Confirming a trend seen in recent excellent quarterly results from companies such as IBM and Apple, OpenText (news, site) has posted a good quarter that has seen profits up 30% on the basis of strong sales growth across its new and established customer base.
While the upbeat results were expected, in the earnings call around the results, a number of interesting trends were identified by CEO John Shackleton, who cited compliance-based solutions, as well as growing interest in ERP integrations, as being responsible for a large number of the Canadian-based company’s bigger deals.
Of interest as well is the role Metastorm has played over the past quarter, with Shackleton citing growing interest in the business process management solutions that they bought with Metastorm as another point of note.
Before looking at his analysis of the figures, let’s see where the money came from. According to Chief Financial Officer Paul McFeeters, who was also present at the earnings call, revenues for the quarter jumped to US$ 263 million, up 24% compared with the same quarter last year.
License revenue -- always a good indicator of company health -- was up 37% to $67.8 million, while maintenance revenues were also heading in the right direction, with an increase of 15% to $143.1 million.
Even with its active technology acquisition strategy over the quarter, the company was still able to post profits of $52.5 million this quarter from $40.3 million in the third quarter last year.
So with the figures out of the way, what is happening in OpenText? Well first, Shackleton has confirmed, at least for OpenText, a global rebound in business, with the Americas responsible for 51% of revenues, Europe 40% and even 9% growth in the Asia Pacific region despite the earthquake in Japan.
Of that business, 46% came from new customers, and a considerable number of big deals, including 14 with a value of $500,000 or more, and additional 10 worth more than $1 million, compared with eight deals and five deals respectively in the same categories for the same period last year.
The average deal value was down to around $250,000, but he said that this reflects their strategy to go after new customers, something that bodes well for the coming year, and even years.
Of those, the largest deals were in the public sector, financial services, IT services and consumer goods, which probably explains why ERP and compliance-based software were such a big hit over the quarter.
License revues also reflected this with sales by sector as follows:
- Financial services 18%
- Service industries 17%
- Technology 15%
- Public sector 13%
- Natural resources 12%
- Healthcare 8%
- Consumer goods 8%
- Industrial goods 6%.
And this despite government spending cutbacks globally, where Shackleton says OpenText has still managed to build up business.
Partnerships also performed well, with Microsoft, in particular, providing “positive impact” in the quarter just closed, and providing other opportunities in the pipeline.
Code-sharing with Oracle last year has also been a positive influence on OpenText business.
We continue to build on the source code that Oracle shared with us last year. This code-sharing agreement is part of an effort to integrate tighter ECM functionality from OpenText in Oracle's Fusion Middleware and provide joint selling opportunities,” Shackleton said.
Acquisitions, Future Business
The Metastorm deal finally closed on February 18 and OpenText now intends to integrate its business process management products into Open Text ECM Suite, while Shackleton also said that this would be important in the future for the company’s mobile strategy.
While commercially the weComm deal is still too recent to have had any impact, in the future OpenText says that it will enable it to create and deploy mobile apps across a number of different platforms and devices. Further than this Shackleton didn’t go, although the recent upgrade to its Web Experience Management software was the first product to use the weComm technology.
And for the rest of the year? Shackleton says that analysts are telling them that enterprise content management growth will be in the region of 7% to 15% between this year and 2015 -- growth, he said, the company expected to reflect in its figures.