Open Text CEO: Nascent Magellan AI Platform Turning Heads

Less than a month after its debut, OpenText’s new Magellan artificial intelligence (AI) platform has garnered “solid feedback” from both customers and company employees so far, according to OpenText CEO and CTO Mark Barrenechea.

The company unveiled and demonstrated Magellan at OpenText Enterprise World 2017 in July, saying the flexible AI and analytics platform combines open-source machine learning with advanced analysis and the capabilities to acquire, merge, manage and analyze big data and content.

Initial Magellan users like its “ease of use” and “affordability,” Barrenechea said Aug. 3 in an earnings call for his company’s fiscal fourth quarter (ended June 30) results. But, despite the initial excitement around Magellan, “it’s still early days” for the new AI platform, he said. Therefore, “we’re not ready to put Magellan into our financial model at this point,” he said, adding the company will “continue to monitor our first sales cycles and first wins.”

One way in which Magellan differs from IBM’s AI platform Watson is that “we’re taking an open approach and they’re taking a closed approach,” he said.

Asked by an analyst on the call what the addressable market size would be within the OpenText space for Magellan, Barrenechea said, “I think it’s going to be applicable to every customer eventually,” adding: “It’s clearly interesting to our business network customers who are looking for supplier and trading grid algorithms and optimization.

“It’s going to be applicable to customer experience management and algorithms and insights around customers and content analytics to both the Documentum as well as content suite customers. So, it’s going to be broadly applicable into our enterprise install base.”

Documentum is the enterprise content management platform that OpenText acquired when it recently bought Dell EMC’s Enterprise Content Division.

Late last month, OpenText closed on its previously announced purchase of IT company Covisint and its cloud platform, which focuses on building identity, automotive and Internet of Things (IoT) applications, for about $103 million, OpenText CFO John Doolittle pointed out on the call. Over the next fiscal year, the company expects the revenue run rate from Covisint to be down about 25-30% from Covisint’s publicly reported numbers, “due to the usual purchase price accounting and first year integration disruptions,” he said. OpenText also expects to report “minimal” Covisint revenue in the first quarter of this year, and it “will not be accretive to the bottom line until the second half” of the fiscal year that started July 1, he told analysts.

OpenText also announced July 26 that it entered into a definitive agreement to buy Guidance Software, a provider of forensic security solutions, for about $240 million, Doolittle said. That acquisition is expected to close in OpenText’s current quarter, “subject to customary closing conditions,” he said.

The Covisint purchase represents OpenText’s entry into the IoT, auto supplier portal and digital identity management markets, while the Guidance purchase will “strengthen our information platform and discovery offerings,” Barrenechea said.

OpenText shares were up 4.25% at $34.80 in afternoon trading Aug. 4 after the company reported total fourth-quarter revenue jumped 37.2% from a year earlier, to $663.6 million. Profit, however, fell 46.6% to $46.1 million.