Canadian software company is prepared to spend US$3 billion over next five years

Hard on the heels of closing its latest acquisition, OpenText Corp. said it is prepared to spend $3 billion on buying technology in the next five years.

Company CEO Mark Barrenechea made the statement Thursday as he released the Waterloo, Ont., software firm’s latest quarterly results. For the period ending Dec. 31 it had revenue of $363.5 million (all numbers U.S.) up three per cent over the same period a year ago. Net income was $53.5 million.

Licence revenue was up seven per cent over the same period a year ago, and customer support revenue was up six per cent.

Things are so good the company announced a two-for-one stock split.

Thursday was also the day OpenText closed its $1 billion dollar purchase of GXS Group Inc., which runs a B2B integration and managed services business.

OpenText is combining GXS’s managed services with its own managed hosting services. Together their operations have 700 customers around the world in the OpenText cloud, Barrenechea told financial analysts in a conference call.

Separately GSX’s electronic data interchange (EDI) messaging service is being combined with OpenText’s EasyLink fax and notification grid – which it bought in 2012. “We are driving to be the world’s largest business network,” Barrenchea said.

With the recent introduction of the company’s Red Oxygen suite, OpenText’s product line “has never been stronger,” he told the analysts.

“Red Oxygen is our opportunity to engage with all our customers and drive upgrades and new sales.”

Barrenechea said that acquisitions are core to OpenText’s strategy. In the last 20 years it has bought 48 companies to create a business process management, content management and messaging service provider.

Acquisitions have included Hummingbird, Vignette, Streamserve, Nstein and Cordys.

In an interview Kevin Cochrane, OpenText’s chief marketing officer, said GSX offers the company a number of advantages.

“One of the things GXS brings us is a worldwide network of over 2,000 professionals around managed hosted services,” plus a number of data centres. The added staff will help expand OpenText applications in the cloud, he said.

GXS’s managed hosting business is larger than OpenText’s, he added. In cloud computing scale matters, he said, and “overnight” OpenText has added more scale.

On the messaging side, through EasyLink OpenText [TSX: OTC] is strong in fax and notification, but had a small EDI business and no managed services capability. GXS is the opposite — a global leader in EDI through its Trading Grid, which handles customers’ supply chains.

The two systems still have to be integrated.

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