Good morning. You guys are going to have an exciting time here at OpenText 2019 Investor Day. Welcome. We're very excited to have you all here with us today. This morning, you will hear presentations from Mark J. Barrenechea, OpenText Chief Executive Officer and Chief Technology Officer, as well as the other members of the OpenText executive team. This meeting is being webcast, and the slides are available on our website at investors.opentext.com. A replay of today's meeting will also be available on our website shortly after the conclusion of the meeting. The meeting today will last at a total of approximately three hours, with a 10-minute break at around 10:00 A.M. There will also be a 15-minute Q&A session with all presenters from OpenText available at the end for remarks and questions. Please kindly hold your questions until the Q&A session at the end.
Now I will proceed with a reading of our safe harbor statement. Please note, during the course of today's meeting, we may make statements relating to the future performance of OpenText that contain 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 conclusion. 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 the risk factors that may project future performance results of OpenText, are contained in OpenText recent forms 10-K and 10-Q, as well as our press releases and on our website. We undertake no obligation to update these forward-looking statements unless required to do so by law.
In addition, our conference calls may include discussions of certain non-GAAP financial measures. Reconciliations of any non-GAAP financial measures to their most directly comparable GAAP measures may be found within our public filings and other materials, which are also available on our website. With that, I'm very pleased to hand over the meeting to Mark Barrenechea, who will tell you much more about the OpenText story. Mark?
Thank you. Good morning, everyone. How's everyone doing?
Yeah.
Good. Thanks for taking time out of your schedules and travel and being with us here in N.Y. this morning. We had a celebratory day yesterday in opening the Nasdaq, and it's always an important moment to step back and look at your history over 27 years, from $10 million in revenue to $2.9 billion, and be able to open the markets in the morning. We couldn't have done that without you. Thank you for all that support, and we're pleased to be here today to talk a bit more about the future. I'm going to start with about OpenText and kick right off into our value creation playbook. You know us as a leader in enterprise information management. We have a marquee ecosystem in the enterprise. We're an enterprise software company. We're not a mid-market company. We're not a consumer company. We're an enterprise company.
You hear that term a lot today. We have a marquee ecosystem in the enterprise. 74,000 customers. Obviously, we get out. It's customers and divisions and a lot of other things. 60 million identities, 40 million endpoints, 2 million trading partners in our wide horizontal EIM platform. We're a large-scale enterprise software business. Our fiscal 2019 results in constant currency, $2.9 billion, up 3.8% year-over-year. A large recurring revenue base, $2.2 billion in annual recurring revenues, up 3.8% year-over-year. Our cloud revenues from zero to $908 million over seven years, up 10.8% year-over-year. We set out to be a productivity leader as a company.
As a capital allocator, which you'll hear me speak about today, we feel it's very important as stewards of our shareholders' cash that as we put it to work, we need to meet a high ROIC, we need a strong payback, and we need to put that capital to work in an efficient engine. I'm going to speak about that efficiency upper quartile, where we're setting the bar, where we don't think we need to be the number one company in software, but among the top 10 companies in software, and how we're going to reinvest over a certain threshold of EBITDA. That'll be part of my discussion today. We delivered 38.4% adjusted EBITDA, up from the mid-20s just 10 years ago, and $876 million in operating cash flows, up 23.8% year-over-year. As I look at our value creation playbook, it's about growing recurring revenues.
It's about continuing to expand margin. It's about strong cash flow. It's about accretive acquisitions. Alongside that, continuing to innovate, and we're going to spend a fair amount of time today on that, reinvestment for growth, which Ted is going to talk about, and disciplined capital structure and dividends, which Madhu will speak about today as well. We set out on our dividend policy to return capital and return value every year, and we set as a metric of 20% of trailing 12 months cash flows. Since the inception of our dividend, we've grown our dividend both in its absolute quantum as well as the rates of the dividend every year-over-year for the last five years, because as we grow cash flows, we grow the return back to investors. I put on the bottom here a very important point, which is the rule of 40.
The rule of 40 has gotten a lot of attention over the last few years to say, how do you value a SaaS company? The rule of 40 says, "Give me your SaaS growth, your growth, plus your margin, and get above 40." I think the rule of 40 is right, but addition is associative. It's an associative property, right. If it's growth plus profits equals value, right. You can swap the variables and still get the same value. I think the rule of 40 is right of growth plus margin, but I think it's profitable growth. In fiscal 2019, with our growth rate of 3.8% and our 38.4% EBITDA, we achieve 42.4% in the rule of 40. We'll continue to operate above the rule of 40.
We just do it the OpenText way, which is extremely high profit contribution in the associative arithmetic. I wanted to put the rule of 40 up here because I do believe in the formula, and we just think that it's not just growth plus profits. We think it's growth and a lot of profits that gets you to the 40% to equal value. Our strategy, which you'll hear throughout the morning, it's about helping companies unlock their information advantage. You look back through time where we went from mainframe to client-server, and that was a once in a 20-year opportunity. Client-server to internet, once in a 20-year opportunity. Internet to the cloud is a once in a 20-year opportunity. As more data gets created, more data gets centralized, companies don't need more processes, right? We're in a post-ERP era.
This is about getting not more process advantage, it's about getting the information advantage for companies. How do you gain insight into your data to build a stronger, better company? We think we're in a great position to help companies gain the information advantage. That's part of our strategy. Two, is be the leading platform for Enterprise Information Management. You're going to hear today, it's still a very young market. We're 27 years old as a company. It's still a young market. IBM is over 100 years old. Oracle's over 50 years old. This is still a very young market. Our strategy is to deliver the best hybrid cloud and customer experiences. We see the world as hybrid. It's not 100% cloud. It's not 100% off cloud. We continue to see the world as hybrid. Emphasis on cloud, but hybrid. We work in regulated industries.
We work in industries that have much of their differentiation is bespoke or customized and deeply integrated. We work in a lot of industries that want the benefits of cloud, but are going to continue to run off cloud, to gain their value. In that perspective, it remains a hybrid world. It's not all cloud, it's not all off cloud, it's hybrid cloud, but the emphasis cloud. Part of our strategy is a relentless, purposeful word, relentless focus on operational excellence and efficiency. We're a well-run company. You see it in our operating parameters, and Madhu is going to spend a fair amount of time on this today. The anchoring part of our strategy is to continue to hire, develop, retain the best and most diverse and inclusive talent in the world. I just want to lay out our strategy right up front.
Also our ambitions. When we look at our ambitions. I want to continue to emphasize we're young, and it's still early in our journey, and we won't use age against IBM, to quote a politician. We are still young in our journey, and it's exciting that youthfulness of continuing to grow and expand. We started as a search company, then an on-premise enterprise content management company. We created a category, enterprise information management, just like ERP was created as a category. We created the category. This is a big, large, growing marquee category, and we spend a little time. We have a new presentation on total addressable market to give a bit more detail on the $100 billion TAM. Along the journey, we have analysts now covering this as a segment. You go back, ERP wasn't a thing. ERP is now a thing. EIM wasn't a thing.
It's now a market. The next journey is a hybrid cloud-wide horizontal platform or a wide horizontal platform for information management in the enterprise. This journey continues into a full vertical SaaS cloud over time. This journey continues into a full vertical SaaS cloud, and for us, full market leadership. We have market leadership, you'll hear today, in content services and business network. We have scale in those markets. We have leadership positions in those markets. The other markets, we don't have the scale yet, but we're investing to win. Right? These bullets have a point on the slide, is that we're investing to win. We have leadership in content services and business network. We have tenant properties in security, analytics, EIM Cloud, and vertical applications. We're investing to win in all these markets.
As we grow and mature and through our journey, we'll look to be in the top 3, then top 2, and then the market leader in each of these categories. This is part of our strategy. These are our ambitions. What you'll hear today, I think you'll have four takeaways from today. Four takeaways. First is the mission-critical nature of Enterprise Information Management. It's more important than Enterprise Resource Planning. We speak to customers, and they say, "You know what? My ERP system can go down, but my EIM system can't." Because we're so integral into the running of the Global 10,000. This is a once in 20-year shift. I guess where maybe maturity and a little wisdom may be of a bit of benefit. I mean, I grew up on the mainframe. My first language was 360/ BAL, Basic Assembly Language.
The transition from the mainframe to the internet was an opportunity in the market. Internet to client server. Client server to internet was an opportunity in the market. Internet to cloud, it's a once in a 20-year opportunity, and you're going to hear an expression from Ted. We call it our 3M strategy. 3Ms. Migrate, modernize, and then monetize, in the shift to the cloud. Migrate, modernize, monetize. It really is a once in a 20-year opportunity to look into our marquee install base and apply that 3M strategy. Second thing you're going to hear today, I'm going to emphasize, if there's one word for today, it's durable. One word. There's one thing and one word, it's durable.
I'm going to spend time and have a section on talking about us as a durable business, strong results driven by our OpenText Business System and that relentless focus on efficiency and excellence. If there's one thing and one word, and this is a CEO emphasizing the one word, it's durable. Third thing you'll hear today is how we're building and evolving into a stronger company through our TAM and through account expansion. The fourth thing that the team looks to convey today is how we're going to run our playbook for total growth and longer-term value creation. I want to start up front and provide an overview of the things that you'll hear today from myself and the leadership team. Let me start with number one, and talk about the mission-critical nature of EIM.
Let me start with the big trends that intersect with OpenText, that shape our thinking, then form our action. These are those trends. One is hybrid cloud. API economy, the ability to be able to bring our great capabilities and our business network as part of wider use cases inside the enterprise. Third thing shaping us is workforces are nomadic. I call them nomadic workforces today. If I wind the clock back 20 years, teams were highly centralized. Either your team was completely centralized or the majority of your team was completely centralized. It's kind of shifted where maybe half your team is in one place, and now it's shifted to where the majority of your team, if not all your teams, are nomads. This is a big shift because how do you work together? How do you collaborate? How do you share information?
How do you keep versions? How do you do projects? When we talk about the new way to work or the new nature of work, a lot that's being driven is not necessarily from regulations and compliance, but it's the fact that the workforce is highly nomadic. Gig economy, driving a nomadic workforce as well. I like to express it as a nomadic workforce. Extreme mobility, drive for information insight, information security, and privacy is going to be with us. GDPR is just the start. It's going to come to North America. It's already coming to California. We see a mashup of compliance, regulation, GDPR, chief information security officers, privacy, data rights, all coming together as a very large theme. In this mobility, the edge is a smart edge. It's very empowered. It's all about customer experience.
If you don't like the app and I can't get something, I'm going to delete it and move on. Of course, a steady drumbeat of regulations and compliance. There are very strong trends that favor OpenText and they're not just episodic events, they're long-lasting trends for the business. Mission-critical nature of EIM. OpenText runs at the center of the enterprise. We hear a lot from our customers that we're the glue that holds the enterprise together, right? We're the place where all their ERP, CRM, MRP, supply chain planning, HR applications, it all comes together. They can't integrate all the ERP systems and all their billing systems except with content. We're the glue that sits in the middle for enterprise apps, the platform, and the network.
Whether you're running a supply chain from SAP, ERP from Oracle, Workday HR, Salesforce HRM, where you keep the 10 million documents associated with employees and all that information and processing. Where do you keep all the asset information? Where do you keep all your supplier and customer, all this unstructured data? We're the glue. We're the platform. We sit at the center of being the integration point across inside the ERP. We also integrate outside the ERP, outside of the four walls through trading partners, customer suppliers, and vendors. We wanted to try to create a graphic to share with you, to show that how we sit at the center, both inside an organization and outside the four walls of an organization in our enterprise information management. One of our big components we talked about earlier is content services. We're number one in content services.
We have the Forrester Wave on your right, Gartner Magic Quadrant on your left. This is an exciting market because content services is reinventing itself. We're on a path to digitize everything, to make everything machine-readable. Not everything is machine-readable today. Perhaps half of an enterprise is machine-readable. Voice, facial recognition, every business process, make it machine-readable. Make it embeddable in everything that you do. Bring it together. I'll get to information sprawl in a moment. Content services is cool again. It's in the center of reinventing business processes as everything becomes machine-readable. It's not just about PDFs and PowerPoint and Word documents and Excel. It is about creating a new language for invoices, a new language for sales orders, a new language for forecasting, a new language for trading partners. How did the nomadic workforce bring all that content together?
Facial recognition, voice to text, et cetera, make it all machine-readable. We're the market leader. It's a big area of our investment, and the segment is reinventing itself. We're the leader in business networks, as well, inside of enterprise information management. Liaison, a recent addition, has just really created these new app-to-app capabilities. Part of the reasons we're excited about the business network is our ability to go not just from a transactional platform like we had at GXS, but now to go up to app-to-app integration. With information sprawl, you need to integrate to more applications. Liaison brings us a library of over 10,000 prepackaged connectors. How do you have SAP talk to DocuSign and do that securely? It's just not one version of each of those. How do you have Oracle talk to Workday? It's not just one version of each of those.
It's the ability to connect system to system, to secure it, and reliably deliver that transaction. That's an exciting part of growth for us in the business network. The second area in the business network that we're looking to leverage from our number one position is that supply chain manufacturers today are looking to build ethical supply chain. The circular economy is driving the supply chain. It started from being able to track the efficacy of a mineral or component part, but now it's the whole circular economy through the supply chain. Muhi will speak about what we had codenamed internally Project Emerald, of our ability now to have ethical scores for component parts, the ability to meet requirements in an ethical supply chain, and have that be part of our business network. I want to touch base on the mission-critical nature of EIM.
My first point I wanted to make today is that there's an important challenge. There's a problem that has arisen in the enterprise. We're uniquely positioned. Of all the aspects of the trends, there's really one that I want to highlight, that's the information sprawl. Companies over the last few years have just. It's like having a. How best to say this? Like a zoo, all your animals just escaped. With rhinos and giraffes running down the street. Those are your systems, those are your data. How do you manage that sprawl of data outside the enterprise? We talk to CIOs. They have 30, 40, 50, some have 100 third-party systems, where it's 10:00 P.M., where's your data? How many systems? Can you even find them? What level of standard of security are they?
You keep pushing your employee identities out to all these systems. You push it out 100 times across these. Our business network with our Identity and Access Management platform can solve information sprawl. We can, in a consolidated place, find all your systems outside your firewall. We can manage the identity and security across all those systems real-time in one place. This is a big trend for us and a driver for our growth in the coming years. We do the same thing inside the firewall as well. We've done it for a long time in our business, and we can do all this through APIs as well. Information sprawl is a very important concept, challenge that we can solve. The mission-critical nature of EIM. The most trusted companies trust OpenText. BMW. We're a proud partner with BMW, and we run their electronic invoicing platform globally.
I don't know how companies can plan when they don't know the landed cost of a good. You talk about tariffs and pricing and these things that happen around the world, but as a manufacturer, how do you actually plan your production if you don't know the landed cost of an item? The answer is you can't. Our platform is helping customers both in their planning and invoicing. I look at BMW, we're providing electronic invoicing, taxation, shipping, notifications, specific tax regulatory requirements in 40 countries around the world digitally, for their production fleet. We're a proud partner. Nestlé, the most trusted companies trust OpenText. We run the vast majority of their supply chain through our business network. European Central Bank, the ECB. We've been their off cloud partner for near a decade, where the entire ECB runs on our content platform in collaboration.
We've won the next generation for OpenText Core to now work with all their member banks in a public SaaS platform, integrated hybrid back. Been a proud partner, and we will continue to be a proud partner in the future. On-premise, for preventative maintenance. Citibank, we're the platform. We have billions of objects in a single repository for communications and compliance. We're proud to be the partner with the Government of Canada, for the government's digitalization project, to have a digital folder for every citizen. We're doubly proud as being Canadians as well to partner with the Government of Canada. Serious Fraud Office, we are their platform for e-discovery, machine learning, and AI. General Motors, we're the platform for identity in their connected cars. Mission-critical nature, mission-critical customers, most trusted companies trust OpenText. I wanted to spend a moment and just proudly highlight that mission-critical nature.
I'd like to get to my second point this morning, of the four things I wanted to talk about, and that's a durable business. OpenText is a durable business. Strong results. I thought I would start with the definition of durable, if I'm going to use the word. Something that is durable, is strong, and lasts a long time without breaking or becoming weaker. The synonyms I really like, long-lasting, long-lived, mission-critical, resistant, secure, stout, long, et cetera. When I look at applying this one word to OpenText, EIM is mission-critical to the enterprise, regardless of the economic environment. We are mission-critical. We're at the center of the enterprise, regardless of an up or down economy. We have strong recurring revenues, cash flow, and profitability. We are a capital allocator. Gordon's going to be speaking today.
We have substantial opportunities at lower valuations in the down market, which provides significant investor protection. We have a global structure. We've built a global structure as an enterprise software company. Whether we develop or acquire technology, we have a vast system to go out and distribute our technology across. We take a hybrid approach, so customers have choice of how they want to deploy. We provide choice. It's not just one way. We provide choice, and that gives our products a very long-lasting value. We have enduring organic growth with our well-made EIM platform. We're a durable company. If you'll allow me a CEO moment, I brought a football. I'm going to do my Vince Lombardi moment. This is a football, ladies and gentlemen. This is a football. Ladies and gentlemen, this is OpenText. I'll hold up my football. There you go.
This is OpenText. We're a durable business. Mission-critical nature, regardless of your economic environment. Strong recurring revenues, cash flow, profitability. We are a capital allocator, and we will have substantial opportunity in lower values in a down market that provides protection and upside to our investors. We've built a global structure, this marquee infrastructure, this marquee sales franchise, as a $2.9 billion enterprise company to distribute acquired and developed technology. We give customer choice through a hybrid approach. We grow organically in fiscal 2018 at 2.5%. We had positive organic growth last year, albeit for some isolated issues. We were still positive organic growth last fiscal year. We expect to grow low single-digit organically this year. We're a durable business. We're also a durable business, and thank you for allowing me to hold up a football. My Vince Lombardi moment. If you like Vince Lombardi.
I like Vince Lombardi. Second reason we're durable is our TAM. This is a large and growing addressable market. We're not in a small market, we're in a large market. It's $100 billion total addressable market. We've broken this out into five key areas. The first is ECM business collaboration, file sync and share, roughly a $30 billion market. The key value statement is supporting that new way to work that we spoke a little bit about. We mapped up some products to that market segment. Key market area. Second market area, about a $25 billion market, it's a business network supply chain, Internet of Things, and on-demand messaging. This is our VAN, the network. About a $25 billion TAM customer value digital supply chain application integration. We think the addressable part of artificial intelligence, machine learning, and other advanced technology is about a $10 billion TAM today for OpenText.
Security is about a $10 billion TAM of things that incorporate information security, governance, compliance, and endpoint management. Then the fifth area is vertical applications. This is part of our ambitions to grow into that, to develop and acquire technologies, to grow into this market. We see it roughly as a $25 billion market, where we're looking to build and/or acquire the next generation of content-based applications, whether it be contracts, case management, whether it be by industry and legal tech, engineering, construction, biosciences, et cetera. Muhi will talk about some of our new projects in the vertical application space. A durable business. If you look at our results over the last five years, we've grown recurring revenues from just, let's call it $1 billion to $2.1 billion over the last five years, up 100%. Our renewal rates cloud in the mid-90s and off cloud low 90s.
James is gonna talk about the future of how we look to grow from a renewal rate to an expansion rate. James will emphasize part of that. Our adjusted EBITDA margin, from low 30s to high 30s, up 530 basis points over five years, from $538 billion of adjusted EBITDA to $1.1 billion. Our operating cash flows. Cash is clean in an organization, and we've grown our cash flows from $417 million to $876 million over this five-year period. These are results of our Business System and the durability of our business. Third point I wanted to talk about today, is building and evolving into a stronger, better OpenText. We're still young in our journey, and I've always loved the Snapple expression, "The best things on Earth get better." The best well-run companies need to keep getting better.
As we look in the coming years, how do we build a stronger, better OpenText? You always have to keep raising the bar on yourselves and then make it to that bar, and then go raise the bar again. I think the best-run leadership teams set high bars, they go achieve those bars, and then they set an even higher bar above that. If we look at our top priorities for fiscal 2020, and again, in the spirit of the one thing, I'm picking one thing in each area. In innovation for us this fiscal year, it's about 20.2. I have just a few comments on that, and Muhi will walk through the detail of it. Innovation, top priority for the year. Expand the EIM opportunity, G10K. We are 40% covered today in the Global 10,000, which means we're 60% uncovered.
At the extreme of that statement, it says we don't see 60% of the opportunity because we don't have account coverage. We come back with partners to try to cover that. We wait by the fax machine, for that other 60%. It's pure opportunity as we grow and mature into a stronger, better OpenText, is to get full account coverage in the G10K and participate in more opportunity. Third priority, growth. That growth is coming in the cloud. As we talk about our expectations of high single-digit growth in the cloud. Fourth priority is to deploy capital and continue to do that in upper teens ROIC. Then our fifth priority for the year is productivity advancements. We increased our EBITDA margin range for the year to I know it's a fairly narrow range, but 38%-39%. Those are our top five priorities for the year.
Let me spend a moment expanding on each one of those. 20.2. If I look at what's important in our upcoming release called 20.2, OpenText 20.2. In the past, we've had many sort of point products. Recently, we've sort of gotten product family integration. 20.2 provides a variety of things. One is, it's a cloud-first approach. We will approach our customers and our install base, that once-in-a-20-year opportunity, in a cloud-first approach. Migrate, modernize, and then monetize for all parties in 20.2. Second, the next point of that is getting to module 2, 3, and 4 will be that much easier because it's an integrated platform, right? Getting to module 2, 3, and 4 will be that much easier. That provides a straighter path to more adoption of our technology. Third thing is we will enter the services market, the microservices market.
I don't like the term microservices because micro sounds small. These are big services. Capture services. Send me 1 million documents today in a travel process or invoice process, and I'll return you the metadata. Send me 1 million PDFs, and I'll send you back everything that's machine-readable for you to insert into your biller or your ERP system. That's a powerful process. Leverage our electronic signature platform as another use case. Today, you're archiving. You have your records retention, compliance, and archival on-premise. In 20.2, we have a new archive service layer, microservice, where you can literally take something on-premise, put our new APIs in, points you right out to the cloud, and everything's being archived in the cloud. You can literally just snip off the on-prem piece, change nothing, except all the data flows out into the OpenText Cloud.
Those are examples of these powerful services, electronic signature, and compliance platform, intelligent capture, archive. There are about 12 services. That will be new in 20.2. You'll never upgrade again as part of a cloud first. We'll take on the ability to do all the upgrading. As a priority for us this year is to bring 20.2 to market as we weren't born cloud, but we're reborn cloud, and 20.2 is that reborn and native piece of our technology. We will get into detail on that. Second piece is the Global 10,000. This is our market. I won't hold the football up again. This is our market, the Global 10,000. This is our key opportunity. This is the strategic theater for enterprise software and clouds. The numbers in circles on the slide is OpenText analysis. We've gone out and studied the 10,000.
We run our systems, of course, but it's 10,000. You can put this in Excel. We've studied the 10,000, and this is the end state. This is what the end state looks for us in the Global 10,000. We're not there today. We're only about 40% covered. But when we get to 100% covered, 34% of those accounts would be in North America, 387 accounts in Latin America, up to 2,300 in Europe, 106 on the African continent. In Central Europe, Russia, and Middle East, about 500. China, just under 1,000 accounts. Asia-Pacific, more widely, less Japan, about 1,000 accounts. And in Japan, 1,200 accounts. This is our strategic theater of operations to be able to cover the world's largest enterprises and governments.
You'll hear a plan from Ted to go double our coverage over the next three years, to go from 40% up to 80% as part of our ambitious view of coverage. Our straightest line to organic growth is account coverage. One thing, it's account coverage. Our straightest line. There's 60% of the world's opportunity we don't see direct, and to go double that coverage is our straightest line to growth. Bear with me, I'm going to go straight to this slide. Total growth strategy fiscal 2020. I wanted to lay out our growth profile for fiscal 2020. I know we do spend a little more time on this. If you look at our total growth over the last five years, our cumulative average growth rate over these five years is 12%.
This is acquired growth and organic growth over this 5-year period, $1.6 billion-$2.9 billion over this 5-year period. Our fiscal 2020 profile, and this is a recap from our earnings call in a visual slide, is we expect license to be constant dollars year-over-year. We're going to sell a lot of license this year, but we expect the business to be constant year-over-year. License is still an important part of our business as clients deploy hybrid, and we're going to sell a lot of license. We expect the business to be constant in dollars year-over-year. We're expecting our cloud to grow high single-digit with the innovations and trends that we've talked about. We're looking at customer support to be constant to low double-digit growth.
Our professional services business, constant dollars year-over-year. We're already optimized for margins. I'm going to speak to margin in a couple of slides here. M&A to be additive revenues. When we add that all up together, it's low single digit organic growth plus additive M&A revenues. That's the business profile that we're looking for in fiscal 2020. Our business system starts with total growth. We talk about total growth as a company. Total growth to us is three things. It's retain, it's grow, it's acquire. Total growth, retain, grow, acquire. Retain. High recurring revenues, which is 75% of our revenues, durable, increasing customer intimacy and value creation, and 90% plus renewal rates. James will talk about retain. Grow. You're going to hear Muhi lay out places where we're accelerating our innovation.
If you look out over the next five years, we'll be investing $2 billion in R&D organically over the next five years. Scale our leadership positions in content services and business network, and going deeper coverage in the global 10,000. Acquire a $100 billion TAM, increase pipeline development, and to leverage our business system for value creation. Gordon's going to speak this afternoon about acquire. On retain, we have opportunity, right? Even though we're operating at a 75% part of our business as recurring revenues, cloud renewal rates in the mid-90s, off cloud in the low 90s. Our key metrics in support are, we hit 90% margin in fiscal 2019 and 95% customer satisfaction rate. This is a steady consumable stream of revenue for the business. Steady consumable stream for the business.
We've set as a new standard in the business, what we call Prime Protect, which is our value advantage here, right? It's 24/7 global support. It's product and service updates. As part of that subscription, annual subscription, if you will, you're getting security updates. You're not just getting patches, but you're also getting all our new versions. We've raised the bar on what base support is to include security, all product updates, 24/7 support around the world, one support package, which we call Prime Protect. We put price increases in effect this year. It takes a few quarters to work through the system. It takes a cycle of renewal to work through the system, and we'll expect a positive impact of those price increases in fiscal 2021.
One of the greatest opportunities we have to improve the business, to keep raising the bar, to keep improving the efficiency and keep improving the performance is through artificial intelligence and machine learning. I won't take James's thunder. He's going to talk about that. On total growth, retain, grow, acquire. Let me touch base on the acquire piece for a moment. I'd like to make a very important point that we hit a milestone in fiscal 2019 in our approach to capital allocation as a capital allocator. Our M&A is now self-funding off the income statement. If we look at our OCF in fiscal 2019 at $876 million, less $10 million of principal, less $64 million of CapEx, less our dividends of $169 million, that's cash flows available of $633 million. Roughly a 2x multiple of revenue.
I show CEO math, ROIC's the most important, but if you look at buying it in our value playbook at 2 times revenue, that available cash allows you to fund $300 million, $310 million, $315 million of M&A in a capital allocation formula. That's self-funded M&A. That's greater than 10% M&A growth per year if you could deploy that capital. That's a major milestone for the business to have our M&A be in a self-funding category. M&A is a core competency of the business. We've built our teams. We run our playbook. We're always learning. We have an internal team of experts that range from sourcing to deal execution, financial modeling, and integration. We look to companies that are leaders and have sustainable competitive advantage in their segment who can benefit from being part of our scale and our distribution. The businesses we look for are typically CapEx light.
M&A is now self-funded. We deployed $4.8 billion over the last five years. We delivered 18.7% ROIC in fiscal 2019 as well. We're where we want to be in ROIC. Upper teens is exactly where we want to be. We don't feel we need to raise the bar, rather sustain the bar at ROIC. We're always looking at capital allocation approaches. I'm sure I'm going to get a question on buyback. I'll try to address it right here. The board always looks at a buyback. As we continue to deliver upper teens ROIC, the best way to invest a dollar, if we can continue to get these high teens ROIC, it's through M&A to get the most value versus buying a dollar of stock at these levels. Building and evolving into a stronger OpenText.
Let me talk about investing in the future. This is a key point. Something we talked about on the earnings call and something that is new. If you look on the left-hand side of the slide, total software companies. We went out to Bloomberg. We just booted up Excel, the interactive Excel that talks out to the Bloomberg APIs. We took out the field adjusted EBITDA for all public software companies. Did an extract from the Bloomberg service. Did a quartile ranking of adjusted EBITDA. The lowest quartile of public companies have negative margin. Second quartile, negative, just slightly profitable. Third quartile is 10%-24% adjusted EBITDA, and the upper quartile is 24%-44%. There is not a better software company in the world above 44%. The best run software company as low as 44%, that's Oracle.
We delivered 38.4% last year. There's only four companies in the 40s for software companies. We're in the top 10. And as we look at our progress or capital allocator, we want to deploy that capital not just at a high teens ROIC. We write a check, we want it back in about a five-year period. We want to deploy that asset into an efficient machine. The center column is the efficient machine. As you can see, from 33% to 38%, a $1.1 billion in adjusted EBITDA dollars. You ask yourself, where do you go in the future, right? Do you want to be in the top 10 or the top four out of the software universe? We think it's good enough to be in the top 10 best-run companies. We have paths to get into the 40s. Look at our software line.
We operate at a 97% margin on the software line. Can we get another 100, 200 basis points on the software line by eliminating third parties through time? Absolutely, we can in the coming years. We acquire a company, they have third-party technology. We take that technology out, we get more efficient. Is there room there? Absolutely. Our cloud is operating in the high 50s today for gross margin, right? Can we improve our cloud business? Yes. We've talked about, over time, getting our cloud business into the mid-60s. As its scales grow, then its margins improve by potentially 20% in the coming years. That's a great contributor. PS already optimized, right? It's already where it's at its theoretical peak. We perform better than the world's largest PS companies as a PS organization. You have our renewable business that delivered 90% last year.
Can it keep getting better? Of course, it can. Can it get another 25 basis points or 50 basis points a year? Yes, it can over time. We have a path to get above 40. We've made a decision we don't need to get above 40. What we deliver above 40, we're going to reinvest back into the business for growth. We're going to keep getting more efficient, want to keep doing the things we need to do, but we think our peak is around 40, and then what would otherwise be gained at 40, we'll reinvest back into the business. Where would we reinvest? Go back to the one thing, coverage. The Global 10,000, right? We're going to go cover the market that we're in. This is a football, right?
We're going to go from 40% coverage to 50% to 60% to 70% up to 80% in the coming years. It's about coverage. It's a low degree, low risk operational play to get more accounts. For example, we don't cover an account in Europe. Allianz, we don't cover them, right? Our next AE will cover Allianz, just as an example. Our value proposition and other insurance firms, right, and providers will be just as relevant to those new accounts that we cover. This is a very important point. We talked about it on the earnings call. We wanted to bring it to life in a single slide, as crisply as we could, as part of our morning here. Fourth point, running the OpenText playbook, then I will get into my summary remarks. I'm hitting the wrong button, sorry. Running the OpenText playbook, right?
We started with the mission-critical nature, durable business, building and evolving into a better OpenText. My fourth section for this morning is running the OpenText playbook for total growth and long-term value creation. We have a business system, and we call it the OpenText Business System. It keeps getting stronger and better, but this is a formal system that we run. We've taken inspiration from some of the largest conglomerates and the largest businesses in the world. We've taken our own due diligence and experience and created our business system that we've been running for a variety of years. It starts with total growth and customer-driven innovation. It goes into operating excellence in our systems and our tools and our methods. This is a team sport. It's not an individual tennis match. This is the best teams win.
That flows into our key metrics of recurring revenue, adjusted EBITDA dollars in OCF. Those metrics reflect our value orientation as a business, right? You're going to hear every executive speak this morning on a commitment to value. It's that value orientation. To our disciplined capital allocation approach. That allocation approach includes our dividend, our capital, and our talent. We apply a due diligence approach into a return on invested capital for strategic acquisitions. There's one key word for our method on acquisitions, and that's integration. We integrate, integrate, and then we innovate, innovate. Those are the things. We don't run 100 independent companies when we acquire. We're not a public-private equity firm. We are a capital allocator, but we're building a technology, a horizontal information platform.
The integration of the Salesforce, the integration of the systems. We spend a lot of time on our due diligence to make sure we have a path to execute well. I think you've seen that in our results. This is our competitive advantage. It's who we are and how we work. You've seen that business system at work, right? If we just look back over the last five or six years, we've put $4.8 billion of capital to work and delivered an 18.7% ROIC in fiscal 2019. This little fish bone is just a nice visual of founded out of the University of Waterloo, went public on the Nasdaq in 1996. We then shorten the timeline and just look starting from the 2014 of the bottom part is the Business Network and other, the top part is Content Management.
GXS got us into the business networks. Actuate, and Gordon's going to do three case studies for you this afternoon, got us into analytics. Guidance got us into security business. Liaison, top three player where MuleSoft plays for business integration and app to app. Of course, the two HP groups are CEM and CCM Software. Recommind got us into electronic discovery. Dell EMC brought us from number two to number one in content services. Catalyst, a nice tuck-in for us, for electronic discovery. Of course, we joined the TSX-60 just in 2017. Proudly part of that membership. We have 20.2 coming later in the year. This is our business system at work, and it is who we are and how we work. We've also assembled, and it's one of the proudest things of my career, is the best team in software.
We work hard, we play hard, and I couldn't be more excited about the team that we have. This is a team sport. Simon Harrison will be speaking later today, running Worldwide Sales. Muhi Majzoub, leading Engineering. James, our Customer Operations. Madhu, our CFO and Operations. Gordon, Corporate Development and our Chief Legal Officer. Prentiss, we have a newly formed Portfolio Group. Gordon's going to talk about small, medium, and large acquisition categories. Prentiss is leading up the effort to get to more predictability and more capital allocated in the small group. Patty, our Chief Marketing Officer. Paul Duggan, if there's anyone who's a walking quant, part cyborg, it's Paul on Revenue Operations. David Jamieson, our Chief Information Officer. Brian, who's joined us recently as Chief HR Officer. Savinay Berry, who joined us from ECD, who's running Cloud Service Delivery.
It is a world-class team, best in software, and a very proud moment for me. Committed to value. I've asked each executive to talk about their commitment to value. Here's my commitment. I talked about five things this morning. It's that mission-critical nature of EIM. It's a durable business. This is a durable business of high recurring revenues. Best question will get the football today. Building and evolving into a stronger, better OpenText. Running our playbook. Keep strengthening our playbook in the coming years. That value creation playbook is recurring revenues, margin expansion, strong cash flows, and accretive acquisitions that supports innovation, that reinvestment for growth that we highlighted above the 40%, capital structure and dividends. We have been beating the rule of 40. We beat the rule of 40 last year. We'll beat the rule of 40 again. Addition is associative.
As the market swings, and you're looking for a company beating the rule of 40, we beat it the right way with profitable growth. Thank you, and I will hand the platform over to Simon Harrison. Simon. Thank you.
Thank you, Mark. Thank you very much.
Is this yours?
No.
Huh. I have no idea.
Well, good morning, ladies and gentlemen. It's a privilege to talk to you this morning. My name's Simon Harrison, I head up our worldwide sales organization for OpenText. I'm very proud to be able to talk to you about my sales organization and how we grow in OT. I've been with OpenText for 19 years, just to introduce myself to you. I may have seen a few of you here last year at the same event. I came through an acquisition. I think it's important to know that OpenText is an organization rife with opportunity for those of us who join us, both as volunteers and through our acquisitions. I started off in the U.K., or the country formerly known as the U.K. I don't know what we're going to call it after Brexit.
I ran professional services for a while in OpenText, then I moved into sales. I ran sales for Northern Europe and then for all of EMEA. Now I run worldwide sales, and I'm based in California. I've been living in San Mateo in California for the last four years. I could just about accept that this is a football, although it seems like an odd shape to me. I'm going to talk to you today about these themes. Customers are our true competitive advantage. After 27 years in the business and probably millions of man-hours of experience of leading our customers through digital transformation, our customers are our single and greatest advantage. Huge number of customers. OpenText thrives in mission-critical environments for some of the largest organizations on Earth.
I'm going to explain to you today how we organize around this opportunity, how we will expand our G10K customers through increased coverage. We'll talk about the plan, as Mark highlighted, to double our coverage from the current 40% of the G10K. I'll talk to you about how we develop our base. Overall, we look in our systems, we've got 74,000 individual customer organizations consuming products and services from OpenText and deriving value from those interactions. I'll give you a highlight of a few of those. Something new. This is a football. Here is our opportunity. It's expanding our coverage in G10K. It's leveraging our positions already in our install base, and it's scaling out through meaningful partnerships.
Something new, which is our 3M strategy, servicing a customer demand to migrate, modernize, and monetize into the OpenText Cloud. A kind of a 20-year event, just like Mark says, like client-server movement or like Y2K. We're seeing this huge customer demand to move into our managed services and into the OpenText Cloud. I'll explain a little bit about that as we go along. This is what I've got for you today, ladies and gentlemen. Let us start with a little bit more about what I mean by customers being our ultimate advantage. It's not just our pedigree of 27 years or the experience that we have in the organization of leading through digital transformation, although it is that. It's not just the size of our organizations, the largest customers in the world trust OpenText, and our credibility, and our permanency in the industry.
It is the fact that when our customers invest in OpenText, they're investing over a period of decades, not for a point solution. They will often invest to begin with in a specific business case, but they'll invest in that business case informed by turning on many more business cases as they go along. It has to be a decades long decision to invest in the kind of solutions that we provide, because BMW have turned over their e-invoicing as a managed service to OpenText with a specific geographical requirements about how they transact from one country to another. If you're going to hand over that kind of trust to an organization, this has to be a decade long decision.
Nestlé has one of the, if not the largest and most complex supply chains in the world, which is managed by the OpenText Managed Services in the OpenText Cloud. Just one more example from these logos. We're adding new G10K customers all of the time, and one of our recent new logos added in is Google. Very proud to have, being in the Bay Area myself, to have this top technology organization who trusted OpenText with their worldwide partner experience with our experience management systems. I'll explain to that to you a little bit later on in a case study. What we're finding is that our customers invest for the long term. They satisfy an immediate business case, but they need a set of integrated suites, not point solutions, so that they can turn on new business cases as they move along.
You'll see later on an example of a customer who's moved around all of these different sets of integrated suites and has started at the top there in security and then moved into e-discovery and then over through our content services and is putting together long chains of end-to-end processes that are managed by our integrated suites. Customers are our ultimate advantage. This is how we serve those. We have 2,000 field-facing sales professionals servicing our customers. We serve those customers. We listen to those customers. What we learn together in our partnerships with our customers, we can then bring that wisdom and insight to other organizations and help to lead them through digital transformation. Our focus, the bulk of our investment and focus is on the largest organizations in the world, the G10K, the largest global organizations.
Not just in the private sector, but in the public sector as well, of course. That's where I'm very proud to have a large enterprise selling team. This is enterprise sales, as Mark said earlier on. This is high touch. This is a human being who we've loaded up with our kind of franchise model of the wisdom and insight of all of our organizations. A human being sat at the table with a CIO of one of these very large organizations, guiding them through their digital transformation and information strategy over the next 10 years. There isn't a shortcut for this. This is what we mean by coverage. We need to equip our enterprise sales force with the capability to do that as we expand. We cover about 40% of our customers with this high touch enterprise relationship today. We will increase that.
It means there's 60% of opportunity for us. I'll talk about that in a moment. I'm just proud to have this large set of enterprise account executives servicing these customers. This is like the gem in the crown of OpenText. There are many other types of role associated with this as well. We segment our customers, our largest customers, by size and by use of our software and solutions. We call our global accounts, and we have specific global account managers who will marshal multiple teams of sales professionals around the world, across the geos, across all of the products, so that we've got one point of contact at an executive level with our largest customers.
At the bottom of the triangle, it's a volume play, getting our messages out and our solutions to as many people as possible through inside sales representatives, through our meaningful partnerships as a force multiplier into new geographies with different domain expertise. They're supported by teams of solution consultants and pre-sales, by value engineers. Very important. These are the individuals who are trained to make the business case with the customer. Business development managers and ADRs. Our account development representatives are constantly hitting the phone, talking to our targeted customers around new conversations about OpenText, and new things that we've learned, and new innovations that we can offer. This is the OpenText go-to-market model. This service is the opportunity. I'm going to talk to you about growth today, specifically. Our opportunity to grow can be summed up in these four broad categories.
We are going to open up new G10K customers, and we're going to increase our coverage. We have a plan over three years to double our coverage from where it is today. We're going to develop our install base, which is our strength. 27 years of experience, 74,000 named customers, only lightly penetrated with the solutions that we're able to offer them, all of them setting off on this journey where they start in one place and then they expand. We're going to extend our reach above our plans to double our G10K coverage to more of that G10K through partners as a force multiplier, and also to those smaller companies below that line.
This once in a 20-year opportunity for us to migrate, modernize, and monetize into the OpenText Cloud as more and more demand we see from our customers and our prospects to move into these services and into the OT Cloud. I'm going to talk to you about each of these four topics, then I'll sum up after that. First, the G10K coverage model. You've seen this slide from Mark. Knowing where our target customers are, reducing it down to 10,000 or maybe 12,000 with the public sector entities that we also target. Reducing it down to a finite list gives us a precise tool for planning, a precise plan about how we can expand across that. There are 10,000 companies here across these locations. We're 40% covered. We've got 60% of the opportunity to go. Mark gave an example.
In Europe, we don't cover Allianz right now. We're prolific in financial services and insurance, it's an uncovered account right now. For a U.S. example, whilst we cover their largest competitor, we don't currently cover Macy's, just by way of an example. There's some huge organizations out there which we're expanding and growing in and towards. This expansion is a low-risk path to growth. It's a well-trodden path. What we've learned from the 40% of deep coverage that we have today, it's easily repeatable as we expand the sales force to our playbook, to our franchise model, if you like. It's very repeatable. It's the straightest line towards growth for us. If nothing else, this is the key to unlocking growth year on year and consistency inside OpenText. We've got our existing install base as well.
Point number 2 from my heads-up slide is about how we develop inside our install base. We have to prove our initial business case, but they invest with strategic intent. They do not want point solutions. They want integrated suites. They want to go from one business case to another. You'll see examples of this when I cover my customer case studies. It's like the ERP story 20 years ago, where a customer might buy a HR solution, for example, and then they would go for an integrated suite inside the ERP. You very rarely meet an ERP customer now who's 100% all on the same ERP system. It's the same story with OpenText. We're expanding out. We provide that runway for our customers as they invest in business case after business case.
I think having a huge install base, which is only on average 10% penetrated with our solutions, having a new conversation every day with that customer to different buying centers, different lines of business, and our account-based marketing approach allows us to cross-sell and upsell for our second of the four major growth vectors that we have in OT. The third is partners, a force multiplier, of course. We divide up our partners into these broad categories, ecosystem, large players like SAP and Salesforce, which we have world-beating partnerships with. The global SIs, the top seven system integrators, ladies and gentlemen, that we have deep relationships with, including the Deloitte quote that you see below, which is about how the combination of OpenText and Deloitte provides a unique value to customers together that we couldn't see independently.
Our managed partners are those smaller partner organizations who have specific reach into geographies that we don't have, or they have specific domain expertise, or perhaps they have mastery in a particular vertical or a set of vertical value propositions. Our developer community who are constantly building new applications using AppWorks and our open services. OEM, which is a burgeoning area for our business, where organizations white label our technology inside their own IP to give additional values to their own customers. Just a few examples of recent partner announcements, very recent partner announcements to give you an idea about the meaningful partnerships that we have. SAP trusted OpenText in an industry-famous relationship for the last decade for enterprise information management for their off cloud.
They announced in May 2019, this year, that the next decade, with a big push to S/4HANA and the cloud, is going to be with OpenText as well. They're going to trust their enterprise information management and our relative solutions over the next decade in the cloud. We're very proud to join them in the cloud, which is one of the biggest events for SAP themselves as it is with us. Google announced, just a month or two ago, that we are their enterprise information management service for the Google Cloud. We have partnerships like MasterCard, and you'll hear a bit about this in some other presentations as well.
They joined with OpenText and our supplier portal to provide a seamless service for automotive manufacturing organizations, including being able to factor the trades, the millions of dollars of trades that we push across our cloud. Talking of the cloud, let me introduce you to the OpenText Cloud briefly, ladies and gentlemen. The OpenText Cloud is not a mono, one, amorphous service. It's a collection of high-value services for our customers at great scale. Our Trading Grid, for example, has over 2 million trading partners. Organizations like my example, Nestlé, the largest and most complex supply chain in the world, trust our Trading Grid to support their systems. Our managed services, I have a slide about on the next slide, so I'm going to come to that in a moment. Security and identity, 60 million identities managed in our cloud, 40 million endpoints secured.
VAN, our value-added network, has $ trillions of transactions passing to and from organizations every year. Our on-demand messaging, our ODM service, provides a unified messaging platform for some of the largest organizations in the world. Our SaaS applications. In our SaaS applications, we have vertical apps. We have our e-signature, and we have our business collaboration, file sync and share. Let me zoom in a little bit to the managed services. This is the migrate, modernize and monetize, our 3M strategy. A huge demand from our customers. Burgeoning demand. This is like a 20-year opportunity as they shift workloads. We love managed services. We absolutely love it. Some workloads are moving to our SaaS applications, and we'll give you an example of that in just a moment.
For many of our customers, it's their competitive advantage is bound up in their customizations and the configurations of the way that they've got their systems in-house, and the integrations that they have to their systems. We can take that and lift it up, and we can give that customer all of the benefits of the cloud, a lower total cost of ownership. Four nines best-in-class uptime, highly secure, never have to worry about upgrading again. We can take all of those benefits up in the cloud without losing any of the critical IP and competitive differentiation that they have for their current systems. These are hybrid workloads. You'll see an example in a moment where we've taken a customer, we've got workloads in our SaaS applications. We've also got them in our managed services. This is about migrate, modernize, and monetize.
That's a whirlwind tour through our three sections there. We saw developing the install base. We saw adding new G10K customers for growth. We saw partners as a force multiplier, and we saw migrate, modernize, and monetize. A couple of customer examples to fill this in. Pacific Life, great customer, existing customer for OpenText, and talked to us about moving to the OpenText Cloud. They saw high value in some of our SaaS applications, but they wanted to maintain their differentiated and unique solution that they had off cloud as well. We took them into the OpenText Cloud. They moved, they migrated, they went to their very latest version, which is a platform for innovation. There's the modernize for you, a modern performance, delightful user interface and user experience. They used our SaaS applications, but they didn't just move our data.
As a trusted customer, a partner with OpenText for their off-cloud solutions, they took that up and gave it to us for our managed services. In the process, not only did they modernize the system that we were providing for them, but they used this as a consolidation event, and this is very common. They decommissioned a very fragmented enterprise information management structure inside their own organization, and they moved all of it into one platform in the OpenText Cloud, including several of our competitors, so for example, IBM. They decommissioned and migrated out of that into one platform. A great example of Migrate, Modernize, Monetize. Here's a top 10 global bank. This is a long-term customer, which I know well. This is an example of how a customer starts with one business case and then starts to move out into our integrated suites.
This customer started with our security and endpoint management with over 500,000 endpoints managed by our security solution. Those same agents for security can be used for collection. They use us for e-discovery of that collected information. It's only a short step to total regulated content management inside the organization. They're extensive users of our Documentum in this organization. Most recently, they've been investing quite heavily in new business cases with us. They have automated the process of onboarding new customers, and KYC, know your customer. They've added Capture from OpenText, but not just Capture, but our artificial intelligence, Magellan, as well. They apply Magellan to the Capture process to derive better information and a faster onboarding process for their customer. They also apply Magellan after the onboarding process so that they can run full reporting and audits around their customer information.
Our AI automatically redacts personal information in these reports and gives them great value through that while keeping them working very quickly, and yet in a highly regulated environment. Final example. Very proud to add Google as a new logo this year. They've entrusted OpenText technology with their partner experience, an experience which delights their global partners using our web content management system, Team Sites. It's beautiful, but it's also highly functional. One of the key drivers here was our deep integration with Salesforce.com. It's a good example of our meaningful partnerships in our ecosystem using our state-of-the-art user experience technology, but deeply integrated in the cloud with Salesforce.com. I'm very proud to welcome Google to our list of customers. Okay, a whirlwind tour. I hope you stayed with me, ladies and gentlemen. Let me just recap. Our customers are our ultimate advantage.
I talked to you today about how we will develop our install base. We're only partly penetrated in an enviable, and I would go as far as to say, unassailable position in terms of our customer base in the market. It's a heck of a competitive differentiator and a blocker for any new entrants. I've talked to you about how we plan over three years to double our coverage across the G10K. Huge opportunity for us. More opportunity out there than there is coverage that we've already realized. From 40%, we've got 60% ahead of us. Our partners as a force multiplier and our 3M strategy around migrate, modernize, and monetize. It's a 20-year event, as Mark said. It's like Y2K. It's like client server.
I think we've all been watching the tech industry long enough to see that there are these big events, and this shift to the cloud is a big event for us and for our partners. Lastly, and certainly not leastly, ladies and gentlemen, I'm very proud of my team and of working in an organization that has one of the largest high-touch enterprise sales teams, true enterprise sales teams in the industry. Our model, the OpenText way, our franchise, if you like, our way of having a playbook, a set of account-based marketing principles, a way of educating with the wisdom and insight that we've gained over the last 27 years into a repeatable sales model, which we're going to land in a new set of accounts or a new geography with consistency, and it's fundamental to our growth model.
Thank you very much for listening to these sales messages, ladies and gentlemen. I'll see you for the questions later on today. I'd like to introduce Muhi Majzoub, our EVP of Engineering. Muhi, welcome to the stage, sir.
Good morning, thank you for being with us today. We'll spend the next 30 years diving deeper into product and innovation. Let me tell you a little bit about myself. Been with OpenText seven plus years, but around Silicon Valley for 30 years plus, many years at Oracle, many years at CA, and a couple of startup experiences. If you look and build on the message that Mark shared with you earlier this morning, very important you understand an few takeaways. One is OpenText has a cloud-first strategy in everything we do, all our innovation. As we walk through the deck, I'll share with you a lot more. Second, we are leaders and very proud of what we have achieved in content services and the business network. That's big part of our heritage and where the company started. It's important to understand why we are leaders.
We are leaders because of three things. One, the breadth of our solution and the strength of our product offering adds a lot of value to our 74,000 customers. Two, the integrations we have done as OpenText grew through acquisitions, we integrated the solutions to add more value to our customers. It's the second value that we add to customers today. Three, we created EIM, and from day one in EIM, we communicated we're a hybrid company. Meaning we give the choice to our customers to choose if their data stays off cloud, on-prem, the data goes fully SaaS or managed services in the OpenText Cloud or any hyperscaler, or they could pick and choose certain workloads to run in the cloud and keep certain workload close to heart in their own data centers.
Few years ago, we announced OT2 as our future innovation for SaaS, and I'll share with you a lot of the successes that we have with OT2 and some of the innovations that we have delivered. If you look at the product advantage and you look at the history of OpenText, started as a search engine company, moved into ECM and document management, moved into the business network with the GXS acquisition and EasyLink. In the past seven years, have matured to bring artificial intelligence, machine learning, e-discovery, analytics, IoT, identity management and security, and endpoint security and forensics. It's important you understand that when we, six years ago, created the term EIM, every one of the acquisitions that followed came in to add value and to fill new innovations in EIM.
Through the integrations we have done across all of our products, we are able to take the business network, fax or on-demand messaging, and integrate into machine learning. We are able to take our content services and document management and integrate to any data source that is relevant to you, whether it's an ERP system like SAP or Oracle E-Business Suite, whether it's a CRM system Salesforce, whether it's an HCM system, SuccessFactors, or Workday, all of these integration allow our customers to protect their content and their information all in one place. Secure, scalable, and provide you all the data compliance and regulatory needs, plus the analysis and insight that you require from your data. The future for us is continuing to build on OT2, continuing to deliver vertical applications that integrates into EIM and add more value.
We are very proud that the industry, our customers, our technology analysts have responded very well. The areas that we focus in, we are leaders. We compete well because of our product richness, because of the integration, because we give customer the choice to deploy any way they like that meets their need, depending on where their journey is. 10 examples of leadership positions that you see in content services, business network, media management, e-discovery, text mining, and AppWorks. Everything we do in engineering is based on adding value to our customers. Every person day we invest into development or research is to add value. Few examples. Taking content services and document management and being able to deliver federated compliance, meaning your content can sit on a file system running in your data center.
They could sit in a Documentum, they could sit in OT2, Core Collaboration in Content Suite, and we're able to give you the compliance and federation. We're able to give you record retention policy regardless where their information sit. Taking our business network and integrating our business network into content sources like Veritas or D&B, and be able to extract knowledge of certification and ethical supply chain. From within our Trading Grid, giving our customers the ability to review every one of their suppliers and make sure that they achieve the ethical supply chain certification that they require. Taking our Covisint IoT and IAM and delivering identity access management for the 9 million GM customers that require OnStar services in their vehicle. Securing the identity of the user, the human, the car, the machine, or the device, if you will, and the application, OnStar.
Being able to do all of that innovation within our EIM solution. Being able to deliver workload in the cloud that you could take subset of your content from Content Suite or Documentum or media management, and putting them to share with a third-party supplier, with a law firm that is helping you on a case, and be able to do all the compliance and electronic signature needed. I'll give you more detail on that. At the end, having the right platform that is modern, that is secure, that is scalable, that could deliver these innovation, whether it's a vertical application for life sciences, a case management app, a collaboration file sync and share, an intelligent machine learning app, delivering all of that securely in the cloud. How do we invest at OpenText today?
60% of my investment in R&D goes into innovating on top of our existing strong platform. Again, it ties back to adding value to our customers in everything we do. These are platforms like the Business Network, Fax on Demand, Content Suite, Documentum, Media Management, and dozens of others leadership position platforms that we have. 30% goes into new innovation to take IoT to the next level, to take our security guidance, forensic analysis, hardware imaging solution to the next level, to deliver new applications that are SaaS running on top of OT2. 10% of our investment, we invest into looking forward, understanding where technology that today is being tested will be in three years or five years.
Things like blockchain, things that involve IoT and new sensor devices, things that involve security, and where we believe the needs for securing the information we have need to be in three years and five years. We are 3,500-plus strong engineers globally. There are a few data points that are important. In the last eight years, we've quadrupled the engineering organization and the R&D investment at OpenText. We have 1,000-plus patents. We have a solid program to encourage our engineers and our scientists to continue to submit, working with our legal department and our patent team, to continue to grow our IP in patents. We run a very lean organization that runs today 11%-13% in expense.
What's important in that data point is we are a lean organization because we have mature development processes that understand how we communicate with our customers, extract the requirements they need in their solution, and how we build it. We build it once, we integrated many across our portfolio when these capabilities or functionality are needed across different systems. You've heard a lot about the OpenText Cloud. We are very proud of our innovations in the cloud. From scalability to security, we power billions of transactions. 22-plus billion transactions flows through our business network every 12 months. 74,000 customers have trusted OpenText. 3,000 of these customers have taken solutions, as Ted highlighted, like Content Suite or Documentum, and asked OpenText to put it in the OpenText Cloud and run it for them.
We are very proud of our achievement in Identity and Access Management to continue to power and secure the identity of human applications and systems/devices. At OpenText World, we announced Release 16 for OpenText was the strongest release we have delivered that is integrated and very feature-rich. With our cloud-first strategy, we announced in July of this year at OpenText World in Toronto that all of our products will be cloud-enabled and will come to Release CE. Release 16 will move to the next generation, which is OpenText Cloud Editions. That means it runs anywhere. Of course, the OpenText Cloud is our first choice, but we could run in any of the hyperscaler, Amazon, Microsoft Azure, or Google.
It is containerized, Docker-enabled, and Kubernetes-enabled for automated deployment, making the value return to investment to our customers much faster in how they deploy and how they manage the Oracle software going forward in their data center, or how our OpenText Cloud Services delivery team can manage it in the OpenText Data Center, or our customers can manage it in a hyperscaler. Of course, customers still have the choice to run Release CE in their own data center, managed by their teams, by their IT organization. It is all about continuing to deliver to the commitment to customers that they have a choice to run our solution any way they want. With the strength of Release 16, it's important you know and understand how bright the future is for OpenText from a technology and a platform perspective.
If you look in the center of the screen here, these are all the platforms that we run today. They provide certain capabilities. Now look at what OT2 will wrap the strength of our platform with. We took all of our platforms and developed services, microservices. As Mark highlighted, microservices sounds very small. We deliver content services. We deliver intelligent capture services. We deliver authentication services. Those sit on top of the OT2 platform that is modern and scalable, powered by tools that are available on the open source that have been used in many technology companies like Hadoop, Spark, Cassandra, HTML5, JavaScript. These allow us to build scalable platform in our cloud. We integrate machine learning and AI and analytics on top of it, and now we have a platform I could build hundreds of vertical applications.
In July of this year, we announced six new applications that were delivered in the last 12 months within OpenText. We delivered extended ECM for SuccessFactors, running in a native SaaS multi-tenant offering to our SAP customers. We delivered Experience Insight for our media customers and Exstream. We delivered Core Signature. We delivered Quality Center. We delivered Contract Center and many other applications that run and leverage one and many of these services.If you look at the past and walk with us through the journey, in the past, we had many products. Some were organically built at OpenText, some came through acquisition. With Release 16, we brought these products together and started integrating. We delivered hundreds of integration and touch points across all of our platforms. In April of 2020, we delivered the first release of CE with a cloud-first strategy.
Every one of our products will be container enabled through Docker, will be Kubernetes enabled for automated deployment. With the integration to OT2's catalog of services, we are able to deliver the future generation of OpenText applications that could be vertically needed for the legal space, for life sciences, and many others, or could be specific to content services, machine learning, analytics, or any other part of our portfolio. I'll give you two customer examples, and I hope to highlight one thing, is the innovation we're building are adding value to customers, and they're adding value to customers very quickly. I'll start with Kohler. We acquired Hightail in January of this year.
In under 90 days, our innovation machine delivered the first integration to Hightail with media management running off cloud or as a managed services, where customers that are running our media management solution can come to our cloud and can integrate subset of their content and share it with third party. We demonstrated that solution and that integration to Kohler. That was a use case that for many years they've been looking to achieve to share content with their partners and suppliers.
European Central Bank is a similar use case, a user of our Content Suite solution. Need to collaborate with 160-plus banking affiliates in Europe are using the two-way sync between Content Suite and Core Collaboration to share a subset of their information in the cloud, secure, audited, compliant with two-factor authentication, with encryption at rest and in transit, with all the compliance that they require for their business. These are two examples of many use cases where customers are choosing the hybrid approach to leverage our innovation. I'll dive a little bit deeper into the product, Content Services. Two years ago, when we acquired Documentum, we committed to modernizing and improving the Documentum platform. Documentum is flourishing at OpenText. We have built a new UI, we have built mobile application, we created Extended ECM for SAP for Documentum.
All of these innovations were delivering on customer demands and customer commitments that we made a year ago, two years ago, a year and a half ago. In the business network, Mark highlighted Project Emerald, and this is very important for us. Project Emerald bring ethical supply chain to our 60,000 customers in the Trading Grid, allowing a customer to look at a list of their partners and suppliers, and then through integration to D&B and Veritas, we're able to extract and bring into the Trading Grid all the certification for ethical supply chain and make it visible to customers in real time in the Trading Grid. Many other integration, building a portal for our fax and notification and SMS solution, integrating into machine learning, integration into Core, and integration into analytics for insights for the Trading Grid.
Magellan is a growing area for us. It's a young area for us. Magellan is less than four years young at OpenText. Many advancements and innovations are happening, I'll highlight few. Being able to bring self-service capability to data scientists, where they can build algorithms leveraging tools like R and Scala and Python without having to write physical programming code. They can write English languages that gets translated behind the scene and then developed into algorithm to leverage the Magellan text mining engine, the Magellan predictive intelligence engine. Security, we are looking to grow how we support the landscape. Today, EnCase Security supports the Windows platform. We are looking to expand into supporting the iOS devices, the macOS, the iOS smartphone, Apple phone, the iPads. All of these will come in.
We're integrating our security solution to deliver capabilities through Magellan, where we provide you security dashboard, as you see in the screen on the slide, that allow a security officer or a security team within a company complete visibility into abnormal behaviors in their endpoint, into data, and be able to trap and produce alerts and notification to a security team. Enterprise World in July of this year, many announcements were made, one of which is OpenText CE, bringing all of our solutions to the cloud, running in a Docker container and with Kubernetes automation. We announced the SAP partnership for content services in the cloud. This is very important. I know Ted touched on that our partnership with SAP is 15 plus years. SAP went out for a year process and evaluated cloud vendor native SaaS multi-tenant cloud solution. Box, Dropbox, Alfresco.
They looked at FileNet if they have anything to offer in the cloud. They selected OpenText as their content services for every one of their cloud application. Every one of their cloud application that have content services workloads or needs to upload a document and protect it and save it, they will leverage the content services from OpenText in OT2. They will leverage our machine learning for intelligent capture, to leverage it for invoicing, for expense receipt, into many other areas. Our announcement with Google is equally important. We offer Google content services in the cloud and enterprise services that today Google cannot offer themselves.
We can leverage services from Google, like translation, where if I am in my Brava viewer looking at a document that came from Spain, but unfortunately I don't speak Spanish, I could quickly leverage Google translation in real time to translate that document to English, and I could store both version of the document and attach it to a record in a contract or in a case management. These are capabilities that will add value to many of our customers as they use these solutions. Let me summarize a little bit where we are. Again, we are a cloud-first company. Everything we deliver and everything we work on is based on customer value, customer demand. We value the relationship that we have with our customers through many of the interfaces.
Events like OpenText World, Customer Advisory Board, where we get to bring 100-plus customers or 50-plus customers in different locations in the world and learn about their vision for our solutions and our product. We have a compelling roadmap that we deliver to, we have the credibility that when we make commitment every year when we stand on stage at OpenText World, we make certain commitment to new products, to new application. The next year, when we're back on stage in front of these customers, we deliver to these commitment, and we produce customer examples that have taken innovations from an acquisition or an integration that happened in 90 days, and we have customers using it 120 days later. We're very proud of that.
We have built in OT2 a platform for a solid native SaaS applications, and the goal is to deliver three to five application every year going forward. These applications can be vertical related. Life sciences is very important to us, so we plan to build many of the life sciences need. We are already working on regulatory compliance and partnering with large pharmaceutical companies like J&J and Merck. We are working on more advancement to our Core Signature to integrate into contract management, to integrate into case management and other solutions. We're working on more AI workload for. Thank you very much.
Okay. We are going to take a 10-minute break. We will resume promptly at 10:30 A.M. For those of you on the webcast, you'll be hearing music until we resume. The first presentation after the break will be from Gordon Davies, who's going to talk about our corporate development pipeline. Thank you. Who's going to win the football? If I could get everybody to take their seats, please. All right, everybody. Hopefully, we'll be flipping the webcast back over momentarily. We're all set? Okay. Welcome back, everybody, to the second half of OpenText's Investor Day presentations. You'll be hearing three more executive presentations, followed by a question and answer period for the entire executive team. Our next speaker will be Gordon Davies, who's our Executive Vice President, Chief Legal Officer, and heads up our corporate development.
Also, I wanted to draw your attention, for those of you here in the room, that as you leave, we have a copy of Mark J. Barrenechea's book on "The Intelligent and Connected Enterprise" that you are welcome to have as a complimentary copy. With that, I'm going to turn it over to Gordon, who'll tell us more about our M&A strategy.
Thank you very much. Welcome back from the break, everyone. It's a pleasure to be able to speak with you. I'm going to talk about three themes today in my presentation. The first is growth, the second is expertise, and the third is financial discipline. Those three things, as part of our total growth strategy, make up the M&A advantage. From a growth perspective, M&A is the largest contributor to our total growth strategy. It's part of our core competency, and it's part of our DNA. Although we're on a young journey, OpenText has had over 50 acquisitions in its young life. Corporate development, expertise. We have a robust corporate development team, covers all aspects of building from a full pipeline, strategic opportunities through to execution and then acquisition, and very importantly, through integration. Pardon me. Then finally, through financial expertise.
We're disciplined value buyers, and our key metric is ROIC. You've heard that from Mark, you'll hear that from Madhu, and you'll hear that from me a few times. First about the team and the expertise. We have a dedicated team of M&A professionals that actually exceed over 25 individuals who lead or are responsible for the full life cycle that I've talked to you about. In terms of expertise, I gave up counting, actually, the number of years of experiences we have with this team, but it goes into the tens, if not hundreds of years. Fairly highly skilled leaders. They're very valuable contacts in the industry, and very knowledgeable in terms of how to run a deal. We add to that expertise within technology and within go-to-market as well. The importance of that is twofold.
One is to ensure we do effective due diligence, and the second is to ensure we do effective integration. Thirdly, and this is where the financial discipline comes in, we have a robust financial modeling team. Deep understanding, expertise comes out of that group. They build sound business cases, and again, that helps us in our financial discipline, but also helps us in terms of due diligence and ultimately in integration. Integration excellence, I'll talk about that a little bit more in this presentation as well. We have deep institutional knowledge within that group. There's a team of six people just within the M&A group itself who do integration on a full-time basis and bring that expertise to the table. Our acquisition criteria. As Mark has said, and I'll repeat again, we must meet our high teens ROIC. That is always the key in every single deal.
Mark touched on our revenue multiples that we've sometimes seen on deal. You can look historically and see our revenue multiples that typically have a landing area between two and three times. The constant will always be when you look at those acquisitions is that we deliver on high teens ROIC. The other thing we deliver on is getting those businesses to our target margins. We have a solid track record of ensuring that we can bring these acquisitions within a 12-month period onto the OpenText operating system and business model. There's four things that we focus on. That'll hold true whether it's a small or medium or large size acquisition. One is the leadership position, looking for recognized leaders in key market segments to assist us in growing the business. The second, market penetration, deepening relationships with our existing customers.
Muhi and Ted have touched upon that in particular, about the importance of deepening our relationship with existing customers through products or through growth internally or through acquisitions. The third is the value for OpenText customers, enhancing our product offerings and capabilities. I've got a case study or two at the very back end, which will demonstrate that. The fourth, which is always the thing that you're looking at, is whether you should build versus buy. Looking at our new capabilities, looking at the products that our customers are asking us for, and making an assessment as to whether we should build that internally or whether we should buy.
Within that, the context of this acquisition criteria as well, we've tried to bring additional focus, and Mark talked about that a little bit when he noted in his executive team that we've got Prentiss Donohue now, who's leading the OPG team, which is the OpenText Portfolio Group. That group we've brought together, and I brought together as well, expertise within the corporate development and M&A team as well, that's going to enhance our focus on the smaller acquisitions. That's going to bring to us a focus in an area, which we're able to grow on. I think also very importantly, what that's going to enable us to do is to implement our playbook in that area and get more predictability when we get our operating rhythm going in the OPG model. I'm very excited about that. Acquisition strategy.
Two things I want to talk about there. One is what we target, unlocking the value, to demonstrate once again the importance of the OpenText Business System. As Mark said, we evaluate our businesses within the context of the information company, within the EIM strategy. Within that context, we're going to look to fill white spaces. We're going to look at vertical capacities and capabilities. We're also going to look at opportunities geographically in order to extend our footprint around the world. We value recurring revenues. James is going to talk about that a little bit. As I've indicated before, we need to see a path to the higher margins. We need to see us be able to get on the acquisition, get onto our system within 12 months, and we need to see strong cash flows.
In order to do that, there's certain things that you need to see within a potential acquisition. Strong leadership teams is perhaps an obvious, but we focus very much on culture and on leadership within those acquisitions. Disciplined engineering is another example, as are their distribution models. Finally, Mark highlighted this as well. Very importantly, when we're looking at a potential acquisition, we're looking for acquisitions that are going to benefit from the OpenText Business System and OpenText continuing scale. You'll see examples of that in one of our case studies as well. I'll highlight, perhaps Documentum as one of our great examples. Within that OpenText Business System, as I mentioned before, we've got a dedicated in-house team in sourcing and integration. We have very clear and consistent business models that we apply in every single context.
We have clear cash-based returns and ROIC is king. Cost synergies is something else that we absolutely focus on, turning free cash flow and driving more value for our revenue synergies. The last part that I'll talk about, which is a combined thought, is really the onboarding. The onboarding is really all about integration. It was mentioned when I was introduced, I'm also the Chief Legal Officer, perhaps the lawyer would tell you that the most important thing when you're doing an acquisition is the purchase agreement, which are negotiated in quite some detail right down to the last semicolon. In fact, what delivers success in an acquisition is integration. Integration is a maniacal focus for us. Talking a little bit about the current acquisition environment. Internally, we're certainly seeing a robust amount of work happening in the corp dev M&A space.
Deals are being sourced from a multitude of different sources, be it internal and external. We're certainly benefiting from all of the relationships that our employees and our corporate development people have, but we're also seeing it externally in terms of the relationship we have with investment bankers and others that you would recognize. We have a very active outreach program and a robust funnel. I think funnel is the right analogy, as it really is a process that we have to go through. I'll talk about the diligence a little bit, of taking that robust funnel and narrowing it down through our diligence and our financial modeling to look at acquisitions that'll actually be able to benefit from the OpenText model and achieve the objectives that we set out in terms of delivering products to our customers. Then again, focusing on the integration excellence.
Externally, we're actually seeing an uptick this year in terms of M&A volume versus 2018. I think part of our financial discipline, our remaining diligent, our being patient, our being confident in our business model is paying off. You're seeing valuations now declining in some areas and becoming much more attractive. I see very positive signs from that perspective. Diligence. I'll talk about that a little bit more, given it's important within M&A. As I mentioned, we've got a very robust due diligence process and a lot of expertise in order to carry that out. I've already made the point as well about the integration efforts and what we need to do within the first 12 months. The Corporate Development team owns integration right through to getting that over to the business model, which is an important part of our objective.
We do not turn it over to the business day one. We work in partnership with them. We get them to the business model before it 100% goes over to the business side. The expertise doesn't just exist within the M&A group. As I mentioned, it's been a young journey for OpenText, we've got a lot of muscle memory in doing over 50 acquisitions. You see that within legal, within HR, you see it in marketing, sales, professional services. You see it in engineering, importantly, you see that in finance and tax as well. The purpose of this slide is really just to demonstrate to you the muscle memory that exists within OpenText. Our approach to integration excellence.
The accelerated 12-month time to value model, I will put up against anyone in the industry, and I'll argue that it's one of the fastest in the industry as well. We go to full integration. Full integration is incredibly important to the acquired business within OpenText. We have a robust change management process focusing at, I would say day one, but I'll actually say before we actually close, on employees, customers, and vendors. Importantly, we have to ensure as part of the integration that we maintain the important governance model that exists within OpenText and continues to exist with our acquired entities as well. We very much run an integrated management model and have quite a formal approach as you would hopefully expect in terms of integration committees, steering committees, and things like that.
The point that I would make at the bottom of the slide is that we hold everyone accountable to that business case as well. When you're going through the integration model, it's also an accountability model. You're also seeing metrics that are being put out there and to ensure that everybody is driving the same objective. Those metrics are proven and they're repeatable as well. I like this slide. It's a little different than the slide that Mark used in terms of acquisitions, just to give you a little bit of the breadth of the different areas. I've included a few more of the acquisitions as well in the different areas within the EIM information company space. Very proud of the capital deployment, in my area of focus of almost $5 billion since 2014, the number of transactions we've completed within that period of time.
Again, if you go and measure us against ROIC, you'll see a consistent delivery of high teens ROIC. Track record of success. Documentum is one that I mentioned before. Quite a large transaction. When we acquired it in 2017, you look at Documentum, they were number 3 in content management, shrinking business, losing share, declining single digits year-over-year with low teens margin, and they were not investing in their products. Their products were stale. Today, Content Services, Documentum is part of OpenText and Content Services, we are number 1. Our margins are on the corporate model, and that business is growing. We managed within our target to improve margins from low teens to the OpenText operating model.
Another example of success is a recent one that Ted actually talked about, which is Covisint, which is a cloud-based identity and access management leader in IAM with particularly relating to connected vehicle and Internet of Things, technologies. From our integration perspective and what we focused on was cost optimization as well, bringing that business from negative margins to the mid-20s adjusted EBITDA. We did that again within the first 4 quarters following closing. The evidence, I think, of bringing it in and the success that we can bring to companies like the Covisint is indeed the recently announced partnership with Mastercard that Ted described. Finally, Liaison, which I think is a great example of market and product capabilities bringing to OpenText the Alloy platform, very focused to us from a product perspective, but also we enhanced our verticals.
Healthcare, life sciences, manufacturing, automotive, I think was an important component of that acquisition as well. In summary, if I circle back to what I first talked about, there's really three key things that we focus on within M&A and corporate development. The first is growth. M&A, again, the largest contributor to our total growth strategy. It's a core competency. It's part of our DNA. Secondly is expertise, and I'll highlight integration excellence because it is the key differentiator in any transaction. Third, financial discipline. Track record of success, high teens ROIC is our key metric. We've got a large market, we've got ample assets, and we've got the financial capacity to execute. Thank you. With that, I'm going to turn you over to James McGourlay, who's EVP, Customer Operations.
Thanks, Mark. Thanks for joining us today. I just want to give you a bit of an overview of exactly what customer operations is before I jump into the actual deck. Customer operations at OpenText is pretty much everything post-sale. Ted and team go out and get the new customers or Gordon goes in and gets the acquired customers and then they hand them over to our team. We've got 3,300 people spread across the globe, and we focus on everything from professional services, our global technical support services, obviously our annual recurring revenue, which I'm going to talk about today, and our overall customer experience. I'll just jump right in. Obviously Mark's already touched on this chart about our annual recurring revenue growing from $1 billion in FY 2014 up to $2.156 in FY 2019. Great growth in the annual recurring revenue.
Obviously a big chunk of OpenText's overall revenue. It receives a great deal of attention from the team. I want to talk about how we do that as we go through the presentation today. We've got market-leading renewal and margin rates. We'll touch on those in a second. I already talked about our global organization of 3,300 people focused on making sure that we retain our customers. We're focused on providing expertise, so technical expertise, professional consulting, through a professional services organization, compelling product updates. Muhi talked a lot about the product updates off the top. A great advantage to us as we're going out and selling our Prime Protect program is the fact that we're bringing along that entire engineering efforts that Muhi and team are putting in.
Security services. As I'm sure you're all aware today, the focus on security is front and center in every operation. We deliver that as part of our service as well. Compelling customer experiences and organization improvements. I'll touch on that as we go through. I think the big message here is this is not an or situation, right? We're not focused on annual recurring revenues and margins only. We're focused on our customer experience, making sure that we have great performance as an organization. At the same time, we're delivering great experiences to our customers. High margin, but great experiences for our customers as well. I think that goes across the entire organization, but I've got it on my slide, so I'm going to touch on it. Key financial metrics.
In the cloud, our renewal rates are in the mid-90s, 58% gross margin. As we talked about, we've got a lot of opportunity to improve that margin as we go forward. Incremental improvement over that margin over the next few years and onwards, we'll continue to see that growth to mid-60s long term. Efficient investment in CapEx, making sure that we're efficiently investing in the operation on our cloud side to continue to improve. That's also helping drive, obviously, our margin, as well as opportunity to grow usage. I'm going to talk a bit about how we grow usage, as part of the renewal process, as we go through the presentation here, on both the cloud and on the off-cloud side. Let's talk about customer support. Our renewal rates in the low 90s, and our margins are 90%, as Mark talked about earlier.
We've got an opportunity to continue to improve those margins and continue a bit of expansion there, through things like AI, investing in AI and self-service, and moving our customer support more to self-service, taking advantage of the AI capabilities, taking advantage of features that Muhi's building into the products to make onboarding easier too. Those things will help with our margin as we go ahead here. Our obviously best-in-class renewal rates of 90%, and we're still moving forward with improvements there, as you'll see in a few moments. The value advantage, customer support programs. We talk about our Prime Protect program. Our Prime Protect program essentially gives our enterprise customers an enterprise class support program, 24 by seven availability. We're providing security updates. We're pulling those patches and those updates forward, the security updates.
We're also giving them access to all future versions of the software. That's the key feature. As Muhi's teams continue to iterate through and develop and release on a regular basis, we're able to help our customers upgrade to the latest version very quickly, very easily through our Prime Protect program. You can see the features. Our Loyal to the Core program, which allows our customers access to Core for full renewal on time. They get access to Core for a number of users for their maintenance base. We're very proud of our Prime Protect program. We stand it up against any in the industry.
We'll stand it up against any in the industry, and we're sure that we've got the value and the features that, as you've seen by our renewal rates, that brings our customers back year-over-year again. All right. The OpenText Cloud Advantage. Obviously, Mark talked about the growth in the cloud as we started out. In FY 2014, $373.4 million. Sorry, in FY 2019, $907.8 million. The reason I laugh is we were having a debate about actual numbers, and Ted went to the specificity that you would expect Muhi to go to, and I just went there. We've gone from roughly $375 million to $910 million over that year period. How do we do it? Right? How did we do that? How did we make that growth, and how do we make that sticking?
What's the value add advantage that we bring to our customers in the cloud? Well, it's quite simple. Right? Who better to run OpenText software than OpenText? We'll give you one SLA. We'll give you 99.9% uptime. We'll make sure that the security's in there. Right? These are things that flow through to our customers and resonate with our customers. It's simplicity, it's security. Right? It's availability. Those are all things that we bring with the cloud advantage from OpenText. When you look at the managed services that we bring, obviously the help desk, our storage, our ability to expand that storage rapidly, manage backups, monitoring. We've got a team of people that sits and monitors all of our cloud systems as you would expect, but customers don't have to worry about that.
They just know that we're going to be monitoring, and we're going to be proactive on any of these issues, be it security, be it storage that's getting full. All the mundane stuff that customers really don't want to take care of. What they want to do is accomplish their business goals, and the OpenText Cloud allows them to go out, accomplish their business goals without worrying about the mundane stuff that goes on in the background. Like who's poking around my system. That's all taken care of by OpenText, by a team of dedicated professionals. Change management and hardware procurement, all that type of stuff. We'll take that away and let you focus on delivering your business. Let you focus on if you're a bank, making sure that the cash transfers are on time. All that stuff that you can do using the OpenText Cloud.
Our customer management model. We talked about our $2 billion in annual recurring revenue. How do we do it? We use a model that's fairly common, and you may have seen it out there before. Land, adopt, expand, renew. This really taking us right from the start of a customer life cycle, whether it's through Ted's sales team going out and selling a new license or selling a new service into a customer. In other case, if Gord's acquisition team. We talked about the acquisitions earlier and about how we make sure that we get them onboarded onto our model within 12 months. That holds true for annual recurring revenue as well. We'll bring those customers in, we'll get them onto our systems, we'll get them into the OpenText way of doing things. We'll be using our OpenText Business Systems to bring them in.
It's our starting point. This is our starting point. We get the customers into OpenText. They started using our applications, or they've come along via acquisition. Getting them on board. Making customer success plans for these customers. How are you going to be successful? I talked earlier about delivering business value. How are you going to deliver that business value out to your end users? We work with our customers, build out those plans. We've got our professional services team that will help onboard new customers. If you're a cloud customer, if you're coming onto the business network, how do you onboard your trading partners quickly? How do you make sure that your workflows are proper? If you're a software customer, for example, how are you making sure that your data management plan's in place?
How are you making sure that you're actually going to drive user adoption? How are you going to be successful? That's all done through our professional services organization. Adopt. New product plays, making sure that when you go out and you purchase your application or you purchase your service, that you're actually using it and able to deploy it into your user base, your customer base. Make sure that you get that value again. We have adoption services through our learning services organization, where we can work with customers to build out that adoption plan. We can monitor and help our customers move along through adoption. Really, consistent communication with our customers and help them doing consistent communication outwards as well. One of the things that Ted mentioned briefly, and I'll mention briefly again, is account-based marketing.
Helping accounts, helping them, helping their customers market inside of their own user base is really a key thing for us and a great benefit that we're rolling out more and more. Really does help with that adoption, helps with that understanding of the capabilities we have. Expand. Build on the delivered value. We've gone out, you've adopted the software, you've adopted the service, you got your trading partners onboarded. There's lots of transactions flowing through the system. What's next? What's the next business application that you're going to move to? Are you going to expand usage on our cloud? Do we need more storage? Do we need more volume? What do you need? How are we going to move that ahead? Our customer managers work closely with our customers all the way through this process, to help drive new opportunities.
You'll see a couple of things that come out of this expand. You'll get small opportunities that we get out of that we manage through our customer management team. A small opportunity, additional usage, a small professional services engagement that goes into the customer, and maybe a small additional feature, that type of thing. Then we'll also generate leads that we pass up through to Ted's organization for larger transactions. A whole new use case, for example. I know we've talked about, well, Ted talked about some of the customers.
We've seen cases where our customers are sitting down and working through with our customer management team, working through on our QBR with the customer, and they'll come out and say, "Oh, by the way, we've got this project here where we want to do labeling of a specific product," or, "We want to do customer experience management effectively." That gets passed over to Ted's organization, starts a whole new opportunity. Really, there's a couple of different ways that we can see expansion coming out of here. Renew. Our renewals are generally process-based. We've got a very rigid process that we use for our renewals process to make sure that we get our renewals in on time before expiry, and it's managed through automation, and whatnot. Obviously managing and reducing churn and early renewals, all those things are the benefits of this renewal process.
When you take this all together, and when you put that line across the middle, you've got systematic process. We do have, as was mentioned, the OpenText business model. We have the OpenText business model for renewals. When we do an acquisition, we're pulling all those acquired customers into the OpenText processes. We're able to do that within a very short period of time, and we do aim to be completely through the process by that first renewal term of all the customers. AI-based risk. As you look at this, if you were to think, we've got 74,000 customers in the cloud. If we're to apply this model on a person-based basis to all of these customers, it's very expensive. As you notice, we're a very efficient organization, so we're not running with extra headcount. AI is our secret sauce here.
AI is what allows us to look out, look at our customers, make predictions on which customers are at risk, where do we have opportunities, and then direct our resources internally according to that. It's a great opportunity for us, and we're continuing to expand the use of AI through our renewals process, as part of this land adopt, expand and renew. It really does go all the way across the process. Automation, I talked about briefly off the top there. We're continuing to automate as we go through. We're continuing to automate in the renewals process. We're continuing to automate in various other parts and processes here. In the communication, we can pick high-touch customers, low-touch customers, what goes to automation, what goes to AI, and then what is handled by a human. All the way through the model here. There we go.
Customer satisfaction, NPS performance. As I talked about earlier, we're a lean organization. We're highly efficient. We've got a great model for generating return on our investment. At the same time, we're focused on that customer experience. You can see that 95% customer satisfaction is a great score for an enterprise software company. We continue to improve our NPS score, tracking it year-over-year. As we're going out, and the feedback loop with the customers are very important, that NPS is actually a relationship survey that we do once a year. The customer satisfaction is based on our transactions with the customers at each point. We're getting our score back quickly. It's very flexible. We combine these two things together, and really look at it as a trend and where we're going.
You can look at the things that customers are telling us back as part of the survey, highest quality, faster resolution times, mutual collaboration, ease of sales, and best professional service delivery. Deliver on time, on budget, of course. These things are all related to help us do business quicker. Help us get through this process as fast as possible. Help us deliver business value back to our end users. As Mark says occasionally to us, we've never gone faster as business. Business today moves at a hugely faster pace than it did five, six years ago. It'll never go slower. We will never go this slow again. We're going to be continuously improving. That's what customers are telling us through our surveys here. We need to go faster. We need to be able to move ahead. That's what we're doing. We're building our organization.
Our 3,300 people is focused on making sure that our customers are able to move through and deliver business value quicker, which ultimately helps us build and expand on our renewal rates and our margins. Where does this work? Here's an example. Michelin. We all know the Michelin Man. Obviously headquartered in France, Michelin operates in 170 countries, 100,000 employees, 67 production plants in 17 different countries. An immense supply chain. Michelin is part of our business network customer base. Look, in order to minimize supply chain risk and move production, improve production, minimize costs, they've worked with us over the years. Michelin has been a long-term customer with OpenText. As a Trading Grid customer, you have lots of traffic across Trading Grid, integration platforms, and Michelin's international operations. You can see the list of products there.
Over the last 6 months, we've worked with Michelin on renewing their contract, their business network contract. We were able to expand the contract, expand the volume that we're getting through with Michelin, expand the products that are in place, moving Active Intelligence and Active Invoices in, professional services and additional services that were sold on top of the existing contract. That was all based on our customer management model in conjunction with working with Ted's team as we expanded that program. A great success story for us there. Salt River Project. Salt River Project is a utility in the Phoenix area, delivering services to over 2 million people in the Phoenix area. A classic content management problem. Content was managed in disparate systems, labor-intensive compliance processes.
When you're a utility, you're dealing with electricity, you've got employees in the field, you need to be sure that you've got the right document, the right version and all that type of thing. They turned to OpenText to help them to build and modernize their content management products. They're using OpenText Content Suite, Extended ECM for SAP, and OpenText Professional Services. OpenText is providing a managed service on-premise for Salt River Project. Really an extensive list of products continue to expand the usage, and driving annual recurring revenue for us. Our commitment to value from the OpenText customer operations team. As I said, 3,300 employees across the organization, professional services, global technical support, our annual recurring revenue teams, our customer experience teams, all focused on making sure that our customers are successful. We continue to grow our CSAT and our NPS.
It's an and proposition for us, great customer experience and great financial operation. High margin model. We're continuing to support and grow our gross margin into the mid-60s long term on the cloud, and as Mark mentioned, over and above our current 90% as we move forward on-premise. Great opportunities for us to continue to improve as we move ahead. Renewal rates 90%, low 90s for off cloud and mid-90s for cloud. We expect to see these to continue to move ahead as we continue to improve our process, to continue to refine our land, adopt, expand, renew process, and working in with AI, working with different technologies in order to improve that. Continuous improvement in operational efficiency both on and off cloud. I already kind of mentioned that when I was talking about the margin expansion, but it's that important.
We are going to continue to grow, and we're going to continue to grow both in efficiency as well as in our ability to expand into our customer base. You're going to see us start talking more and more about expansion as we go along here. I think it was a great opportunity to talk with you today. I appreciate your time, appreciate everybody coming in for us. It's now my honor to introduce my friend and colleague, OpenText EVP and CFO, Madhu Ranganathan. Thanks, Madhu.
Yeah. Thank you, James. Okay. I stand between you and your Q&As. First of all, thank you to all of you here, and the Investor Relations team tells me that we have over 40 participants online as well. Thank you all for the support and time and engagement. You have all the financials, and you've heard my comments on the earnings calls. What is new that I would like to share with you today? I'll go deeper into the operating framework, as you've seen from the materials. More important, I want to highlight a few key aspects of our business. It's important for us to make sure we emphasize those. It's important that we mutually understand the importance of those, and hopefully we have your acceptance and embracing of those key concepts, right?
At the end of the day, it's about affording OpenText the value of those key differentiators in the business model. That's really what I'm going to focus on today. The OpenText Business System, it is an advantage. It's proven, it's durable, and we absolutely believe it's a winning model for us, right. Profitable total growth model. I'm going to delve into that a little bit more. In a performance in the upper quartile financial metrics, you heard Mark mention as well, and this is proven with data that you and us, all of us have. At the end of the day, we are very well-positioned to deliver in the next several years as well as we've done in the past, and to deliver solid shareholder returns.
As you look at the OpenText Business System, I will say that without exaggeration, I go to bed thinking about the OpenText Business System, and I wake up thinking about the OpenText Business System. There are many circles around the system here. The one that is very close to sort of my leadership role is the operational excellence. I would point you back to slide six of Mark's presentation, where he mentioned the relentless focus on operational excellence and efficiency. The emphasis within the CFO pillars, and not just within the pillars, but the cross-functional pillars, and you heard from my colleagues today, is the tools, the systems, and the methods that contribute to the OpenText Business System that drives everything we do. It's everything we do and the financial results that roll up to everything we do.
I'm gonna look back on a few key metrics. Let's start with the total growth and with annual recurring revenues. As you can see, 77% between fiscal 2014 and fiscal 2019. $4.8 billion of capital deployed. You heard from Gordon Davies the in-depth engine we have to support that. That's about 2.1x in terms of revenue multiple. On the right, you have annual recurring revenue. An important element here that again, we want it to be well understood and well valued as well, right? It's the predictability. If you do the math, in fiscal 2014, our annual recurring revenue was about 66.5% of total. In fiscal 2019, it was 75% of total. That is significant, and it's a world-class progress when you think about recurring revenue and predictability. Getting into just a couple of key drivers there.
Cloud revenues were up about $534 million or 143% in the same time period, and customer support revenue was up about 77%. Again, all of this driven by the OpenText Business System. Let's look back on adjusted EBITDA and operating cash flows as well. 104% growth in the same five-year period, $1.1 billion of adjusted EBITDA in fiscal 2019. What were the key drivers? Our gross margin on a non-GAAP basis grew from 73% to 74%. It was driven by customer support. The operating expenses, there are questions we get about are we investing enough in operating expenses? I'll share a couple more parameters on that. We grew $377 million in OpEx. The ratio of operating expenses to revenue is reduced, which means we improved during the same time period. Again, think about the perspectives you heard on us focused on productivity leadership.
At the same time, we have not under-invested at all. We have adequately invested, and I'll expand on that a bit more. On operating cash flows, again, it was driven by higher adjusted EBITDA in the same time period, about $562 million. Working capital is a big pool of items that we work on. The notable one I want to share with you is we improved cash conversion cycle in the same time period, about 123%. Once again, all of this driven by what we call the OpenText Business System. Strong balance sheet and liquidity. To the left, Mark spoke about the self-funded nature that our financial performance has afforded us at this point, and you see the metrics on the left.
On the right, I will speak to, we have ample capacity for strategic acquisitions and supported, once again, by the engine that Gordon Davies spoke to you about. $940 million of cash at the end of fiscal 2019. We have an undrawn revolver of $450 million, about $1.4 billion of capacity. On the right, if you look at our leverage of 1.5 times, is the lowest leverage in a very long time. For strategic acquisitions and ROIC remains a key metric. We could expand to, say, three times. We've done that in the past. I'll remind you of two things. As we extend our leverage, we always have a clear path to bring it back to the desired leverage, whether it's 1.5 or two times. We've done that, and we did that with Documentum within a period of, I believe, five quarters.
Again, leaving you with balance sheet strength, flexibility, ample capacity from a total growth model perspective to do strategic acquisitions. This is a personal favorite slide of mine. It might look a little complicated, but I'm going to walk you through it. The total growth model. We speak about growth, we speak about total growth, and several of you have questions as to the magnitude of the growth. The profitable total growth model is really what I want you to leave with. To the left of the chart, where does the profitable growth model start? It starts with decisions. Gross margin is a leading indicator of business models, and we are all very much aware of it, of solid business models.
To get to the gross margin, we make decisions at a customer level, at a deal level, at an SOW level, as to what the margin threshold should be. You can always look at a growth model of an alternate business model of, say, 30% or 25%, and I would urge you to also look at the gross margin model, and we'll get to the adjusted EBITDA. We had a total growth model, and ROIC is a key metric. High teens is where we want to be. We were at 18.7%. The two indicators of a profitable total growth model is we start with gross margin and ROIC, and as you move to the right, we did about 12% on a five-year CAGR in the last five years. Did we invest? Did we invest enough? I would urge you to look to the right again.
Product and innovation, go-to-market, G&A and infrastructure, $1.5 billion, $2.6 billion and $1 billion. Muhi talked about the investment in product and innovation, in his time period, quadruple. If you look FY 2014 to 2019, we doubled the R&D headcount. We have our centers of excellence, right? Canada, India, and Philippines. I think as you all know, globalization has really afforded us reasonable homogeneity in R&D skill sets. I would leave you with that we are not only adequately invested, we're strategically invested in R&D products and innovation, we're here to support Simon Harrison's plan of account coverage in terms of sales and marketing investment. What has that done in the five years? You come down the chart into adjusted EBITDA, right? The growth there, $538 million-$1.1 billion. Of course, coming down to OCF.
The conversion from EBITDA to OCF at about 80% is a very important metric for us. If I were to draw an arrow, I would say take the OCF, take it back to our acquire piece of the growth model. Right? That's the connection there. We talked about how we've got to a point of self-funded in terms of acquisitions. Retain and grow. Adjusted EBITDA fuels back into the growth model from an organic perspective as well. Once again, all of it driven by, I would say, every day by the OpenText Business System. This slide, if I could get you down to the floor, not the trading floor, but our operating floor. I thought I'd share with you a few elements of our continuous improvement in our operating framework.
Some of these are baked in our fiscal 2020 in terms of efforts, and some of these are going to be longer term. When you look at our long-term targets of adjusted EBITDA, 38%-40%, and our OCF targets, every one of these and more, if you double-click, has a role to play. We look at it internally as where do we apply our operating framework and the growth factors? If Ted Harrison has to expand account coverage, are we sprinting in terms of putting a quote in front of a customer? Those are all the double clicks you'll find in terms of operational items in each one of these. Cloud-first approach, AI, and what does productivity mean? It means doing more with the same people.
It means doing more with the same people and afforded by methods and tools. That's really where AI comes into play. Continuous acceleration of time to revenue, very important for us. I'll highlight a couple other enhancements. Operating expenses, right? When you look at leveraging efficiencies in content and data, the systems and applications, key focus for us is there still room to be more efficient in worldwide facilities? Always. All the time. That's what we look at. You look at enhancement projects, say, cost of sales. As I mentioned, gross margin is a very key and a leading indicator. Mark also shared the fact that could we reduce our third-party royalties a little bit more. We have world-class gross margins and license. Cloud, we'll talk about a little bit more.
Cloud has a path to get from our current high 50s into the low to mid-60s in the longer term. Part of that is going to be leveraging our partnership with the hyperscalers so that we remain internally operationally efficient, at the same time leveraging their capabilities. All of it comes down to operating cash flows, right? Higher profitability, the use of AI, for example, in cash collections is a very key focus personally for me. Leveraging procurement and vendor management. We have a centralized global procurement function. I can tell you when it comes to procurement and vendor management, centralization is a good thing. Moving forward, a brief mention of our FY 2020 target model. How do we plan to get there? On the license gross margin, we've talked about it. We're already at world-class levels. Could we improve it through management of third-party royalties?
Absolutely. It's a focus for us. You heard about leveraging AI and automation, customer support. We're sitting at world-class margins. Could we move it a little bit higher? Yes. Cloud gross margin, I would leave you for FY 2020 as another year where we are going to scale the cloud, but smartly invest. As you look at the longer term, there's a path for us to get from the high 50s into the mid-60s. I can't say enough about managing our operating expenses. Invest, yet have a disciplined operating lens is our modus operandi. Long-term aspirations, you've heard these, too. Let me get into a little bit more detail on each one of them. Let's start with our aspirations and roadmap for adjusted EBITDA, 38%-40%. We remain disciplined while we invest, you see the trajectory of the adjusted EBITDA margin.
Fiscal 2017 with ECD, we were sort of down a bit, but absolutely able to pick back up. The margin aspiration is 38%-40%. On the right, I will reemphasize what Mark shared with you, and this is a new message from us, is above 40%, the EBITDA dollars we plan to reinvest. It's sales capacity. It's coverage. You heard about the low-risk path to growth, which is account coverage. Of course, innovations and products and engineering capacity as well. Taking that over to the operating cash flow target of $1 billion-$1.1 billion in fiscal 2022, that's absolutely going to be driven by the higher profitability and the productivity enhancements, the fine print I shared with you earlier, that drives us every day. AI in collection and leveraging in procurement and all aspects of OpEx spending. That's where we're going to be focused on.
Here again, I would urge us to look at, on the left, the chart that got us there, and the path that we're actually going to get to the 38%-40%. The proven model and the efforts we have in place, we feel confident about getting to those numbers. The total growth strategy for fiscal 2020, Mark walked you through each of the line items. What I would add to that is that when we speak about license, we are going to be selling a lot of license dollars. We continue to be a hybrid model. From a constant dollar perspective, year-over-year is what we're directionally providing. Cloud is going to be our leading growth driver, right? Customer support, low to single digits. It's going to be supported, as James mentioned, by solid renewals, smart renewals, proactive renewals, human and system-based.
I'll make an additional comment on M&A. We have ample capacity for acquisitions, and that's what's going to drive our M&A growth. Again, in aggregate, low single-digit organic growth plus the additive M&A. You heard a lot from the team, it is my humble honor to summarize on behalf of the entire team. What did you hear today? A leader in enterprise information management, number one in content services and number one in business network. We are pursuing a large addressable market, a total addressable market of $100 billion. It is a total growth strategy to drive value, is retain, grow, and acquire. Creating value for the global 10,000 customers, expanding account coverage through the information advantage is a very key focus for us. Cloud-first platform and accelerating innovation. Investing in our future growth.
When we talk about ample capacity, I would also add, we're not just talking about financial capacity, which I've emphasized thus far. We're also talking about organizational readiness and management capacity to do strategic acquisitions. At the end, it's about profitable. It's about total growth. It's about profitable total growth. It's about upper quartile performance, strong operating cash flows, and attractive returns. Once again, thank you for joining us. At this point, I'd love to welcome Mark and the executive leadership team presenters to the stage and take your questions. All right. Thank you.
I wanted to see Madhu hold up the football.
I could. I'm gonna hold up the football.
Thank you, Madhu. We'd love to open up the room to any questions you have.
Hi, Mark.
Yeah. Good morning.
James from TS Investors. Thanks for highlighting the rule of 40. It's an impressive metric that you guys achieved through getting margin. Just wondering if you guys looked at it from an organic perspective and determined whether you guys actually hit or exceed that rule of 40 metric on an organic perspective, because without acquisitions, your margin should be way higher. Do you know on an organic basis whether you guys exceed that 40 mark? I've got a follow-up question after that.
Yeah, we'd be just about 40 in fiscal 2019, if it was just organic. I think in 2018 would be just about 40 as well. We'd be just at the 40, but all in for fiscal 2019, 42.2. We would have been just at 40. Yep.
Okay, that's good. As you cap your EBITDA margin at about 40%-
Yep.
as your business scales
We'd be top 5 in the world.
Yeah.
At 40.
It also means you'll be investing a lot more into the business. Is there an organic growth rate that you would be happy with in several years as some of these investments start to generate returns? Right now you're saying low single digits.
Yeah
for the next year, but do you expect that to creep up as you invest more into the business?
Yeah, the expectation I'd like to stay consistent with is getting to this consistency of low single digit organic. Right? Getting upwards to 40-plus low single digit organic would put you well over the 40% rule with no M&A. Right? I think repeatedly, consistently, predictably, delivering that low single digit is the next steady state for the business. Once we get there, then, we'll think about resetting the bar above that. I'd like to be able to consistently and predictably deliver that low single digit organic growth. When you look at businesses like Oracle, they're not growing organically. You look at businesses like Micro Focus, they're not growing organically. It's a big base, right? Even that low single digit, we're going to expect higher growth rates in the cloud, kind of in the key value segments.
We should see higher than low single digit, because in that big math, if it averages out to low single digit in the core value segments, they have to be growing faster, to be able to get to that low single digit.
Hey, Mark.
Welcome
self-funded acquisitions, does that mean that you're going to be focused more on smaller deals? I think if you said if you deploy all the cash flow, you're going to drive about 10% growth from acquisitions. Historically, it's kind of been probably close to the high teens or low twenties.
Yeah, we're not signaling that's the only capital available, right? If you look at our historical growth, our growth CAGR over the last five years, around 12%, you're made up of organic plus acquired. That would be self-funded in that $633 million. We're not saying we're capped by the $633. Kind of the run rate of what we're doing is self-funded. I'd like Gordon to speak to this as well. I'd like to just amplify a point where we're I like to use always the swim lane analogy. We got three swim lanes and three swimmers in the water, kind of the small, medium, and large category. We're actively working all three swim lanes. Our new portfolio group is about building out, a more predictable model for the smaller acquisitions and deploying capital more predictably.
There are acquisitions here that we haven't had the structure to really manage them. Something small, you don't want to just fully integrate into the larger company. That we can create value in keeping them more together. We have more activity in the small category to both kind of get to value we haven't been able to get to historically and to get more predictability into the model. We're active in all 3 categories. We have a new category, building some corporate strength in the smaller. That 633 is not meant to say we're capped by it, but rather kind of if there is such a thing as run rate, that is self-funded. Gordon, is there anything you'd like to add?
Yeah, sure. Mark, thanks. I would underscore, I think the predictability in the OPG, the smaller category that we're focused on now, which I think is a great opportunity for us. One of the competitive advantages I think we'll have from that as well is when I talked to you in my presentation about the muscle memory that we have, about the expertise we have in terms of financial modeling and due diligence as well. What we are seeing as we're looking at the rather robust pipeline in all the swim lanes, but in the OPG smaller category in particular, is speed to close. Speed to those transactions. That's why I think that, we'll have a competitive advantage there. Through increased focus, you'll see that predictability.
Just one other quick one.
Please.
I'm not trying to put you on the spot here, but why now to push into the sort of global 10,000 and sort of the push on the sales side, and why wasn't that done years ago where you were focused on other things? I was kind of curious on the timing on that.
We've built scale now. We've built confidence. We've built stability in the structure, and really referencability in key industries. Being at rough percentages, knowing 40% of the insurance industry, and now going fuller, knowing a critical mass of the retail industry, and now going more fully. Why now? Scale, confidence, and the best way to sell is through reference and not by lead. I would say that's the why now.
Mark, just expanding on-
Ted, I don't know if there's anything you want to add to that at all, but feel free. Sorry.
Yeah, no, I totally agree with that. Our solutions require a big investment in terms of the time we spend with our customer. We've gone to the scale now and the reference ability that allows us to go deeper in and expand our enterprise sales team, just as Ted explained in our model. Fully agree with the statement, Mark.
Best way to sell is by reference.
Just expanding on that point. If I look at your target operating model, it suggests that the sales and marketing spend in dollar terms will be much the same as it was last year. Just help us understand how you're going to increase the coverage without spending a lot more.
I'm not sure I understand the question.
Just looking at the target operating model in terms of your sales and marketing spend for fiscal 2020, it suggests that the dollar amount of spend might not be that much different from what you spent fiscal 2019. Help us understand how you're going to increase coverage. Is that through the use of more automations you talked about, or is the comment about expanding coverage more focused longer term as you reinvest past the 40% margin?
There's no doubt it's beyond the 40%, right? It's part of the longer-term model. I don't know if you want to speak to the current ratio. Yeah.
Yeah. When you look at FY 2020, we baked the org structure, the expansion of the coverage into our FY 2020 model. As the growth of revenue happens, you're going to have more $ to spend in sales and marketing, obviously. If you look beyond FY 2020, we are going to be spending more $ in sales and marketing. The third point is when you get to that zone of 38%-40%, as we have shared anything above and beyond that, the prioritization would be to invest in sales capacity and then in product capacity. Right? I would think about it as FY 2020, and beyond FY 2020, and the longer term.
I would also point to, I know some of you do a detailed analysis of, I'd sort of point to our recruiting site. If you go out and add up, I don't want to get kind of pinned down in what capacity you're expanding right now, but you do analyze all our open recs. If you go to that site, I think you'll see close to 80 open AE positions right now around the world.
Yeah. A question for Gord, just expanding on the incremental focus on small acquisitions. Can you define small? Is there a level which below wouldn't make sense for you guys? Would we see you buy $10 million revenue companies, or what might be the cutoff?
It's a good debate that we've had internally as well. I hesitate a little bit to put a number on it. If I was giving you a little bit of insight into our discussion, I would say that typically you would find those transactions in the $50 million and below range. Other those that are probably too small for us to look at. That will depend, it's not only a dollar value or a revenue number that you're looking at. Sometimes there's getting a product capability or a strategic reason for doing a smaller transaction. I wouldn't discount any of those.
Thank you. Dan Jester from Citi. In Ted's presentation, he talked about that you're 10% penetrated in your current client base. If you think about the straight line to organic growth, why isn't investing more in inside sales and working with customers you already have relationships with versus going out and hiring a bunch of new AEs to go and target folks that you don't have relationships with right now? Thanks.
Want to go for that one, Mark?
Absolutely.
I'd love to. It's not exclusive. We've got one football on the podium, and I wanted to draw one straight line. I am spending a lot of time, and we're investing in expanding out the proven model of our sales force, and that means opening up new customers. It was only a couple of years ago that we segmented our model with the level of clarity that you see in that pyramid, and that meant an investment in inside sales team. The inside sales team, it didn't even really exist four or five years ago, and has grown into a highly performant team, and helps us to get our messages out there to our existing install base. If I pick one thing, I'm very proud of having one of the largest enterprise sales teams in the industry.
My 40.
High touch. We can't just wait for our customers to come to us. We've got to get in there and educate them about why move and build the momentum. Thank you. It isn't only one thing. It's these three major sectors increasing our reach with the partners, and developing our install base. Each one of them is magnified in its own way by this move to the cloud. Inside sales is an important investment for us. We continue to grow in inside sales as well.
You want multiple on-ramps to growth.
Yeah.
Right? You never want just one on-ramp, and Dan, you highlight one very important on-ramp, which is to kind of grow the install base. You want multiple on-ramps. Sometimes you get a traffic jam or something happens on an on-ramp, to use that analogy. You want multiple on-ramps, and these are there.
Yeah. Expansion of the coverage. What does that mean for the sales force? Are we talking about doubling the size of the sales force, the balance? How do you think about the balance between direct versus using partners, same partners as you have existing relationships with in other areas? Maybe just, again, more color on that. Sure.
I'd say there were two factors to our growth in the sales force that it's worth bearing in mind. The first one is, as Mark mentioned, if you go on our website, you'll see the number of recs that we've got open for AEs. It's the war on talent. We've been investing in our own talent acquisition capabilities and to go out there and attract the very best people. Our speed is somewhat dictated by our capability to not only acquire the best talent in the industry, but also to onboard them. One of the investments that we've made this year is around the OpenText University that gets them up to speed faster and improves our speed, our time to revenue. The second is externally. These enterprise reps are important to us because we can't just wait for our customers to come to us.
We have to build the need in that customer base, and that takes time as well. You've got to onboard the talent as quickly as you can, get them capable of leading the customer, and then you've got to lead the customer through the business case, where we've got support and resources around building the business case. In terms of our mix, we're not exclusive to the 40% that we cover. We're just talking about doubling our coverage of our investment in the enterprise AEs.
If I amplify a couple points there.
Yeah
Do we need to double the sales force to double the coverage? The answer is no. There are efficiencies in some economies of scale. We don't need to double the sales force to double the coverage. It's less than 2X increase in the sales force to get to 2X coverage. In relation to the partners, we're actively working that 60% we don't cover through forms of partners. GSIs, our named partners, and others. The emphasis on partners as we cover more, there are some enterprise models. You look at Oracle, Microsoft, SAP, and there's many things to learn there, is that in their top 200 to 500 accounts, there's no partner between those companies and that account. No partner sits between them. As we put our global account program in place, there is no partner between us and some of our key clients, right?
Where partners do come into play is one word, value. If that partner has value, they can get us to a vertical customer we can't get to. They can get a customer in Riyadh that we can't get to, or they can bring us somewhere. The focus is on value, and getting us to that client. Once we're at that client, we're generating the trust and the value from there on. I hope that's helpful, Charles.
Yeah. I'd add one more thing, if I may, Mark.
Yeah, of course.
It's about excellent answer. One other thing to bear in mind, which I didn't mention in my presentation, is we do have salespeople covering non-G10K. We're moving the bar up. It's not just about bringing in, expanding the sales force, it's also about moving the bar up on some of our existing enterprise AEs who are looking a bit too far below that line of the G10K.
Yeah. We don't need to double the sales force-
No
to double the coverage.
No.
Hi. Thank you. Great presentation, especially on the financials.
We'll take your question.
Two quick questions. On the sales force side, do you measure sales force productivity, and how exactly do you measure that? Give us an idea of the numerator and denominator and what the trend has been. Secondly, on cloud gross margins, if your target is mid-60s over time, can you help us understand why it cannot be higher, why it cannot be 75%, for example? Within cloud, the subscription versus services, if you can help us understand what the gross margins are today and where they will trend to. Thank you.
Okay, there are three things in there. I'm going to take the cloud margin one. Okay?
Okay.
There are three things, but I'll take the cloud margin. We're operating in the high 50s today, and it's part of the mix of our business. There are three main businesses in there. When you boil it all down, there are three big things. There's our value-added network, and that's the highest margin today. We have our private cloud, our managed services business, which is lower margin, and then we have our new SaaS product lines. Altogether, that's high 50s. We see a very straight path to get to the mid-60s in our mix of business. Some of the best-run clouds at scale today deliver about 70%. Best-run clouds deliver around 70%, and they too are going to get more efficient over time.
Given our mix of business of the value-added network, swift traffic, EDI, fax, notification, on-demand messaging, plus our managed service business, plus the growth rate and maturity of SaaS, we see right now a straight line path into the mid-60s. Once we get there, we'll evaluate if we can go higher. If we were a pure SaaS company at scale, maybe we'd get to 70. We have a good line to, in this arithmetic, increased our margin by 20%, almost 600 basis points. When we get there, we'll reevaluate if we see a path above that given the mix of business. Short answer is mix of business. There's a path to getting at least 500 basis points. Ted, you want to talk a bit about maybe productivity and yield?
Yeah, Salesforce metrics. The highest level 1 that I look at all the time, and that we hold ourselves accountable to is productivity or yield. Yield per AE. I am pleased with our yield. It has been raising over the last two years. We're happy with the level of productivity we have with the sales force, and our attention is more on moving them up the bar to larger accounts rather than any issues that we see in the sales productivity right now. Yield's the main metric.
Yeah, results over quota.
Yeah, exactly.
Yeah.
Sorry, I should have explained that.
Thank you. Maybe one more question. Go right ahead.
Hey. Raimo Lenschow from Barclays. The one question, going back to your organic growth, was around on-premise or off cloud and cloud. Because if I look at your cloud business, you're growing like 19.
Yeah.
In theory, that's where the-
High single digit for fiscal 2020.
Yeah. Okay. As you think over time, as your capabilities increase, you should get a mix effect. Can you just talk a little bit about how you think about it, how aggressive you want to push that into your client base, et cetera?
We still believe go to kind of a fundamental principle, that is customer choice. For 20.2, we're making a strong statement. It's cloud first. As Ted and his team engages with the install base, we're certainly going to engage with the principle that it's cloud first. Migrate, Modernize, Monetize. It's an important point in time for us at 20.2 to say A few years back, I said, "Look, I don't know if it's 50/50, 40/60/40." I can tell you with confidence today, it feels more like 60/40. 60 cloud, 40 off cloud. Still hybrid, but the emphasis on cloud. We're patient. It's a dial. We're just dialing another notch up, very prescriptively with 20.2 to say, "Okay. It's now cloud first." When we engage with our customers, we'll be cloud first in that engagement and really emphasizing that 3M strategy.
Let's migrate, let's modernize the stack, new platform for innovation. Let's both monetize how to do that. That's an important point in time, 20.2. Very good. We're going to end there. Thank you so much. Hope this was a high return on invested time. Where we focused on ROIC for our capital allocation, I hope this was high on return on invested time this morning. Thank you very much. This concludes our presentation.