OpenText Corp Q2 2015 Earnings Call Summary

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

Question: Kris Thompson - National Bank Financial - Analyst : Great, thanks. Mark, I'd just like to talk about the Actuate deal for a couple of minutes here. I believe they're discontinuing their perpetual offering, and I think I heard you say you're going to reintroduce that?

Question: Kris Thompson - National Bank Financial - Analyst : Okay. And can you give us a little bit of color on how you plan on integrating their sales team with your guys?

Question: Kris Thompson - National Bank Financial - Analyst : Okay. And what about channel conflict? Do you think there's any conflict there with some of your key Partners, SAP and Microsoft, for instance? 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. JANUARY 27, 2015 / 10:00PM, OTEX.TO - Q2 2015 OpenText Corp Earnings Call

Question: Kris Thompson - National Bank Financial - Analyst : Okay. Just last one, maybe John or Mark, you said that you expect it to be accretive, slightly accretive in 2015. Is that before or after the higher interest expenses associated with the new debt?

Question: Kris Thompson - National Bank Financial - Analyst : Okay. So you're not attaching that to this deal.

Question: Kris Thompson - National Bank Financial - Analyst : Got it. Okay. Thanks, guys. Appreciate it.

Question: Richard Tse - Cormark Securities - Analyst : Yes, thanks. Mark, could you I guess give us a gauge on the size of the potential opportunity for Actuate in your install base? I'm sure you guys have done some kind of rough math on that. Just to give us an impression of what that could be?

Question: Richard Tse - Cormark Securities - Analyst : Okay. And then just switching gears a little bit, you guys are offering quite a spectrum of pricing models right now. Can you give us an impression of which model you found the most popular among your existing and prospective customers?

Question: Richard Tse - Cormark Securities - Analyst : Okay, fair enough. And this is an odd question, but I haven't seen any data out there on this patent infringement case against Box. I think that they overturned one of 400 or 500 cases you guys had within that broad case. What's the status of that right now?

Question: Richard Tse - Cormark Securities - Analyst : Okay. All right. Looking forward to hearing the outcome of that. Thanks, guys.

Question: Thanos Moschopoulos - BMO Capital Markets - Analyst : Mark, just going back to the licenses. Should our takeaway be that the more developed markets performed more or less in line with your expectations, or was there any weakness there?

Question: Thanos Moschopoulos - BMO Capital Markets - Analyst : And just to be clear, those are currency, constant currency numbers, or no?

Question: Thanos Moschopoulos - BMO Capital Markets - Analyst : Okay. And should we think about that developing market weakness persisting into the current quarter, or is it too early to tell at this stage?

Question: Thanos Moschopoulos - BMO Capital Markets - Analyst : Okay. And then just one last one for John, are maintenance renewals still tracking in the low 90% range, or has there been any change there? 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. JANUARY 27, 2015 / 10:00PM, OTEX.TO - Q2 2015 OpenText Corp Earnings Call

Question: Thanos Moschopoulos - BMO Capital Markets - Analyst : Great. Thanks a lot, guys. I'll pass the line.

Question: Scott Penner - TD Securities - Analyst : Thanks. Just first of all, Mark, what has been the feedback on the Core products since you guys unveiled at Enterprise World? And do you think the use case sets up the product against Box or Dropbox?

Question: Scott Penner - TD Securities - Analyst : And with the upcoming release of SP1, I think given your geographical comments, the answer to this is no. But did you see that having any real impact on license revenue or customer renewals?

Question: Scott Penner - TD Securities - Analyst : Okay. Richard asked a good question about the -- and you made a good answer about a couple customers that went early to subscription instead of licensed revenue. Were those sizable deals? 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. JANUARY 27, 2015 / 10:00PM, OTEX.TO - Q2 2015 OpenText Corp Earnings Call

Question: Scott Penner - TD Securities - Analyst : Okay. One last question for John, and just what is -- what's going on if you could flush out the special charges? It looked like there was a reversal this quarter. And then following on that, have you guys formulated the plan for charters related to Actuate?

Question: Scott Penner - TD Securities - Analyst : Excluding Actuate, should we expect any additional charges for the next couple of quarters?

Question: Scott Penner - TD Securities - Analyst : Okay. Appreciate it. Thank you.

Question: Phillip Huang - Barclays Capital - Analyst : Thanks. Good afternoon. Question on the installed base's upgrade to red oxygen. I was wondering what improvements have you seen on cross-selling? 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. JANUARY 27, 2015 / 10:00PM, OTEX.TO - Q2 2015 OpenText Corp Earnings Call Deal size seems like it's continuing to grow. I think it's up 5% year over year this quarter. I was wondering if you can see that growth accelerate from here with SP1 and launch?

Question: Phillip Huang - Barclays Capital - Analyst : Got it. And how quickly will your customers be able to see added functionality from Actuate on the new integrated platform?

Question: Phillip Huang - Barclays Capital - Analyst : I see. Got it. And then switching gears to the more like the macro environment for a second. Can you maybe talk a little bit about the sales cycles under the current environment? Are you seeing any improved visibility since the last quarter, or has it remained relatively lower than normal? And if so, how's the sales team matching through this phase of lower visibility?

Question: Phillip Huang - Barclays Capital - Analyst : Got it. And then final one for me, if my calculation is correct, you're roughly 1/9 through your acquisition target of $3 billion in the five years. Can you maybe give us an update on how much liquidity you currently have to pull in acquisitions, and also your view on the current environment for accretive opportunities? And whether you see good opportunities for tuck-ins or more maybe platform size deals? Thanks.

Question: Phillip Huang - Barclays Capital - Analyst : Got it. And then just to clarify, a question for John. So, based on that calculation, is it roughly like just over $1 billion dollars in terms of liquidity for deploy -- available for acquisitions currently?

Question: Phillip Huang - Barclays Capital - Analyst : Great. Thank you very much, guys.

Question: Paul Steep - Scotiabank - Analyst : Great, thanks. Mark, maybe you could talk just about cloud deals in general, and more at the OpenText Core which I know has just launched. What targets does the sales team or do they have any targets in terms of selling cloud or license? It sounds like they're agnostic, but are you pushing the team to try to gain more experience around selling on the cloud side in the traditional business?

Question: Paul Steep - Scotiabank - Analyst : Great. Just on the cloud as well, since presumably the majority in this quarter and you indicated one likely was correlated of those six the $1 million-plus deals. Of those though, what are we seeing in terms of the core GXS business? Are these new clients, old clients, are they upsizing or renewals? I think some context around GXS given where we're at would be I think useful and helpful. Thanks.

Question: Paul Steep - Scotiabank - Analyst : Great. And that was up -- I think you were tracking at 80 or something before, so it's a significant lift there if I'm not mistaken. But I'll go back and check that. The last part would be, what's been the move to version 10 in the core basis as a final point? 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. JANUARY 27, 2015 / 10:00PM, OTEX.TO - Q2 2015 OpenText Corp Earnings Call

Question: Paul Steep - Scotiabank - Analyst : Sounds great. Thanks.

Question: Kyle Chen - Credit Suisse - Analyst : Hello. This is Kyle Chen in for Michael. Thanks for taking the question. Just a couple of housekeeping questions for me. John, can you quantify what the revenue contribution was from GXS this quarter? Was there any benefit to license? And also given the significant FX impact to the total revenue, can you quantify the individual impact to license cloud support service lines?

Question: Kyle Chen - Credit Suisse - Analyst : Correct.

Question: Kyle Chen - Credit Suisse - Analyst : Great, thanks. And relative to your revenue expectations for Actuate, you had mentioned a 10% to 20% decline year over year. But how does that look like from a revenue mix perspective considering their revenue -- ongoing revenue transition? 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. JANUARY 27, 2015 / 10:00PM, OTEX.TO - Q2 2015 OpenText Corp Earnings Call

Question: Kyle Chen - Credit Suisse - Analyst : All right. Thanks very much.

Question: Paul Treiber - RBC Capital Markets - Analyst : Thanks very much. I just wanted to speak about the efficiencies that you're seeing in the business over the last year or so. In particular, and just in regards to sales and marketing, it looks like it dropped from about 22% a year ago down to 19% currently. Is that coming from GXS, or is it related also to efficiencies in the traditional in enterprise software or core OpenText business?

Question: Paul Treiber - RBC Capital Markets - Analyst : And then could you just delve into further on the prudent cost actions that you took? Just how are you implementing those so that you don't overly constrain the spending, particularly when you have some new product launches on the roadmap?

Question: Paul Treiber - RBC Capital Markets - Analyst : Great. Good to hear. Just lastly, just on the emerging markets license business. Did you see the lower than expected performance, do you attribute that more towards external factors, or is it related to execution in the quarter? And then what changes do you think are necessary or would you make to improve performance going forward? 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. JANUARY 27, 2015 / 10:00PM, OTEX.TO - Q2 2015 OpenText Corp Earnings Call

Question: Paul Treiber - RBC Capital Markets - Analyst : Okay, great. Thank you. I'll pass the line.

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

Question: Stephanie Price - CIBC World Markets - Analyst : Hello. Just a bit of a follow on to the last question there. Can you talk a bit about the channel and partner strategy? I think that's the way you're mainly entering these emerging markets. Please lay the VARs and the SIs, and maybe the mix between those and your traditional Partners, such as SAP.

Question: Stephanie Price - CIBC World Markets - Analyst : Okay. And then in terms of your sales force, that's been pretty stable over the last couple quarters as well. Can you comment if there's any changes you're looking at there, or if you're happy with the organization as it is? 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. JANUARY 27, 2015 / 10:00PM, OTEX.TO - Q2 2015 OpenText Corp Earnings Call

Question: Stephanie Price - CIBC World Markets - Analyst : Great. And then final question for me just around the competitive situation. Has there been any changes in the quarter that your saw?

Question: Stephanie Price - CIBC World Markets - Analyst : Okay, thanks.