OpenText Revenues Jump; Global 360, Metastorm Integrations on Target
It’s been another good quarter for OpenText, even with the cost of the Global 360 and Operitel acquisitions taken into consideration. According to the figures, which were released late yesterday, revenues jumped by 32.5%, with profits of US$ 35 million up from US$ 21.7 million a year earlier.

While the results are good, they are by no means exceptional in what has been a good six months for the enterprise CMS industry in general as enterprises bite the bullet and invest in enterprise CMS technologies.

The reasons for this are many, but we have already seen earlier this week that, according to Gartner, the focus on business productivity is a least one of the main drivers and OpenText has shown itself able -- and willing -- to cash in.

OpenText Figures

The result is some impressive figures, not least of which are license revenues, which rose by 53% to US$ 65 million, up from US$ 43 last year. Other notable figures include:

  • Maintenance revenues was US$ 162 million, up 25%
  • Services in the quarter was US$ 61 million, up 36%

The overall result will please shareholders, with net income rising by 18% to US$ 59 million, up 17% per share for the same period a year ago.

In a conference call late yesterday evening, CEO John Shackleton outlined where OpenText had performed well over the quarter.

Acquisition Integration

The first thing on most investors' minds would have been return for money spent on acquisitions. It's unlikely that anyone was expecting notable gains from this, but some kind of indication of movement on this front was definitely needed.

And Shackleton didn’t disappoint.

The consolidation of Metastorm and Global 360 is going well. As mentioned on the last quarter call, we expect some typical disruption in first year license sales. The license revenue run rate for both Metastorm and Global 360 business are expected to decline in a 5% to 10% range,” he said.

What he really means is that the process of integration is still ongoing, but once that process is complete, the company expects its business process management business to return to a normal growth rate in the 2013 financial year.

Operitel, a specialist in learning management, is also in the process of being integrated, which will add social and mobile learning management to the OpenText portfolio once the integration is complete.

Commercial Strategy

By way of explaining OpenText’s commercial strategy over the past quarter, Shackleton said that it had spent a good deal of energy servicing its existing installed base as well as focusing on sales in emerging markets.

Breaking that down into different geographies, OpenText achieved US$ 65 million in license revenue in total, with North America responsible for 51% of revenue, Europe 41% with the remaining 8% primarily coming from Asia Pacific.

While we're still navigating the economic challenges of global IT spend, we're seeing particular pickup in emerging markets, with areas like China being well-served by our partners and territories such as Brazil, flourishing under our own internal sales team,” he said.

In Q1, OpenText saw license revenue broken down by vertical at:

  • 19% from business services
  • 19% from technology
  • 14% from public sector
  • 12% from financial services

The rest came form base materials (10%), consumer goods 7%, healthcare 7%, industrial goods 4% and 8% from other industries.

It also increased the number of transactions over US$ 500,000 from three to 15, and seven transactions over $1 million, up from two last year. License revenue from partners and resellers was approximately 44% in the quarter, with SAP providing 10% of our annual license revenue.

Notable releases this quarter included a new version of OpenText Email for Microsoft Exchange that offers support for large or geographically dispersed environments as well as legal content management for Microsoft SharePoint designed for law firms and corporate legal departments using Microsoft SharePoint 2010.

With Gartner predicting enterprise CMS license revenue to grow in the 7% to 11.5% range at a compound rate up until 2015, Shackleton says it expects revenues to reflect that in the coming quarters.