Record Q3 Total Revenues and Enterprise Cloud
Bookings
Announces $250
Million Share Repurchase Program
Fiscal 2024 Third Quarter Highlights
|
Total
Revenues
(in
millions)
|
|
Annual Recurring
Revenues
(in
millions)
|
|
Cloud
Revenues
(in
millions)
|
|
Reported
|
Constant
Currency
|
|
Reported
|
Constant
Currency
|
|
Reported
|
Constant
Currency
|
|
$1,447
|
$1,444
|
|
$1,146
|
$1,143
|
|
$455
|
$454
|
|
+16.3 %
|
+16.0 %
|
|
+13.3 %
|
+13.1 %
|
|
+4.4 %
|
+4.4 %
|
|
Annual Recurring
Revenues represent 79% of Total Revenues
|
- Total revenues of $1.447 billion,
up 16.3% Y/Y or up 16.0% in constant currency (CC)
- Annual Recurring Revenues (ARR) of $1.146 billion, up 13.3% Y/Y or up 13.1% in
CC
- Cloud revenues of $455 million,
up 4.4% Y/Y and up 4.4% in CC
- Quarterly enterprise cloud bookings(1) of
$165 million, up 52.6% Y/Y
- Operating cash flows of $385
million, up 14.2% Y/Y
- Free cash flows(2) of $348
million, up 13.9% Y/Y
- GAAP-based net income of $98
million
- Adjusted EBITDA(2) of $464
million, up 27.0% Y/Y, margin of 32.0%
- GAAP-based diluted earnings per share (EPS) of $0.36, Non-GAAP diluted EPS(2) of
$0.94
- Completed previously announced sale of AMC business to Rocket
Software for $2.275 billion in cash
before taxes, fees and other adjustments
WATERLOO, ON, May 2, 2024
/PRNewswire/ -- Open Text Corporation (NASDAQ: OTEX), (TSX: OTEX),
today announced its financial results for the third quarter ended
March 31, 2024.
"OpenText delivered strong financial performance in Q3 with
revenues of $1.45 billion, or 16%
year-over-year growth, reflecting customer demand for information
management and new AI capabilities," said Mark J. Barrenechea, OpenText CEO & CTO.
"OpenText sits at the center of connected ecosystems, the internet
of clouds, and we play a trusted role as our customers adopt cloud,
security and AI."
Mr. Barrenechea added: "OpenText is focused on growth,
profitability and the future of Information Management. The
divestiture of our AMC/Mainframe business is now complete, and we
are using the net proceeds to repay $2
billion of debt. With our increased capital flexibility, we
are pleased to announce a new capital allocation program,
continuance of our dividend program, and a new $250 million share buyback."
"In Q3, OpenText successfully achieved its operating goals while
focusing on supporting our growth initiatives," said Madhu Ranganathan, OpenText President, CFO &
Corporate Development. "We delivered $464
million of adjusted EBITDA, up 27% year-over-year and free
cash flows of $348 million, up 14%
year-over-year. With the divestiture now complete and our capital
flexibility restored, we expect to commence OpenText's cloud-based
M&A strategy to complement our focus on organic
growth."
|
(1)
|
Enterprise cloud
bookings is defined as the total value from cloud services and
subscription contracts, entered into in the period that are new,
committed and incremental to our existing contracts, entered into
with our enterprise based customers.
|
|
(2)
|
Please see Note 2 "Use
of Non-GAAP Financial Measures" to the condensed consolidated
financial statements below.
|
Financial Highlights for Q3 Fiscal 2024 with Year Over Year
Comparisons
|
Summary of Quarterly
Results
|
|
|
|
|
|
|
|
|
|
(In millions, except
per share data)
|
Q3
FY'24
|
Q3
FY'23
|
$
Change
|
% Change
|
|
Q3
FY'24
in CC*
|
% Change
in CC*
|
|
|
Revenues:
|
|
|
|
|
|
|
|
|
|
Cloud services and
subscriptions
|
$454.5
|
$435.4
|
$19.1
|
4.4 %
|
|
$454.4
|
4.4 %
|
|
|
Customer
support
|
691.4
|
575.9
|
115.6
|
20.1 %
|
|
689.0
|
19.6 %
|
|
|
Total annual
recurring revenues**
|
$1,146.0
|
$1,011.3
|
$134.6
|
13.3 %
|
|
$1,143.4
|
13.1 %
|
|
|
License
|
200.4
|
139.7
|
60.6
|
43.4 %
|
|
200.0
|
43.2 %
|
|
|
Professional service
and other
|
100.8
|
93.6
|
7.2
|
7.7 %
|
|
100.2
|
7.0 %
|
|
|
Total
revenues
|
$1,447.1
|
$1,244.7
|
$202.5
|
16.3 %
|
|
$1,443.7
|
16.0 %
|
|
|
GAAP-based operating
income
|
$227.1
|
$64.0
|
$163.1
|
254.9 %
|
|
N/A
|
N/A
|
|
|
Non-GAAP-based
operating income (1)
|
$431.6
|
$334.6
|
$97.0
|
29.0 %
|
|
$429.7
|
28.4 %
|
|
|
GAAP-based net income
attributable to OpenText
|
$98.3
|
$57.6
|
$40.7
|
70.8 %
|
|
N/A
|
N/A
|
|
|
GAAP-based EPS,
diluted
|
$0.36
|
$0.21
|
$0.15
|
71.4 %
|
|
N/A
|
N/A
|
|
|
Non-GAAP-based EPS,
diluted (1)(2)
|
$0.94
|
$0.73
|
$0.21
|
28.8 %
|
|
$0.94
|
28.8 %
|
|
|
Adjusted
EBITDA (1)
|
$463.7
|
$365.1
|
$98.6
|
27.0 %
|
|
$461.5
|
26.4 %
|
|
|
Operating cash
flows
|
$384.7
|
$336.8
|
$47.9
|
14.2 %
|
|
N/A
|
N/A
|
|
|
Free cash flows
(1)
|
$348.2
|
$305.5
|
$42.6
|
13.9 %
|
|
N/A
|
N/A
|
|
|
Summary of YTD
Results
|
|
|
|
|
|
|
|
|
|
(In millions, except
per share data)
|
FY'24 YTD
|
FY'23 YTD
|
$
Change
|
% Change
|
|
FY'24
YTD in CC*
|
% Change
in CC*
|
|
|
Revenues:
|
|
|
|
|
|
|
|
|
|
Cloud services and
subscriptions
|
$1,355.6
|
$1,248.8
|
$106.9
|
8.6 %
|
|
$1,349.1
|
8.0 %
|
|
|
Customer
support
|
2,084.9
|
1,209.7
|
875.2
|
72.3 %
|
|
2,059.8
|
70.3 %
|
|
|
Total annual
recurring revenues**
|
$3,440.5
|
$2,458.5
|
$982.0
|
39.9 %
|
|
$3,408.9
|
38.7 %
|
|
|
License
|
662.6
|
310.2
|
352.4
|
113.6 %
|
|
654.3
|
110.9 %
|
|
|
Professional service
and other
|
304.3
|
225.4
|
78.8
|
35.0 %
|
|
299.3
|
32.8 %
|
|
|
Total
revenues
|
$4,407.4
|
$2,994.2
|
$1,413.3
|
47.2 %
|
|
$4,362.4
|
45.7 %
|
|
|
GAAP-based operating
income
|
$693.8
|
$395.0
|
$298.8
|
75.7 %
|
|
N/A
|
N/A
|
|
|
Non-GAAP-based
operating income (1)
|
$1,425.3
|
$933.6
|
$491.7
|
52.7 %
|
|
$1,394.1
|
49.3 %
|
|
|
GAAP-based net income
attributable to OpenText
|
$216.9
|
$199.1
|
$17.7
|
8.9 %
|
|
N/A
|
N/A
|
|
|
GAAP-based EPS,
diluted
|
$0.80
|
$0.74
|
$0.06
|
8.1 %
|
|
N/A
|
N/A
|
|
|
Non-GAAP-based EPS,
diluted (1)(2)
|
$3.19
|
$2.39
|
$0.80
|
33.5 %
|
|
$3.10
|
29.7 %
|
|
|
Adjusted
EBITDA (1)
|
$1,524.8
|
$1,010.1
|
$514.7
|
51.0 %
|
|
$1,492.3
|
47.7 %
|
|
|
Operating cash
flows
|
$782.5
|
$663.9
|
$118.6
|
17.9 %
|
|
N/A
|
N/A
|
|
|
Free cash flows
(1)
|
$663.2
|
$564.1
|
$99.0
|
17.6 %
|
|
N/A
|
N/A
|
|
|
|
|
(1)
|
Please see Note 2 "Use
of Non-GAAP Financial Measures" to the condensed consolidated
financial statements below.
|
|
|
|
(2)
|
Please also see Note 14
to the Company's Fiscal 2018 Consolidated Financial Statements on
Form 10-K. Reflective of the amount of net tax benefit arising from
the internal reorganization assumed to be allocable to the current
period based on the forecasted utilization period.
|
|
|
|
Note: Individual line
items in tables may be adjusted by non-material amounts to enable
totals to align to published financial statements.
|
|
|
*CC: Constant currency
for this purpose is defined as the current period reported
revenues/expenses/earnings represented at the prior comparative
period's foreign exchange rate.
|
|
|
**Annual recurring
revenue is defined as the sum of Cloud services and subscriptions
revenue and Customer support revenue.
|
Dividend
As part of our quarterly, non-cumulative cash dividend program,
the Board declared on April 30, 2024, a cash dividend of
$0.25 per common share. The record
date for this dividend is May 31, 2024 and the payment date is
June 18, 2024. OpenText believes strongly in returning value
to its shareholders and intends to maintain its dividend program.
Any future declarations of dividends and the establishment of
future record and payment dates are all subject to the final
determination and discretion of the Board of Directors.
Share Repurchase Plan/Normal Course Issuer Bid
OpenText also announced today the reinstatement of its share
repurchase plan and that it intends to purchase for cancellation in
open market transactions, from time to time over the next 12
months, if considered advisable, up to an aggregate of $250 million of its common shares on the Toronto
Stock Exchange (the "TSX"), the NASDAQ Global Select Market and/or
other exchanges and alternative trading systems in Canada and/or the
United States, if eligible, subject to applicable law and
stock exchange rules (the "Repurchase Plan"). The price that
OpenText will pay for common shares in open market transactions
will be the market price at the time of purchase or such other
price as may be permitted by applicable law or stock exchange
rules.
The Company's determination to reinstate the Repurchase Plan
reflects its confidence in its operational execution and expanding
cash flows, with the Repurchase Plan being additive to the
Company's overall strategic capital allocation, complementing its
ongoing M&A activity and dividend program. The Repurchase Plan
will be effected in accordance with Rule 10b-18 under the U.S. Securities Exchange Act of
1934, as amended. Purchases made under the Repurchase Plan
may commence on May 7, 2024 and will
expire on May 6, 2025, and will be
subject to a limit of 13,643,472 shares (representing 5% of the
Company's issued and outstanding common shares as of April 26, 2024). All common shares purchased by
OpenText pursuant to the Repurchase Plan will be cancelled.
Normal Course Issuer Bid
The Company has reinstated its normal course issuer bid (the
"NCIB") in order to provide it with a means to execute purchases
over the TSX as part of the overall Repurchase Plan.
The TSX has approved the Company's notice of intention to
commence the NCIB pursuant to which the Company may purchase common
shares over the TSX for the period commencing May 7, 2024 until May 6,
2025 in accordance with the TSX's normal course issuer bid
rules, including that such purchases are to be made at prevailing
market prices or as otherwise permitted. Under the rules of the
TSX, the maximum number of shares that may be purchased in this
period is 13,643,472 shares (representing 5% of the Company's
issued and outstanding common shares as of April 26, 2024), and the maximum number of shares
that may be purchased on a single day is 138,175 common shares,
which is 25% of 552,700 (the average daily trading volume for the
common shares on the TSX for the six months ended March 31, 2024), subject to certain exceptions
for block purchases, subject in any case to the volume and other
limitations under Rule 10b-18.
The Company did not renew its NCIB that expired on November 11, 2022, and therefore has not
purchased any common shares under a NCIB within the past 12
months.
Quarterly Business Highlights
- OpenText completes divestment of its AMC business to Rocket
Software for $2.275 billion in cash
before taxes, fees and other adjustments
- OpenText announced Cloud Editions (CE) 24.2 at OpenText World
Europe, unveiling the latest information management solutions
powered by AI
- Key customer wins in the quarter include: Akamai Technologies,
BAE Systems, Commercial Vehicle Group, Insecurity Inc., Kuveyt
Turk, Lotte Non-Life Insurance Co, MAN Energy Solutions, Merck,
Metso, Nestle Operational Services Worldwide, Redcentric Plc,
Serica Energy, Shell International Petroleum, The Standard and
Tyson Foods
- OpenText strengthens leadership team and appoints three
presidents, including Todd Cione as
President WW Sales
- OpenText earned prestigious Environment, Social and Governance
(ESG) recognitions and achievements, including qualifying as a
constituent of the Dow Jones Sustainability North America Index
(DJSI) for the second year in a row as well as receiving its second
consecutive "AAA" rating from MSCI
- OpenText named a member of the U.S. Government public-private
cybersecurity initiative, Joint Cyber Defense Collaborative (JCDC)
to strengthen U.S. government cybersecurity
- OpenText announced the second generation of its advanced
cybersecurity auditing technology, Fortify Audit Assistant,
debuting at the inaugural OpenText Security Summit 2024
|
Summary of Quarterly
Results
|
|
|
|
|
|
|
|
|
Q3
FY'24
|
Q2
FY'24
|
Q3
FY'23
|
% Change
(Q3 FY'24 vs
Q2 FY'24)
|
|
% Change
(Q3 FY'24 vs
Q3 FY'23)
|
|
|
Revenue
(millions)
|
$1,447.1
|
$1,534.9
|
$1,244.7
|
(5.7) %
|
|
16.3 %
|
|
|
GAAP-based gross
margin
|
73.0 %
|
73.6 %
|
70.3 %
|
(60)
|
bps
|
270
|
bps
|
|
Non-GAAP-based gross
margin (1)
|
76.7 %
|
78.6 %
|
75.8 %
|
(190)
|
bps
|
90
|
bps
|
|
GAAP-based earnings
(loss) per share, diluted
|
$0.36
|
$0.14
|
$0.21
|
157.1 %
|
|
71.4 %
|
|
|
Non-GAAP-based EPS,
diluted (1)(2)
|
$0.94
|
$1.24
|
$0.73
|
(24.2) %
|
|
28.8 %
|
|
|
|
|
(1)
|
Please see Note 2 "Use
of Non-GAAP Financial Measures" to the condensed consolidated
financial statements below.
|
|
|
|
(2)
|
Please also see Note 14
to the Company's Fiscal 2018 Consolidated Financial Statements on
Form 10-K. Reflective of the amount of net tax benefit arising from
the internal reorganization assumed to be allocable to the current
period based on the forecasted utilization period.
|
Conference Call Information
OpenText posted an investor presentation on its Investor
Relations website and invites the public to listen to the earnings
conference call webcast today at 5:00 p.m.
ET (2:00 p.m. PT) from the
Investor Relations section of the Company's website at
https://investors.opentext.com. To join the webcast instantly, use
this webcast link. A webcast replay will be available shortly
following completion of the live call.
Please see below note (2) for a reconciliation of
U.S. GAAP-based financial measures used in this press release
to Non-GAAP-based financial measures.
About OpenText
OpenText, The Information Company™, enables organizations to
gain insight through market leading information management
solutions, powered by OpenText Cloud Editions. For more information
about OpenText (NASDAQ: OTEX, TSX: OTEX) visit opentext.com.
Cautionary Statement Regarding Forward-Looking
Statements
Certain statements in this press release, including statements
about Open Text Corporation ("OpenText" or "the Company") on
growth, profitability and future of Information Management; future
cloud booking growth and cloud demand; future organic growth
initiatives and deployment of capital; intention to maintain a
dividend program, including any targeted annualized dividend;
expected size and timing of the Repurchase Plan, including
execution thereof; organic growth of Micro Focus; the
expected impact of the divestiture of the AMC business; future tax
rates; new platform and product offerings and associated benefits
to customers; continued strength in enterprise cloud businesses and
our new OpenText Aviator™ AI products, including our AI strategy
and vision; and other matters, which may contain words such as
"anticipates", "expects", "intends", "plans", "believes", "seeks",
"estimates", "may", "could", "would", "might", "will" and
variations of these words or similar expressions are intended to
identify forward-looking statements or information under applicable
securities laws (forward-looking statements). In addition, any
statements or information that refer to expectations, beliefs,
plans, projections, objectives, performance or other
characterizations of future events or circumstances, including any
underlying assumptions, are forward-looking statements, and are
based on our current expectations, forecasts and projections about
the operating environment, economies and markets in which we
operate. Forward-looking statements reflect our current estimates,
beliefs and assumptions, which are based on management's perception
of historic trends, current conditions and expected future
developments, as well as other factors it believes are appropriate
in the circumstances, such as certain assumptions about the
economy, as well as market, financial and operational assumptions.
Management's estimates, beliefs and assumptions are inherently
subject to significant business, economic, competitive and other
uncertainties and contingencies regarding future events and, as
such, are subject to change. We can give no assurance that such
estimates, beliefs and assumptions will prove to be correct. Future
declarations of dividends are also subject to the final
determination and discretion of the Board of Directors, and an
annualized dividend has not been approved or declared by the Board.
Forward-looking statements involve known and unknown risks and
uncertainties such as those relating to: all statements regarding
the expected future financial position, results of operations, cash
flows, dividends, share buybacks, financing plans, business
strategy, budgets, capital expenditures, competitive positions,
growth opportunities, plans and objectives of management, including
any anticipated synergy benefits; incurring unanticipated costs,
delays or difficulties, including as a result of the integration of
Micro Focus' operations and programs and the divestiture of the AMC
business; and our ability to develop, protect and maintain our
intellectual property and proprietary technology and to operate
without infringing on the proprietary rights of others. We rely on
a combination of copyright, patent, trademark and trade secret
laws, non-disclosure agreements and other contractual provisions to
establish and maintain our proprietary rights, which are important
to our success. From time to time, we may also enforce our
intellectual property rights through litigation in line with our
strategic and business objectives. The actual results that OpenText
achieves may differ materially from any forward-looking statements.
For additional information with respect to risks and other factors
which could occur, see the Company's Annual Report on Form 10-K,
Quarterly Reports on Form 10-Q and other securities filings with
the Securities and Exchange Commission (SEC) and other securities
regulators. Readers are cautioned not to place undue reliance upon
any such forward-looking statements, which speak only as of the
date made. Unless otherwise required by applicable securities laws,
the Company disclaims any intention or obligation to update or
revise any forward-looking statements, whether as a result of new
information, future events or otherwise. Further, readers should
note that we may announce information using our website, press
releases, securities law filings, public conference calls, webcasts
and the social media channels identified on the Investors section
of our website (https://investors.opentext.com). Such social media
channels may include the Company's or our CEO's blog, X, formerly
known as Twitter, account or LinkedIn account. The information
posted through such channels may be material. Accordingly, readers
should monitor such channels in addition to our other forms of
communication.
OTEX - F
Copyright ©2024 Open Text. OpenText is a trademark or registered
trademark of Open Text. The list of trademarks is not exhaustive of
other trademarks. Registered trademarks, product names, company
names, brands and service names mentioned herein are property of
Open Text. All rights reserved. For more information, visit:
https://www.opentext.com/about/copyright-information.
|
OPEN TEXT
CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands of U.S. dollars, except share
data)
|
|
|
March 31,
2024
|
|
June 30,
2023
|
|
ASSETS
|
(unaudited)
|
|
|
|
Cash and cash
equivalents
|
$
1,125,323
|
|
$
1,231,625
|
|
Accounts receivable
trade, net of allowance for credit losses of $11,390 as of
March 31, 2024 and $13,828 as of June 30, 2023
|
654,190
|
|
682,517
|
|
Contract
assets
|
66,124
|
|
71,196
|
|
Income taxes
recoverable
|
14,119
|
|
68,161
|
|
Prepaid expenses and
other current assets
|
212,261
|
|
221,732
|
|
Assets held for
sale
|
2,120,311
|
|
—
|
|
Total current
assets
|
4,192,328
|
|
2,275,231
|
|
Property and
equipment
|
346,073
|
|
356,904
|
|
Operating lease right
of use assets
|
229,327
|
|
285,723
|
|
Long-term contract
assets
|
42,659
|
|
64,553
|
|
Goodwill
|
7,528,147
|
|
8,662,603
|
|
Acquired intangible
assets
|
2,624,117
|
|
4,080,879
|
|
Deferred tax
assets
|
1,019,878
|
|
926,719
|
|
Other assets
|
314,580
|
|
342,318
|
|
Long-term income taxes
recoverable
|
95,567
|
|
94,270
|
|
Total
assets
|
$
16,392,676
|
|
$
17,089,200
|
|
LIABILITIES AND
SHAREHOLDERS' EQUITY
|
|
|
|
|
Current
liabilities:
|
|
|
|
|
Accounts payable and
accrued liabilities
|
$
898,611
|
|
$
996,261
|
|
Current portion of
long-term debt
|
45,850
|
|
320,850
|
|
Operating lease
liabilities
|
80,960
|
|
91,425
|
|
Deferred
revenues
|
1,583,638
|
|
1,721,781
|
|
Income taxes
payable
|
150,990
|
|
89,297
|
|
Liabilities held for
sale
|
228,106
|
|
—
|
|
Total current
liabilities
|
2,988,155
|
|
3,219,614
|
|
Long-term
liabilities:
|
|
|
|
|
Accrued
liabilities
|
48,031
|
|
51,961
|
|
Pension liability,
net
|
128,955
|
|
126,312
|
|
Long-term
debt
|
8,305,670
|
|
8,562,096
|
|
Long-term operating
lease liabilities
|
224,984
|
|
271,579
|
|
Long-term deferred
revenues
|
170,544
|
|
217,771
|
|
Long-term income taxes
payable
|
154,679
|
|
193,808
|
|
Deferred tax
liabilities
|
241,013
|
|
423,955
|
|
Total long-term
liabilities
|
9,273,876
|
|
9,847,482
|
|
Shareholders'
equity:
|
|
|
|
|
Share capital and
additional paid-in capital
|
|
|
|
|
272,561,685
and 270,902,571 Common Shares issued and
outstanding at March 31, 2024 and June 30, 2023,
respectively; authorized Common Shares: unlimited
|
2,276,758
|
|
2,176,947
|
|
Accumulated other
comprehensive income (loss)
|
(73,045)
|
|
(53,559)
|
|
Retained
earnings
|
2,059,060
|
|
2,048,984
|
|
Treasury stock, at
cost (3,376,994 and 3,536,375 shares at March 31, 2024 and
June 30, 2023, respectively)
|
(133,606)
|
|
(151,597)
|
|
Total OpenText
shareholders' equity
|
4,129,167
|
|
4,020,775
|
|
Non-controlling
interests
|
1,478
|
|
1,329
|
|
Total shareholders'
equity
|
4,130,645
|
|
4,022,104
|
|
Total liabilities
and shareholders' equity
|
$
16,392,676
|
|
$
17,089,200
|
|
OPEN TEXT
CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF
INCOME
(In thousands of U.S. dollars, except share
and per share data)
(unaudited)
|
|
|
Three Months
Ended
March
31,
|
|
Nine Months
Ended
March
31,
|
|
2024
|
|
2023
|
|
2024
|
|
2023
|
|
Revenues:
|
|
|
|
|
|
|
|
|
Cloud services and
subscriptions
|
$
454,528
|
|
$
435,449
|
|
$
1,355,633
|
|
$
1,248,774
|
|
Customer
support
|
691,441
|
|
575,884
|
|
2,084,916
|
|
1,209,743
|
|
License
|
200,363
|
|
139,722
|
|
662,627
|
|
310,230
|
|
Professional service
and other
|
100,799
|
|
93,619
|
|
304,252
|
|
225,403
|
|
Total
revenues
|
1,447,131
|
|
1,244,674
|
|
4,407,428
|
|
2,994,150
|
|
Cost of
revenues:
|
|
|
|
|
|
|
|
|
Cloud services and
subscriptions
|
186,400
|
|
157,658
|
|
537,960
|
|
423,771
|
|
Customer
support
|
74,639
|
|
67,067
|
|
223,027
|
|
123,010
|
|
License
|
6,769
|
|
3,840
|
|
16,591
|
|
10,461
|
|
Professional service
and other
|
75,455
|
|
78,526
|
|
230,836
|
|
186,390
|
|
Amortization of
acquired technology-based intangible assets
|
48,094
|
|
62,639
|
|
195,702
|
|
146,139
|
|
Total cost of
revenues
|
391,357
|
|
369,730
|
|
1,204,116
|
|
889,771
|
|
Gross profit
|
1,055,774
|
|
874,944
|
|
3,203,312
|
|
2,104,379
|
|
Operating
expenses:
|
|
|
|
|
|
|
|
|
Research and
development
|
234,022
|
|
210,731
|
|
688,679
|
|
430,629
|
|
Sales and
marketing
|
296,249
|
|
271,013
|
|
848,313
|
|
615,354
|
|
General and
administrative
|
145,924
|
|
127,047
|
|
450,399
|
|
282,724
|
|
Depreciation
|
32,109
|
|
30,577
|
|
99,615
|
|
76,609
|
|
Amortization of
acquired customer-based intangible assets
|
100,841
|
|
97,237
|
|
334,958
|
|
205,121
|
|
Special charges
(recoveries)
|
19,561
|
|
74,350
|
|
87,521
|
|
98,937
|
|
Total operating
expenses
|
828,706
|
|
810,955
|
|
2,509,485
|
|
1,709,374
|
|
Income
from operations
|
227,068
|
|
63,989
|
|
693,827
|
|
395,005
|
|
Other income (expense),
net
|
9,950
|
|
85,706
|
|
(38,664)
|
|
59,824
|
|
Interest and other
related expense, net
|
(132,663)
|
|
(104,502)
|
|
(413,719)
|
|
(183,599)
|
|
Income
before income taxes
|
104,355
|
|
45,193
|
|
241,444
|
|
271,230
|
|
Provision for (recovery
of) income taxes
|
6,028
|
|
(12,420)
|
|
24,434
|
|
71,979
|
|
Net income for the
period
|
$
98,327
|
|
$
57,613
|
|
$
217,010
|
|
$
199,251
|
|
Net (income)
attributable to non-controlling interests
|
(42)
|
|
(57)
|
|
(149)
|
|
(138)
|
|
Net income attributable
to OpenText
|
$
98,285
|
|
$
57,556
|
|
$
216,861
|
|
$
199,113
|
|
Earnings per
share—basic attributable to OpenText
|
$
0.36
|
|
$
0.21
|
|
$
0.80
|
|
$
0.74
|
|
Earnings per
share—diluted attributable to OpenText
|
$
0.36
|
|
$
0.21
|
|
$
0.80
|
|
$
0.74
|
|
Weighted average number
of Common Shares outstanding—basic (in '000's)
|
272,272
|
|
270,441
|
|
271,671
|
|
270,143
|
|
Weighted average number
of Common Shares outstanding—diluted (in '000's)
|
273,033
|
|
270,650
|
|
272,349
|
|
270,173
|
|
OPEN TEXT
CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF
COMPREHENSIVE INCOME
(In thousands of U.S.
dollars)
(unaudited)
|
|
|
Three Months
Ended
March
31,
|
|
Nine Months
Ended
March 31,
|
|
2024
|
|
2023
|
|
2024
|
|
2023
|
|
Net income for the
period
|
$
98,327
|
|
$
57,613
|
|
$
217,010
|
|
$
199,251
|
|
Other comprehensive
income (loss)—net of tax:
|
|
|
|
|
|
|
|
|
Net foreign currency
translation adjustments
|
11,765
|
|
(28,640)
|
|
(18,614)
|
|
(25,587)
|
|
Unrealized gain (loss)
on cash flow hedges:
|
|
|
|
|
|
|
|
|
Unrealized gain (loss)
- net of tax (1)
|
(1,634)
|
|
38
|
|
(1,953)
|
|
(2,343)
|
|
(Gain) loss
reclassified into net income - net of tax (2)
|
118
|
|
699
|
|
455
|
|
2,388
|
|
Unrealized gain (loss)
on available-for-sale financial assets:
|
|
|
|
|
|
|
|
|
Unrealized gain (loss)
- net of tax (3)
|
90
|
|
(900)
|
|
319
|
|
(900)
|
|
Actuarial gain (loss)
relating to defined benefit pension plans:
|
|
|
|
|
|
|
|
|
Actuarial gain (loss)
- net of tax (4)
|
—
|
|
(3,318)
|
|
(110)
|
|
878
|
|
Amortization of
actuarial (gain) loss into net income - net of tax
(5)
|
115
|
|
35
|
|
417
|
|
109
|
|
Total other
comprehensive income (loss) net, for the period
|
10,454
|
|
(32,086)
|
|
(19,486)
|
|
(25,455)
|
|
Total comprehensive
income
|
108,781
|
|
25,527
|
|
197,524
|
|
173,796
|
|
Comprehensive income
attributable to non-controlling interests
|
(42)
|
|
(57)
|
|
(149)
|
|
(138)
|
|
Total comprehensive
income attributable to OpenText
|
$
108,739
|
|
$
25,470
|
|
$
197,375
|
|
$
173,658
|
|
|
|
|
|
|
|
|
(1)
|
Net of tax expense
(recovery) of ($589) and $15 for the three months ended March 31,
2024 and 2023, respectively; $(704) and $(844) for the nine months
ended March 31, 2024 and 2023, respectively.
|
|
(2)
|
Net of tax expense
(recovery) of $42 and $252 for the three months ended March 31,
2024 and 2023, respectively; $163 and $861 for the nine months
ended March 31, 2024 and 2023, respectively.
|
|
(3)
|
Net of tax expense
(recovery) of $24 and ($238) for the three months ended March 31,
2024 and 2023, respectively; $84 and ($238) for the nine months
ended March 31, 2024 and 2023, respectively.
|
|
(4)
|
Net of tax expense
(recovery) of $— and $(892) for the three months ended March 31,
2024 and 2023, respectively; $110 and $318 for the nine months
ended March 31, 2024 and 2023, respectively.
|
|
(5)
|
Net of tax expense
(recovery) of $50 and $25 for the three months ended March 31, 2024
and 2023, respectively; $175 and $76 for the nine months ended
March 31, 2024 and 2023, respectively.
|
|
OPEN TEXT
CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF
SHAREHOLDERS' EQUITY
(In thousands of U.S. dollars
and shares)
(unaudited)
|
|
|
Three Months Ended
March 31, 2024
|
|
Common Shares
and
Additional Paid in Capital
|
|
Treasury
Stock
|
|
Retained
Earnings
|
|
Accumulated
Other
Comprehensive
Income
|
|
Non-Controlling
Interests
|
|
Total
|
|
Shares
|
|
Amount
|
|
Shares
|
|
Amount
|
|
|
Balance as of
December 31, 2023
|
271,855
|
|
$
2,261,856
|
|
(4,400)
|
|
$
(179,089)
|
|
$
2,029,643
|
|
$
(83,499)
|
|
$
1,436
|
|
$
4,030,347
|
|
Issuance of Common
Shares
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Under employee stock
option plans
|
517
|
|
17,315
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
17,315
|
|
Under employee stock
purchase plans
|
190
|
|
6,698
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
6,698
|
|
Share-based
compensation
|
—
|
|
35,947
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
35,947
|
|
Issuance of treasury
stock
|
—
|
|
(45,058)
|
|
1,023
|
|
45,483
|
|
(425)
|
|
—
|
|
—
|
|
—
|
|
Dividends
declared
($0.25 per Common
Share)
|
—
|
|
—
|
|
—
|
|
—
|
|
(68,443)
|
|
—
|
|
—
|
|
(68,443)
|
|
Other comprehensive
income (loss) - net
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
10,454
|
|
—
|
|
10,454
|
|
Net income for the
period
|
—
|
|
—
|
|
—
|
|
—
|
|
98,285
|
|
—
|
|
42
|
|
98,327
|
|
Balance as of
March 31, 2024
|
272,562
|
|
$
2,276,758
|
|
(3,377)
|
|
$
(133,606)
|
|
$
2,059,060
|
|
$
(73,045)
|
|
$
1,478
|
|
$
4,130,645
|
|
|
Three Months Ended
March 31, 2023
|
|
Common Shares
and
Additional Paid in Capital
|
|
Treasury
Stock
|
|
Retained
Earnings
|
|
Accumulated
Other
Comprehensive
Income
|
|
Non-Controlling
Interests
|
|
Total
|
|
Shares
|
|
Amount
|
|
Shares
|
|
Amount
|
|
|
Balance as of
December 31, 2022
|
270,235
|
|
$
2,092,079
|
|
(3,295)
|
|
$
(142,126)
|
|
$
2,171,236
|
|
$
(1,028)
|
|
$
1,223
|
|
$
4,121,384
|
|
Issuance of Common
Shares
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Under employee stock
option plans
|
16
|
|
479
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
479
|
|
Under employee stock
purchase plans
|
228
|
|
5,776
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
5,776
|
|
Share-based
compensation
|
—
|
|
36,505
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
36,505
|
|
Issuance of treasury
stock
|
—
|
|
(4,496)
|
|
79
|
|
3,426
|
|
—
|
|
—
|
|
—
|
|
(1,070)
|
|
Dividends
declared
($0.24299 per Common
Share)
|
—
|
|
—
|
|
—
|
|
—
|
|
(65,454)
|
|
—
|
|
—
|
|
(65,454)
|
|
Other comprehensive
income (loss) - net
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
(32,086)
|
|
—
|
|
(32,086)
|
|
Net income for the
period
|
—
|
|
—
|
|
—
|
|
—
|
|
57,556
|
|
—
|
|
57
|
|
57,613
|
|
Balance as of
March 31, 2023
|
270,479
|
|
$
2,130,343
|
|
(3,216)
|
|
$
(138,700)
|
|
$
2,163,338
|
|
$
(33,114)
|
|
$
1,280
|
|
$
4,123,147
|
|
OPEN TEXT
CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF
SHAREHOLDERS' EQUITY
(In thousands of U.S. dollars
and shares)
(unaudited)
|
|
|
Nine Months Ended
March 31, 2024
|
|
Common Shares
and
Additional Paid in Capital
|
|
Treasury
Stock
|
|
Retained
Earnings
|
|
Accumulated
Other
Comprehensive
Income
|
|
Non-Controlling
Interests
|
|
Total
|
|
Shares
|
|
Amount
|
|
Shares
|
|
Amount
|
|
|
Balance as of June
30, 2023
|
270,903
|
|
$
2,176,947
|
|
(3,536)
|
|
$
(151,597)
|
|
$
2,048,984
|
|
$
(53,559)
|
|
$
1,329
|
|
$
4,022,104
|
|
Issuance of Common
Shares
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Under employee stock
option plans
|
942
|
|
31,318
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
31,318
|
|
Under employee stock
purchase plans
|
717
|
|
23,709
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
23,709
|
|
Share-based
compensation
|
—
|
|
112,944
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
112,944
|
|
Purchase of treasury
stock
|
—
|
|
—
|
|
(1,400)
|
|
(53,085)
|
|
—
|
|
—
|
|
—
|
|
(53,085)
|
|
Issuance of treasury
stock
|
—
|
|
(68,160)
|
|
1,559
|
|
71,076
|
|
(2,916)
|
|
—
|
|
—
|
|
—
|
|
Dividends
declared
($0.75 per Common
Share)
|
—
|
|
—
|
|
—
|
|
—
|
|
(203,869)
|
|
—
|
|
—
|
|
(203,869)
|
|
Other comprehensive
income (loss) - net
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
(19,486)
|
|
—
|
|
(19,486)
|
|
Net income for the
period
|
—
|
|
—
|
|
—
|
|
—
|
|
216,861
|
|
—
|
|
149
|
|
217,010
|
|
Balance as of
March 31, 2024
|
272,562
|
|
$
2,276,758
|
|
(3,377)
|
|
$
(133,606)
|
|
$
2,059,060
|
|
$
(73,045)
|
|
$
1,478
|
|
$
4,130,645
|
|
|
Nine Months Ended
March 31, 2023
|
|
Common Shares
and
Additional Paid in Capital
|
|
Treasury
Stock
|
|
Retained
Earnings
|
|
Accumulated
Other
Comprehensive
Income
|
|
Non-Controlling
Interests
|
|
Total
|
|
Shares
|
|
Amount
|
|
Shares
|
|
Amount
|
|
|
Balance as of
June 30, 2022
|
269,523
|
|
$
2,038,674
|
|
(3,706)
|
|
$
(159,966)
|
|
$
2,160,069
|
|
$
(7,659)
|
|
$
1,142
|
|
$
4,032,260
|
|
Issuance of Common
Shares
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Under employee stock
option plans
|
88
|
|
2,473
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
2,473
|
|
Under employee stock
purchase plans
|
868
|
|
22,997
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
22,997
|
|
Share-based
compensation
|
—
|
|
88,535
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
88,535
|
|
Issuance of treasury
stock
|
—
|
|
(22,336)
|
|
490
|
|
21,266
|
|
—
|
|
—
|
|
—
|
|
(1,070)
|
|
Dividends
declared
($0.72897 per Common
Share)
|
—
|
|
—
|
|
—
|
|
—
|
|
(195,844)
|
|
—
|
|
—
|
|
(195,844)
|
|
Other comprehensive
income (loss) - net
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
(25,455)
|
|
—
|
|
(25,455)
|
|
Net income for the
period
|
—
|
|
—
|
|
—
|
|
—
|
|
199,113
|
|
—
|
|
138
|
|
199,251
|
|
Balance as of
March 31, 2023
|
270,479
|
|
$
2,130,343
|
|
(3,216)
|
|
$
(138,700)
|
|
$
2,163,338
|
|
$
(33,114)
|
|
$
1,280
|
|
$
4,123,147
|
|
OPEN TEXT
CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH
FLOWS
(In thousands of U.S.
dollars)
(unaudited)
|
|
|
Three Months
Ended
March
31,
|
|
Nine Months
Ended
March
31,
|
|
2024
|
|
2023
|
|
2024
|
|
2023
|
|
Cash flows from
operating activities:
|
|
|
|
|
|
|
|
|
Net income for the
period
|
$
98,327
|
|
$
57,613
|
|
$
217,010
|
|
$
199,251
|
|
Adjustments to
reconcile net income to net cash provided by operating
activities:
|
|
|
|
|
|
|
|
|
Depreciation and
amortization of intangible assets
|
181,044
|
|
190,453
|
|
630,275
|
|
427,869
|
|
Share-based
compensation expense
|
36,042
|
|
36,368
|
|
113,312
|
|
88,398
|
|
Pension
expense
|
3,196
|
|
2,362
|
|
9,579
|
|
5,806
|
|
Amortization of debt
discount and issuance costs
|
6,766
|
|
5,330
|
|
19,587
|
|
8,496
|
|
Write-off of right of
use assets
|
4,278
|
|
3,344
|
|
15,241
|
|
7,119
|
|
Loss on extinguishment
of debt
|
10,803
|
|
21
|
|
10,803
|
|
8,152
|
|
Loss on sale and write
down of property and equipment, net
|
(162)
|
|
1,307
|
|
1,715
|
|
1,428
|
|
Deferred
taxes
|
(72,144)
|
|
(131,898)
|
|
(249,174)
|
|
(178,700)
|
|
Share in net loss of
equity investees
|
835
|
|
4,724
|
|
19,013
|
|
11,547
|
|
Changes in financial
instruments
|
(16,671)
|
|
102,713
|
|
3,551
|
|
112,567
|
|
Changes in operating
assets and liabilities:
|
|
|
|
|
|
|
|
|
Accounts
receivable
|
111,772
|
|
167,866
|
|
51,487
|
|
141,269
|
|
Contract
assets
|
(24,859)
|
|
(11,442)
|
|
(71,486)
|
|
(29,896)
|
|
Prepaid expenses and
other current assets
|
728
|
|
(62,121)
|
|
4,717
|
|
(65,186)
|
|
Income taxes
|
16,943
|
|
87,277
|
|
75,676
|
|
131,517
|
|
Accounts payable and
accrued liabilities
|
(24,731)
|
|
(146,638)
|
|
(72,887)
|
|
(137,674)
|
|
Deferred
revenue
|
56,840
|
|
(13,498)
|
|
14,338
|
|
(42,631)
|
|
Other assets
|
650
|
|
54,708
|
|
5,868
|
|
(5,998)
|
|
Operating lease assets
and liabilities, net
|
(4,960)
|
|
(11,714)
|
|
(16,154)
|
|
(19,430)
|
|
Net cash provided by
operating activities
|
384,697
|
|
336,775
|
|
782,471
|
|
663,904
|
|
Cash flows from
investing activities:
|
|
|
|
|
|
|
|
|
Additions of property
and equipment
|
(36,537)
|
|
(31,233)
|
|
(119,316)
|
|
(99,772)
|
|
Micro Focus
acquisition
|
—
|
|
(5,655,606)
|
|
(9,272)
|
|
(5,655,606)
|
|
Realized gain on
financial instruments
|
—
|
|
131,248
|
|
—
|
|
131,248
|
|
Proceeds from net
investment hedge derivative contracts
|
2,490
|
|
—
|
|
4,456
|
|
—
|
|
Other investing
activities
|
6,315
|
|
—
|
|
(468)
|
|
(873)
|
|
Net cash used in
investing activities
|
(27,732)
|
|
(5,555,591)
|
|
(124,600)
|
|
(5,625,003)
|
|
Cash flows from
financing activities:
|
|
|
|
|
|
|
|
|
Proceeds from issuance
of Common Shares from exercise of stock options and ESPP
|
27,770
|
|
9,399
|
|
57,027
|
|
25,172
|
|
Proceeds from long-term
debt and Revolver
|
—
|
|
3,927,450
|
|
—
|
|
4,927,450
|
|
Repayment of long-term
debt and Revolver
|
(186,463)
|
|
(11,463)
|
|
(559,389)
|
|
(16,463)
|
|
Debt issuance
costs
|
—
|
|
(65,559)
|
|
(2,792)
|
|
(77,209)
|
|
Purchase of treasury
stock
|
—
|
|
—
|
|
(53,085)
|
|
—
|
|
Payments of dividends
to shareholders
|
(67,293)
|
|
(64,919)
|
|
(200,672)
|
|
(194,481)
|
|
Other financing
activities
|
(1,447)
|
|
(2,193)
|
|
(1,447)
|
|
(2,193)
|
|
Net cash provided by
(used in) financing activities
|
(227,433)
|
|
3,792,715
|
|
(760,358)
|
|
4,662,276
|
|
Foreign exchange gain
(loss) on cash held in foreign currencies
|
(7,521)
|
|
2,903
|
|
(3,982)
|
|
2,632
|
|
Income
(decrease) in cash, cash
equivalents and restricted cash during the period
|
122,011
|
|
(1,423,198)
|
|
(106,469)
|
|
(296,191)
|
|
Cash, cash equivalents
and restricted cash at beginning of the period
|
1,005,472
|
|
2,822,918
|
|
1,233,952
|
|
1,695,911
|
|
Cash, cash equivalents
and restricted cash at end of the period
|
$ 1,127,483
|
|
$ 1,399,720
|
|
$ 1,127,483
|
|
$ 1,399,720
|
|
OPEN TEXT
CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH
FLOWS
(In thousands of U.S.
dollars)
(unaudited)
|
|
|
Reconciliation of
cash, cash equivalents and restricted cash:
|
March 31,
2024
|
|
March 31,
2023
|
|
Cash and cash
equivalents
|
$
1,125,323
|
|
$
1,396,817
|
|
Restricted cash
(1)
|
2,160
|
|
2,903
|
|
Total cash, cash
equivalents and restricted cash
|
$
1,127,483
|
|
$
1,399,720
|
|
|
|
|
|
(1)
|
Restricted cash is
classified under the Prepaid expenses and other current assets and
Other assets line items on the Consolidated Balance
Sheets.
|
Notes
(1) All dollar amounts in this
press release are in U.S. Dollars unless otherwise indicated.
(2) Use of Non-GAAP Financial
Measures: In addition to reporting financial results in accordance
with U.S. GAAP, the Company provides certain financial
measures that are not in accordance with U.S. GAAP (Non-GAAP).
These Non-GAAP financial measures have certain limitations in that
they do not have a standardized meaning and thus the Company's
definition may be different from similar Non-GAAP financial
measures used by other companies and/or analysts and may differ
from period to period. Thus it may be more difficult to compare the
Company's financial performance to that of other companies.
However, the Company's management compensates for these limitations
by providing the relevant disclosure of the items excluded in the
calculation of these Non-GAAP financial measures both in its
reconciliation to the U.S. GAAP financial measures and its
condensed consolidated financial statements, all of which should be
considered when evaluating the Company's results.
The Company uses these Non-GAAP financial measures to supplement
the information provided in its condensed consolidated financial
statements, which are presented in accordance with U.S. GAAP. The
presentation of Non-GAAP financial measures is not meant to be a
substitute for financial measures presented in accordance with
U.S. GAAP, but rather should be evaluated in conjunction with
and as a supplement to such U.S. GAAP measures. OpenText
strongly encourages investors to review its financial information
in its entirety and not to rely on a single financial measure. The
Company therefore believes that despite these limitations, it is
appropriate to supplement the disclosure of the U.S. GAAP
measures with certain Non-GAAP measures defined below.
Non-GAAP-based net income and Non-GAAP-based EPS, attributable
to OpenText, are consistently calculated as GAAP-based net income
(loss) or earnings (loss) per share, attributable to OpenText, on a
diluted basis, excluding the effects of the amortization of
acquired intangible assets, other income (expense), share-based
compensation, and special charges (recoveries), all net of tax and
any tax benefits/expense items unrelated to current period income,
as further described in the tables below. Non-GAAP-based gross
profit is the arithmetical sum of GAAP-based gross profit and the
amortization of acquired technology-based intangible assets and
share-based compensation within cost of sales. Non-GAAP-based gross
margin is calculated as Non-GAAP-based gross profit expressed as a
percentage of total revenue. Non-GAAP-based income from operations
is calculated as GAAP-based income from operations, excluding the
amortization of acquired intangible assets, special charges
(recoveries), and share-based compensation expense.
Adjusted earnings before interest, taxes, depreciation and
amortization (Adjusted EBITDA) is consistently calculated as
GAAP-based net income (loss), attributable to OpenText, excluding
interest income (expense), provision for (recovery of) income
taxes, depreciation and amortization of acquired intangible assets,
other income (expense), share-based compensation and special
charges (recoveries). Adjusted EBITDA margin is calculated as
adjusted EBITDA expressed as a percentage of total revenue.
Return of capital per share as the total value of cash dividends
paid and common shares repurchased in the period divided by by the
weighted average number of common shares outstanding during the
period.
The Company's management believes that the presentation of the
above defined Non-GAAP financial measures provides useful
information to investors because they portray the financial results
of the Company before the impact of certain non-operational
charges. The use of the term "non-operational charge" is defined
for this purpose as an expense that does not impact the ongoing
operating decisions taken by the Company's management. These items
are excluded based upon the way the Company's management evaluates
the performance of the Company's business for use in the Company's
internal reports and are not excluded in the sense that they may be
used under U.S. GAAP.
The Company does not acquire businesses on a predictable cycle,
and therefore believes that the presentation of Non-GAAP measures,
which in certain cases adjust for the impact of amortization of
intangible assets and the related tax effects that are primarily
related to acquisitions, will provide readers of financial
statements with a more consistent basis for comparison across
accounting periods and be more useful in helping readers understand
the Company's operating results and underlying operational trends.
Additionally, the Company has engaged in various restructuring
activities over the past several years, primarily due to
acquisitions and in response to our return to office planning, that
have resulted in costs associated with reductions in headcount,
consolidation of leased facilities and related costs, all which are
recorded under the Company's "Special charges (recoveries)" caption
on the Consolidated Statements of Income. Each restructuring
activity is a discrete event based on a unique set of business
objectives or circumstances, and each differs in terms of its
operational implementation, business impact and scope, and the size
of each restructuring plan can vary significantly from period to
period. Therefore, the Company believes that the exclusion of these
special charges (recoveries) will also better aid readers of
financial statements in the understanding and comparability of the
Company's operating results and underlying operational trends.
In summary, the Company believes the provision of supplemental
Non-GAAP measures allow investors to evaluate the operational and
financial performance of the Company's core business using the same
evaluation measures that management uses, and is therefore a useful
indication of OpenText's performance or expected performance of
future operations and facilitates period-to-period comparison of
operating performance (although prior performance is not
necessarily indicative of future performance). As a result, the
Company considers it appropriate and reasonable to provide, in
addition to U.S. GAAP measures, supplementary Non-GAAP
financial measures that exclude certain items from the presentation
of its financial results. Information reconciling certain
forward-looking GAAP measures to non-GAAP measures related to F'24
targets and F'26 aspirations, including A-EBITDA is not available
without unreasonable effort due to high variability, complexity and
uncertainty with respect to forecasting and quantifying certain
amounts that are necessary for such reconciliations.
The following charts provide unaudited reconciliations of
U.S. GAAP-based financial measures to Non-GAAP-based financial
measures for the following periods presented. The Micro Focus
Acquisition significantly impacts period-over-period
comparability.
|
Reconciliation of
selected GAAP-based measures to Non-GAAP-based
measures
for the three months
ended March 31, 2024
(In thousands,
except for per share data)
|
|
Three Months Ended
March 31, 2024
|
|
GAAP-based
Measures
|
GAAP-based
Measures
% of Total
Revenue
|
Adjustments
|
Note
|
Non-GAAP-based
Measures
|
Non-GAAP-based
Measures
% of Total
Revenue
|
|
Cost of
revenues
|
|
|
|
|
|
|
|
Cloud services and
subscriptions
|
$
186,400
|
|
$ (3,292)
|
(1)
|
$
183,108
|
|
|
Customer
support
|
74,639
|
|
(1,149)
|
(1)
|
73,490
|
|
|
Professional service
and other
|
75,455
|
|
(1,458)
|
(1)
|
73,997
|
|
|
Amortization of
acquired technology-based intangible assets
|
48,094
|
|
(48,094)
|
(2)
|
—
|
|
|
GAAP-based gross
profit and gross margin (%) / Non-GAAP-based gross profit and gross
margin (%)
|
1,055,774
|
73.0 %
|
53,993
|
(3)
|
1,109,767
|
76.7 %
|
|
Operating
expenses
|
|
|
|
|
|
|
|
Research and
development
|
234,022
|
|
(10,799)
|
(1)
|
223,223
|
|
|
Sales and
marketing
|
296,249
|
|
(12,260)
|
(1)
|
283,989
|
|
|
General and
administrative
|
145,924
|
|
(7,084)
|
(1)
|
138,840
|
|
|
Amortization of
acquired customer-based intangible assets
|
100,841
|
|
(100,841)
|
(2)
|
—
|
|
|
Special charges
(recoveries)
|
19,561
|
|
(19,561)
|
(4)
|
—
|
|
|
GAAP-based income
from operations / Non-GAAP-based income from
operations
|
227,068
|
|
204,538
|
(5)
|
431,606
|
|
|
Other income (expense),
net
|
9,950
|
|
(9,950)
|
(6)
|
—
|
|
|
Provision for
income taxes
|
6,028
|
|
35,824
|
(7)
|
41,852
|
|
|
GAAP-based net
income / Non-GAAP-based net income, attributable to
OpenText
|
98,285
|
|
158,764
|
(8)
|
257,049
|
|
|
GAAP-based earnings
per share / Non-GAAP-based earnings per share-diluted, attributable
to OpenText
|
$
0.36
|
|
$
0.58
|
(8)
|
$
0.94
|
|
|
|
|
(1)
|
Adjustment relates to
the exclusion of share-based compensation expense from our
Non-GAAP-based operating expenses as this expense is excluded from
our internal analysis of operating results.
|
|
(2)
|
Adjustment relates to
the exclusion of amortization expense from our Non-GAAP-based
operating expenses as the timing and frequency of amortization
expense is dependent on our acquisitions and is hence excluded from
our internal analysis of operating results.
|
|
(3)
|
GAAP-based and
Non-GAAP-based gross profit stated in dollars and gross margin
stated as a percentage of total revenue.
|
|
(4)
|
Adjustment relates to
the exclusion of special charges (recoveries) from our
Non-GAAP-based operating expenses as special charges (recoveries)
are generally incurred in the periods relevant to an acquisition
and include certain charges or recoveries that are not indicative
or related to continuing operations and are therefore excluded from
our internal analysis of operating results.
|
|
(5)
|
GAAP-based and
Non-GAAP-based income from operations stated in dollars.
|
|
(6)
|
Adjustment relates to
the exclusion of other income (expense) from our Non-GAAP-based
operating expenses as other income (expense) generally relates to
the transactional impact of foreign exchange and is generally not
indicative or related to continuing operations and is therefore
excluded from our internal analysis of operating results. Other
income (expense) also includes our share of income (losses) from
our holdings in investments as a limited partner. We do not
actively trade equity securities in these privately held companies
nor do we plan our ongoing operations based around any anticipated
fundings or distributions from these investments. We exclude gains
and losses on these investments as we do not believe they are
reflective of our ongoing business and operating results. Other
income (expense) also includes unrealized and realized gains
(losses) on our derivatives which are not designated as hedges. We
exclude gains and losses on these derivatives as we do not believe
they are reflective of our ongoing business and operating
results.
|
|
(7)
|
Adjustment relates to
differences between the GAAP-based tax provision rate of
approximately 6% and a Non-GAAP-based tax rate of approximately
14%; these rate differences are due to the income tax effects of
items that are excluded for the purpose of calculating
Non-GAAP-based net income. Such excluded items include
amortization, share-based compensation, special charges
(recoveries) and other income (expense), net. Also excluded are tax
benefits/expense items unrelated to current period income such as
changes in reserves for tax uncertainties and valuation allowance
reserves and "book to return" adjustments for tax return filings
and tax assessments. Included is the amount of net tax benefits
arising from the internal reorganization that occurred in Fiscal
2017 assumed to be allocable to the current period based on the
forecasted utilization period. In arriving at our Non-GAAP-based
tax rate of approximately 14%, we analyzed the individual
adjusted expenses and took into consideration the impact of
statutory tax rates from local jurisdictions incurring the
expense.
|
|
(8)
|
Reconciliation of
GAAP-based income to Non-GAAP-based net income:
|
|
Three Months
Ended March 31, 2024
|
|
|
Per share
diluted
|
|
GAAP-based net income,
attributable to OpenText
|
$
98,285
|
$
0.36
|
|
Add
(deduct):
|
|
|
|
Amortization
|
148,935
|
0.55
|
|
Share-based
compensation
|
36,042
|
0.13
|
|
Special charges
(recoveries)
|
19,561
|
0.07
|
|
Other (income) expense,
net
|
(9,950)
|
(0.04)
|
|
GAAP-based provision
for income taxes
|
6,028
|
0.02
|
|
Non-GAAP-based
provision for income taxes
|
(41,852)
|
(0.15)
|
|
Non-GAAP-based net
income, attributable to OpenText
|
$
257,049
|
$
0.94
|
|
Reconciliation of
Adjusted EBITDA
|
|
|
Three Months
Ended March 31, 2024
|
|
GAAP-based net income,
attributable to OpenText
|
$
98,285
|
|
Add:
|
|
|
Provision for
income taxes
|
6,028
|
|
Interest and other
related expense, net
|
132,663
|
|
Amortization of
acquired technology-based intangible assets
|
48,094
|
|
Amortization of
acquired customer-based intangible assets
|
100,841
|
|
Depreciation
|
32,109
|
|
Share-based
compensation
|
36,042
|
|
Special charges
(recoveries)
|
19,561
|
|
Other (income) expense,
net
|
(9,950)
|
|
Adjusted
EBITDA
|
$
463,673
|
|
|
|
GAAP-based net income
margin
|
6.8 %
|
|
Adjusted EBITDA
margin
|
32.0 %
|
|
Reconciliation of
Free cash flows
|
|
|
Three Months
Ended March 31, 2024
|
|
GAAP-based cash flows
provided by operating activities
|
$
384,697
|
|
Add:
|
|
|
Capital expenditures
(1)
|
(36,537)
|
|
Free cash
flows
|
$
348,160
|
|
|
|
(1)
Defined as "Additions of property and
equipment" in the Consolidated Statements of Cash Flows.
|
|
Reconciliation of
selected GAAP-based measures to Non-GAAP-based
measures
for the nine months
ended March 31, 2024
(In thousands,
except for per share data)
|
|
Nine Months Ended
March 31, 2024
|
|
GAAP-based
Measures
|
GAAP-based
Measures
% of Total
Revenue
|
Adjustments
|
Note
|
Non-GAAP-based
Measures
|
Non-GAAP-based
Measures
% of Total
Revenue
|
|
Cost of
revenues
|
|
|
|
|
|
|
|
Cloud services and
subscriptions
|
$
537,960
|
|
$ (9,892)
|
(1)
|
$
528,068
|
|
|
Customer
support
|
223,027
|
|
(3,335)
|
(1)
|
219,692
|
|
|
Professional service
and other
|
230,836
|
|
(5,096)
|
(1)
|
225,740
|
|
|
Amortization of
acquired technology-based intangible assets
|
195,702
|
|
(195,702)
|
(2)
|
—
|
|
|
GAAP-based gross
profit and gross margin (%) / Non-GAAP-based gross profit and gross
margin (%)
|
3,203,312
|
72.7 %
|
214,025
|
(3)
|
3,417,337
|
77.5 %
|
|
Operating
expenses
|
|
|
|
|
|
|
|
Research and
development
|
688,679
|
|
(35,300)
|
(1)
|
653,379
|
|
|
Sales and
marketing
|
848,313
|
|
(37,294)
|
(1)
|
811,019
|
|
|
General and
administrative
|
450,399
|
|
(22,395)
|
(1)
|
428,004
|
|
|
Amortization of
acquired customer-based intangible assets
|
334,958
|
|
(334,958)
|
(2)
|
—
|
|
|
Special charges
(recoveries)
|
87,521
|
|
(87,521)
|
(4)
|
—
|
|
|
GAAP-based income
from operations / Non-GAAP-based income from
operations
|
693,827
|
|
731,493
|
(5)
|
1,425,320
|
|
|
Other income (expense),
net
|
(38,664)
|
|
38,664
|
(6)
|
—
|
|
|
Provision for
income taxes
|
24,434
|
|
117,191
|
(7)
|
141,625
|
|
|
GAAP-based net
income / Non-GAAP-based net income, attributable to
OpenText
|
216,861
|
|
652,966
|
(8)
|
869,827
|
|
|
GAAP-based earnings
per share / Non-GAAP-based earnings per share-diluted, attributable
to OpenText
|
$
0.80
|
|
$
2.39
|
(8)
|
$
3.19
|
|
|
|
|
(1)
|
Adjustment relates to
the exclusion of share-based compensation expense from our
Non-GAAP-based operating expenses as this expense is excluded from
our internal analysis of operating results.
|
|
(2)
|
Adjustment relates to
the exclusion of amortization expense from our Non-GAAP-based
operating expenses as the timing and frequency of amortization
expense is dependent on our acquisitions and is hence excluded from
our internal analysis of operating results.
|
|
(3)
|
GAAP-based and
Non-GAAP-based gross profit stated in dollars and gross margin
stated as a percentage of total revenue.
|
|
(4)
|
Adjustment relates to
the exclusion of special charges (recoveries) from our
Non-GAAP-based operating expenses as special charges (recoveries)
are generally incurred in the periods relevant to an acquisition
and include certain charges or recoveries that are not indicative
or related to continuing operations and are therefore excluded from
our internal analysis of operating results.
|
|
(5)
|
GAAP-based and
Non-GAAP-based income from operations stated in dollars.
|
|
(6)
|
Adjustment relates to
the exclusion of other income (expense) from our Non-GAAP-based
operating expenses as other income (expense) generally relates to
the transactional impact of foreign exchange and is generally not
indicative or related to continuing operations and is therefore
excluded from our internal analysis of operating results. Other
income (expense) also includes our share of income (losses) from
our holdings in investments as a limited partner. We do not
actively trade equity securities in these privately held companies
nor do we plan our ongoing operations based around any anticipated
fundings or distributions from these investments. We exclude gains
and losses on these investments as we do not believe they are
reflective of our ongoing business and operating results. Other
income (expense) also includes unrealized and realized gains
(losses) on our derivatives which are not designated as hedges. We
exclude gains and losses on these derivatives as we do not believe
they are reflective of our ongoing business and operating
results.
|
|
(7)
|
Adjustment relates to
differences between the GAAP-based tax provision rate of
approximately 10% and a Non-GAAP-based tax rate of approximately
14%; these rate differences are due to the income tax effects of
items that are excluded for the purpose of calculating
Non-GAAP-based net income. Such excluded items include
amortization, share-based compensation, special charges
(recoveries) and other income (expense), net. Also excluded are tax
benefits/expense items unrelated to current period income such as
changes in reserves for tax uncertainties and valuation allowance
reserves and "book to return" adjustments for tax return filings
and tax assessments. Included is the amount of net tax benefits
arising from the internal reorganization that occurred in Fiscal
2017 assumed to be allocable to the current period based on the
forecasted utilization period. In arriving at our Non-GAAP-based
tax rate of approximately 14%, we analyzed the individual
adjusted expenses and took into consideration the impact of
statutory tax rates from local jurisdictions incurring the
expense.
|
|
(8)
|
Reconciliation of
GAAP-based net income to Non-GAAP-based net income:
|
|
Nine Months
Ended March 31, 2024
|
|
|
Per share
diluted
|
|
GAAP-based net income,
attributable to OpenText
|
$
216,861
|
$
0.80
|
|
Add
(deduct):
|
|
|
|
Amortization
|
530,660
|
1.95
|
|
Share-based
compensation
|
113,312
|
0.42
|
|
Special charges
(recoveries)
|
87,521
|
0.32
|
|
Other (income) expense,
net
|
38,664
|
0.13
|
|
GAAP-based provision
for income taxes
|
24,434
|
0.09
|
|
Non-GAAP-based
provision for income taxes
|
(141,625)
|
(0.52)
|
|
Non-GAAP-based net
income, attributable to OpenText
|
$
869,827
|
$
3.19
|
|
Reconciliation of
Adjusted EBITDA
|
|
|
Nine Months
Ended March 31, 2024
|
|
GAAP-based net income,
attributable to OpenText
|
$
216,861
|
|
Add:
|
|
|
Provision for
income taxes
|
24,434
|
|
Interest and other
related expense, net
|
413,719
|
|
Amortization of
acquired technology-based intangible assets
|
195,702
|
|
Amortization of
acquired customer-based intangible assets
|
334,958
|
|
Depreciation
|
99,615
|
|
Share-based
compensation
|
113,312
|
|
Special charges
(recoveries)
|
87,521
|
|
Other (income) expense,
net
|
38,664
|
|
Adjusted
EBITDA
|
$
1,524,786
|
|
|
|
GAAP-based net income
margin
|
4.9 %
|
|
Adjusted EBITDA
margin
|
34.6 %
|
|
Reconciliation of
Free cash flows
|
|
|
Nine Months
Ended March 31, 2024
|
|
GAAP-based cash flows
provided by operating activities
|
$
782,471
|
|
Add:
|
|
|
Capital expenditures
(1)
|
(119,316)
|
|
Free cash
flows
|
$
663,155
|
|
|
|
(1)
Defined as "Additions of property and
equipment" in the Consolidated Statements of Cash Flows.
|
|
Reconciliation of
selected GAAP-based measures to Non-GAAP-based
measures
for the three months
ended December 31, 2023
(In thousands,
except for per share data)
|
|
Three Months Ended
December 31, 2023
|
|
GAAP-based
Measures
|
GAAP-based
Measures
% of Total
Revenue
|
Adjustments
|
Note
|
Non-GAAP-based
Measures
|
Non-GAAP-based
Measures
% of Total
Revenue
|
|
Cost of
revenues
|
|
|
|
|
|
|
|
Cloud services and
subscriptions
|
$
180,148
|
|
$ (3,609)
|
(1)
|
$
176,539
|
|
|
Customer
support
|
73,374
|
|
(1,128)
|
(1)
|
72,246
|
|
|
Professional service
and other
|
75,459
|
|
(1,756)
|
(1)
|
73,703
|
|
|
Amortization of
acquired technology-based intangible assets
|
70,784
|
|
(70,784)
|
(2)
|
—
|
|
|
GAAP-based gross
profit and gross margin (%) /Non-GAAP-based gross profit and gross
margin (%)
|
1,129,120
|
73.6 %
|
77,277
|
(3)
|
1,206,397
|
78.6 %
|
|
Operating
expenses
|
|
|
|
|
|
|
|
Research and
development
|
220,220
|
|
(12,767)
|
(1)
|
207,453
|
|
|
Sales and
marketing
|
280,263
|
|
(13,227)
|
(1)
|
267,036
|
|
|
General and
administrative
|
173,264
|
|
(7,688)
|
(1)
|
165,576
|
|
|
Amortization of
acquired customer-based intangible assets
|
113,925
|
|
(113,925)
|
(2)
|
—
|
|
|
Special charges
(recoveries)
|
54,166
|
|
(54,166)
|
(4)
|
—
|
|
|
GAAP-based income
from operations / Non-GAAP-based income from
operations
|
253,867
|
|
279,050
|
(5)
|
532,917
|
|
|
Other income (expense),
net
|
(68,784)
|
|
68,784
|
(6)
|
—
|
|
|
Provision for
income taxes
|
8,054
|
|
47,054
|
(7)
|
55,108
|
|
|
GAAP-based net
income / Non-GAAP-based net income, attributable to
OpenText
|
37,675
|
|
300,780
|
(8)
|
338,455
|
|
|
GAAP-based earnings
(loss) per share / Non-GAAP-based earnings per share-diluted,
attributable to OpenText
|
$
0.14
|
|
$
1.10
|
(8)
|
$
1.24
|
|
|
|
|
(1)
|
Adjustment relates to
the exclusion of share-based compensation expense from our
Non-GAAP-based operating expenses as this expense is excluded from
our internal analysis of operating results.
|
|
(2)
|
Adjustment relates to
the exclusion of amortization expense from our Non-GAAP-based
operating expenses as the timing and frequency of amortization
expense is dependent on our acquisitions and is hence excluded from
our internal analysis of operating results.
|
|
(3)
|
GAAP-based and
Non-GAAP-based gross profit stated in dollars and gross margin
stated as a percentage of total revenue.
|
|
(4)
|
Adjustment relates to
the exclusion of special charges (recoveries) from our
Non-GAAP-based operating expenses as special charges (recoveries)
are generally incurred in the periods relevant to an acquisition
and include certain charges or recoveries that are not indicative
or related to continuing operations and are therefore excluded from
our internal analysis of operating results.
|
|
(5)
|
GAAP-based and
Non-GAAP-based income from operations stated in dollars.
|
|
(6)
|
Adjustment relates to
the exclusion of other income (expense) from our Non-GAAP-based
operating expenses as other income (expense) generally relates to
the transactional impact of foreign exchange and is generally not
indicative or related to continuing operations and is therefore
excluded from our internal analysis of operating results. Other
income (expense) also includes our share of income (losses) from
our holdings in investments as a limited partner. We do not
actively trade equity securities in these privately held companies
nor do we plan our ongoing operations based around any anticipated
fundings or distributions from these investments. We exclude gains
and losses on these investments as we do not believe they are
reflective of our ongoing business and operating results. Other
income (expense) also includes unrealized and realized gains
(losses) on our derivatives which are not designated as hedges. We
exclude gains and losses on these derivatives as we do not believe
they are reflective of our ongoing business and operating
results.
|
|
(7)
|
Adjustment relates to
differences between the GAAP-based tax provision rate of
approximately 18% and a Non-GAAP-based tax rate of approximately
14%; these rate differences are due to the income tax effects of
items that are excluded for the purpose of calculating
Non-GAAP-based net income. Such excluded items include
amortization, share-based compensation, special charges
(recoveries) and other income (expense), net. Also excluded are tax
benefits/expense items unrelated to current period income such as
changes in reserves for tax uncertainties and valuation allowance
reserves and "book to return" adjustments for tax return filings
and tax assessments. Included is the amount of net tax benefits
arising from the internal reorganization that occurred in Fiscal
2017 assumed to be allocable to the current period based on the
forecasted utilization period. In arriving at our Non-GAAP-based
tax rate of approximately 14%, we analyzed the individual adjusted
expenses and took into consideration the impact of statutory tax
rates from local jurisdictions incurring the expense.
|
|
(8)
|
Reconciliation of
GAAP-based net income to Non-GAAP-based net income:
|
|
Three Months
Ended December 31, 2023
|
|
|
Per share
diluted
|
|
GAAP-based net income,
attributable to OpenText
|
$
37,675
|
$
0.14
|
|
Add
(deduct):
|
|
|
|
Amortization
|
184,709
|
0.68
|
|
Share-based
compensation
|
40,175
|
0.15
|
|
Special charges
(recoveries)
|
54,166
|
0.20
|
|
Other (income) expense,
net
|
68,784
|
0.24
|
|
GAAP-based provision
for income taxes
|
8,054
|
0.03
|
|
Non-GAAP-based
provision for income taxes
|
(55,108)
|
(0.20)
|
|
Non-GAAP-based net
income, attributable to OpenText
|
$
338,455
|
$
1.24
|
|
Reconciliation of
Adjusted EBITDA
|
|
|
Three Months
Ended December 31, 2023
|
|
GAAP-based net income,
attributable to OpenText
|
$
37,675
|
|
Add
(deduct):
|
|
|
Provision for
income taxes
|
8,054
|
|
Interest and other
related expense, net
|
139,292
|
|
Amortization of
acquired technology-based intangible assets
|
70,784
|
|
Amortization of
acquired customer-based intangible assets
|
113,925
|
|
Depreciation
|
33,415
|
|
Share-based
compensation
|
40,175
|
|
Special charges
(recoveries)
|
54,166
|
|
Other (income) expense,
net
|
68,784
|
|
Adjusted
EBITDA
|
$
566,270
|
|
|
|
GAAP-based net income
margin
|
2.5 %
|
|
Adjusted EBITDA
margin
|
36.9 %
|
|
Reconciliation of
Free cash flows
|
|
|
Three Months
Ended December 31, 2023
|
|
GAAP-based cash flows
provided by operating activities
|
$
350,653
|
|
Add:
|
|
|
Capital expenditures
(1)
|
(45,240)
|
|
Free cash
flows
|
$
305,413
|
|
|
|
(1)
Defined as "Additions of property and
equipment" in the Consolidated Statements of Cash Flows.
|
|
Reconciliation of
selected GAAP-based measures to Non-GAAP-based
measures
for the three months
ended March 31, 2023
(In thousands,
except for per share data)
|
|
Three Months Ended
March 31, 2023
|
|
GAAP-based
Measures
|
GAAP-based
Measures
% of Total
Revenue
|
Adjustments
|
Note
|
Non-GAAP-based
Measures
|
Non-GAAP-based
Measures
% of Total
Revenue
|
|
Cost of
revenues
|
|
|
|
|
|
|
|
Cloud services and
subscriptions
|
$
157,658
|
|
$ (2,943)
|
(1)
|
$
154,715
|
|
|
Customer
support
|
67,067
|
|
(1,157)
|
(1)
|
65,910
|
|
|
Professional service
and other
|
78,526
|
|
(1,884)
|
(1)
|
76,642
|
|
|
Amortization of
acquired technology-based intangible assets
|
62,639
|
|
(62,639)
|
(2)
|
—
|
|
|
GAAP-based gross
profit and gross margin (%) /Non-GAAP-based gross profit and gross
margin (%)
|
874,944
|
70.3 %
|
68,623
|
(3)
|
943,567
|
75.8 %
|
|
Operating
expenses
|
|
|
|
|
|
|
|
Research and
development
|
210,731
|
|
(10,801)
|
(1)
|
199,930
|
|
|
Sales and
marketing
|
271,013
|
|
(11,947)
|
(1)
|
259,066
|
|
|
General and
administrative
|
127,047
|
|
(7,636)
|
(1)
|
119,411
|
|
|
Amortization of
acquired customer-based intangible assets
|
97,237
|
|
(97,237)
|
(2)
|
—
|
|
|
Special charges
(recoveries)
|
74,350
|
|
(74,350)
|
(4)
|
—
|
|
|
GAAP-based income
from operations / Non-GAAP-based income from
operations
|
63,989
|
|
270,594
|
(5)
|
334,583
|
|
|
Other income (expense),
net
|
85,706
|
|
(85,706)
|
(6)
|
—
|
|
|
Provision for (recovery
of) income taxes
|
(12,420)
|
|
44,631
|
(7)
|
32,211
|
|
|
GAAP-based net
income / Non-GAAP-based net income, attributable to
OpenText
|
57,556
|
|
140,257
|
(8)
|
197,813
|
|
|
GAAP-based earnings
per share / Non-GAAP-based earnings per share-diluted, attributable
to OpenText
|
$
0.21
|
|
$
0.52
|
(8)
|
$
0.73
|
|
|
|
|
(1)
|
Adjustment relates to
the exclusion of share-based compensation expense from our
Non-GAAP-based operating expenses as this expense is excluded from
our internal analysis of operating results.
|
|
(2)
|
Adjustment relates to
the exclusion of amortization expense from our Non-GAAP-based
operating expenses as the timing and frequency of amortization
expense is dependent on our acquisitions and is hence excluded from
our internal analysis of operating results.
|
|
(3)
|
GAAP-based and
Non-GAAP-based gross profit stated in dollars and gross margin
stated as a percentage of total revenue.
|
|
(4)
|
Adjustment relates to
the exclusion of special charges (recoveries) from our
Non-GAAP-based operating expenses as special charges (recoveries)
are generally incurred in the periods relevant to an acquisition
and include certain charges or recoveries that are not indicative
or related to continuing operations and are therefore excluded from
our internal analysis of operating results.
|
|
(5)
|
GAAP-based and
Non-GAAP-based income from operations stated in dollars.
|
|
(6)
|
Adjustment relates to
the exclusion of other income (expense) from our Non-GAAP-based
operating expenses as other income (expense) generally relates to
the transactional impact of foreign exchange and is generally not
indicative or related to continuing operations and is therefore
excluded from our internal analysis of operating results. Other
income (expense) also includes our share of income (losses) from
our holdings in investments as a limited partner. We do not
actively trade equity securities in these privately held companies
nor do we plan our ongoing operations based around any anticipated
fundings or distributions from these investments. We exclude gains
and losses on these investments as we do not believe they are
reflective of our ongoing business and operating results. Other
income (expense) also includes unrealized and realized gains
(losses) on our derivatives which are not designated as hedges. We
exclude gains and losses on these derivatives as we do not believe
they are reflective of our ongoing business and operating
results.
|
|
(7)
|
Adjustment relates to
differences between the GAAP-based tax provision rate of
approximately 27% and a Non-GAAP-based tax rate of approximately
14%; these rate differences are due to the income tax effects of
items that are excluded for the purpose of calculating
Non-GAAP-based net income. Such excluded items include
amortization, share-based compensation, special charges
(recoveries) and other income (expense), net. Also excluded are tax
benefits/expense items unrelated to current period income such as
changes in reserves for tax uncertainties and valuation allowance
reserves and "book to return" adjustments for tax return filings
and tax assessments. Included is the amount of net tax benefits
arising from the internal reorganization that occurred in Fiscal
2017 assumed to be allocable to the current period based on the
forecasted utilization period. In arriving at our Non-GAAP-based
tax rate of approximately 14%, we analyzed the individual adjusted
expenses and took into consideration the impact of statutory tax
rates from local jurisdictions incurring the expense.
|
|
(8)
|
Reconciliation of
GAAP-based net income to Non-GAAP-based net income:
|
|
Three Months
Ended March 31, 2023
|
|
|
Per share
diluted
|
|
GAAP-based net income,
attributable to OpenText
|
$
57,556
|
$
0.21
|
|
Add
(deduct):
|
|
|
|
Amortization
|
159,876
|
0.59
|
|
Share-based
compensation
|
36,368
|
0.13
|
|
Special charges
(recoveries)
|
74,350
|
0.28
|
|
Other (income) expense,
net
|
(85,706)
|
(0.32)
|
|
GAAP-based recovery of
income taxes
|
(12,420)
|
(0.04)
|
|
Non-GAAP-based
provision for income taxes
|
(32,211)
|
(0.12)
|
|
Non-GAAP-based net
income, attributable to OpenText
|
$
197,813
|
$
0.73
|
|
|
Reconciliation of
Adjusted EBITDA
|
|
|
Three Months
Ended March 31, 2023
|
|
GAAP-based net income,
attributable to OpenText
|
$
57,556
|
|
Add
(deduct):
|
|
|
Recovery of
income taxes
|
(12,420)
|
|
Interest and other
related expense, net
|
104,502
|
|
Amortization of
acquired technology-based intangible assets
|
62,639
|
|
Amortization of
acquired customer-based intangible assets
|
97,237
|
|
Depreciation
|
30,577
|
|
Share-based
compensation
|
36,368
|
|
Special charges
(recoveries)
|
74,350
|
|
Other (income) expense,
net
|
(85,706)
|
|
Adjusted
EBITDA
|
$
365,103
|
|
|
|
GAAP-based net income
margin
|
4.6 %
|
|
Adjusted EBITDA
margin
|
29.3 %
|
|
Reconciliation of
Free cash flows
|
|
|
Three Months
Ended March 31, 2023
|
|
GAAP-based cash flows
provided by operating activities
|
$
336,775
|
|
Add:
|
|
|
Capital expenditures
(1)
|
(31,233)
|
|
Free cash
flows
|
$
305,542
|
|
|
|
(1)
Defined as "Additions of property and
equipment" in the Consolidated Statements of Cash Flows.
|
|
Reconciliation of
selected GAAP-based measures to Non-GAAP-based
measures
for the nine months
ended March 31, 2023
(In thousands,
except for per share data)
|
|
Nine Months Ended
March 31, 2023
|
|
GAAP-based
Measures
|
GAAP-based
Measures
% of Total
Revenue
|
Adjustments
|
Note
|
Non-GAAP-based
Measures
|
Non-GAAP-based
Measures
% of Total
Revenue
|
|
Cost of
revenues
|
|
|
|
|
|
|
|
Cloud services and
subscriptions
|
$
423,771
|
|
$ (7,788)
|
(1)
|
$
415,983
|
|
|
Customer
support
|
123,010
|
|
(2,414)
|
(1)
|
120,596
|
|
|
Professional service
and other
|
186,390
|
|
(5,172)
|
(1)
|
181,218
|
|
|
Amortization of
acquired technology-based intangible assets
|
146,139
|
|
(146,139)
|
(2)
|
—
|
|
|
GAAP-based gross
profit and gross margin (%) / Non-GAAP-based gross profit and gross
margin (%)
|
2,104,379
|
70.3 %
|
161,513
|
(3)
|
2,265,892
|
75.7 %
|
|
Operating
expenses
|
|
|
|
|
|
|
|
Research and
development
|
430,629
|
|
(25,481)
|
(1)
|
405,148
|
|
|
Sales and
marketing
|
615,354
|
|
(28,243)
|
(1)
|
587,111
|
|
|
General and
administrative
|
282,724
|
|
(19,300)
|
(1)
|
263,424
|
|
|
Amortization of
acquired customer-based intangible assets
|
205,121
|
|
(205,121)
|
(2)
|
—
|
|
|
Special charges
(recoveries)
|
98,937
|
|
(98,937)
|
(4)
|
—
|
|
|
GAAP-based income
from operations / Non-GAAP-based income from
operations
|
395,005
|
|
538,595
|
(5)
|
933,600
|
|
|
Other income (expense),
net
|
59,824
|
|
(59,824)
|
(6)
|
—
|
|
|
Provision for
income taxes
|
71,979
|
|
33,021
|
(7)
|
105,000
|
|
|
GAAP-based net
income / Non-GAAP-based net income, attributable to
OpenText
|
199,113
|
|
445,750
|
(8)
|
644,863
|
|
|
GAAP-based earnings
per share / Non-GAAP-based earnings per share-diluted, attributable
to OpenText
|
$
0.74
|
|
$
1.65
|
(8)
|
$
2.39
|
|
|
|
|
(1)
|
Adjustment relates to
the exclusion of share-based compensation expense from our
Non-GAAP-based operating expenses as this expense is excluded from
our internal analysis of operating results.
|
|
(2)
|
Adjustment relates to
the exclusion of amortization expense from our Non-GAAP-based
operating expenses as the timing and frequency of amortization
expense is dependent on our acquisitions and is hence excluded from
our internal analysis of operating results.
|
|
(3)
|
GAAP-based and
Non-GAAP-based gross profit stated in dollars and gross margin
stated as a percentage of total revenue.
|
|
(4)
|
Adjustment relates to
the exclusion of special charges (recoveries) from our
Non-GAAP-based operating expenses as special charges (recoveries)
are generally incurred in the periods relevant to an acquisition
and include certain charges or recoveries that are not indicative
or related to continuing operations and are therefore excluded from
our internal analysis of operating results.
|
|
(5)
|
GAAP-based and
Non-GAAP-based income from operations stated in dollars.
|
|
(6)
|
Adjustment relates to
the exclusion of other income (expense) from our Non-GAAP-based
operating expenses as other income (expense) generally relates to
the transactional impact of foreign exchange and is generally not
indicative or related to continuing operations and is therefore
excluded from our internal analysis of operating results. Other
income (expense) also includes our share of income (losses) from
our holdings in investments as a limited partner. We do not
actively trade equity securities in these privately held companies
nor do we plan our ongoing operations based around any anticipated
fundings or distributions from these investments. We exclude gains
and losses on these investments as we do not believe they are
reflective of our ongoing business and operating results. Other
income (expense) also includes unrealized and realized gains
(losses) on our derivatives which are not designated as hedges. We
exclude gains and losses on these derivatives as we do not believe
they are reflective of our ongoing business and operating
results.
|
|
(7)
|
Adjustment relates to
differences between the GAAP-based tax provision rate of
approximately 27% and a Non-GAAP-based tax rate of approximately
14%; these rate differences are due to the income tax effects of
items that are excluded for the purpose of calculating
Non-GAAP-based net income. Such excluded items include
amortization, share-based compensation, special charges
(recoveries) and other income (expense), net. Also excluded are tax
benefits/expense items unrelated to current period income such as
changes in reserves for tax uncertainties and valuation allowance
reserves and "book to return" adjustments for tax return filings
and tax assessments. Included is the amount of net tax benefits
arising from the internal reorganization that occurred in Fiscal
2017 assumed to be allocable to the current period based on the
forecasted utilization period. In arriving at our Non-GAAP-based
tax rate of approximately 14%, we analyzed the individual adjusted
expenses and took into consideration the impact of statutory tax
rates from local jurisdictions incurring the expense.
|
|
(8)
|
Reconciliation of
GAAP-based net income to Non-GAAP-based net income:
|
|
Nine Months
Ended March 31, 2023
|
|
|
Per share
diluted
|
|
GAAP-based net income,
attributable to OpenText
|
$
199,113
|
$
0.74
|
|
Add
(deduct):
|
|
|
|
Amortization
|
351,260
|
1.30
|
|
Share-based
compensation
|
88,398
|
0.32
|
|
Special charges
(recoveries)
|
98,937
|
0.37
|
|
Other (income) expense,
net
|
(59,824)
|
(0.22)
|
|
GAAP-based provision
for income taxes
|
71,979
|
0.27
|
|
Non-GAAP-based
provision for income taxes
|
(105,000)
|
(0.39)
|
|
Non-GAAP-based net
income, attributable to OpenText
|
$
644,863
|
$
2.39
|
|
Reconciliation of
Adjusted EBITDA
|
|
|
Nine Months
Ended March 31, 2023
|
|
GAAP-based net income,
attributable to OpenText
|
$
199,113
|
|
Add:
|
|
|
Provision for
income taxes
|
71,979
|
|
Interest and other
related expense, net
|
183,599
|
|
Amortization of
acquired technology-based intangible assets
|
146,139
|
|
Amortization of
acquired customer-based intangible assets
|
205,121
|
|
Depreciation
|
76,609
|
|
Share-based
compensation
|
88,398
|
|
Special charges
(recoveries)
|
98,937
|
|
Other (income) expense,
net
|
(59,824)
|
|
Adjusted
EBITDA
|
$
1,010,071
|
|
|
|
GAAP-based net income
margin
|
6.7 %
|
|
Adjusted EBITDA
margin
|
33.7 %
|
|
Reconciliation of
Free cash flows
|
|
|
Nine Months
Ended March 31, 2023
|
|
GAAP-based cash flows
provided by operating activities
|
$
663,904
|
|
Add:
|
|
|
Capital expenditures
(1)
|
(99,772)
|
|
Free cash
flows
|
$
564,132
|
|
|
|
(1)
Defined as "Additions of property and
equipment" in the Consolidated Statements of Cash Flows.
|
(3) The following tables provide a
composition of our major currencies for revenue and expenses,
expressed as a percentage, for the three and nine months ended
March 31, 2024 and 2023:
|
Three Months Ended
March 31, 2024
|
|
Three Months Ended
March 31, 2023
|
|
Currencies
|
% of Revenue
|
% of Expenses(1)
|
|
% of Revenue
|
% of Expenses(1)
|
|
EURO
|
22 %
|
12 %
|
|
21 %
|
12 %
|
|
GBP
|
5 %
|
7 %
|
|
5 %
|
8 %
|
|
CAD
|
3 %
|
10 %
|
|
3 %
|
11 %
|
|
USD
|
59 %
|
50 %
|
|
61 %
|
50 %
|
|
Other
|
11 %
|
21 %
|
|
10 %
|
19 %
|
|
Total
|
100 %
|
100 %
|
|
100 %
|
100 %
|
|
|
Nine Months Ended
March 31, 2024
|
|
Nine Months Ended
March 31, 2023
|
|
Currencies
|
% of Revenue
|
% of Expenses(1)
|
|
% of Revenue
|
% of Expenses(1)
|
|
EURO
|
22 %
|
12 %
|
|
20 %
|
12 %
|
|
GBP
|
5 %
|
7 %
|
|
5 %
|
6 %
|
|
CAD
|
3 %
|
10 %
|
|
3 %
|
12 %
|
|
USD
|
59 %
|
51 %
|
|
63 %
|
53 %
|
|
Other
|
11 %
|
20 %
|
|
9 %
|
17 %
|
|
Total
|
100 %
|
100 %
|
|
100 %
|
100 %
|
|
|
|
(1)
|
Expenses include all
cost of revenues and operating expenses included within the
Consolidated Statements of Income, except for amortization of
intangible assets, share-based compensation and special charges
(recoveries).
|
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SOURCE Open Text Corporation