Open Text Corp reports 21.0% EBITDA growth and 14.0% Revenue growth
29.07.2015 • About Open Text Corp (
$OTC) • By InTwits
Open Text Corp reported FY2015 financial results today. Overall the company's long term financial model is characterised by the following facts:
- Open Text Corp is a growth stock: FY2015 revenue growth was 14.0%, 5 year revenue CAGR was 15.2% at FY2015 ROIC 11.3%
- EBITDA Margin is expanding: 31.8% in FY2015 vs. 30.0% in FY2014 vs. 27.1% in FY2011
- Open Text Corp has low CAPEX intensity: 5 year average CAPEX/Revenue was 2.8%. At the same time it's a lot of higher than industry average of 1.9%.
- CAPEX is quite volatile: 77.0 in FY2015, 42.3 in FY2014, 23.1 in FY2013, 25.8 in FY2012, 36.7 in FY2011
- The company has business model with average profitability: ROIC is at 11.3%
- It operates with high leverage: Net Debt/EBITDA is 1.5x while industry average is -2.1x
Below you can find a comprehensive analysis of the key data driving the company's performance and stock price.
Open Text Corp ($OTC) key annual financial indicators
| mln. $ | 2011 | 2012 | 2013 | 2014 | 2015 | 2015/2014 |
|---|
P&L
|
|---|
| Revenue | 1,033 | 1,207 | 1,363 | 1,625 | 1,852 | 14.0% |
| Gross Profit | 760 | 874 | 971 | 1,183 | 1,254 | 6.0% |
| SG&A | 319 | 372 | 398 | 488 | 536 | 9.9% |
| EBITDA | 280 | 320 | 396 | 487 | 589 | 21.0% |
| Net Income | 123 | 125 | 149 | 218 | 234 | 7.4% |
Balance Sheet
|
|---|
| Cash | 284 | 560 | 470 | 428 | 700 | 63.6% |
| Short Term Debt | 16 | 41 | 52 | 63 | 8 | -87.2% |
| Long Term Debt | 282 | 555 | 514 | 1,257 | 1,549 | 23.3% |
Cash flow
|
|---|
| Capex | 37 | 26 | 23 | 42 | 77 | 82.3% |
Ratios
|
|---|
| Revenue growth | 13.3% | 16.9% | 12.9% | 19.2% | 14.0% | |
| EBITDA growth | 25.4% | 14.5% | 23.7% | 22.8% | 21.0% | |
| Gross Margin | 73.6% | 72.4% | 71.2% | 72.8% | 67.7% | -5.1% |
| EBITDA Margin | 27.1% | 26.5% | 29.1% | 30.0% | 31.8% | 1.8% |
| Net Income Margin | 11.9% | 10.4% | 10.9% | 13.4% | 12.7% | -0.8% |
| SG&A, % of revenue | 30.9% | 30.8% | 29.2% | 30.0% | 29.0% | -1.1% |
| CAPEX, % of revenue | 3.5% | 2.1% | 1.7% | 2.6% | 4.2% | 1.6% |
| ROIC | 11.6% | 9.7% | 11.1% | 12.7% | 11.3% | -1.4% |
| ROE | 12.8% | 11.3% | 11.8% | 14.6% | 13.5% | -1.1% |
| Net Debt/EBITDA | 0.0x | 0.1x | 0.2x | 1.8x | 1.5x | -0.4x |
Revenue and profitability
Open Text Corp's Revenue surged on 14.0% in FY2015. Having declining revenue the company managed to increase EBITDA margin. EBITDA Margin increased on 8.6 pp from 15.8% to 24.3% in 2015.
Gross Margin decreased on 5.1 pp from 72.8% to 67.7% in FY2015. SG&A as a % of Revenue decreased slightly on 1.1 pp from 30.0% to 29.0% in FY2015.
Net Income marign decreased slightly on 0.77 pp from 13.4% to 12.7% in FY2015.
Capital expenditures (CAPEX) and working capital investments
In FY2015 Open Text Corp had CAPEX/Revenue of 4.2%. The company's CAPEX/Revenue increased on 2.0 pp from 2.1% in FY2012 to 4.2% in FY2015. It's average level of CAPEX/Revenue for the last three years was 2.8%.
Return on investment
The company operates at good ROE (13.50%) while ROIC is low (11.30%). ROIC decreased slightly on 1.4 pp from 12.7% to 11.3% in FY2015. ROE decreased slightly on 1.1 pp from 14.6% to 13.5% in FY2015.
Leverage (Debt)
Debt level is 1.5x Net Debt / EBITDA and 2.6x Debt / EBITDA. Net Debt / EBITDA dropped on 0.4x from 1.8x to 1.5x in FY2015. Debt jumped on 18.0% in FY2015 while cash jumped on 63.6% in FY2015.
Management team
Mark J Barrenechea is a the company's CEO. Mark J Barrenechea is a founder and has spent 6 years at the company. The company's CFO is John M Doolittle. John M Doolittle has 4 years tenure at the company.
Appendix 1: Peers in Technology
Below we provide Open Text Corp benchmarking against other companies in Technology industry for the last 5 years. We show data for the top-5 companies by key financial metric together with the median value for all the companies in the industry.
Top companies by Revenue growth, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Mitel Networks Corp ($MNW) | -9.0% | 3.8% | -5.7% | 91.4% | |
| Redknee Solutions Inc ($RKN) | 25.9% | -4.5% | 151.6% | 81.4% | |
| Intrinsyc Technologies Corp ($ITC) | -19.0% | -26.8% | -21.7% | 70.8% | |
| Espial Group Inc ($ESP) | 10.2% | -9.5% | -5.5% | 59.4% | |
| iLOOKABOUT Corp ($ILA) | -7.6% | 19.6% | 8.9% | 58.8% | |
| |
|---|
| Median (33 companies) | 10.2% | 3.7% | 11.4% | 13.7% | 4.6% |
|---|
| Open Text Corp ($OTC) | | 16.9% | 12.9% | 19.2% | 14.0% |
Top companies by Gross margin, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| ProntoForms Corp ($PFM) | 90.1% | 96.1% | 98.1% | 98.0% | |
| Constellation Software Inc/Canada ($CSU) | 85.5% | 86.2% | 85.5% | 86.1% | |
| Symbility Solutions Inc ($SY) | 82.1% | 80.6% | 79.9% | 81.0% | |
| Espial Group Inc ($ESP) | 77.9% | 77.5% | 81.7% | 78.5% | |
| Absolute Software Corp ($ABT) | 71.6% | 73.6% | 76.3% | 78.4% | |
| |
|---|
| Median (31 companies) | 49.7% | 52.4% | 48.8% | 51.1% | 48.1% |
|---|
| Open Text Corp ($OTC) | 73.6% | 72.4% | 71.2% | 72.8% | 67.7% |
Top companies by EBITDA margin, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Wi-LAN Inc ($WIN) | 26.5% | 40.9% | 12.2% | 56.2% | |
| Computer Modelling Group Ltd ($CMG) | 51.5% | 53.8% | 52.2% | 51.5% | 50.8% |
| Sandvine Corp ($SVC) | 5.1% | 0.9% | 24.0% | 28.2% | |
| Enghouse Systems Ltd ($ESL) | 24.8% | 25.4% | 23.6% | 24.7% | |
| Descartes Systems Group Inc/The ($DSG) | 21.8% | 26.0% | 27.0% | 23.8% | 27.9% |
| |
|---|
| Median (33 companies) | 8.5% | 8.3% | 5.5% | 7.0% | 12.6% |
|---|
| Open Text Corp ($OTC) | 27.1% | 26.5% | 29.1% | 30.0% | 31.8% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Halogen Software Inc ($HGN) | | 4.9% | 9.0% | 8.4% | |
| Intermap Technologies Corp ($IMP) | 0.4% | 1.0% | 3.2% | 7.4% | |
| Kinaxis Inc ($KXS) | 2.2% | 2.9% | 2.3% | 5.0% | |
| BlackBerry Ltd ($BB) | 5.2% | 4.9% | 3.8% | 4.2% | 2.6% |
| ProntoForms Corp ($PFM) | 1.3% | 1.1% | 0.8% | 3.6% | |
| |
|---|
| Median (33 companies) | 1.3% | 1.5% | 1.4% | 1.2% | 1.8% |
|---|
| Open Text Corp ($OTC) | 3.5% | 2.1% | 1.7% | 2.6% | 4.2% |
Top companies by ROIC, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Kinaxis Inc ($KXS) | | | 61.8% | 63.6% | |
| Computer Modelling Group Ltd ($CMG) | 75.5% | 74.2% | 68.6% | 62.9% | 63.5% |
| SMART Technologies Inc ($SMA) | 43.2% | 21.4% | -18.9% | 28.1% | 43.8% |
| Constellation Software Inc/Canada ($CSU) | 45.8% | 45.9% | 22.4% | 24.7% | |
| Sandvine Corp ($SVC) | -1.7% | -4.9% | 16.9% | 20.2% | |
| |
|---|
| Median (33 companies) | 4.7% | 2.9% | -4.8% | 0.5% | 7.5% |
|---|
| Open Text Corp ($OTC) | 11.6% | 9.7% | 11.1% | 12.7% | 11.3% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Data Group Ltd ($DGI) | 3.2x | 3.5x | 3.7x | 4.0x | |
| Critical Control Energy Services Corp ($CCZ) | 1.9x | | 1.4x | 2.7x | |
| Mitel Networks Corp ($MNW) | 4.9x | 3.7x | 3.8x | 2.6x | |
| CGI Group Inc ($GIB.A) | 1.3x | 6.0x | 2.4x | 1.3x | |
| SMART Technologies Inc ($SMA) | 1.4x | 2.1x | | 1.2x | 1.3x |
| |
|---|
| Median (21 companies) | -0.5x | -0.4x | -0.6x | -1.3x | -0.0x |
|---|
| Open Text Corp ($OTC) | 0.0x | 0.1x | 0.2x | 1.8x | 1.5x |
