Open Text Corp Q1 2016 Earnings Call Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Kris Thompson - National Bank Financial - Analyst : Thank you. Mark, it looks and sounds like more than $50 million of annual savings were achieved from the restructuring. Can you quantify what the savings are actually? And if they are fully reflected in Q1? Also then also, maybe for John, if we should expect anyone restructuring expenses related to this restructuring in future quarters?

Question: Kris Thompson - National Bank Financial - Analyst : Okay. While I have you, John, just on the IRS last quarter, I think you mentioned the potential liabilities around $550 million. Am I hearing that it may be increasing?

Question: Kris Thompson - National Bank Financial - Analyst : Okay, just my last one, Mark, for you on the Dell acquisition of EMC. Can you just maybe give us some comment on what you think that might mean for you guys opportunity-wise? Thank you.

Question: Kris Thompson - National Bank Financial - Analyst : Thanks. Looking forward to learning more about it at your show. See you there.

Question: Phillip Huang - Barclays Capital - Analyst : Thanks, good afternoon. Just wanted to touch on the cloud and how agile it's been for the business; certainly your goal is to grow. Cloud mainly from you from new revenue sources, including acquisitions over time. Was wondering if you might be able to give us some color around how that's going so far? Since the launch of your full cloud solutions in January, how much of the growth for cloud has been from new revenue sources from your perspective?

Question: Phillip Huang - Barclays Capital - Analyst : That's very helpful. Just on the top of that, would you -- just based on your current sales strategy, would you assume maybe more pronounced seasonality on your marketing costs between the quarters going forward? Do you think -- do you expect for the fiscal Q4 is going to be the big marketing spend quarter, as you kind of see your strategy play through?

Question: Phillip Huang - Barclays Capital - Analyst : Got it. That's very helpful. Then the last one, just looking at your buybacks, obviously, you repurchased 13 million of shares this quarter, taking advantage of the current share valuation. Should we view your buyback any indication on the available of large acquisition opportunities at all? Or do you also see room for both acquisition and buybacks in the foreseeable future? Thanks.

Question: Phillip Huang - Barclays Capital - Analyst : That's very helpful. Thanks very much, guys.

Question: Richard Tse - Cormark Securities - Analyst : Thanks. Mark, despite the currency, the cloud growth has been, I guess, flat; and I think constant currency grew about 1.4%. Given you guys have won a number of MCV new deals this past few quarters, when do you guys actually are going to see the cloud piece start to pick up and accelerate here? Is that later this year or maybe give us a sense of when that would be? without the prior written consent of Thomson Reuters. 'Thomson Reuters' and the Thomson Reuters logo are registered trademarks of Thomson Reuters and its affiliated companies. OCTOBER 28, 2015 / 9:00PM, OTEX.TO - Q1 2016 Open Text Corp Earnings Call

Question: Richard Tse - Cormark Securities - Analyst : Okay. And for many of us who have been following for a long time, this has obviously been a largely a growth by acquisition story. I think as you sort of look forward, you talked about a number of acquisitions this year. Can you give us a sense of what you think about the contribution from acquisitions versus organically when it comes to growth? Do the acquisitions tilt more? Does that represent 70% of your growth targets, or give a sense of where that comes from?

Question: Richard Tse - Cormark Securities - Analyst : Okay and one last question. You guys are obviously in different markets now. You've got ECM Analytics, a little bit EDI, but where are you seeing the most traction today? I guess this probably will change after the release 16 as it stands today. Where was that strength this quarter? That's it. Thanks.

Question: Richard Tse - Cormark Securities - Analyst : That's great. See you in a couple of weeks.

Question: Paul Steep - Scotiabank - Analyst : Great. Thanks. Mark, maybe you could talk just a little bit and you mentioned it in the Q that you released about increasing the rate of flexibility for customers and the fact that you're agnostic. Maybe talk about your interactions with customers and how, we from the outside, should be thinking about that rate of adoption in terms of the overall growth rate as you see clients explore and examine some of the cloud options?

Question: Paul Steep - Scotiabank - Analyst : Fair enough. The other question that popped in was you touched on briefly in the script; as you drive towards being a $2 billion Company, hopefully, sometime soon, how are you feeling about spans of control? Obviously, there was a senior sales change towards the end of middle of last year, middle of the year. without the prior written consent of Thomson Reuters. 'Thomson Reuters' and the Thomson Reuters logo are registered trademarks of Thomson Reuters and its affiliated companies. OCTOBER 28, 2015 / 9:00PM, OTEX.TO - Q1 2016 Open Text Corp Earnings Call Where are we had in terms of your thinking about the need to maybe broaden out the team even more? Are you satisfied at this point?

Question: Paul Steep - Scotiabank - Analyst : Fantastic, thanks. Look forward to seeing more.

Question: Eyal Ofir - Dundee Capital Markets - Analyst : Great, thanks for taking my question. Just first off on your commentary on Blue Carbon, obviously, you guys are pretty excited about that and it's going to beta this quarter. Traditionally, the December quarter has been pretty strong from a seasonality standpoint over the first fiscal quarter. Should we be assuming that, that could -- some of that could be deferred into Q3? How should we think about the license revenue here into Q2 and Q3?

Question: Eyal Ofir - Dundee Capital Markets - Analyst : Good and just on the -- your commentary on MCV, do you guys have a -- is there like an average period of this MCV? Is there like a -- this revenue is recognized over a three-year timeline? Or is it -- it's like an average term contract length you can talk to? It would be easier for (multiple speakers) --

Question: Eyal Ofir - Dundee Capital Markets - Analyst : Okay, perfect. And then before I pass the line, last question for me. Actuate, do you guys have a number of how much revenue recognized on the Actuate side? And then, it seems like also you guys have integrated with this restructuring have already integrated, potentially to your OpEx target margins? How has that gone? Where are you guys at there and then I'll pass the line. Thank you.

Question: Eyal Ofir - Dundee Capital Markets - Analyst : Okay, great. Thanks. I will pass the line. Thank you.

Question: Paul Treiber - RBC Capital Markets - Analyst : Thanks very much and good afternoon. I just want to follow up on one of Richard's questions on cloud growth. without the prior written consent of Thomson Reuters. 'Thomson Reuters' and the Thomson Reuters logo are registered trademarks of Thomson Reuters and its affiliated companies. OCTOBER 28, 2015 / 9:00PM, OTEX.TO - Q1 2016 Open Text Corp Earnings Call Could you quantify either the revenue or MCV mix between the business network, like the GXS EasyLink versus SaaS or software subscription revenue? Or could you speak to the general growth rates from those two segments?

Question: Paul Treiber - RBC Capital Markets - Analyst : Thanks. I just wanted to shift to your capital structure just in light of comments on M&A and then also the recent share repurchases. How do you think about your capital structure -- you completed a successful high-yield offering earlier this year. Would you continue to use high-yield to augment existing liquidity that you have?

Question: Paul Steep - Scotiabank - Analyst : Thank you. I will pass the line.

Question: Vernon Choya - CIBC World Markets - Analyst : Good afternoon, gentlemen. Just two quick ones for me. Going back to the MCV, you noted -- you mentioned that most of it, it's from the multi-year managed services deals. Do you have like any growth

Question: Vernon Choya - CIBC World Markets - Analyst : And that is pretty much the managed service. Do you have any --

Question: Vernon Choya - CIBC World Markets - Analyst : I know you said you haven't really touched on the SaaS from a contract value perspective but is it safe to say that once you start seeing a lot of these SaaS deals, would it be like multiples of the existing managed service, MCV?

Question: Vernon Choya - CIBC World Markets - Analyst : Great. And switching gears to the M&A front, what sort of targets look attractive to you in any specific vertical in your business? without the prior written consent of Thomson Reuters. 'Thomson Reuters' and the Thomson Reuters logo are registered trademarks of Thomson Reuters and its affiliated companies. OCTOBER 28, 2015 / 9:00PM, OTEX.TO - Q1 2016 Open Text Corp Earnings Call Is it more on the analytics side? Is it more on the program and the content side? Do you feel you have a good mix of functionality in your offerings?

Question: Vernon Choya - CIBC World Markets - Analyst : Great, that's all I've got. I will pass the line. Thanks.