Open Text Corp Q4 2015 Earnings Call Transcript

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

Question: Steven Li - Raymond James & Associates, Inc. - Analyst : John, the gross amount for the tax issue of $550 million, how do you reconcile that with the $280 million and the $18 million [numbers]?

Question: Steven Li - Raymond James & Associates, Inc. - Analyst : Okay, and if I understood you, so even if IRS position stands, your 20% tax rate going forward does not change. So this is a one time issue?

Question: Steven Li - Raymond James & Associates, Inc. - Analyst : Is there a possibility for an assessment for 2013 to 2015? So was there any other asset transfers of the global 360?

Question: Steven Li - Raymond James & Associates, Inc. - Analyst : All right, just one last one. So this was -- this earnings report was significantly better than your pre-announcement. Did the market improve that much in the last few weeks? And has the climate been maintained so far in Q1? Thank you.

Question: Steven Li - Raymond James & Associates, Inc. - Analyst : That's great, thanks, Mark.

Question: Phillip Huang - Barclays Capital - Analyst : Hi, thanks, good afternoon. I was wondering if you could give us an update to the sales cycle for your customers who are transitioning to the cloud or hybrid solution? I think you mentioned last quarter, typically it does lengthen by a couple quarters or so. I was wondering, based on your experience, whether that has -- is that still your view, or has the refocused execution made the sales cycle not as long as before?

Question: Phillip Huang - Barclays Capital - Analyst : Okay, that's very helpful. Also, on the margin side, obviously very encouraged to see the increased target margin range. Was wondering if you could elaborate a little bit on the key drivers supporting this? I know you've got three years of track records to back this, but was wondering if there was any drivers that you could point to over the next 12 to 18 months or so, that you expect to drive this type of improvement in your margin despite the transition to a bigger mix of cloud revenues in your business? Thanks.

Question: Phillip Huang - Barclays Capital - Analyst : Got it, that's very helpful, thanks very much.

Question: Richard Tse - Cormark Securities - Analyst : Thank you. Mark, I was wondering if you could help me reconcile the margin profile moving up. You go through a 30 point difference when it comes to license and cloud margins, yet you're ticking your margin profile up. Is it, I'm guessing, going to be on the operating cost side and, if so, maybe walk me through the math of how that works?

Question: Richard Tse - Cormark Securities - Analyst : Okay, and I guess on Steven's question, there's obviously a big difference between the guidance you gave back in May and the results today, which were vastly better. Now at that point in time you talked about the environment being fairly soft, now has the environment improved since then, or is this purely because of the execution that you talked to?

Question: Richard Tse - Cormark Securities - Analyst : Okay, that's really helpful. Just one last question, related to the tax issue. When do you guys figure that you're going to be at a point you'll resolve this, or there's a decision one way or another? And I guess, related to that, I think in Canada, when you end up with these situations you have to put up half the cash, and I guess you're suggesting that's not the case, you're not creating a liability, but I just wanted to see how the mechanics work behind this. 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. JULY 29, 2015 / 9:00PM, OTEX.TO - Q4 2015 Open Text Corp Earnings Call

Question: Richard Tse - Cormark Securities - Analyst : Okay, thank you.

Question: Kris Thompson - National Bank Financial - Analyst : Great, thanks. Mark, just to go into the pre-announcement one last time. I'm assuming that was mostly on some license catch-up, and what I want to understand is should we be a little bit cautious looking into Q1? I mean, is there going to be some normal Q1 seasonality where maybe you've pulled some deals you figured wouldn't close so we should be a bit cautious on our Q1 license number?

Question: Kris Thompson - National Bank Financial - Analyst : Okay, and were there any eight digit license deals in the quarter?

Question: Kris Thompson - National Bank Financial - Analyst : And just on the Corp Dev team, can you -- 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. JULY 29, 2015 / 9:00PM, OTEX.TO - Q4 2015 Open Text Corp Earnings Call

Question: Kris Thompson - National Bank Financial - Analyst : Can you just give us an idea of the Corp Dev team, how many bodies you have there now? You said you were planning on doubling it. And maybe just confirm that you're still focusing what's in your five pillars?

Question: Kris Thompson - National Bank Financial - Analyst : Okay, thanks a lot, guys.

Question: Paul Steep - Scotiabank - Analyst : Great, thanks. Mark, maybe you can just, on the latest SAP partnership, maybe we can go back and talk a little bit about the scope and the timing, and maybe even what the potential of that new deal with Ariba means and maybe SAP in general, how that relationship has now evolved?

Question: Paul Steep - Scotiabank - Analyst : Great. Two quick clean-up questions, then. One, post the 2016 sales kick-off, is there anything we should think about, or note, in the sales compensation that changed heading into 2016 that's going to further incent the sales teams to go after cloud wins, or, again, is it sort of an agnostic view that you've traditionally had?

Question: Paul Steep - Scotiabank - Analyst : And then the last one, just to put this IRS thing, hopefully, to bed. It was very clear that you've not reserved for this. Can you just comment on, with the Board and the Audit Committee, did they go and get a second opinion that would've obviously led you to not take the reserve? And obviously there was clearly meetings about this.

Question: Paul Steep - Scotiabank - Analyst : Thank you.