Open Text Q4 2013 Earnings Conference Call Transcript

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

Question: Richard Tse - Cormark Securities - Analyst : Yes, thanks. Mark, you talked about adding about a 150 new partners in the quarter. I just have a question in regards to the partner contribution this quarter. If I look at your supplemental financial stats, it looks at the contribution has gone down about 31% from about 39% last year to probably the lowest it's been in quite some time. Can you give us some color on that?

Question: Richard Tse - Cormark Securities - Analyst : Okay. And then when you talk about execution issues in North America in the quarter, can you give us more color on that and what you're doing specifically to the address some of those issues?

Question: Richard Tse - Cormark Securities - Analyst : So, it was the execution more than the environment that caused --

Question: Richard Tse - Cormark Securities - Analyst : Okay, all right. Thanks.

Question: Paul Steep - Scotia Capital - Analyst : Great. Mark, actually maybe just to close off of that for a second, on the conversion side, what have you done post the quarter to address some of the conversion issues if the pipeline is actually healthy in terms of getting the process tightened up?

Question: Paul Steep - Scotia Capital - Analyst : Fair enough. I guess the second question is, if we look broader term in take it back up to the model and look at the 100 point lift on R&D and G&A, as well as a margin moves. Maybe talk a little bit about behind the thinking, or the confidence, I guess, to shift the model and bump up where you think operating margin is going to land next year.

Question: Paul Steep - Scotia Capital - Analyst : That helps a lot, Paul. But the take away message overall is tightening up against actuals apart from a couple of little points you made there on licensing. Right?

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

Question: Blair Abernethy - Stifel Nicolaus - Analyst : Hi, thank you. Paul, on the ICCM and Resonate acquisitions, can you just walk through what the revenue contribution would have been in Q4 from those acquisitions, and did either of them have an impact on the higher service margins?

Question: Blair Abernethy - Stifel Nicolaus - Analyst : Okay, in Q4?

Question: Blair Abernethy - Stifel Nicolaus - Analyst : And then I'm sorry Resonate?

Question: Blair Abernethy - Stifel Nicolaus - Analyst : I'm sorry, I was -- I thought you had said that was AKT.

Question: Blair Abernethy - Stifel Nicolaus - Analyst : Got it. Okay, and the next question I just had on the R&D headcount, did you say it was 1,300?

Question: Blair Abernethy - Stifel Nicolaus - Analyst : So, what percentage of that roughly would you say is based in India at this point, and is that going to shift materially from where you are now?

Question: Blair Abernethy - Stifel Nicolaus - Analyst : Okay, great. And last quick question for me. Paul, on maintenance, any commentary on pricing and renewals at the end of the year?

Question: Blair Abernethy - Stifel Nicolaus - Analyst : Okay, great. Thank you.

Question: Kris Thompson - National Bank Financial - Analyst : Great, thanks. Mark, you mentioned the sales leadership role were completed, obviously except for the one you're trying to replace for Greg. What about the quota carrying reps? Are you full there, or you do expect to add some new bodies?

Question: Kris Thompson - National Bank Financial - Analyst : The sales leadership roles, you mentioned they are mostly completed. I just wanted an update of the quota carrying reps, where you are in that process. Are you still adding or subtracting?

Question: Kris Thompson - National Bank Financial - Analyst : Okay, and on the US west and Canada where you had some missed execution there on sales, is that because they are new account managers that are not hitting their stride yet?

Question: Kris Thompson - National Bank Financial - Analyst : Okay, fair enough. And just on that, are they sales guys going to hit their accelerators? Are they going to be happy, is there any risk that you might lose some of your top guys just because the license revenue was a bit weaker than I think everybody was expecting?

Question: Kris Thompson - National Bank Financial - Analyst : Okay, thanks. All the best.

Question: Eyal Ofir - Clarus Securities - Analyst : Thanks, just a follow-up on the cloud. I know that you guys talked about transitioning some revenue from cloud into professional services, but even if you adjust for -- I think it was a little bit weaker than expected. Is there any dynamic t play there you guys could talk about?

Question: Eyal Ofir - Clarus Securities - Analyst : Just beyond, how is your new offerings going so far? I know you are offering Temple Social, Temple Cloud, how are the clients reacting to these new services?

Question: Eyal Ofir - Clarus Securities - Analyst : Okay, thanks. And can you just touch on, first of all, was there any product category that was weaker from a license standpoint? And maybe also, obviously you focused your attention on North America. How did Europe do this quarter? 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: Eyal Ofir - Clarus Securities - Analyst : Okay, thanks. And just a comment on Europe and I will pass the line, thank you very much.

Question: Eyal Ofir - Clarus Securities - Analyst : Okay. Thanks again. I will pass the line.

Question: Paul Trieber - RBC Capital Markets - Analyst : Thanks very much. You've been out in the market with your AM message for last year, so now it seems like the Red Oxygen is a significant investment in that vision. Does Red Oxygen reflect the interest that you're seeing from customers in EIM and then also their feedback on the existing road map?

Question: Paul Trieber - RBC Capital Markets - Analyst : In light of that, do you think the existing product robots maybe restraining some of the demand at a high-level that you may be seeing, or interest at a high-level? 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: Paul Trieber - RBC Capital Markets - Analyst : I think you previously mentioned there is about a six month development cycle on your point solutions, existing point solutions. Will the focus on Red Oxygen, will that impact that development cycle in any way? And also, can you provide an update on the BPM product, if we should expect an update before Red Oxygen?

Question: Paul Trieber - RBC Capital Markets - Analyst : Thank you. I will pass the line.

Question: Rakesh Kumar - Susquehanna Financial Group - Analyst : Great, thanks. This is Rakesh Kumar for Derrick Wood. Mark, I wanted to ask about, do you foresee any structural changes after the departure of head of sales?

Question: Rakesh Kumar - Susquehanna Financial Group - Analyst : And just another question on -- of weakness in financial services vertical, do you see any different dynamic over there? And any impact of federal budget flush in the first quarter that you foresee? 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: Rakesh Kumar - Susquehanna Financial Group - Analyst : Okay. Just one last question, how should we look for license growth in fiscal '14 as we model next year?

Question: Rakesh Kumar - Susquehanna Financial Group - Analyst : Great. Thank you.

Question: Gabriel Leung - Paradigm Capital - Analyst : Thanks Mark, Maybe just a point of clarification. When you talk about targeting that 10% license growth for the year,, are you thinking organic or are you thinking with a couple of acquisitions in there?

Question: Richard Tse - Cormark Securities - Analyst : Thanks. Just going back to this execution issue now. I know you're addressing this, but given that you have increased your sales capacity, I would say 20% from a headcount perspective, can you give us some sense of what the pipeline growth is looking like this year versus last year, given that change?

Question: Richard Tse - Cormark Securities - Analyst : Okay. Thank you.