technical support, our annual recurring revenue teams, our customer experience teams, all focused on making sure that our customers are successful. We continue to grow our CSAT and NPS, it's a NAND proposition for us, great customer experience and a great financial operation.

 High-margin model. We're continuing to support and grow our gross margin into the mid-60s, long-term on the cloud. And as Mark mentioned, over and above our not -- current 90% as we move forward on-premise. So some great opportunities for us to continue to improve as we move ahead.

 Renewal rates, 90% and -- sorry, low 90s for off cloud, mid-90s for cloud. We expect to see these to continue to move ahead as we continue to improve our process to continue to refine our land -- Land, Adopt, Expand, Renew process and working in with AI, working with different technologies in order to improve that.

 And then continuous improvement in operational efficiency, both on and off cloud. I already kind of mentioned that when I was talking about the margin expansion, but it's that important.

 We're going to continue to grow, and we're going to continue to grow, both in efficiency as well as in our ability to expand into our customer base. You're going to see us start talking more and more about expansion as we go along here. So I think it was a great opportunity to talk with you today. I appreciate your time, appreciate you really coming in for us.

 And it's now my honor to introduce my friend and colleague, OpenText's EVP and CFO, Madhu Ranganathan.

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 Madhu Ranganathan,  Open Text Corporation - Executive VP & CFO   [9]
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 Thank you, James. Okay. I stand between you and your Q&As. So first of all, thank you to all of you here, and the Investor Relations team tells me that we have over 40 participants online as well. So thank you all for the support and time and engagement.

 So you have all the financials. And you have heard my comments on the earnings call. So what is new that I would like to share with you today?

 I'll go deeper into the operating framework, as you've seen from the materials. And more important, I want to highlight a few key aspects of our business. It's important for us to make sure we emphasize those. It's important that we mutually understand the importance of those and hopefully, we have your acceptance and embracing of those key concepts, right? And at the end of the day, it's about affording OpenText, the value of those key differentiators in the business model, and that's really where I'm going to -- that I'm going to focus on today.

 So the OpenText Business System, it is an advantage. It's proven, it's durable and we absolutely believe it's a winning model for us, right? Profitable growth, total growth model. I'm going to delve into that a little bit more in the performance in the upper quartile financial metrics. You heard -- you heard Mark mention as well, and this is proven with data that you and us, all of us have. And at the end of the day, we are very well positioned to deliver in the next several years as we've done in the past and to deliver solid shareholder returns.

 So as you look at the OpenText Business System, I will say that without exaggeration, I go to bed thinking about the OpenText Business System, and I wake up thinking about the OpenText Business System. And there are many circles around and like around the system here, the one that is very close to sort of my leadership role is the operational excellence.

 And I would point you back to Slide 6 of Mark's presentation, where he mentions the relentless focus on operational excellence and efficiency. So the emphasis within the CFO pillars, not -- and not just within the pillars, but the cross-functional pillars. And you heard from my colleagues today is the tools, the systems and the methods that contribute to the OpenText Business System that drives everything we do. It is everything we do and the financial results that roll up to everything we do.

 I'm going to look back on a few key metrics. And let's start with the total growth and with annual recurring revenues. As you can see, 77% between fiscal '14 and fiscal '19, $4.8 billion of capital deployed. And you heard from Gordon Davies, the in-depth engine we have to support that. That's about 2.1x in terms of revenue multiple.

 On the right, you have annual recurring revenue. And an important element here that, again, it's -- we wanted to be well understood and well valued as well, right? It's a predictability. If you do the math, in fiscal '14, our annual recurring revenue was about 66.5% of total. In fiscal '19, it was 75% of total. And that is significant, and it's a world-class progress when you think about recurring revenue and predictability.

 And getting into just a couple of key drivers there. Cloud revenues were up about $534 million or 143% in the same time period, and customer support revenue was up about 77%. Again, all of this driven by the OpenText Business System.

 So let's look back on adjusted EBITDA and operating cash flows as well, 104% growth in the same 5-year period, $1.1 billion of adjusted EBITDA in fiscal '19. And what were the key drivers? Our gross margin on a non-GAAP basis grew from [70%] to 74%. It was driven by customer support.

 The operating expenses, there are questions we get about, are we investing enough in operating expenses? And I'll share a couple more parameters on that. We grew $377 million in OpEx. The ratio of operating expenses to revenue is reduced, which means we improved during the same time period. Again, think about the perspectives you heard on us focused on productive leadership. At the same time, we have not under-invested at all. We have adequately invested, and I'll expand on that a bit more.

 On operating cash flows, again, it was driven by higher adjusted EBITDA in the same time period, about $562 million. And working capital is a big pool of items that we work on. The notable one I want to share with you is we improve cash conversion cycle in the same time period, about 123%. And once again, all of this is driven by what we call the OpenText Business System.

 Strong balance sheet and liquidity. So to the left, Mark spoke about the self-funded nature that our financial performance has afforded us at this point. And you see the metrics on the left.

 On the right, I will speak to, we have ample capacity for strategic acquisitions and supported once again by the engine that Gordon Davies spoke to you about.

 $940 million of cash at the end of fiscal '19, we have an undrawn revolver of $450 million, about $1.4 billion of capacity. But on the right, if you look at our leverage of 1.5x, is the lowest leverage in a very long time. For strategic acquisitions, and ROIC remains a key metric, we could expand to say 3x. We've done that in the past, but I'll remind you of 2 things.

 As we extend our leverage, we always have a clear path to bring it back to the desired leverage, whether it's 1.5 or 2x. And we've done that. And we did that with Documentum within a period of, I believe, 5 quarters. So again, leaving you with balance sheet strength, flexibility, ample capacity from a total growth model perspective to do strategic acquisitions.

 This is a personal favorite slide of mine, it might look a little complicated, but I'm going to walk you through it. The total growth model, we speak about growth, we speak about total growth. And several of you have questions as to the magnitude of the growth, the profitable total growth model is really what I want you to leave with.

 So to the left of the chart, where does the profitable growth model start? It starts with decisions. Gross margin is a leading indicator of business models, and we are all very much aware of it, of solid business models. So to get to the gross margin, we make decisions at a customer level, at a deal level, at an SOW level as to what the margin threshold should be.

 You can always look at a growth model of an ultimate business model of, say, 30% or 25%. And I would urge you to also look at the gross margin model, and we'll get to the adjusted EBITDA. We had a total growth model and ROIC is a key metric. And high teens is where we want to be. We were at 18.7%.

 So the 2 indicators of a profitable total growth model is we start with gross margin and ROIC. And as you move to the right, we did about 12% on a 5-year CAGR in the last 5 years. Did we invest? Did we invest enough? And I would urge you to look to the right again: product and innovation, go-to-market and G&A and infrastructure; $1.5 billion, $2.6 billion and $1 billion, respectively.

 Muhi talked about investment in product innovation. And in his time period it quadrupled. If you look at by '14 to '19, we've doubled the R&D head count. And we have our Centers of Excellence, right? Canada, India and Philippines. And I think, as you all know, globalization has really afforded us reasonable homogeneity in R&D skill sets. So I would leave you with that. We not only adequately invested, we strategically invested in R&D products and innovation, and we are here to support Ted Harrison's plan of account coverage in terms of sales and marketing investment.

 So what has that done in the 5 years? You come down the chart into adjusted EBITDA, right? And the growth there, $538 million to $1.1 billion. And of course, coming down to OCF. The conversion from EBITDA to OCF at about 80% is a very important for us.

 If I were to draw an arrow, I would say, take the OCF, take it back to an acquired piece of the growth model. Right? And that's the connection there. And we talked about how we've gotten to a point of self-funded in terms of acquisitions and retain and grow. Adjusted EBITDA fuels back into the growth model from an organic perspective as well. And once again, all of it is driven by, I would say, every day by the OpenText Business System.

 And this slide, if I could get you down to the floor. Not the trading floor, but our operating floor. Thought I'd share with you a few elements of our continuous improvement in our operating framework. Again, some of these are baked in our fiscal '20 in terms of efforts and some of these are going to be longer-term. But when you look at our long-term targets of adjusted EBITDA 38% to 40%, and our OCF target, every one of these and more, if you double-check has a role to play.

 So we look at it internally as where do we apply our operating framework and the growth factors? And if Ted Harrison has to expand account coverage, are we sprinting in terms of putting a quote in front of the customers. So those are all the double-click you'll find in terms of operational items in each one of these.

 Cloud-first approach, AI and what does productivity mean? It means doing more with the same people. It means doing more with the same people and afforded by methods and tools, and that's really where AI comes into play. Continuous acceleration of time-to-revenue, very important for us.

 I'll highlight a couple other enhancements. Operating expenses, right? When you look at leveraging efficiencies and content and data, the systems and applications, key focus for us is there's still room to be more efficient in worldwide facilities? Always, all the time. And that's what we look at. And you look at enhancement projects, the cost of sales, as I mentioned, gross margin is a very key and a leading indicator. Mark also shared the fact that, could we reduce the third-party royalties a little bit more? We have world-class gross margins and license, and that's absolutely a key focus for us.

 And cloud, we'll talk about it a little bit more. Cloud has a path to get from our current high 50s into the low to mid-60s in the longer term. And part of that is going to be leveraging our partnership with hyperscalers, so that we remain internally operationally efficient. At the same time, leveraging the capabilities. All of it comes down to operating cash flows, right? Higher profitability and the use of AI, for example, in cash collections is a very key focus, personally for me, and leveraging, procurement and vendor management. We have a centralized global procurement function. And I can tell you when it comes to procurement and vendor management, centralization is a good thing.

 So moving forward, a brief mention of our F '20 target model, how do we plan to get there? On the license gross margin, we've talked about and we're already at world-class levels. Could we improve it through the management of third-party royalties? Absolutely. It's a focus for us. You heard about leveraging AI and automation, customer support. Again, we're sitting at world-class margins. So could we move it a little bit higher? Yes.

 Cloud gross margin, I would leave you with F '20 as another year where we are going to scale the cloud, but smartly invest. But as you look at the longer term, there's a path for us to get from the high 50s into the -- into the mid-60s. And I can't say enough about managing our operating expenses, invest yet have a disciplined operating lens is our modus operandi.

 The long term aspirations, you've heard this too, let me get into a little bit more detail on each one of them. And let's start with our aspirations and roadmap for adjusted EBITDA, 38% to 40%. We remain disciplined while we invest and you see the trajectory of the adjusted EBITDA margin. Fiscal '17 with ECD, we were sort of down a bit, but absolutely able to pick back up. And the margin aspiration is 38% to 40%. On the right, I will reemphasize what Mark shared with you, and this is a new -- and this is a new message from us, is above 40%, the EBITDA dollars we plan to reinvest.

 Its sales capacity. It's coverage. You heard about the low-risk path to growth, which is account coverage. And of course, innovations in products and engineering capacity -- in the capacity as well. So taking that over to the operating cash flow target of $1 billion to $1.1 billion in fiscal '22, that's absolutely going to be driven by the higher profitability. And the productivity enhancement the fine print I shared with you earlier that drives us every day, AI and collection and leveraging and procurement in all aspects of OpEx spending. That's where we're going to be focused on.

 Here again, I would urge us to look at on the left, the chart that got us there. And the path that we are actually going to get to the 38% to 40%. The proven model and the efforts we have in place, we feel confident about getting to those numbers.

 The total growth strategy for fiscal '20, and Mark walked you through each of the line items. What I would add to that is that when we speak about license, we are going to be selling a lot of license dollars. We continue to be a hybrid model. From a constant dollar perspective year-over-year is what we're directionally providing.

 And cloud, cloud is going to be our leading growth driver, right? And customer support, low to single digits. It's going to be supported, as James mentioned, by solid renewals, smart renewals, proactive renewals, human and system-based. And I'll make an additional comment on M&A. We have ample capacity for acquisitions. And that's -- that's what's going to drive our M&A growth. So again, in aggregate, low single-digit organic growth plus the additive M&A.

 You've heard a lot from the team, and it is my humble honor to summarize on behalf of the entire team. And what did you hear today? A leader in enterprise information management, #1 in content services, and #1 in business network. We are pursuing a large addressable market, a total addressable market of $100 billion. It is a total growth strategy to drive value is retain, grow and acquire, and creating value for the global 10,000 customers expanding account coverage through the information advantage is a very key focus for us.

 Cloud-first platform and accelerating innovation. Investing in our future growth. And when we talk about ample capacity, I would also add, we're not just talking about financial capacity, which I've emphasized thus far. We are also talking about organizational readiness and management capacity to do strategic acquisitions. At the end, it's about profitable. It's about total growth, it's about profitable total growth. It's about upper quartile performance, strong operating cash flows and attractive returns.

 So once again, thank you for joining us. And at this point, I'd love to welcome Mark and executive leadership team presenters to the stage and take your questions.

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Questions and Answers
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 Mark J. Barrenechea,  Open Text Corporation - Vice Chairman, CEO & CTO   [1]
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 I wanted to see Madhu hold up the football.

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 Madhu Ranganathan,  Open Text Corporation - Executive VP & CFO   [2]
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 I could, I am going to hold up the football.

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 Mark J. Barrenechea,  Open Text Corporation - Vice Chairman, CEO & CTO   [3]
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 Thank you, Madhu. I would love to open up the room to any questions you have.

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 Unidentified Analyst,    [4]
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 Thanks for highlighting the Rule of 40, it's an impressive metric that you guys achieved through getting margin. Just wondering if you guys looked at it from an organic perspective, and determine whether you guys actually hit or exceed that Rule of 40 metric on an organic perspective? Because without acquisitions, your margin should be way higher. So do you know on an organic basis, whether it's -- whether you guys exceed that 40% mark? And I've got a follow-up question after that.

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 Mark J. Barrenechea,  Open Text Corporation - Vice Chairman, CEO & CTO   [5]
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 Yes, we'd be just about 40% in fiscal '19. It was just organic. And I think in '18, we'd be just about 40% as well. So it would be just at the 40%, but all in, for fiscal '19, 42.2%. So we would have been just about -- just at 40%. So yes.

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 Unidentified Analyst,    [6]
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 Okay. That's good. And then as you cap your EBITDA margin at about 40%. And as your business scales, you have been top 5 in the world at 40%. But it also means you'll be investing a lot more into the business. Is there an organic growth rate that you would be happy with in several years as some of these investments start to generate returns? Right now, you're saying low single-digit for the next year, but do you expect that to creep up as you invest more into the business?

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 Mark J. Barrenechea,  Open Text Corporation - Vice Chairman, CEO & CTO   [7]
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 Yes. The expectation, I'd like to kind of stay consistent with is getting to this consistency of low single-digit organic, right? Getting upwards to 40%-plus low single-digit organic, would put you well over the 40% rule with no M&A. Right? So I think repeatedly, consistently, predictably, delivering that low single-digit is kind of the next steady stage for the business.

 And once we get there, then we'll think about resetting the bar above that. But I'd like to be able to consistently and predictably deliver that low single-digit organic growth. When you look at businesses like Oracle, they're not growing organically. And you look at businesses like Micro Focus, they're not growing organically. And it's a big base, right? So even that low single digit, we're going to expect higher growth rates in the cloud, kind of in the key value segments, we should see higher than low single digit because of that big math if it averages out to low single digit. In the core value segments, they have to be growing faster to be able to get to that low single digit.

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 Unidentified Analyst,    [8]
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 Mark, when you talk about self-funded acquisitions, does that mean that you're going to be focused more on smaller deals? Because I think you said if you deploy all the cash flow, you're going to drive about 10% growth from acquisitions. But historically, it's kind of been probably close to the high teens or low 20s?

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 Mark J. Barrenechea,  Open Text Corporation - Vice Chairman, CEO & CTO   [9]
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 Yes. I don't want to -- we're not signaling that's the only capital available, right? But if you look at our historical growth -- our growth CAGR over the last 5 years, around 10% -- 12%, made up of organic plus acquired, that would be self-funded in that $633 million. But I'm not -- we're not saying we're capped by the $633 million. Rather the kind of the run rate of what we're doing is self-funded.

 I'd like Gordon to speak to this as well. I'd like to just amplify a point where we're -- like to use always the swim lane analogy. We've got 3 swim lanes and 3 swimmers in the water, kind of the small, medium and large category. And we're actively working all 3 swim lanes. Our new portfolio group is about building out a more predictable model for the smaller acquisitions and deploying capital more predictable.

 There are acquisitions here that we haven't had the structure to really manage. Something small, you don't want to just fully integrate into the larger company that we can create value and keeping them more together. So we have more activity in the small category to both kind of get to value we haven't been able to get to historically, and to get more predictability into the model.

 So we're active in all 3 categories. We have a new category, building some corporate strength in the smaller. But at $633 million, it's not meant to say we're capped by it. But rather kind of the -- if there is such a thing as run rate, that is self-funded.

 Gordon, is there anything you'd like add?

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 Gordon Allan Davies,  Open Text Corporation - Executive VP, Chief Legal & Corporate Development Officer, Chief Compliance Officer & Secretary   [10]
------------------------------
 Yes, sure, Mark. Thanks. I would underscore, I think the predictability in the OPG, the smaller category that we're focused on now, which I think is a great opportunity for us.

 One of the competitive advantages, I think, we will have from that as well as when I talked to you in my presentation, about the muscle memory that we have, the expertise we have in terms of financial modeling and due diligence as well.

 What we are seeing as we're looking at the rather robust pipeline in [-- not in every category] but in the OPG smaller category, in particular, is speed to close, speeds those transactions. And that's why I think that we'll have a competitive advantage there and through increased focus, you'll see that predictability.

------------------------------
 Unidentified Analyst,    [11]
------------------------------
 And just one other quick one, and I'm not trying to put you on the spot here. But why now to push into the sort of global 10,000 and sort of the push on the sales side? And why wasn't that done years ago where you were focused on other things? And just kind of curious on the timing on that?

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 Mark J. Barrenechea,  Open Text Corporation - Vice Chairman, CEO & CTO   [12]
------------------------------
 We've built scale now. We've built confidence. We've built stability in the structure and really reference-ability in key industries. Being at rough percentages, knowing 40% in the insurance industry. And now going forward, knowing a critical mass of the retail industry and now going more fully. So why now? Scale, confidence and the best way to sell is through reference and not by lead. So I would say that's the, why now?

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 Unidentified Analyst,    [13]
------------------------------
 Mark, just expanding...

------------------------------
 Mark J. Barrenechea,  Open Text Corporation - Vice Chairman, CEO & CTO   [14]
------------------------------
 And Ted, I don't know, if there's anything you want to add to that at all, but feel free. Sorry.

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 Simon David Harrison,  Open Text Corporation - EVP of Worldwide Sales   [15]
------------------------------
 Yes. No, I totally agree with that. The solutions require a big investment in terms of the time we spend with our customers. And we've gone to the scale now and the reference-ability that allows us to go deeper in and expand our expert sales team, we just explained in our model. So fully agree with the statement.

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 Mark J. Barrenechea,  Open Text Corporation - Vice Chairman, CEO & CTO   [16]
------------------------------
 Best way to sell is by -- it is by reference.

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 Unidentified Analyst,    [17]
------------------------------
 Just extending on that point, if I look at your target operating model, it suggests that the sales and marketing spend in dollar terms will be much the same as it was last year. So just help us understand how you are going to increase the coverage without spending a lot more?

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 Mark J. Barrenechea,  Open Text Corporation - Vice Chairman, CEO & CTO   [18]
------------------------------
 I'm not sure I understand the question.

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 Unidentified Analyst,    [19]
------------------------------
 Well, just looking at the target operating model in terms of your sales and marketing spend for fiscal '20, it suggests that the dollar amount of spend might not be that much different from what you spent in fiscal '19. So help us understand how you're going to increase coverage, is that through these more automations you talked about? Or is it a comment about extending coverage, more focused longer-term as you reinvest half the 40% margin?

------------------------------
 Mark J. Barrenechea,  Open Text Corporation - Vice Chairman, CEO & CTO   [20]
------------------------------
 There's no doubt, it's beyond the 40%, right? So it's part of the longer-term model. I don't know if you want to speak to the current ratio.

------------------------------
 Madhu Ranganathan,  Open Text Corporation - Executive VP & CFO   [21]
------------------------------
 So when you look at F '20, so we've baked the old structure, the expansion of the coverage, into our F '20 model. And as the growth of revenue happens, you're going to have more dollars to spend in terms of marketing, obviously. So if you look beyond F '20, we are going to be spending more dollars in terms of marketing.

 And the third point is when you get to that zone of 38% to 40%, we have -- I mean as we have shared, anything above and beyond that the prioritization would be to invest in sales capacity and then in product capacity, right? So I would think about it as F '20 and beyond F '20 and the longer term.

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 Simon David Harrison,  Open Text Corporation - EVP of Worldwide Sales   [22]
------------------------------
 And I would also point to -- I know some of you do a detailed analysis of, I'd sort of point to our recruiting site. And if you go out and add up -- I don't want to get kind of pinned down and what capacity are we expanding right now. But if you do analyze all our open recs. And if you go to that side, I think you'll see close to 80 open AE positions right now around the world.

------------------------------
 Unidentified Analyst,    [23]
------------------------------
 And then a question for Gordon. Just expanding on the incremental focus on small acquisitions. Can you define small -- is there a level which below wouldn't make sense for you guys? Would we see you buy $10-million revenue companies? Or what would make the cutoff?

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 Gordon Allan Davies,  Open Text Corporation - Executive VP, Chief Legal & Corporate Development Officer, Chief Compliance Officer & Secretary   [24]
------------------------------
 It's a good debate that we've had internally as well, and I hesitate a little bit to put a number on it. If I was giving you a little bit of insight into our discussion, I would say that typically, you will find those transactions in the $50 million and below range. Other -- those that are probably too small for us to look at. And that will depend because it's not only a dollar value or revenue number that you're looking at. Sometimes there's getting a product capability or a strategic reason for doing a smaller transaction. So I wouldn't discount any of those.

------------------------------
 Daniel William Jester,  Citigroup Inc, Research Division - VP   [25]
------------------------------
 Dan Juster from Citi. In Ted's presentation, he talked about that you're 10% penetrated in your current client base. So if you think about the straight-line to organic growth, why isn't investing more in inside sales and working with customers you already have relationships with versus going out and hiring a much new AEs to go and target folks that you don't have relationships with right now?

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 Simon David Harrison,  Open Text Corporation - EVP of Worldwide Sales   [26]
------------------------------
 I go for that one on?

------------------------------
 Daniel William Jester,  Citigroup Inc, Research Division - VP   [27]
------------------------------
 Absolutely.

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 Simon David Harrison,  Open Text Corporation - EVP of Worldwide Sales   [28]
------------------------------
 Okay. So it's not exclusive. I want to say we've got one football on the podium, and I wanted to draw one straight line. I am spending -- I am spending a lot of time, and we're investing and expanding out the proven model of our sales force. And that means opening a few customers. But we also -- it was only a couple of years ago that we have segmented our model with the level of clarity that you see in that pyramid. And that meant an investment in inside sales teams. So inside sale team, it didn't even really exist 4 or 5 years ago and has grown into a highly performing team. It helps us to get our messages out there to our existing installed base. So if I pick one thing, I'm very proud about that we're one of the largest enterprise sales teams in the industry and high touch. We can't just wait for our customers to come to us. We've got to get in there and educate them about why move and build the momentum. But it -- but it isn't only one thing. It's these 3 major sectors, increasing our reach of the partners and developing our installed base. Each one of them is magnified in its own way by this move to the cloud. And so sales is an important investment for us. We continue to grow in inside sales.

------------------------------
 Mark J. Barrenechea,  Open Text Corporation - Vice Chairman, CEO & CTO   [29]
------------------------------
 You want multiple on-ramps to growth?

------------------------------
 Simon David Harrison,  Open Text Corporation - EVP of Worldwide Sales   [30]
------------------------------
 Yes.

------------------------------
 Mark J. Barrenechea,  Open Text Corporation - Vice Chairman, CEO & CTO   [31]
------------------------------
 Right. You never want just one on-ramp. And you Danny highlight one very important on-ramp, which is to kind of grow the installed base. But you want multiple on-ramps. Sometimes you got a traffic jam or something happens on an on-ramp to use that analogy. So you want multiple on-ramps and these are there.

------------------------------
 Daniel William Jester,  Citigroup Inc, Research Division - VP   [32]
------------------------------
 Expansion of the coverage. So what does that mean for the sales force. Are we talking about doubling the size of the sales force, the balance, how do you think about the balance between direct versus using partners, same partners as you have existing relationships with in other areas. So maybe just get more color on that. Sure.

------------------------------
 Simon David Harrison,  Open Text Corporation - EVP of Worldwide Sales   [33]
------------------------------
 I'd say there were 2 factors to our growth in the sales force, that it's worth bearing in mind. The first one is as Mark mentioned, you go on our website, you'll see the number of racks that we've got open for AEs. It's the war on talent. So we've been investing in our own talent acquisition capabilities to go there and attract the very best people. So the speed, our speed is somewhat dictated by our capability to not only acquire the best talent in the industry, but also to onboard them. One of the investments that we've made this year is around the OpenText University that gets a lot to speed faster and improves our speed our time to revenue. Another, second is internal is externally. So these enterprise reps are important to us because we can't just wait for our customers to come to us. We have to build the need in that customer base. And that takes time as well. So even onboard the talent as quickly as you can, get them capable of leading the customer. And then you're going to lead the customer through the business case, where we've got some supporting resources around building the business case. So in terms of our mix, we will not -- we're not exclusive to the 40% that we cover. We're just talking about doubling our coverage of our investment in the enterprise AEs.

------------------------------
 Mark J. Barrenechea,  Open Text Corporation - Vice Chairman, CEO & CTO   [34]
------------------------------
 So if I amplify a couple of points there. Do we need to double the sales force to double the coverage? The answer is no. There are efficiencies and some economies of scale. So we don't need to double the sales force to double the coverage. So it's less than a 2x increase to get. So it's less than 2x increase in the sales force to get to 2x coverage. In relation to the partners, which we're actively working that 60% we don't cover through forms of partners, GSIs our named partners and others. And the emphasis on partners as we cover more. There are some enterprise models. You look at Oracle, Microsoft, SAP and there are some things -- many things to learn there is that in their top 200 to 500 accounts, there's no partner between those companies in that account. No partnerships between them. And as we put our global account program in place, there is no partner between us and some of our key clients. Right? But where the -- where partners do come into play is one word, value. If that partner has value. They can get us to a vertical customer, we can't get to. They get to a customer in Riyadh that we can't get to or they can bring us somewhere. The focus is on value and getting us to that client. But once we're at that client we're generating the trust and the value from thereon. So hope that's helpful.

------------------------------
 Simon David Harrison,  Open Text Corporation - EVP of Worldwide Sales   [35]
------------------------------
 I'd add one more thing, if I may. Excellent answer. One other thing to bear in mind, which I did mention in my presentation is we do have salespeople covering G 10-K we're moving the bar up. So it's not just about bringing in, expanding the sales force. It's also about moving the bar up on some of our existing enterprise AEs who are looking a bit too far below that line that you've taken today.

------------------------------
 Mark J. Barrenechea,  Open Text Corporation - Vice Chairman, CEO & CTO   [36]
------------------------------
 Yes, we don't need to double the sales force to double the coverage.

------------------------------
 Simon David Harrison,  Open Text Corporation - EVP of Worldwide Sales   [37]
------------------------------
 No, no.

------------------------------
 Unidentified Analyst,    [38]
------------------------------
 A great presentation, especially on the financials. Two quick questions. On the sales force side, do you measure sales force productivity and how exactly do you measure that, give us an idea of the numerator and denominator and what the trend has been? And secondly, on cloud gross margins if your target is mid-60s over time. Can you help us understand why it cannot be higher, why it cannot be 75%, for example, and within cloud the subscription versus service revenue, if you can help us understand what the gross margins are today and where they will trend to?

------------------------------
 Mark J. Barrenechea,  Open Text Corporation - Vice Chairman, CEO & CTO   [39]
------------------------------
 Okay, there are 3 things in there. I'm going to take the cloud margin ones. Okay. So there are three things, but I'll take the cloud margin. So we're operating in the high 50s today, and it's part of the mix of our business, there are 3 main businesses in there. Those are value added. When you boil it all down, there are 3 big things is our value-added network. And that's the highest margin today. We have our managed -- our private cloud, our managed services business, which is lower margin. And then we have our new SaaS product lines. And all together that's high 50s. We see a very straight path to get to the mid-60s, in our mix of business. Some of the best run clouds at scale today, deliver about 70%, right? Fast run clouds deliver around 70%. And there -- they too are going to get more efficient over time. But given our mix of business of the value-added network, swift traffic, EDI, facts, notifications, on-demand messaging plus our managed service business, plus the kind of the growth rate and maturity of SaaS, we see right now a straight-line path into the mid-60s. And once we get there, we'll evaluate if we can go higher. If we were a pure SaaS company at scale, maybe we get to 70% so -- but we have a good line to -- and this arithmetic increased our margin by 20%, almost 600 basis points. And when we get there, we'll reevaluate, if we see a path above that, given the mix of business. So short answer is mix of business. But there's a path to getting at least 500 bps. Ted, you want to talk a bit about maybe productivity and yield?

------------------------------
 Simon David Harrison,  Open Text Corporation - EVP of Worldwide Sales   [40]
------------------------------
 Yes, sales force metrics. So the highest level ones that I look at all the time, and that we hold ourselves accountable to is productivity or yield. So yield, I'm pleased with our yield, and it has been raising over the last 2 years. And so we're happy with the level of productivity we have with the sales force, and our attention is more on moving them up the bar to larger accounts rather than anything -- any issues that we see in the sales productivity right now. So yield is the main metric, and then we've got the...

------------------------------
 Mark J. Barrenechea,  Open Text Corporation - Vice Chairman, CEO & CTO   [41]
------------------------------
 Sales over quarter.

------------------------------
 Simon David Harrison,  Open Text Corporation - EVP of Worldwide Sales   [42]
------------------------------
 Yes, exactly. Yes. Sorry, I should have explained that.

------------------------------
 Mark J. Barrenechea,  Open Text Corporation - Vice Chairman, CEO & CTO   [43]
------------------------------
 Maybe one more question. Go right ahead.

------------------------------
 Raimo Lenschow,  Barclays Bank PLC, Research Division - MD & Analyst   [44]
------------------------------
 Raimo Lenschow from Barclays. The one question going back to your organic growth was around on-premise or off cloud and on cloud? Because if I look at your cloud business, you are growing like '19. In theory, that's where the...

------------------------------
 Mark J. Barrenechea,  Open Text Corporation - Vice Chairman, CEO & CTO   [45]
------------------------------
 High single-digit for fiscal '20.

------------------------------
 Unidentified Analyst,    [46]
------------------------------
 Yes. Okay. And so as you think over time, as you kind of -- as your capabilities kind of increase, you should get a mix effect. Can you just talk a little bit about how you think about it? How aggressive you want to push that into your client base, et cetera?

------------------------------
 Mark J. Barrenechea,  Open Text Corporation - Vice Chairman, CEO & CTO   [47]
------------------------------
 We still believe in go to kind of a fundamental principle that is customer choice. For 20.2, we're making a strong statement. It's cloud-first. And so as Ted and his team engages with the installed base, we're certainly going to engage with a principal that is cloud-first.

 Migrate, Modernize, Monetize. And so it's an important point in time for us at 20.2, to say, a few years back, I said, look, I don't know if it's 50-50, 40-60, 60-40. I could tell you with confidence today, it feels more like 60-40, 60 cloud, 40 off cloud, still hybrid. So -- but the emphasis on cloud.

 So we're taking -- we're just -- more patient. It's a dial. We're just dialing. We're just another notch up very prescriptively with 20.2 to say, okay, it's now cloud-first. So when we engage with our customers, we'll be cloud-first in that engagement and really emphasizing that 3M strategy, us Migrate, us Modernize the stack, new platform for innovation. Let's both Monetize, how to do that. So that's an important point in time, 20.2.

 Very good. So we're going to end there. Thank you so much for the -- I hope this was a high return on invested time. So where we focused on ROIC for our capital allocation, I hope this was a high on return on invested time this morning. Thank you very much. And this concludes our presentation.




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