WATERLOO, Ontario, Feb. 2,
2017 /PRNewswire/ --
- Total revenue of $543 million,
up 17% Y/Y
- Recurring revenues of $445
million, up 16% Y/Y
- Cloud services and subscription revenue of $175 million, up 17% Y/Y
- License revenue of $98
million, up 19% Y/Y
- GAAP-based EPS, diluted of $0.18 on a post share split basis, down 50% Y/Y
(up 634% YTD)
- Non-GAAP-based EPS, diluted of $0.54 on a post share split basis, up 8% Y/Y
(up 5% YTD)
- The public offering of common shares in the quarter diluted
both GAAP-based and Non-GAAP-based EPS by approximately
$0.01 on a post share split
basis
Open Text Corporation (NASDAQ: OTEX) (TSX: OTC) announced today
its financial results for the second quarter ended
December 31, 2016.
"OpenText delivered record revenue of $543 million in the second quarter of Fiscal
2017, up 17% year over year, with solid operational performance of
34% adjusted operating margin,"
said OpenText CEO and CTO Mark J.
Barrenechea. "We made significant progress in advancing our
vision, products and market reach over the last 12 months, and it
is reflected in our financial results."
"Businesses in all industries are transforming into software and
analytic companies and Enterprise Information Management ("EIM") is
a key platform in enabling that transformation. The very nature of
work has changed, and customers are seeking new platforms for
content services, customer experience, supply chains, with
discovery and analytics," said Barrenechea. "Customers are seeing
greater value from Digitalization, and with Release 16 and our
recent acquisitions, OpenText is well positioned to enable the next
wave of digital transformation."
On January 23, 2017, OpenText
completed the acquisition of Dell-EMC's Enterprise Content Division
("ECD Business"), including Documentum.
Mr. Barrenechea added, "OpenText, with great enthusiasm,
welcomes our new Documentum and ECD employees, customers, and
partners. We are the market leader in Content Services. This
acquisition adds a world-class team of Content Management experts
and significantly increases our presence in key verticals such as
Life Sciences, Pharmaceuticals, Energy, Engineering and Public
Sector industries, while expanding our Cloud Services offerings and
increasing our geographical reach into new countries."
Reconciliation of Common Shares Outstanding
|
Pre share-split
|
|
Post share-split
|
|
Common shares
outstanding prior to equity public offering
|
121,595,146
|
|
243,190,292
|
|
Issuance of Common
Shares from equity public offering
|
9,250,000
|
|
18,500,000
|
|
Exercise of
underwriters over allotment option
|
655,302
|
|
1,310,604
|
|
Total common shares
outstanding as of December 31, 2016
|
131,500,448
|
|
263,000,896
|
|
Financial Highlights for Q2 FY17 with Year Over Year
Comparisons
Summary of
Quarterly Results
|
|
Q2
FY17
|
Q2
FY16
|
$
Change
|
% Change (Y/Y)
|
|
Q2 FY17 in
CC*
|
% Change in
CC*
|
|
Revenues: (in
millions)
|
|
|
|
|
|
|
|
|
Cloud services and
subscriptions
|
$175.1
|
|
$149.1
|
|
$26.0
|
|
17.4
|
%
|
|
$175.6
|
|
17.8
|
%
|
|
Customer
support
|
219.7
|
|
184.1
|
|
35.5
|
|
19.3
|
%
|
|
221.1
|
|
20.1
|
%
|
|
Professional service
and other
|
50.2
|
|
50.3
|
|
---
|
|
(0.1)
|
%
|
|
50.8
|
|
1.2
|
%
|
|
Total Recurring
revenues
|
$444.9
|
|
$383.5
|
|
$61.5
|
|
16.0
|
%
|
|
$447.5
|
|
16.7
|
%
|
|
License
|
97.8
|
|
81.9
|
|
15.9
|
|
19.4
|
%
|
|
98.0
|
|
19.7
|
%
|
|
Total
revenues
|
$542.7
|
|
$465.3
|
|
$77.4
|
|
16.6
|
%
|
|
$545.6
|
|
17.2
|
%
|
|
GAAP-based operating
margin
|
19.7
|
%
|
23.6
|
%
|
n/a
|
|
(390)
|
|
bps
|
|
|
|
|
|
Non-GAAP-based
operating margin (1)
|
34.0
|
%
|
37.0
|
%
|
n/a
|
|
(300)
|
|
bps
|
33.9
|
%
|
(310)
|
|
bps
|
GAAP-based EPS,
diluted(2)
|
$0.18
|
|
$0.36
|
|
($0.18)
|
|
(50.0)
|
%
|
|
|
|
|
|
|
Non-GAAP-based EPS,
diluted (1)(2)(3)
|
$0.54
|
|
$0.50
|
|
$0.04
|
|
8.0
|
%
|
|
$0.54
|
|
8.0
|
%
|
|
Operating cash flows
(in millions)
|
$107.0
|
|
$123.9
|
|
($16.9)
|
|
(13.6)
|
%
|
|
|
|
|
|
|
Summary of YTD
Results
|
|
FY17
YTD
|
FY16
YTD
|
$
Change
|
% Change (Y/Y)
|
|
FY17 YTD in
CC*
|
% Change in
CC*
|
|
Revenues: (in
millions)
|
|
|
|
|
|
|
|
|
Cloud services and
subscriptions
|
$344.7
|
|
$296.9
|
|
$47.9
|
|
16.1
|
%
|
|
$346.3
|
|
16.6
|
%
|
|
Customer
support
|
429.9
|
|
369.8
|
|
60.1
|
|
16.2
|
%
|
|
433.9
|
|
17.3
|
%
|
|
Professional service
and other
|
101.3
|
|
100.0
|
|
1.3
|
|
1.3
|
%
|
|
102.8
|
|
2.8
|
%
|
|
Total Recurring
revenues
|
$876.0
|
|
$766.7
|
|
$109.3
|
|
14.3
|
%
|
|
$883.0
|
|
15.2
|
%
|
|
License
|
158.4
|
|
133.2
|
|
25.2
|
|
18.9
|
%
|
|
159.2
|
|
19.5
|
%
|
|
Total
revenues
|
$1,034.4
|
|
$899.9
|
|
$134.5
|
|
14.9
|
%
|
|
$1,042.2
|
|
15.8
|
%
|
|
GAAP-based operating
margin
|
17.5
|
%
|
20.7
|
%
|
n/a
|
|
(320)
|
|
bps
|
|
|
|
|
|
Non-GAAP-based
operating margin (1)
|
32.5
|
%
|
35.6
|
%
|
n/a
|
|
(310)
|
|
bps
|
32.3
|
%
|
(330)
|
|
bps
|
GAAP-based EPS,
diluted(2)
|
$3.89
|
|
$0.53
|
|
$3.36
|
|
634.0
|
%
|
|
|
|
|
|
|
Non-GAAP-based EPS,
diluted (1)(2)(3)
|
$0.97
|
|
$0.92
|
|
$0.05
|
|
5.4
|
%
|
|
$0.98
|
|
6.5
|
%
|
|
Operating cash flows
(in millions)
|
$180.5
|
|
$216.7
|
|
($36.2)
|
|
(16.7)
|
%
|
|
|
|
|
|
|
|
(1) Please
see note 2 "Use of Non-GAAP Financial Measures" below
|
(2) As a
result of the two-for-one share split, effected January 24, 2017 by
way of a share sub-division, all current and historical period per
share data and number of Common Shares outstanding in this press
release are presented on a post share split basis.
|
(3) Please
also see note 14 to the Company's Condensed Consolidated Financial
Statements on Form 10-Q. 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.
|
"The Company achieved excellent results for the second quarter
of Fiscal 2017, with strong revenue growth in all regions and a
continued focus on delivering solid bottom line results. Factoring
integration of the ECD Business, we expect our adjusted operating
margin for Fiscal 2017 to be at the mid-point of our published 30%
to 34% target margin range," said OpenText CFO, John Doolittle. "Our 2020 aspirations for the
business remain unchanged, including the anticipated adjusted
operating margin range of 34% to 38%."
Doolittle added, "OpenText generated significant operating cash
flow in our second quarter, up approximately 46% from the first
quarter of this Fiscal year and down 14% compared to the same
period last year. With the
acquisition of the ECD Business, OpenText will onboard a
significant cash flow generating business. The Company's financial
position remains strong and we expect to benefit from synergies as
we integrate our recently acquired assets into our business
model."
*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.
Integration of the ECD Business
As OpenText integrates the acquisition, we anticipate a one-time
deferred revenue adjustment that will
result in a reduction in revenue over the next four quarters of
approximately $50 million. The impact on revenues for Q3
and Q4 of Fiscal 2017 is approximately half of this
adjustment. In addition to this
deferred revenue adjustment, we expect revenues from the ECD
Business to be down 5% to 10% for the next few quarters due to
typical integration activities, and then normalize to historical
levels thereafter. Further, we expect the ECD Business to be
on the OpenText operating model within 12 months.
In connection with the acquisition, OpenText is implementing
restructuring activities to streamline our operations. These
restructuring charges are expected to be incurred during the
remainder of Fiscal 2017 and into Fiscal 2018. The
anticipated cost is expected to be approximately $50 million, and primarily relates to
workforce and facility consolidations. Once these
restructuring activities are completed, OpenText anticipates
annualized cost savings of approximately $60 million. We expect any savings realized during the
remainder of Fiscal 2017 to be largely offset by one-time ECD
integration costs.
OpenText Quarterly Business Highlights
- 25 customer transactions over $1
million, 8 OpenText Cloud contract signings and 17
on-premises
- Financial, services, consumer goods,
technology, and public sector industries saw the most demand
in cloud and license
- New customers in the quarter included U.S. Defense Logistics
Agency, Philips, Trimfoot, Bruce Power, CenturyLink, Premier
Medical Group, SMA Solar Technology AG, Shiseido Europe,
Subway, Tata
Steel, and Siemens AG
- OpenText Buys DocumentumTM
- OpenText Announces 2-For-1 Share Split
- Successfully raised approximately $840
million in net proceeds from the public offering of common
shares and reopening of senior unsecured fixed rate notes
- OpenText Receives Highest Score for Digital Transformation/
Modernization Use Case in Gartner's 2016 Critical Capabilities for
Enterprise Content Management
- OpenText Named a Leader in Gartner's 2016 Magic Quadrant for
Enterprise Content Management
- OpenText Honored in Computerworld Readers Choice Awards 2016 in
Both Singapore and Malaysia
Toronto Stock Exchange Listing Ticker Symbol Change
Effective on Monday, February 6,
2017, OpenText common shares listed on the Toronto Stock
Exchange ("TSX") as OTC will begin trading under the new ticker
symbol OTEX. The change will align the Company's TSX ticker symbol
with its NASDAQ ticker symbol, which remains "OTEX". No
action is required to be taken by current shareholders in
connection with the change, and no change has been made to the
Company's share capital.
Dividend Program Highlights
Cash Dividend
As part of our quarterly, non-cumulative
cash dividend program, the Board declared on February 1, 2017 a cash dividend of $0.115 per common share, on a post share split
basis. The record date for this dividend is March 3, 2017 and the payment date is
March 23, 2017. Future declarations
of dividends and the establishment of future record and payment
dates are subject to the final determination and discretion of our
Board of Directors.
Summary of
Quarterly Results
|
|
Q2
FY17
|
Q1
FY17
|
Q2
FY16
|
% Change (Q2 FY17 vs Q1 FY17)
|
|
% Change (Q2 FY17 vs Q2 FY16)
|
|
Revenue
(million)
|
$542.7
|
|
$491.7
|
|
$465.3
|
|
10.4
|
%
|
|
16.6
|
%
|
|
GAAP-based gross
margin
|
69.0
|
%
|
66.6
|
%
|
70.0
|
%
|
240
|
|
bps
|
(100)
|
|
bps
|
GAAP-based operating
margin
|
19.7
|
%
|
15.1
|
%
|
23.6
|
%
|
460
|
|
bps
|
(390)
|
|
bps
|
GAAP-based EPS,
diluted(1)(2)
|
$0.18
|
|
$3.73
|
|
$0.36
|
|
(95.2)
|
%
|
|
(50.0)
|
%
|
(2)
|
Non-GAAP-based gross
margin (3)
|
73.8
|
%
|
71.5
|
%
|
74.2
|
%
|
230
|
|
bps
|
(40)
|
|
bps
|
Non-GAAP-based
operating margin (3)
|
34.0
|
%
|
30.8
|
%
|
37.0
|
%
|
320
|
|
bps
|
(300)
|
|
bps
|
Non-GAAP-based EPS,
diluted (2)(3)(4)
|
$0.54
|
|
$0.43
|
|
$0.50
|
|
25.6
|
%
|
|
8.0
|
%
|
|
Summary of Year to
Date Results
|
|
|
|
|
|
Q2 FY17
YTD
|
Q2 FY16
YTD
|
% Change
|
|
Revenue
(million)
|
$1,034.4
|
|
$899.9
|
|
14.9
|
%
|
|
GAAP-based gross
margin
|
67.9
|
%
|
68.9
|
%
|
(100)
|
|
bps
|
GAAP-based operating
margin
|
17.5
|
%
|
20.7
|
%
|
(320)
|
|
bps
|
GAAP-based EPS,
diluted(1)(2)
|
$3.89
|
|
$0.53
|
|
634.0
|
%
|
|
Non-GAAP-based gross
margin (3)
|
72.7
|
%
|
73.4
|
%
|
(70)
|
|
bps
|
Non-GAAP-based
operating margin (3)
|
32.5
|
%
|
35.6
|
%
|
(310)
|
|
bps
|
Non-GAAP-based EPS,
diluted (2)(3)(4)
|
$0.97
|
|
$0.92
|
|
5.4
|
%
|
|
|
(1)
Recorded a significant tax benefit in Q1 FY17 of $876.1 million.
This significant tax benefit is specifically tied to the Company's
internal reorganization and applied to Q1 FY17 only and as a result
does not continue in future periods.
|
(2) As a
result of the two-for-one share split, effected January 24, 2017 by
way of a share sub-division, all current and historical period per
share data and number of Common Shares outstanding in this press
release are presented on a post share split basis.
|
(3) Please
see note 2 "Use of Non-GAAP Financial Measures" below
|
(4) Please
also see note 14 to the Company's Condensed Consolidated Financial
Statements on Form 10-Q. 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
The public is invited to listen to the earnings conference call
today at 5:00 p.m. ET (2:00 p.m. PT) by dialing 1-800-319-4610
(toll-free) or +1-604-638-5340 (international). Please dial-in 15
minutes ahead of time to ensure proper connection. Alternatively, a
live webcast of the earnings conference call will be available on
the Investor Relations section of the Company's website at
http://investors.opentext.com/events.cfm.
A replay of the call will be available beginning February 2, 2017 at 7:00
p.m. ET through 11:59 p.m.
February 16, 2017 and can be accessed
by dialing 1-855-669-9658 (toll-free) or +1-604-674-8052
(international) and using passcode 1085 followed by the number
sign.
Please see below note (2) for a reconciliation of
U.S. GAAP-based financial measures used in this press release,
to non-U.S. GAAP-based financial measures.
About OpenText
OpenText is the largest independent
software provider of Enterprise Information Management (EIM). For
more information please visit www.opentext.com.
Cautionary Statement Regarding Forward-Looking
Statements
Certain statements in this press release,
including statements about the focus of Open Text Corporation
("OpenText" or "the Company") in our fiscal year ending
June 30, 2017 (Fiscal 2017) on growth
in earnings and cash flows, creating value through investments in
broader Enterprise Information Management (EIM) capabilities,
distribution, the Company's presence in the cloud and in growth
markets, expected growth in our revenue lines and revenue expectations regarding the ECD
Business, adjusted operating income and cash flow, its
financial condition, results of operations and earnings, announced
acquisitions, ongoing tax matters, the integration of the ECD
Business, expected timing, charges
and savings related to restructuring activities, declaration of
quarterly dividends, future tax rates, new platform and product
offerings and other matters, 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 considered
forward-looking statements or information under applicable
securities laws. In addition, any information or statements that
refer to expectations, beliefs, plans, projections, objectives,
performance or other characterizations of future events or
circumstances, including any underlying assumptions, are
forward-looking, and 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.
Such forward-looking statements involve known and unknown risks,
uncertainties and other factors and assumptions that may cause the
actual results, performance or achievements to differ materially.
Such factors include, but are not limited to: (i) the future
performance, financial and otherwise, of OpenText; (ii) the ability
of OpenText to bring new products and services to market and to
increase sales; (iii) the strength of the Company's product
development pipeline; (iv) the Company's growth and profitability
prospects; (v) the estimated size and growth prospects of the EIM
market; (vi) the Company's competitive position in the EIM market
and its ability to take advantage of future opportunities in this
market; (vii) the benefits of the Company's products and services
to be realized by customers; (viii) the demand for the Company's
products and services and the extent of deployment of the Company's
products and services in the EIM marketplace; (ix) downward
pressure on our share price and dilutive effect of future sales or
issuances of equity securities (including in connection with future
acquisitions); (x) the Company's financial condition and capital
requirements; and (xi) statements about the impact of "OpenText
Release 16" and other product releases. The risks and uncertainties
that may affect forward-looking statements include, but are not
limited to: (i) integration of acquisitions and related
restructuring efforts, including the quantum of restructuring
charges and the timing thereof; (ii) the potential for the
incurrence of or assumption of debt in connection with acquisitions
and the impact on the ratings or outlooks of rating agencies on the
Company's outstanding debt securities; (iii) the possibility that
the Company may be unable to meet its future reporting requirements
under the U.S. Securities Exchange Act of 1934, as amended, and the
rules promulgated thereunder, or applicable Canadian securities
regulation; (iv) the risks associated with bringing new products
and services to market; (v) fluctuations in currency exchange
rates; (vi) delays in the purchasing decisions of the Company's
customers; (vii) the competition the Company faces in its industry
and/or marketplace; (viii) the final determination of litigation,
tax audits (including tax examinations in the United States and elsewhere) and other
legal proceedings; (ix) potential exposure to greater than
anticipated tax liabilities or expenses, including with respect to
changes in Canadian, U.S. or international tax regimes; (x) the
possibility of technical, logistical or planning issues in
connection with the deployment of the Company's products or
services; (xi) the continuous commitment of the Company's
customers; and (xii) demand for the Company's products and
services. 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.
OTEX-F
For more information, please contact:
Greg Secord
Vice President, Investor
Relations
Open Text Corporation
San Francisco: 415-963-0825
gsecord@opentext.com
Copyright ©2017 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:
http://www.opentext.com/2/global/site-copyright.html_SKU.
OPEN TEXT
CORPORATION
|
CONDENSED
CONSOLIDATED BALANCE SHEETS
|
(In thousands of
U.S. dollars, except share data)
|
|
|
December 31,
2016
|
|
June 30,
2016
|
ASSETS
|
(unaudited)
|
|
|
Cash and cash
equivalents
|
$
|
1,722,491
|
|
|
$
|
1,283,757
|
|
Short-term
investments
|
3,238
|
|
|
11,839
|
|
Accounts receivable
trade, net of allowance for doubtful accounts of $7,903 as of
December 31, 2016 and $6,740 as of June 30, 2016
|
315,562
|
|
|
285,904
|
|
Income taxes
recoverable
|
19,232
|
|
|
31,752
|
|
Prepaid expenses and
other current assets
|
58,129
|
|
|
59,021
|
|
Total current
assets
|
2,118,652
|
|
|
1,672,273
|
|
Property and
equipment
|
179,044
|
|
|
183,660
|
|
Goodwill
|
2,597,685
|
|
|
2,325,586
|
|
Acquired intangible
assets
|
772,534
|
|
|
646,240
|
|
Deferred tax
assets
|
1,078,548
|
|
|
241,161
|
|
Other
assets
|
66,905
|
|
|
53,697
|
|
Deferred
charges
|
59,598
|
|
|
22,776
|
|
Long-term income
taxes recoverable
|
9,225
|
|
|
8,751
|
|
Total
assets
|
$
|
6,882,191
|
|
|
$
|
5,154,144
|
|
LIABILITIES AND
SHAREHOLDERS' EQUITY
|
|
|
|
Current
liabilities:
|
|
|
|
Accounts payable and
accrued liabilities
|
$
|
245,506
|
|
|
$
|
257,450
|
|
Current portion of
long-term debt
|
8,000
|
|
|
8,000
|
|
Deferred
revenues
|
364,872
|
|
|
373,549
|
|
Income taxes
payable
|
24,770
|
|
|
32,030
|
|
Total current
liabilities
|
643,148
|
|
|
671,029
|
|
Long-term
liabilities:
|
|
|
|
Accrued
liabilities
|
30,309
|
|
|
29,848
|
|
Deferred
credits
|
6,820
|
|
|
8,357
|
|
Pension
liability
|
55,827
|
|
|
61,993
|
|
Long-term
debt
|
2,389,826
|
|
|
2,137,987
|
|
Deferred
revenues
|
47,119
|
|
|
37,461
|
|
Long-term income
taxes payable
|
146,845
|
|
|
149,041
|
|
Deferred tax
liabilities
|
72,121
|
|
|
79,231
|
|
Total long-term
liabilities
|
2,748,867
|
|
|
2,503,918
|
|
Shareholders'
equity:
|
|
|
|
Share
capital
|
|
|
|
263,000,896 and
242,809,354 Common Shares issued and outstanding at December 31,
2016 and June 30, 2016, respectively; authorized Common Shares:
unlimited
|
1,416,644
|
|
|
817,788
|
|
Additional paid-in
capital
|
158,975
|
|
|
147,280
|
|
Accumulated other
comprehensive income
|
39,884
|
|
|
46,310
|
|
Retained
earnings
|
1,894,802
|
|
|
992,546
|
|
Treasury stock, at
cost (917,372 shares at December 31, 2016 and 1,267,294 at June 30,
2016, respectively)
|
(20,709)
|
|
|
(25,268)
|
|
Total OpenText
shareholders' equity
|
3,489,596
|
|
|
1,978,656
|
|
Non-controlling
interests
|
580
|
|
|
541
|
|
Total shareholders'
equity
|
3,490,176
|
|
|
1,979,197
|
|
Total liabilities
and shareholders' equity
|
$
|
6,882,191
|
|
|
$
|
5,154,144
|
|
|
As a result of the
two-for-one share split, effected January 24, 2017 by way of a
share sub-division, all current and historical period per
share data and number of Common Shares outstanding in these
Condensed Consolidated Financial Statements are presented on a post
share split basis.
|
OPEN TEXT
CORPORATION
|
CONDENSED
CONSOLIDATED STATEMENTS OF INCOME
|
(In thousands of
U.S. dollars, except share and per share data)
|
(unaudited)
|
|
|
Three Months Ended
December 31,
|
|
Six Months Ended
December 31,
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
Revenues:
|
|
|
|
|
|
|
|
License
|
$
|
97,764
|
|
|
$
|
81,856
|
|
|
$
|
158,420
|
|
|
$
|
133,187
|
|
Cloud services and
subscriptions
|
175,061
|
|
|
149,099
|
|
|
344,748
|
|
|
296,889
|
|
Customer
support
|
219,656
|
|
|
184,137
|
|
|
429,862
|
|
|
369,804
|
|
Professional service
and other
|
50,228
|
|
|
50,255
|
|
|
101,343
|
|
|
100,002
|
|
Total
revenues
|
542,709
|
|
|
465,347
|
|
|
1,034,373
|
|
|
899,882
|
|
Cost of
revenues:
|
|
|
|
|
|
|
|
License
|
2,391
|
|
|
2,029
|
|
|
6,236
|
|
|
4,710
|
|
Cloud services and
subscriptions
|
73,150
|
|
|
58,918
|
|
|
143,442
|
|
|
117,834
|
|
Customer
support
|
27,349
|
|
|
21,689
|
|
|
53,087
|
|
|
42,197
|
|
Professional service
and other
|
40,295
|
|
|
38,375
|
|
|
81,638
|
|
|
76,439
|
|
Amortization of
acquired technology-based intangible assets
|
24,848
|
|
|
18,731
|
|
|
47,983
|
|
|
38,614
|
|
Total cost of
revenues
|
168,033
|
|
|
139,742
|
|
|
332,386
|
|
|
279,794
|
|
Gross
profit
|
374,676
|
|
|
325,605
|
|
|
701,987
|
|
|
620,088
|
|
Operating
expenses:
|
|
|
|
|
|
|
|
Research and
development
|
64,721
|
|
|
45,710
|
|
|
123,293
|
|
|
92,150
|
|
Sales and
marketing
|
102,651
|
|
|
85,875
|
|
|
197,799
|
|
|
163,820
|
|
General and
administrative
|
39,914
|
|
|
33,767
|
|
|
78,111
|
|
|
69,336
|
|
Depreciation
|
15,301
|
|
|
13,330
|
|
|
30,571
|
|
|
26,244
|
|
Amortization of
acquired customer-based intangible assets
|
33,815
|
|
|
27,793
|
|
|
67,423
|
|
|
55,598
|
|
Special
charges
|
11,117
|
|
|
9,088
|
|
|
23,571
|
|
|
26,425
|
|
Total operating
expenses
|
267,519
|
|
|
215,563
|
|
|
520,768
|
|
|
433,573
|
|
Income from
operations
|
107,157
|
|
|
110,042
|
|
|
181,219
|
|
|
186,515
|
|
Other income
(expense), net
|
(3,558)
|
|
|
961
|
|
|
3,141
|
|
|
(3,952)
|
|
Interest and other
related expense, net
|
(27,743)
|
|
|
(19,187)
|
|
|
(55,018)
|
|
|
(38,233)
|
|
Income before income
taxes
|
75,856
|
|
|
91,816
|
|
|
129,342
|
|
|
144,330
|
|
Provision for
(recovery of) income taxes
|
30,822
|
|
|
4,074
|
|
|
(828,603)
|
|
|
15,276
|
|
Net income for the
period
|
$
|
45,034
|
|
|
$
|
87,742
|
|
|
$
|
957,945
|
|
|
$
|
129,054
|
|
Net (income)
attributable to non-controlling interests
|
(12)
|
|
|
(56)
|
|
|
(39)
|
|
|
(82)
|
|
Net income
attributable to OpenText
|
$
|
45,022
|
|
|
$
|
87,686
|
|
|
$
|
957,906
|
|
|
$
|
128,972
|
|
Earnings per
share—basic attributable to OpenText
|
$
|
0.18
|
|
|
$
|
0.36
|
|
|
$
|
3.92
|
|
|
$
|
0.53
|
|
Earnings per
share—diluted attributable to OpenText
|
$
|
0.18
|
|
|
$
|
0.36
|
|
|
$
|
3.89
|
|
|
$
|
0.53
|
|
Weighted average
number of Common Shares outstanding—basic
|
245,653
|
|
|
242,492
|
|
|
244,282
|
|
|
243,398
|
|
Weighted average
number of Common Shares outstanding—diluted
|
247,501
|
|
|
243,584
|
|
|
246,123
|
|
|
244,432
|
|
Dividends declared
per Common Share
|
$
|
0.1150
|
|
|
$
|
0.1000
|
|
|
$
|
0.2300
|
|
|
$
|
0.2000
|
|
|
As a result of the
two-for-one share split, effected January 24, 2017 by way of a
share sub-division, all current and historical period per share
data and number of Common Shares outstanding in these Condensed
Consolidated Financial Statements are presented on a post share
split basis.
|
OPEN TEXT
CORPORATION
|
CONDENSED
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
|
(In thousands of
U.S. dollars)
|
(unaudited)
|
|
|
Three Months Ended
December 31,
|
|
Six Months Ended
December 31,
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
Net income for the
period
|
$
|
45,034
|
|
|
$
|
87,742
|
|
|
$
|
957,945
|
|
|
$
|
129,054
|
|
Other comprehensive
income—net of tax:
|
|
|
|
|
|
|
|
Net foreign currency
translation adjustments
|
(11,526)
|
|
|
(2,751)
|
|
|
(10,307)
|
|
|
(1,028)
|
|
Unrealized gain
(loss) on cash flow hedges:
|
|
|
|
|
|
|
|
Unrealized (loss) -
net of tax (recovery) effect of ($252) and ($515) for the three
months ended December 31, 2016 and 2015, respectively; ($380) and
($1,737) for the six months ended December, 31 2016 and 2015,
respectively
|
(698)
|
|
|
(1,429)
|
|
|
(1,053)
|
|
|
(4,819)
|
|
(Gain) loss
reclassified into net income - net of tax (expense) recovery effect
of ($33) and $294 for the three months ended December 31, 2016 and
2015, respectively; ($38) and $478 for the six months ended
December 31, 2016 and 2015, respectively
|
(91)
|
|
|
814
|
|
|
(108)
|
|
|
1,326
|
|
Actuarial gain (loss)
relating to defined benefit pension plans:
|
|
|
|
|
|
|
|
Actuarial gain - net
of tax expense (recovery) effect of $1,077 and ($92) for the three
months ended December 31, 2016 and 2015, respectively; $484 and
$210 for the six months ended December 31, 2016 and 2015,
respectively
|
2,823
|
|
|
648
|
|
|
4,361
|
|
|
1,761
|
|
Amortization of
actuarial loss into net income - net of tax recovery effect of $57
and $34 for the three months ended December 31, 2016 and 2015,
respectively; $119 and $66 for the six months ended December 31,
2016 and 2015, respectively
|
134
|
|
|
90
|
|
|
281
|
|
|
173
|
|
Unrealized net gain
on short-term investments - net of tax effect of nil for the three
and six months ended December 31, 2016 and 2015,
respectively
|
512
|
|
|
120
|
|
|
400
|
|
|
135
|
|
Total other
comprehensive income (loss), net, for the period
|
(8,846)
|
|
|
(2,508)
|
|
|
(6,426)
|
|
|
(2,452)
|
|
Total comprehensive
income
|
36,188
|
|
|
85,234
|
|
|
951,519
|
|
|
126,602
|
|
Comprehensive
(income) attributable to non-controlling interests
|
(12)
|
|
|
(56)
|
|
|
(39)
|
|
|
(82)
|
|
Total comprehensive
income attributable to OpenText
|
$
|
36,176
|
|
|
$
|
85,178
|
|
|
$
|
951,480
|
|
|
$
|
126,520
|
|
OPEN TEXT
CORPORATION
|
CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS
|
(In thousands of
U.S. dollars)
|
(unaudited)
|
|
|
Three Months Ended
December 31,
|
|
Six Months Ended
December 31,
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
Cash flows from
operating activities:
|
|
|
|
|
|
|
|
Net income for the
period
|
$
|
45,034
|
|
|
$
|
87,742
|
|
|
$
|
957,945
|
|
|
$
|
129,054
|
|
Adjustments to
reconcile net income to net cash provided by operating
activities:
|
|
|
|
|
|
|
|
Depreciation and
amortization of intangible assets
|
73,964
|
|
|
59,854
|
|
|
145,977
|
|
|
120,456
|
|
Share-based
compensation expense
|
7,572
|
|
|
6,581
|
|
|
15,712
|
|
|
13,114
|
|
Excess tax (benefits)
on share-based compensation expense
|
(537)
|
|
|
(256)
|
|
|
(542)
|
|
|
(40)
|
|
Pension
expense
|
871
|
|
|
1,158
|
|
|
2,061
|
|
|
2,325
|
|
Amortization of debt
issuance costs
|
1,331
|
|
|
1,156
|
|
|
2,654
|
|
|
2,312
|
|
Amortization of
deferred charges and credits
|
2,146
|
|
|
1,981
|
|
|
4,292
|
|
|
4,598
|
|
Loss on sale and
write down of property and equipment
|
—
|
|
|
890
|
|
|
—
|
|
|
890
|
|
Deferred
taxes
|
7,591
|
|
|
(3,685)
|
|
|
(868,233)
|
|
|
(7,869)
|
|
Share in net (income)
of equity investees
|
(464)
|
|
|
—
|
|
|
(5,993)
|
|
|
—
|
|
Other non-cash
charges
|
—
|
|
|
—
|
|
|
1,033
|
|
|
—
|
|
Changes in operating
assets and liabilities:
|
|
|
|
|
|
|
|
Accounts
receivable
|
(15,713)
|
|
|
(41,226)
|
|
|
456
|
|
|
10,880
|
|
Prepaid expenses and
other current assets
|
13,074
|
|
|
(5,221)
|
|
|
11,885
|
|
|
613
|
|
Income taxes and
deferred charges and credits
|
(12,841)
|
|
|
(3,503)
|
|
|
(9,620)
|
|
|
294
|
|
Accounts payable and
accrued liabilities
|
6,604
|
|
|
33,503
|
|
|
(23,995)
|
|
|
(14,819)
|
|
Deferred
revenue
|
(21,633)
|
|
|
(16,280)
|
|
|
(47,742)
|
|
|
(48,673)
|
|
Other
assets
|
20
|
|
|
1,242
|
|
|
(5,420)
|
|
|
3,523
|
|
Net cash provided by
operating activities
|
107,019
|
|
|
123,936
|
|
|
180,470
|
|
|
216,658
|
|
Cash flows from
investing activities:
|
|
|
|
|
|
|
|
Additions of property
and equipment
|
(11,609)
|
|
|
(12,702)
|
|
|
(32,274)
|
|
|
(29,899)
|
|
Proceeds from
maturity of short-term investments
|
—
|
|
|
3,069
|
|
|
9,212
|
|
|
5,324
|
|
Purchase of HP Inc.
CCM Business
|
(2,802)
|
|
|
—
|
|
|
(315,000)
|
|
|
—
|
|
Purchase of
Recommind, Inc.
|
—
|
|
|
—
|
|
|
(170,107)
|
|
|
—
|
|
Purchase of HP Inc.
CEM Business
|
—
|
|
|
—
|
|
|
(7,289)
|
|
|
—
|
|
Purchase of ANXe
Business Corporation
|
143
|
|
|
—
|
|
|
143
|
|
|
—
|
|
Purchase of Daegis
Inc., net of cash acquired
|
—
|
|
|
(22,146)
|
|
|
—
|
|
|
(22,146)
|
|
Purchase
consideration for acquisitions prior to Fiscal 2016
|
—
|
|
|
(43)
|
|
|
—
|
|
|
(9,859)
|
|
Other investing
activities
|
(440)
|
|
|
(2,754)
|
|
|
(563)
|
|
|
(3,680)
|
|
Net cash used in
investing activities
|
(14,708)
|
|
|
(34,576)
|
|
|
(515,878)
|
|
|
(60,260)
|
|
Cash flows from
financing activities:
|
|
|
|
|
|
|
|
Excess tax benefits
on share-based compensation expense
|
537
|
|
|
256
|
|
|
542
|
|
|
40
|
|
Proceeds from
issuance of long-term debt
|
256,875
|
|
|
—
|
|
|
256,875
|
|
|
—
|
|
Proceeds from
issuance of Common Shares from exercise of stock options and
ESPP
|
5,391
|
|
|
2,736
|
|
|
10,701
|
|
|
7,988
|
|
Proceeds from
issuance of Common Shares under public Equity Offering
|
604,223
|
|
|
—
|
|
|
604,223
|
|
|
—
|
|
Repayment of
long-term debt and revolver
|
(2,000)
|
|
|
(2,000)
|
|
|
(4,000)
|
|
|
(4,000)
|
|
Debt issuance
costs
|
(2,825)
|
|
|
—
|
|
|
(4,155)
|
|
|
—
|
|
Equity issuance
costs
|
(18,127)
|
|
|
—
|
|
|
(18,127)
|
|
|
—
|
|
Common Shares
repurchased
|
—
|
|
|
(15,483)
|
|
|
—
|
|
|
(65,509)
|
|
Purchase of treasury
stock
|
—
|
|
|
(10,627)
|
|
|
—
|
|
|
(10,627)
|
|
Payments of dividends
to shareholders
|
(27,859)
|
|
|
(24,216)
|
|
|
(55,650)
|
|
|
(47,528)
|
|
Net cash provided by
(used in) financing activities
|
816,215
|
|
|
(49,334)
|
|
|
790,409
|
|
|
(119,636)
|
|
Foreign exchange gain
(loss) on cash held in foreign currencies
|
(20,979)
|
|
|
(4,848)
|
|
|
(16,267)
|
|
|
(10,798)
|
|
Increase in cash and
cash equivalents during the period
|
887,547
|
|
|
35,178
|
|
|
438,734
|
|
|
25,964
|
|
Cash and cash
equivalents at beginning of the period
|
834,944
|
|
|
690,785
|
|
|
1,283,757
|
|
|
699,999
|
|
Cash and cash
equivalents at end of the period
|
$
|
1,722,491
|
|
|
$
|
725,963
|
|
|
$
|
1,722,491
|
|
|
$
|
725,963
|
|
|
|
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 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 consolidated financial statements, which are
presented in accordance with U.S. GAAP. The presentation of
Non-GAAP financial measures are 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 are calculated as net income or
earnings per share on a diluted basis, after giving effect to 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 income from
operations, excluding the amortization of acquired intangible
assets, Special charges (recoveries), and share-based compensation
expense. Non-GAAP-based operating margin is calculated as
Non-GAAP-based income from operations expressed as a percentage of
total revenue.
|
|
|
|
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 and is based upon the way the Company's
management evaluates the performance of the Company's business for
use in the Company's internal reports. In the course of such
evaluation and for the purpose of making operating decisions, the
Company's management excludes certain items from its analysis,
including amortization of acquired intangible assets, Special
charges (recoveries), share-based compensation, other income
(expense), and the taxation impact of these items. These items are
excluded based upon the manner in which management evaluates the
business of the Company and are not excluded in the sense that they
may be used under U.S. GAAP.
|
|
|
|
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.
|
|
|
|
The following charts
provide (unaudited) reconciliations of U.S. GAAP-based
financial measures to Non-U.S. GAAP-based financial measures
for the following periods presented:
|
Reconciliation of
selected GAAP-based measures to Non-GAAP-based measures for the
three months ended December 31, 2016.
(In thousands
except for per share amounts)
|
|
Three Months Ended
December 31, 2016
|
|
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
|
$
|
73,150
|
|
|
$
|
(211)
|
|
(1)
|
$
|
72,939
|
|
|
Customer
support
|
27,349
|
|
|
(270)
|
|
(1)
|
27,079
|
|
|
Professional service
and other
|
40,295
|
|
|
(468)
|
|
(1)
|
39,827
|
|
|
Amortization of
acquired technology-based intangible assets
|
24,848
|
|
|
(24,848)
|
|
(2)
|
—
|
|
|
GAAP-based gross
profit and gross margin (%) / Non-GAAP-based gross profit and gross margin
(%)
|
374,676
|
|
69.0
|
%
|
25,797
|
|
(3)
|
400,473
|
|
73.8
|
%
|
Operating
expenses
|
|
|
|
|
|
|
Research and
development
|
64,721
|
|
|
(1,995)
|
|
(1)
|
62,726
|
|
|
Sales and
marketing
|
102,651
|
|
|
(2,329)
|
|
(1)
|
100,322
|
|
|
General and
administrative
|
39,914
|
|
|
(2,299)
|
|
(1)
|
37,615
|
|
|
Amortization of
acquired customer-based intangible assets
|
33,815
|
|
|
(33,815)
|
|
(2)
|
—
|
|
|
Special charges
(recoveries)
|
11,117
|
|
|
(11,117)
|
|
(4)
|
—
|
|
|
GAAP-based income
from operations and operating margin (%) / Non-GAAP-based income
from operations and operating margin (%)
|
107,157
|
|
19.7
|
%
|
77,352
|
|
(5)
|
184,509
|
|
34.0
|
%
|
Other income
(expense), net
|
(3,558)
|
|
|
3,558
|
|
(6)
|
—
|
|
|
Provision for
(recovery of) income taxes
|
30,822
|
|
|
(7,319)
|
|
(7)
|
23,503
|
|
|
GAAP-based net
income / Non-GAAP-based net income, attributable to
OpenText
|
45,022
|
|
|
88,229
|
|
(8)
|
133,251
|
|
|
GAAP-based
earnings per share / Non-GAAP-based earnings per share-diluted,
attributable to OpenText
|
$
|
0.18
|
|
|
$
|
0.36
|
|
(8)
|
$
|
0.54
|
|
|
|
|
(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 one-time, non-recurring 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, and
operating margin stated as a percentage of total
revenue.
|
(6)
|
Adjustment relates to
the exclusion of Other income (expense) from our Non-GAAP-based
operating expenses as Other income (expense) relates primarily 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 non-marketable securities 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.
|
(7)
|
Adjustment relates to
differences between the GAAP-based tax provision rate of
approximately 41% and a Non-GAAP-based tax rate of approximately
15%; these rate differences are due to the income tax effects of
expenses that are excluded for the purpose of calculating
Non-GAAP-based adjusted net income. Such excluded expenses 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 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 15%, 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, 2016
|
|
|
Per share
diluted
|
GAAP-based net
income, attributable to OpenText
|
$
|
45,022
|
|
$
|
0.18
|
|
Add:
|
|
|
|
|
Amortization
|
58,663
|
|
0.24
|
|
Share-based
compensation
|
7,572
|
|
0.03
|
|
Special charges
(recoveries)
|
11,117
|
|
0.04
|
|
Other (income)
expense, net
|
3,558
|
|
0.01
|
|
GAAP-based provision
for (recovery of ) income taxes
|
30,822
|
|
0.12
|
|
Non-GAAP-based
provision for income taxes
|
(23,503)
|
|
(0.08)
|
|
Non-GAAP-based net
income, attributable to OpenText
|
$
|
133,251
|
|
$
|
0.54
|
|
Reconciliation of
selected GAAP-based measures to Non-GAAP-based measures for the six
months ended December 31, 2016.
|
(In thousands
except for per share amounts)
|
|
Six Months Ended
December 31, 2016
|
|
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
|
$
|
143,442
|
|
|
$
|
(571)
|
|
(1)
|
$
|
142,871
|
|
|
Customer
support
|
53,087
|
|
|
(505)
|
|
(1)
|
52,582
|
|
|
Professional service
and other
|
81,638
|
|
|
(913)
|
|
(1)
|
80,725
|
|
|
Amortization of
acquired technology-based intangible assets
|
47,983
|
|
|
(47,983)
|
|
(2)
|
—
|
|
|
GAAP-based gross
profit and gross margin (%) / Non-GAAP-based gross profit and gross margin
(%)
|
701,987
|
|
67.9
|
%
|
49,972
|
|
(3)
|
751,959
|
|
72.7
|
%
|
Operating
expenses
|
|
|
|
|
|
|
Research and
development
|
123,293
|
|
|
(3,738)
|
|
(1)
|
119,555
|
|
|
Sales and
marketing
|
197,799
|
|
|
(5,149)
|
|
(1)
|
192,650
|
|
|
General and
administrative
|
78,111
|
|
|
(4,836)
|
|
(1)
|
73,275
|
|
|
Amortization of
acquired customer-based intangible assets
|
67,423
|
|
|
(67,423)
|
|
(2)
|
—
|
|
|
Special charges
(recoveries)
|
23,571
|
|
|
(23,571)
|
|
(4)
|
—
|
|
|
GAAP-based income
from operations and operating margin (%) / Non-GAAP-based income
from operations and operating margin (%)
|
181,219
|
|
17.5
|
%
|
154,689
|
|
(5)
|
335,908
|
|
32.5
|
%
|
Other income
(expense), net
|
3,141
|
|
|
(3,141)
|
|
(6)
|
—
|
|
|
Provision for
(recovery of) income taxes
|
(828,603)
|
|
|
870,698
|
|
(7)
|
42,095
|
|
|
GAAP-based net
income / Non-GAAP-based net income, attributable to
OpenText
|
957,906
|
|
|
(719,150)
|
|
(8)
|
238,756
|
|
|
GAAP-based
earnings per share / Non GAAP-based earnings per share-diluted,
attributable to OpenText
|
$
|
3.89
|
|
|
$
|
(2.92)
|
|
(8)
|
$
|
0.97
|
|
|
|
|
(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 one-time,
non-recurring 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, and
operating margin stated as a percentage of total
revenue.
|
(6)
|
Adjustment relates to
the exclusion of Other income (expense) from our Non-GAAP-based
operating expenses as Other income (expense) relates primarily 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.
|
(7)
|
Adjustment relates to
differences between the GAAP-based tax recovery rate of
approximately 641% and a Non-GAAP-based tax rate of approximately
15%; these rate differences are due to the income tax effects of
expenses that are excluded for the purpose of calculating
Non-GAAP-based adjusted net income. Such excluded expenses 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 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 15%, 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:
|
|
Six Months Ended
December 31, 2016
|
|
|
Per share
diluted
|
GAAP-based net
income, attributable to OpenText
|
$
|
957,906
|
|
$
|
3.89
|
|
Add:
|
|
|
Amortization
|
115,406
|
|
0.47
|
|
Share-based
compensation
|
15,712
|
|
0.06
|
|
Special charges
(recoveries)
|
23,571
|
|
0.10
|
|
Other (income)
expense, net
|
(3,141)
|
|
(0.01)
|
|
GAAP-based provision
for (recovery of) income taxes
|
(828,603)
|
|
(3.37)
|
|
Non-GAAP based
provision for income taxes
|
(42,095)
|
|
(0.17)
|
|
Non-GAAP-based net
income, attributable to OpenText
|
$
|
238,756
|
|
$
|
0.97
|
|
Reconciliation of
selected GAAP-based measures to Non-GAAP-based measures for the
three months ended September 30, 2016.
(In thousands
except for per share amounts)
|
|
Three Months Ended
September 30, 2016
|
|
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
|
$
|
70,292
|
|
|
$
|
(360)
|
|
(1)
|
$
|
69,932
|
|
|
Customer
support
|
25,738
|
|
|
(235)
|
|
(1)
|
25,503
|
|
|
Professional service
and other
|
41,343
|
|
|
(445)
|
|
(1)
|
40,898
|
|
|
Amortization of
acquired technology-based intangible assets
|
23,135
|
|
|
(23,135)
|
|
(2)
|
—
|
|
|
GAAP-based gross
profit and gross margin (%) / Non-GAAP-based gross profit and gross margin
(%)
|
327,311
|
|
66.6
|
%
|
24,175
|
|
(3)
|
351,486
|
|
71.5
|
%
|
Operating
expenses
|
|
|
|
|
|
|
Research and
development
|
58,572
|
|
|
(1,743)
|
|
(1)
|
56,829
|
|
|
Sales and
marketing
|
95,148
|
|
|
(2,820)
|
|
(1)
|
92,328
|
|
|
General and
administrative
|
38,197
|
|
|
(2,537)
|
|
(1)
|
35,660
|
|
|
Amortization of
acquired customer-based intangible assets
|
33,608
|
|
|
(33,608)
|
|
(2)
|
—
|
|
|
Special charges
(recoveries)
|
12,454
|
|
|
(12,454)
|
|
(4)
|
—
|
|
|
GAAP-based income
from operations and operating margin (%) / Non-GAAP-based income
from operations and operating margin (%)
|
74,062
|
|
15.1
|
%
|
77,337
|
|
(5)
|
151,399
|
|
30.8
|
%
|
Other income
(expense), net
|
6,699
|
|
|
(6,699)
|
|
(6)
|
—
|
|
|
Provision for
(recovery of) income taxes
|
(859,425)
|
|
|
878,017
|
|
(7)
|
18,592
|
|
|
GAAP-based net
income / Non-GAAP-based net income, attributable to
OpenText
|
912,884
|
|
|
(807,379)
|
|
(8)
|
105,505
|
|
|
GAAP-based
earnings per share / Non-GAAP-based earnings per share-diluted,
attributable to OpenText
|
$
|
3.73
|
|
|
$
|
(3.30)
|
|
(8)
|
$
|
0.43
|
|
|
|
|
(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 one-time, non-recurring 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, and
operating margin stated as a percentage of total
revenue.
|
(6)
|
Adjustment relates to
the exclusion of Other income (expense) from our Non-GAAP-based
operating expenses as Other income (expense) relates primarily 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.
|
(7)
|
Adjustment relates to
differences between the GAAP-based tax recovery rate of
approximately 1,607% and a Non-GAAP-based tax rate of approximately
15%; these rate differences are due to the income tax effects of
expenses that are excluded for the purpose of calculating
Non-GAAP-based adjusted net income. Such excluded expenses 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 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 15%, 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
September 30, 2016
|
|
|
Per share
diluted
|
GAAP-based net
income, attributable to OpenText
|
$
|
912,884
|
|
$
|
3.73
|
|
Add:
|
|
|
Amortization
|
56,743
|
|
0.23
|
|
Share-based
compensation
|
8,140
|
|
0.03
|
|
Special charges
(recoveries)
|
12,454
|
|
0.05
|
|
Other (income)
expense, net
|
(6,699)
|
|
(0.03)
|
|
GAAP-based provision
for (recovery of ) income taxes
|
(859,425)
|
|
(3.51)
|
|
Non-GAAP-based
provision for income taxes
|
(18,592)
|
|
(0.07)
|
|
Non-GAAP-based net
income, attributable to OpenText
|
$
|
105,505
|
|
$
|
0.43
|
|
Reconciliation of
selected GAAP-based measures to Non-GAAP-based measures for the
three months ended December 31, 2015.
(In thousands
except for per share amounts)
|
|
Three Months Ended
December 31, 2015
|
|
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
|
$
|
58,918
|
|
|
$
|
(158)
|
|
(1)
|
$
|
58,760
|
|
|
Customer
support
|
21,689
|
|
|
(258)
|
|
(1)
|
21,431
|
|
|
Professional service
and other
|
38,375
|
|
|
(386)
|
|
(1)
|
37,989
|
|
|
Amortization of
acquired technology-based intangible assets
|
18,731
|
|
|
(18,731)
|
|
(2)
|
—
|
|
|
GAAP-based gross
profit and gross margin (%) / Non-GAAP-based gross profit and gross margin
(%)
|
325,605
|
|
70.0
|
%
|
19,533
|
|
(3)
|
345,138
|
|
74.2
|
%
|
Operating
expenses
|
|
|
|
|
|
|
Research and
development
|
45,710
|
|
|
(736)
|
|
(1)
|
44,974
|
|
|
Sales and
marketing
|
85,875
|
|
|
(2,715)
|
|
(1)
|
83,160
|
|
|
General and
administrative
|
33,767
|
|
|
(2,328)
|
|
(1)
|
31,439
|
|
|
Amortization of
acquired customer-based intangible assets
|
27,793
|
|
|
(27,793)
|
|
(2)
|
—
|
|
|
Special charges
(recoveries)
|
9,088
|
|
|
(9,088)
|
|
(4)
|
—
|
|
|
GAAP-based income
from operations and operating margin (%) / Non-GAAP-based income
from operations and operating margin (%)
|
110,042
|
|
23.6
|
%
|
62,193
|
|
(5)
|
172,235
|
|
37.0
|
%
|
Other income
(expense), net
|
961
|
|
|
(961)
|
|
(6)
|
—
|
|
|
Provision for
(recovery of) income taxes
|
4,074
|
|
|
26,480
|
|
(7)
|
30,554
|
|
|
GAAP-based net
income / Non-GAAP-based net income, attributable to
OpenText
|
87,686
|
|
|
34,752
|
|
(8)
|
122,438
|
|
|
GAAP-based
earnings per share / Non-GAAP-based earnings per share-diluted,
attributable to OpenText
|
$
|
0.36
|
|
|
$
|
0.14
|
|
(8)
|
$
|
0.50
|
|
|
|
|
(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 one-time, non-recurring 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, and
operating margin stated as a percentage of total
revenue.
|
(6)
|
Adjustment relates to
the exclusion of Other income (expense) from our Non-GAAP-based
operating expenses as Other income (expense) relates primarily 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.
|
(7)
|
Adjustment relates to
differences between the GAAP-based tax provision rate of
approximately 4% and a Non-GAAP-based tax rate of approximately
20%; these rate differences are due to the income tax effects of
expenses that are excluded for the purpose of calculating
Non-GAAP-based adjusted net income. Such excluded expenses include
amortization, share-based compensation, Special charges
(recoveries) and other income (expense), net. Also excluded are tax
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. In arriving at our Non-GAAP-based tax rate of
approximately 20%, 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, 2015
|
|
|
Per share
diluted
|
GAAP-based net
income, attributable to OpenText
|
$
|
87,686
|
|
$
|
0.36
|
|
Add:
|
|
|
Amortization
|
46,524
|
|
0.19
|
|
Share-based
compensation
|
6,581
|
|
0.03
|
|
Special charges
(recoveries)
|
9,088
|
|
0.04
|
|
Other (income)
expense, net
|
(961)
|
|
—
|
|
GAAP-based provision
for (recovery of ) income taxes
|
4,074
|
|
0.02
|
|
Non-GAAP-based
provision for income taxes
|
(30,554)
|
|
(0.14)
|
|
Non-GAAP-based net
income, attributable to OpenText
|
$
|
122,438
|
|
$
|
0.50
|
|
Reconciliation of
selected GAAP-based measures to Non-GAAP-based measures for the six
months ended December 31, 2015.
(In thousands
except for per share amounts)
|
|
Six Months Ended
December 31, 2015
|
|
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
|
$
|
117,834
|
|
|
$
|
(439)
|
|
(1)
|
$
|
117,395
|
|
|
Customer
support
|
42,197
|
|
|
(416)
|
|
(1)
|
41,781
|
|
|
Professional service
and other
|
76,439
|
|
|
(839)
|
|
(1)
|
75,600
|
|
|
Amortization of
acquired technology-based intangible assets
|
38,614
|
|
|
(38,614)
|
|
(2)
|
—
|
|
|
GAAP-based gross
profit and gross margin (%) / Non-GAAP-based gross profit and gross margin
(%)
|
620,088
|
|
68.9
|
%
|
40,308
|
|
(3)
|
660,396
|
|
73.4
|
%
|
Operating
expenses
|
|
|
|
|
|
|
Research and
development
|
92,150
|
|
|
(1,488)
|
|
(1)
|
90,662
|
|
|
Sales and
marketing
|
163,820
|
|
|
(5,830)
|
|
(1)
|
157,990
|
|
|
General and
administrative
|
69,336
|
|
|
(4,102)
|
|
(1)
|
65,234
|
|
|
Amortization of
acquired customer-based intangible assets
|
55,598
|
|
|
(55,598)
|
|
(2)
|
—
|
|
|
Special charges
(recoveries)
|
26,425
|
|
|
(26,425)
|
|
(4)
|
—
|
|
|
GAAP-based income
from operations and operating margin (%) / Non-GAAP-based income
from operations and operating margin (%)
|
186,515
|
|
20.7
|
%
|
133,751
|
|
(5)
|
320,266
|
|
35.6
|
%
|
Other income
(expense), net
|
(3,952)
|
|
|
3,952
|
|
(6)
|
—
|
|
|
Provision for
(recovery of) income taxes
|
15,276
|
|
|
41,049
|
|
(7)
|
56,325
|
|
|
GAAP-based net
income / Non-GAAP-based net income, attributable to
OpenText
|
128,972
|
|
|
96,654
|
|
(8)
|
225,626
|
|
|
GAAP-based
earnings per share / Non GAAP-based earnings per share-diluted,
attributable to OpenText
|
$
|
0.53
|
|
|
$
|
0.39
|
|
(8)
|
$
|
0.92
|
|
|
|
|
(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
one-time,
non-recurring 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, and
operating margin stated as a percentage of total
revenue.
|
(6)
|
Adjustment relates to
the exclusion of Other income (expense) from our Non-GAAP-based
operating expenses as Other income (expense) relates primarily 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.
|
(7)
|
Adjustment relates to
differences between the GAAP-based tax provision rate of
approximately 11% and a Non-GAAP-based tax rate of 20%; these rate
differences are due to the income tax effects of expenses that are
excluded for the purpose of calculating Non-GAAP-based adjusted net
income. Such excluded expenses include amortization, share-based
compensation, Special charges (recoveries) and other income
(expense), net. Also excluded are tax 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. In arriving at
our Non-GAAP-based tax rate of 20%, 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:
|
|
Six Months Ended
December 31, 2015
|
|
|
Per share
diluted
|
GAAP-based net
income, attributable to OpenText
|
$
|
128,972
|
|
$
|
0.53
|
|
Add:
|
|
|
Amortization
|
94,212
|
|
0.39
|
|
Share-based
compensation
|
13,114
|
|
0.05
|
|
Special charges
(recoveries)
|
26,425
|
|
0.11
|
|
Other (income)
expense, net
|
3,952
|
|
0.02
|
|
GAAP-based provision
for (recovery of) income taxes
|
15,276
|
|
0.06
|
|
Non-GAAP based
provision for income taxes
|
(56,325)
|
|
(0.24)
|
|
Non-GAAP-based net
income, attributable to OpenText
|
$
|
225,626
|
|
$
|
0.92
|
|
|
|
(3)
|
The following tables
provide a composition of our major currencies for revenue and
expenses, expressed as a percentage, for the three and six months
ended December 31, 2016 and 2015:
|
|
Three Months
Ended December 31,
2016
|
|
Three Months
Ended December 31,
2015
|
Currencies
|
% of Revenue
|
% of Expenses*
|
|
% of Revenue
|
% of Expenses*
|
EURO
|
25
|
%
|
16
|
%
|
|
25
|
%
|
14
|
%
|
GBP
|
7
|
%
|
7
|
%
|
|
8
|
%
|
8
|
%
|
CAD
|
4
|
%
|
11
|
%
|
|
5
|
%
|
11
|
%
|
USD
|
55
|
%
|
50
|
%
|
|
52
|
%
|
50
|
%
|
Other
|
9
|
%
|
16
|
%
|
|
10
|
%
|
17
|
%
|
Total
|
100
|
%
|
100
|
%
|
|
100
|
%
|
100
|
%
|
|
Six Months Ended
December 31, 2016
|
|
Six Months Ended
December 31, 2015
|
Currencies
|
% of Revenue
|
% of Expenses*
|
|
% of Revenue
|
% of Expenses*
|
EURO
|
24
|
%
|
15
|
%
|
|
24
|
%
|
14
|
%
|
GBP
|
7
|
%
|
7
|
%
|
|
9
|
%
|
8
|
%
|
CAD
|
4
|
%
|
11
|
%
|
|
4
|
%
|
12
|
%
|
USD
|
56
|
%
|
51
|
%
|
|
53
|
%
|
50
|
%
|
Other
|
9
|
%
|
16
|
%
|
|
10
|
%
|
16
|
%
|
Total
|
100
|
%
|
100
|
%
|
|
100
|
%
|
100
|
%
|
|
*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).
|
To view the original version on PR Newswire,
visit:http://www.prnewswire.com/news-releases/opentext-reports-second-quarter-fiscal-year-2017-financial-results-300401567.html
SOURCE Open Text Corporation