Open Text Q3 2004 Earnings Conference Call Transcript

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

Question: Tom Liston - Dlouhy Merchant - Analyst : Just in terms of sales force structure, are you running most of your IXOS team in parallel with the Open Text team just due to expertise? Are you starting to consolidate that direct sales force and I guess I --

Question: Nate Swanson - ThinkEquity - Analyst : I was wondering if you could talk about your restructuring in terms of R&D. It was at 13 percent of revenues this quarter. I was wondering if that's sustainable going forward.

Question: Brandon Olsen - Sprott Securities - Analyst : On the restructuring charge, it looks like that number has been up. Can you give us the total IXOS plus Open Text restructuring charge and what's left on the restructuring reserve?

Question: Scott Penner - TD Newcrest - Analyst : Just on the restructuring again, what can we use to think about the operating expenses going forward? How much additional benefit is there from the restructuring still to come?

Question: Mike Abramsky - Canaccord Capital - Analyst : The contribution on the top-line from IXOS, your revenue came in a little bit light to your guidance obviously year-over-year, but were you perhaps expecting IXOS to be a bit stronger at this point? Or what other assumptions were you making in terms of the range of your guidance?

Question: Andrey Glukhov - Southwest Securities - Analyst : Could you take us through what are you doing with trying to squeeze out the minority interest or the minority shares of IXOS and how should we think about it going forward?

Question: Scott Kessler - Standard & Poor's - Analyst : Can you talk a little bit about your services margin? It was notably higher than I had expected, and I was wondering what you expect from that particular area going forward.

Question: David Wright - BMO Nesbitt Burns - Analyst : I wondered if you could break out what revenue you actually recorded for IXOS so we could see the Open Text on a stand-alone basis, because it would seem to me that it is possible it was a record quarter for Open Text on stand-alone.

Question: Byron Berry - National Bank Financial - Analyst : On a recent competitor's conference call -- to be specific FileNet -- they alluded to not seeing you in competitive situations, but they do see IBM and Documentum. Can you comment on who you are seeing in competitive situations and the competitive environment?

Question: Howard Lis - GMP Securities - Analyst : Could you comment what were the major opportunities that exist for you in Europe and Asia outside of sort of the Sarbanes-Oxley opportunities within North America?

Question: David Beck - RBC Capital Markets - Analyst : You suggested that IXOS in the quarter was a little bit light because revenues got shifted forward. Are we to take that that means they got pushed into your fiscal Q4 and that you feel very comfortable about that? (multiple speakers) the fact that those revenues are now about the expectations for Q4. 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.

Question: Richard Tse - Merrill Lynch - Analyst : You made a number of acquisitions in the last 18 months and I had a question on the product license side. Of the 34 million of license revenue, can you give some more granularity on where that's going from? Is it records management, stuff from Centrinity Corechange, etc.?

Question: David Shore - Desjardins Securities - Analyst : Are you seeing any pricing pressure from your competitors?

Question: Mark Schappel - McDonald Investments - Analyst : Alan, could you just give us a sense of how many of the large deals were attributable to IXOS and how many were due to core Open Text in the quarter?

Question: Blair Abernathy - Paradigm Capital - Analyst : I'm just wondering if you can talk a little bit about the pipeline in terms of how many of the larger deals are having to go through pilots and how long that's taking you.

Question: Paul Steep - Scotia Capital - Analyst : Could you just discuss on IXOS if we look going forward where the strength in the business is? Is it on the delivery e-mail product or the data archiving product for SAP?

Question: Brandon Olsen - Sprott Securities - Analyst : With regards to -- I am just looking at the IXOS results here on a stand-alone basis. Revenues are relatively flat. But on the R&D it looks like IXOS did $8 million in R&D and your R&D expense only went up 500,000, and the implication is one month would be a $2.5 million plus sequential increase in R&D. Were there some tax credits there or something like that that would explain why your rise was so low relative to your take on of those expenses?

Question: Scott Kessler - Standard & Poor's - Analyst : I wanted to know if you could talk a little bit about your IBM influenced deals for the quarter and how that relationship is progressing.