Open Text Corp Q1 2017 Earnings Call Transcript

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

Question: Richard Tse - National Bank Financial - Analyst : Great, thanks. Mark, this might be too early to ask this question, but when you close this EMC deal, how long do you think it will keep you out of the market for -- from making other meaningful transactions?

Question: Richard Tse - National Bank Financial - Analyst : Okay and then I going through the presentation deck here and it looks like you are sort of dedicating a little bit more effort towards R&D. I was wondering if you would maybe share with us what areas you will be focusing on with respect to R&D here?

Question: Richard Tse - National Bank Financial - Analyst : And just one last one. Maybe for Steve, since you've come in, it sounds like you've made a lot of changes here. From my vantage point, the Company historically has not been terribly great in terms of up-selling and cross-selling, given the organic numbers. Have done anything since you joined to maybe capitalize on that opportunity, given that you've got all these great products here in front of you?

Question: Richard Tse - National Bank Financial - Analyst : Great, thank you very much, guys.

Question: Paul Treiber - RBC Capital Markets - Analyst : Thanks very much. I was hoping, if you could clarify that the $5 million purchase price accounting impact that you called out, was that already reflected in the estimated revenue from those acquisitions that were in the press releases or is that incremental or in addition to that? Or I guess it would be a reduction to the revenue in those press releases?

Question: Paul Treiber - RBC Capital Markets - Analyst : Okay. Should we -- is there a rule of thumb that we should model for that type of purchase price accounting impact? I think in the past, many years ago, you guys have mentioned 20% to 25% impact from the deferred revenue write-downs is that a fair rule of thumb?

Question: Paul Treiber - RBC Capital Markets - Analyst : Okay, moving on to the receivables, you mentioned -- or I think that the HP acquisitions are structured as carve-outs, that would involve some working capital buildup or some [build up of those receivables, did that have an impact on the cash flows in Q1?

Question: Paul Treiber - RBC Capital Markets - Analyst : Okay. And then just for Mark, when you think about the competitive landscape now that you have Documentum, really it is a three horse race among the big guys. How do you see, over the long-term, differentiating against IBM and Microsoft longer term?

Question: Paul Treiber - RBC Capital Markets - Analyst : Thank you for taking my questions.

Question: Stephen Bersey - MUFJ - Analyst : Hi, great. I know it's early days with the EMC acquisition or the Documentum acquisition. But I'm wondering if you are able to get in there early given the friendly nature of that deal, and kind of understand the product a little more as far as their processes and what they were up to with future functionality.

Question: Stephen Bersey - MUFJ - Analyst : Great, and maybe on the Magellan roll out in the second half, just how is that going to be integrated across all of your platform? What is the game plan for getting that into all of your different products?

Question: Stephen Bersey - MUFJ - Analyst : Sounds fun, looking forward to it, thanks.

Question: Paul Steep - Scotia Capital - Analyst : Great, thanks. Mark, maybe you could just give us a perspective here. There's been lots of FUD in the market as normal with one of the large deals closing with Documentum. With Muhi being in Barcelona on Tuesday can you give us a view of what you committed to Documentum's customers to make them comfortable with the investment you are making here? And then secondly maybe any feedback he brought back from the conference about what those clients are thinking about OpenText.

Question: Paul Steep - Scotia Capital - Analyst : Great, I guess the second one would be for either you or Steve. Maybe feedback on what you seen out of the client base on shifting the traditional light ECM licenses toward the cloud and what you've heard back from the field in terms of clients uptake on that? Thanks, guys.

Question: Paul Steep - Scotia Capital - Analyst : Great, thanks, guys.

Question: Steven Li - Raymond James & Associates, Inc. - Analyst : Thank you. Mark, your PS group had some challenges a couple quarters ago. Has this been resolved and are you happy with this Q1 PS?

Question: Steven Li - Raymond James & Associates, Inc. - Analyst : Great and maybe one more, Mark, For EMEA, was there any unusual weakness? I thought your licenses was down year-over-year despite the acquisition. Thanks. 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. NOVEMBER 03, 2016 / 9:00PM, OTEX.TO - Q1 2017 Open Text Corp Earnings Call

Question: Steven Li - Raymond James & Associates, Inc. - Analyst : Thank you.

Question: Thanos Moschopoulos - BMO Capital Markets - Analyst : Hi, good afternoon. Are you seeing any impact on the sales pipeline, either positive or negative from the Documentum deal? Are you finding that prospects are incrementally more interested in engaging with you guys or, on the flip side, is there any hesitation you're seeing until the deal closes and until you can provide more color on the product roadmap?

Question: Thanos Moschopoulos - BMO Capital Markets - Analyst : Either positive nor negative?

Question: Thanos Moschopoulos - BMO Capital Markets - Analyst : Fair enough. Maybe a different one for John. The license gross margin was slightly below your target operating model this quarter. Was that just some noise related to the acquisitions and should that bounce back to more normal levels going forward?

Question: Thanos Moschopoulos - BMO Capital Markets - Analyst : Maybe one last one in terms of the cloud bookings, I was struck by the number of deals over $1 million. I think Steve kind of alluded to it, but just to clarify, is that sort of incrementally being driven by more engagement on the content side rather than the managed service GSX side of the business that is driving that? Or is it a mix of both?

Question: Thanos Moschopoulos - BMO Capital Markets - Analyst : And in light of this traction does it change at all, your outlook in terms of maintaining the stability of the license base?

Question: Thanos Moschopoulos - BMO Capital Markets - Analyst : Okay, thanks for clarifying. I'll pass the line, thanks guys.

Question: Eyal Ofir - Dundee Capital Markets - Analyst : Thanks, thanks for taking my question. Just a first housekeeping question for you guys. Can you just provide the aggregate dollar figure, how much in the acquisitions contributed this quarter?

Question: Eyal Ofir - Dundee Capital Markets - Analyst : Okay that's fine. And I just wanted to clarify, I guess, a question for both Mark and Steve, just from the pipeline your comment about pretty strong seasonal trends into the December quarter, can you just talk to where you are seeing strength coming out of? Is it a region-specific, product-specific category? And how do the dynamics playing out? Thanks.

Question: Eyal Ofir - Dundee Capital Markets - Analyst : And could there be also some pent-up demand based on contract abilities in either in the quarter post-Brexit or some other areas in Europe? Is that also happening as a trend?

Question: Eyal Ofir - Dundee Capital Markets - Analyst : Okay, great. It seems like from -- based on what [others said], he said they also kind of seeing the same thing in Europe. So thanks, I appreciate the comments and I will pass the line.

Question: Stephanie Price - CIBC World Markets - Analyst : Good evening.

Question: Stephanie Price - CIBC World Markets - Analyst : Steve, you mentioned partners in your prepared remarks, talking about inheriting a number of partnerships with recent acquisitions. Can you talk a bit more about this and where you expect to see some growth out of these new partners?

Question: Stephanie Price - CIBC World Markets - Analyst : Great. And then I know it's early days but can you talk about demand for EP1 as well?

Question: Stephanie Price - CIBC World Markets - Analyst : Great, thank you very much.