Thank you for standing by. This is the conference operator. Welcome to the Open Text Corporation’s Third Quarter Fiscal 2020 Conference Call. As a reminder, all participants are in a listen-only mode and the conference is being recorded. After the presentation, there will be an opportunity to ask questions. [Operator Instructions] I would now like to turn the conference over to Harry Blount, Senior Vice President, Investor Relations. Please go ahead.

Thank you, Operator, and good afternoon, everyone. On the call today is Open Text’s Chief Executive Officer and Chief Technology Officer, Mark J. Barrenechea; and our Executive Vice President and Chief Financial Officer, Madhu Ranganathan. We have some prepared remarks, which will be followed by a question-and-answer session. This call will last approximately 60 minutes, with a replay available shortly thereafter. I would like to take a moment and direct investors to the Investor Relations section of our website, investors.opentext.com, where we have posted two presentations that will supplement our prepared remarks today. First, our strategic overview deck titled Open Text Investor Presentation April 2020. And the second titled Q3 FY2020 Financial & Business Results includes information and financials specific to our quarterly results, notably our updated Quarterly Factors on page 10. In May and June, Open Text management is pleased to virtually meet with investors at the following conferences. CIBC’s Technology and Innovation Conference on May 13th, Barclays Americas Select Franchise Conference on May 14th, Needham’s Technology and Media Conference on May 19th, Bernstein’s Strategic Decisions Conference on May 29th and Bank of America’s Merrill Lynch Global Technology Conference on June 4th. Please feel free to reach out to me or the IR team for additional information. And now I will proceed with a reading of our Safe Harbor statement. Please note during the course of this conference call, we may make statements relating to the future performance of Open Text that contains forward looking information. While these forward looking statements represent our current judgment actual results could differ materially from a conclusion forecast or projection in the forward looking statements today. Certain material factors and assumptions were applied in drawing any such statement. Additional information about the material factors that could cause actual results to differ materially from a conclusion, forecast or projection in the forward looking information, as well as risk factors including in relation to the current global pandemic that may project future performance results of Open Text are contained in Open Text recent Forms 10-K and 10-Q, as well as in our press release that was distributed earlier this afternoon, which may be found on our website. We undertake no obligation to update these forward looking statements unless required to do so by law. In addition, our conference call may include discussions of certain non-GAAP financial measures. Reconciliations of any non-GAAP financial measures to their most directly comparable GAAP measures maybe found within our public filings and other materials which are available on our website. And with that, I am very pleased to hand the call over to Mark.

Thank you, Harry. Good afternoon, everyone, and thank you for joining today’s call. On behalf of the Open Tech’s community we honor the brave women and men who are serving on the frontlines of this pandemic, our healthcare professionals, first responders, infrastructure and cloud experts, food processors and other essential workers who are keeping us healthy, safe and productive. Our hearts remain heavy with the loss of life and hardship and during these difficult times our spirits are uplifted with hopes acts of kindness and courage. The health and well-being of our employees is our first priority, as well as our customers and partners. I am pleased to highlight that the Open Text community is doing exceptionally well. This pandemic impacts every aspect of our work and lives. As we say in Canada all together or tous ensemble. I am inspired every day by the resiliency and innovation of my colleagues. I am so proud of the Open Text leadership our employees their dedication to customer experience operational excellence and their resiliency during this pandemic. While there remain and is still a long journey ahead for all of humanity, we look forward to our in-person camaraderie returning soon. Open Text is a unique platform a very strong company and we are well-positioned for that seminal moment in time. We will come out of this stronger than we went into it. Let me spend a few moments on our Q3 financial highlights. We delivered record total revenues of $850 million up 13% year-over-year or $820 million in constant currency. This is our 24th consecutive quarter of total year-over-year growth in constant currency. We had record annual recurring revenues of $662 million, up 21% year-over-year. Our annual recurring revenue ARR was a record 81% of total revenues. Cloud revenues of $340 million…

Thank you, Mark, and thank you all for joining us today. Our Q3 results were solid and reflect our operational excellence and it continued focus on our balance sheet. We are proud of the DNA and culture that Open Text as we continue to optimize the structure initiate and execute preemptive cost measures, with a strong balance sheet and a highly efficient operating framework they are best positioned to address the shorter term challenges and longer term. And before I share my commentary on Q3, please note that I updated fiscal 2020 target model is included in our Q3 investor presentation posted on our IR website and will be addressed in my comments. And similar to prior quarters, my references will be in the millions of USD and compare to the same period in the prior fiscal year. And let me start with revenues and earnings. Total revenues were $814.7 million, up 13.3% or up 14.1% on a constant currency basis. Foreign exchange continues to be meaningful. There was a $6 million FX unfavorable impact to revenue in the quarter. Year-to-date, total revenues were $2.3 billion, up 7.6% or up 8.8% on a constant currency basis. Earnings per share, Q3 GAAP earnings per share diluted was $0.10 down from $0.27 and primarily due to the incremental impact of amortization relating to the Carbonite acquisition. Q3 non-GAAP earnings per share diluted was $0.61, down from $0.64 or down $0.02 on a constant currency basis. Year-to-date, GAAP earnings per share diluted was $0.77 down from $0.79. Year-to-date, non-GAAP earnings per share diluted was $2.09 up $0.05 or up $0.10 per share on a constant currency basis. The geographical split of total revenues in the quarter with Americas 63%, EMEA 29% and APJ 8%. Annual recurring revenue were $662.3 million, up 20.6% or…

Thank you. [Operator Instructions] Our first question comes from Raimo Lenschow of Barclays. Please go ahead.

Thank you. Congrats on a great Q3 and hope you all stay healthy and our thoughts are with you guys as well. The quick question for you, Madhu, you have seen kind of downturns before as well, like, if you think about the current situation, what’s the -- can you talk a little bit about what you are kind of looking out for in terms of either like conversion rates versus pipeline building versus churn especially now that you own Carbonite with more SMB focus. Just kind of help us a little bit understand, like how trying to or will manage through the current situation? And then I have a follow-up.

Yeah. Very good, Raimo. Thanks for the question. We are well and wish you in your extended family the same. Look, I think at the end of the day, the guiding principle is going to be by industry, right? The -- every industry is going to be different. Auto is going to be different than retail, which is going to be different than health care and hospitals. So we are taking an approach to understand our business and the patterns and any structural shifts industry-by-industry our approach that that we are taking. There’s no doubt that in general there’s an acceleration in transformative discussions. We highlight the ones that we are seeing digital, cloud, remote work, cyber, supply chains. When we add-up our revenues into those industries we think that are most challenged here in the short-term, it’s upward to about 20% of our revenues. Now that’s balanced by expansion discussions that we are having in health care, pharma, industrial manufacturing and government. So it’s -- when you kind of translate all those short-term effects together, for RF-20 we are expecting to grow mid to high single digits, but before COVID, we expected a slightly higher growth rate. So we are taking a look at it by industry, industry-by-industry. You have places where across the Board there is accelerated discussions, but there are more challenges in certain industries and accelerants and others. As it relates to SMB, we are clearly monitoring it. The Carbonite business isn’t all SMB, there is a good portion that’s enterprise, there is a good portion that is OEM which is enterprise, our consumer direct business was actually on an uptick in Q3, and of course, there is the SMB portion of the business. We saw no effects in Q3. We are clearly monitoring it very, very closely. So let me pause there and I think you said you might have a follow on or second part of your question.

Yeah. then -- it’s we are in kind of we are in familiar, but we are also in uncharted territory a little bit in this…

Yeah.

… kind of situation and can you talk a little bit about what are the signals or the metrics that you guys are going to focus on most in terms of kind of managing it and kind of making decision in terms of like changing behavior or changing something. I mean you took very kind of decisive action already now, but like what’s the guiding principle for you here now as you go for the crisis?

Yeah. So we are clearly being preemptive on our choices as you noted and we noted in our script we think it’s better to be decisive of we are slow and incremental. Look, I learned that through my cancer treatment, I learned that through the great recession, right? And you just got to prepare to weather other challenges. Look I know we are going to follow like most in -- out in the market I call the three Ts, right. We are going to track testing. We are going to track tracing and we are going to track treatment, as a general market. And we are going to track industry by industry. We are going to look we get good insight through our business network on many industry trends and Raimo the best I think I can highlight right now. Yes, you have the usual pipeline and other metrics, but we are going to take a very industry by industry view. In each industry those outgoing through every industry here. We are going to we are going to track and trace if you will that the detailed industry metrics, because this recovery is going to happen in industry at a time.

Okay. Makes sense. Thank you good luck.

Thank you.

Our next question comes from Paul Steep of Scotia Capital. Please go ahead.

Hi. Good evening, Mark. Could you talk…

Hi.

Hi. The cloud growth in the quarter, maybe measures you are taking whether you have done anything to actually accelerate the transition towards the cloud and sort of push even harder towards that direction beyond the acquisitions that we talked about earlier?

Well, it’s kind of pre-COVID. We did make structural changes coming into the fiscal year. We certainly part leadership and management priority on it. But Paul the pandemic is an accelerant to the transition to cloud. Customers who are not able to, I mean, we are not blessed and fortunate to have invested for many years in a very strong technology platform or information management technologies and we think about how we how we operate a 15,000 person company today working from home. Look we processed trillions of commerce through our trading grid over the last hundred days. And the conversation to accelerate to the cloud to accelerate -- the conversations of cloud and digital are simply being accelerated due to the pandemic. And we are going to be here altogether to help our customers make that transition rapidly, whether it be consolidated content services to build knowledge economies, whether it be leveraging or trading grid to rapidly adapt supply chains. We had numerous customers who we helped in Q3 that were going from traditional industry manufacturing who had a onboard 2,000 new suppliers, thousands and thousands of new parts to build a platform to build a move to PPE manufacturing and we were able to do that in record time. So they could go reconfigure that physical manufacturing space. So the pandemic is accelerating these conversations. We haven’t had a change structurally our comp plans or anything like that to do this.

Great. And then just a quick follow-up on it maybe put context for people in the call round what [inaudible] and the team has done with today’s announcement now that you have added the other major cloud service provider on the public side and how clients or whether clients have sort of pulled you towards Azure and AWS? Thanks.

Yeah. Yeah. Sure. Thanks. So we announced our relationship and extended relationship with AWS today. And we have previously announced our relationship with SAP, Google. We have always partnered with Microsoft as well. 20.2 Cloud Editions our cloud first they are native cloud applications are completely containerized and we really have kind of completed the tech stack and now the business relationship side to give full choice to our customers. So if a customer has sort of standardized on AWS, if they have standardized on Google, they have standardized on Azure, we can seamlessly support their business decisions and their operating decisions, as well as our tech stack. So 20.2, important steps native cloud, cloud first. AWS really is one of the last big pieces for us to firmly support as I like to say completing the need and the choice for our customers.

Great. Thanks folks.

Our next question comes from Stephanie Price of CIBC. Please go ahead.

Good afternoon and congrats on the quarter.

Yeah. Thanks, Step. Good to hear your voice.

You too. Thanks for the color on what you have seen, so first, just wondering if you could talk a little bit about what we have seen in a first couple of weeks of April? And maybe a related question, as regions start to open up, our prospective customers picking up where they left off or how quick are they to reengage?

Yeah. It’s --software is still unusual where you sort of get the end of quarter activity and like I couldn’t be more pleased that we have completed the transition from license business, really into a cloud business in a highly recurring revenue business. I -- if I look at, we have the transactional work we do and then we have the network work that we do. And on the network side, it seems to be sort of stable coming into April, I would say, you had the end of last calendar year, you had January a bit down, you had February a little lower down, February, excuse me, March a little lower down and in April seems to be sort of a bit more of a steady state right now. It’s too early to declare anything. But I would say, here in the first month of the quarter, it seems to have kind of been steady to where we from end of March. If we just go around the world, China has certainly begin to return to workplace. Southern Europe has begun to return to workplace. I think it’s still too early for Western Europe and North America yet and there are still places that are not plateaued, whether it be India or South America. But from what we can see in our business, we have the transactional piece. We have the network piece. The network piece is sort of stable to where it was at the end of March, but I am just going to know it’s still just too early to make any predictions.

Okay. Thanks for that color. And then maybe for Madhu, just on the cloud margins this quarter obviously very, very strong. Just wondering if you could elaborate a bit on the strength, is it all related to the Carbonite’s integration should we kind of see this as the new run rate going forward?

Yeah. Great. I mean, it’s a great question. I would say think about it in three parts. One certainly we continue to optimize from an Open Text cloud perspective. Our cost framework and we certainly see the benefit of that. And Carbonite is our full quarter and predominant of Carbonite, of Carbonite revenues aren’t back I mean in the cloud. And I also spoke about the CapEx efficiencies we are seeing. So I would say all three factors definitely contributed and we talked previously about being in the low to mid 60s right and you should definitely look to us to be in the low 60s as we look ahead as well.

Great. Thank you very much.

Thank you.

Our next question comes from Paul Treiber of RBC Capital Markets. Please go ahead.

Thanks very much and good afternoon. With the global move to work from home across a number of organizations it seems structural and permanent. As you are experiencing it firsthand, what do you think is perhaps the least understood about that the challenge in transitioning including IT and moving to work from home. And then as you think strategically how do you think that will -- how that help you further reshape Open Text’s software portfolio to address that going forward?

Yeah. Yeah. Thanks for the question. I think many of us tech companies are very tech oriented businesses. If I walked into an office -- if I walked into my management team meeting last year, Monday morning and sat my team down and said look, we are all going to go send everyone home for the next two months and let’s start see how it goes. I would have I thought it would have got locked out of the room. Yeah, we have all now experimented at scale. Many of us have experimented at scale of having our work forces telework. And I think many of us have been surprised just how effective it is and in some cases productivity up and it works. So for us we see it as an opportunity to think differently about what the new return to workplace looks like. We are not going to be constrained in certain markets. This will open up some talent pools for us to think more widely about the talent we can bring on Board. And I also think it will reinvent content services by content services at its heart is a knowledge platform. Don’t think about how you do a remote close, how you do many major processes when you have a remote workforce. If you don’t have knowledge basis or knowledge economies as I call them it’s very hard to work. So I think on one hand many of us have been surprised at how productive it has been. None of us would have experimented like this on our own. I think you are going to see some permanent changes in that hybrid work. I think it’s going to in a lot of ways reinvent reinvigorate content services and these are some of the things that we are seeing.

Thanks for that. Just another question for me, in regard to Carbonite in the quarter it was significantly above our expectations and then on a run rate basis above your prior outlook now does the upside in the quarter does that specifically relate to work from home demand and you did see or was there another driver that drove the upside there?

I would say a few things. One is good integration and execution, as well as there’s going to be in those places that are somewhat as we talked about challenged, auto, airlines, travel, hospitality, oil. But as the workforce moved home and home is more than just home and it’s home, office, school, gym and many people at home, we did see high renewal rates and strong interest in our kind of direct business to consumer and prosumer. So I’d say it was a bit of the integration and execution, as well as an uptick in an opportunity due to the work from home at…

Okay. Thanks for taking my questions.

[Operator Instructions] Our next question comes from Richard Tse of National Bank Financial. Please go ahead.

Yes. Thanks. So I understand that there’s certainly a potential for acceleration broadly on the other side particularly in cloud. But this current crisis kind of uncovered any specific product areas that you can actually see outsize pick up an interest here that you weren’t really seen before.

Richard, thanks for the question. Look, I think, the areas of focus and more conversation are around consolidation of content services, our core platform a collaboration suite and e-signature lots of conversation, and protection of the home and end point. These are things that are certainly in the green column for us more so than they were pre-COVID.

Okay. And then you mentioned a bunch of different verticals like auto, airline, hospitality, obviously those are very, very challenging verticals, but yet when you sort of look at the kind of rain or the year you still seem pretty optimistic, so obviously that’s pretty impressive. So if you were to say it was in a normalized state organic growth, can you maybe talk about what that would have been under kind of normal conditions?

Well, as I said, on earlier, we are not going to talk about fiscal ‘21 yet, right? We will stay on our usual cadence and we get to August we will talk about fiscal ‘21 as we usually do. For herein and which I am just going to talk at the fiscal year level Richard. So for fiscal ‘20 we are expecting to see another growth here. So total growth in the mid-to-high single digits, cloud growth in the low 20s. In relation to organic growth which I think is you should question. The first half of 2020 we had organic growth. Year-to-date and constant currency good organic growth in ARR, but two months ago organic growth will be challenged, right due to COVID. And whereas we have some there are heavily invested industries that have pressure as we all know. We have expansion discussions and other industries healthcare, pharma, industrial manufacturing. That does translate into short-term effects for us. As I said in my prepared remarks, right. Our F-20 growth is expected all in our F-20 growth expected to be in the mid to high single digits and before COVID we expected higher growth. So we are still going to have a growth year. We are still expecting a growth here, but we clearly have growth impacts because of COVID.

Okay. And just one quick one for me, the last question in terms of acquisitions and maybe talk about the ability to pursue acquisitions here in the next few quarters and do you see a change here over those next few quarter in terms of the valuation into the marketplace? Thanks.

Yeah. thanks. Thanks Richard. So it’s -- we remain in the market pursuing opportunities. So there is no doubt that the pandemic is going to affect valuations downwards for the markets that we seek assets in. We continue to build a strong balance sheet 2.25 times leverage and declining. But we are going to continue to pursue opportunity, the right opportunity at the right time. Clearly, any buyer has to understand the effects of the pandemic on that business. It requires yet another part of a playbook to do the due diligence. So we are going to seek, it’s a time to seek to seek companies in your core markets that you already know and that are just strong brands with high recurring revenues. I don’t think it’s a time to kind of get out of your wheel house. So with that we are continuing to pursue opportunity to speak with companies, build our pipeline, continue to do deep discussions and for the right opportunity and the right to deliver asset will be prepared.

Right. Thank you.

Our next question comes from Thanos Moschopoulos of BMO Capital Markets. Please go ahead.

Hi. Good afternoon. Mark, can you speak to what you are seeing in your transaction driven businesses like the trading grid, given that we have been going on our transaction volume is generally up a lot, down a lot. If they are down, to what extent your contractual minimums that might preserve some of the revenue?

Yeah. Thanks, Daniel. Well, I am not going to translate traffic. Traffic does it necessarily translate directly into revenue, right? We have over chase, we have under chase, some contracts are our yearly averages. So it’s not a direct relationship. There are places where we have seen increased traffic, if we look at pharmacy, healthcare, actually certain industrial manufacturers as well. We have also seen areas that have much lower traffic, of course, retail CPG auto. You add the pluses and minuses the traffic is down overall, but doesn’t translate directly into kind of kilo character down doesn’t translate down that to a dollar down, if you will. So we factor that all in to how we look at the year. Again for fiscal ‘20 we are expecting mid to high single digit growth all-in. But overall to answer your question the traffic is down where places that are positive. Many places that are negative, but you add the positives and negatives it still equals a negative and we think it’s a short term short-term issue and we will wait to see the other side.

Great. Thanks. And in the current climate are you seeing any pressure on DSOs, the customers asking for longer payment terms or for that matter our existing customers pushing for concessions on weakness of oil pricing or not to-date?

Yeah. I think it’s safe to say every industry is going to talk about longer payment terms and every industry is going to talk about renewal rates. We experienced in Q3 very strong renewal rates. And look we are in a great position, because we offer a suite of products. We are able to offset those conversations with more product, more services, consolidation opportunity, and look the maintenance and features in the service is what’s running a lot of these essential industries. So I think, we are in a great position to be able to maintain upper quartile renewal rates both cloud and off cloud, given, we take a platform, product portfolio approach, consolidation approach, where we own the platform that is essential in many businesses. So I feel really good on our renewables. Every company is -- everyone is asking for a longer payment terms. We are going to do what’s right and fair here in the short-term and as everyone should, as we say altogether. We will do what’s right and fair for those industries and customers, who need our help, in our preventive actions also help offset anything and you saw that kind of altogether spirit actually take record cash flows in Q3.

This concludes the question-and-answer session. I will now hand the call back over to Mr. Barrenechea for closing remarks.

Okay. Well, thank you, everyone. This was certainly a very unique time and a seminal moment to have an earnings call. Our solid Q3 puts us in a great position to weather the short-term challenges ahead, with 21 consecutive quarters of year-over-year growth in constant currency, record revenues, record ARR 1%, record cloud to $340 million up 42%, we are maintaining our dividend and visibility and our hearts and minds are with all those affected by this series of events and pandemic. Thank you for joining today’s call and we will see you on our conferences in the quarter. Thank you very much.

This concludes today’s conference call. You may disconnect your lines. Thank you for participating and have a pleasant day.