Reports Record Total Revenues of $4.5 Billion with 28% Growth
Fiscal 2023 Annual Highlights Y/Y
Total
Revenues
(in
millions)
|
|
Annual Recurring
Revenues
(in
millions)
|
|
Cloud
Revenues
(in
millions)
|
Reported
|
Constant
Currency
|
|
Reported
|
Constant
Currency
|
|
Reported
|
Constant
Currency
|
$4,485
|
$4,617
|
|
$3,615
|
$3,718
|
|
$1,700
|
$1,739
|
+28.4 %
|
+32.2 %
|
|
+26.2 %
|
+29.7 %
|
|
+10.8 %
|
+13.3 %
|
Annual Recurring
Revenues represent 81% of Total Revenues
|
- Total revenues of $4.5 billion up
28.4% Y/Y or up 32.2% Y/Y in constant currency (CC)
- Annual Recurring Revenues (ARR) of $3.6
billion, up 26.2% Y/Y or up 29.7% Y/Y in CC
- Cloud revenues of $1.7 billion up
10.8% Y/Y or up 13.3% Y/Y in CC
- FY'23 enterprise cloud bookings(1) of $528 million, up 9.5% Y/Y
- 10 consecutive quarters of cloud and ARR organic growth in
constant currency
- Operating cash flows were $779
million and free cash flows(2) were $655 million
- GAAP-based net income of $150
million, down 62.1% Y/Y, margin of 3.4%
- Adjusted EBITDA(2) of $1.5
billion, margin of 32.8% while making key investments in
cloud, AI and Security
- Record capital returns of $260
million via dividends
- GAAP-based diluted earnings per share (EPS) of $0.56, Non-GAAP diluted EPS(2) of
$3.29
- Increased annualized dividend to $1.00 per share, subject to quarterly Board
approval. Declared quarterly dividend of $0.25 per share.
- Includes Micro Focus results from February 1, 2023 to June
30, 2023
Fiscal 2023 Fourth Quarter Highlights
Total
Revenues
(in
millions)
|
|
Annual Recurring
Revenues
(in
millions)
|
|
Cloud
Revenues
(in
millions)
|
Reported
|
Constant
Currency
|
|
Reported
|
Constant
Currency
|
|
Reported
|
Constant
Currency
|
$1,491
|
$1,502
|
|
$1,157
|
$1,167
|
|
$452
|
$455
|
+65.2 %
|
+66.5 %
|
|
+56.4 %
|
+57.7 %
|
|
+9.7 %
|
+10.6 %
|
Annual Recurring
Revenues represent 78% of Total Revenues
|
- Total revenues of $1.5 billion,
up 65.2% Y/Y or up 66.5% in CC
- Annual recurring revenues of $1.2
billion, up 56.4% Y/Y or up 57.7% in CC
- Cloud revenues of $452 million,
up 9.7% Y/Y or up 10.6% Y/Y in CC
- Quarterly enterprise cloud bookings(1) of
$164 million, up 12.3%
- Operating cash flows were $115
million and free cash flows(2) were $91 million
- GAAP-based net loss of ($49)
million, down (147.7)% Y/Y, margin of (3.3)%, due to
acquisition expenses
- Adjusted EBITDA(2) of $463
million, margin of 31.0%
- GAAP-based diluted earnings per share (EPS) of ($0.18), Non-GAAP diluted EPS(2) of
$0.91
WATERLOO, ON, Aug. 3, 2023
/PRNewswire/ -- Open Text Corporation (NASDAQ: OTEX), (TSX: OTEX),
today announced its financial results for the fourth quarter and
year ended June 30, 2023.
"OpenText Fiscal 2023 progress and results are exceptional and
record setting, with 28% total revenue growth. OpenText delivered
record total revenues of $4.5 billion
of which 81%, or $3.6 billion, is
annually recurring," said Mark J.
Barrenechea, OpenText CEO & CTO. "Our mission to empower
individuals and organizations of all sizes to achieve the
Information Advantage. Looking ahead, Fiscal 2024 will be another
year of outstanding growth for OpenText led by Cloud and our
expanded Information Management mission, with Micro Focus products
contributing organic growth."
"OpenText holds a distinctive position as a leader in
Information Management. Our comprehensive range of products,
effective go-to-market strategies, and talented employees position
us favorably for sustained growth and profitability," added Mr.
Barrenechea. "Today we are announcing opentext.ai and OpenText
Aviator™, our vision and initial AI products, to be the trusted
partner for our customer's AI journey. I am extremely optimistic
about the future of OpenText, and helping our customers unlock the
value of their information."
"OpenText delivered an exceptional operating performance in
Fiscal 2023 with adjusted EBITDA of $1.5
billion and free cash flows of $655
million. Our balance sheet and liquidity position remain
strong with approximately $1.2
billion in cash as of June 30, 2023, and a net leverage
ratio of 3.5x," said Madhu
Ranganathan, OpenText EVP, CFO. "The value we are generating
through the OpenText Business System of Total Growth is truly
remarkable. We accelerated our initial integration of Micro Focus
operations ahead of schedule, we remain on track to meet our
near-term and long-term operating goals."
(1)
|
Enterprise cloud
bookings is defined as the total value from cloud services and
subscription contracts, entered into in the fiscal year 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 consolidated financial
statements below.
|
Financial Highlights for Fiscal 2023 and Q4 with Year Over
Year Comparisons
Summary of Annual
Results
|
|
|
|
|
|
|
|
|
(In millions, except
per share data)
|
FY'23
|
FY'22
|
$
Change
|
% Change
|
|
FY'23
in CC*
|
% Change
in CC*
|
|
Revenues:
|
|
|
|
|
|
|
|
|
Cloud services and
subscriptions
|
$1,700.4
|
$1,535.0
|
$165.4
|
10.8 %
|
|
$1,739.1
|
13.3 %
|
|
Customer
support
|
1,915.0
|
1,331.0
|
$584.1
|
43.9 %
|
|
1,978.8
|
48.7 %
|
|
Total annual
recurring revenues**
|
$3,615.5
|
$2,866.0
|
$749.5
|
26.2 %
|
|
$3,717.9
|
29.7 %
|
|
License
|
539.0
|
358.4
|
$180.7
|
50.4 %
|
|
555.4
|
55.0 %
|
|
Professional service
and other
|
330.5
|
269.5
|
$61.0
|
22.6 %
|
|
344.1
|
27.7 %
|
|
Total
revenues
|
$4,485.0
|
$3,493.8
|
$991.1
|
28.4 %
|
|
$4,617.4
|
32.2 %
|
|
GAAP-based operating
income
|
$ 516.3
|
$644.8
|
($128.5)
|
(19.9) %
|
|
N/A
|
N/A
|
|
Non-GAAP-based
operating income (1)
|
$1,365.3
|
$1,176.9
|
$188.4
|
16.0 %
|
|
$1,387.5
|
17.9 %
|
|
GAAP-based net income
attributable to OpenText
|
$150.4
|
$397.1
|
($246.7)
|
(62.1) %
|
|
N/A
|
N/A
|
|
GAAP-based EPS,
diluted
|
$0.56
|
$1.46
|
($0.90)
|
(61.6) %
|
|
N/A
|
N/A
|
|
Non-GAAP-based EPS,
diluted (1)(2)
|
$3.29
|
$3.22
|
$0.07
|
2.2 %
|
|
$3.37
|
4.7 %
|
|
Adjusted
EBITDA (1)
|
$1,472.9
|
$1,265.0
|
$207.9
|
16.4 %
|
|
$1,495.8
|
18.2 %
|
|
Operating cash
flows
|
$779.2
|
$981.8
|
($202.6)
|
(20.6) %
|
|
N/A
|
N/A
|
|
Free cash flows
(1)
|
$655.4
|
$888.7
|
($233.3)
|
(26.3) %
|
|
N/A
|
N/A
|
|
Summary of Quarterly
Results
|
|
|
|
|
|
|
|
|
(In millions, except
per share data)
|
Q4
FY'23
|
Q4
FY'22
|
$
Change
|
% Change
|
|
Q4
FY'23
in CC*
|
% Change
in CC*
|
|
Revenues:
|
|
|
|
|
|
|
|
|
Cloud services and
subscriptions
|
$451.7
|
$411.6
|
$40.1
|
9.7 %
|
|
$455.4
|
10.6 %
|
|
Customer
support
|
705.3
|
328.3
|
$376.9
|
114.8 %
|
|
711.4
|
116.7 %
|
|
Total annual
recurring revenues**
|
$1,156.9
|
$739.9
|
$417.0
|
56.4 %
|
|
$1,166.8
|
57.7 %
|
|
License
|
228.8
|
94.7
|
$134.1
|
141.6 %
|
|
229.2
|
142.0 %
|
|
Professional service
and other
|
105.1
|
67.8
|
$37.3
|
54.9 %
|
|
106.3
|
56.7 %
|
|
Total
revenues
|
$1,490.8
|
$902.5
|
$588.4
|
65.2 %
|
|
$1,502.3
|
66.5 %
|
|
GAAP-based operating
income
|
$121.3
|
$137.6
|
($16.3)
|
(11.8) %
|
|
N/A
|
N/A
|
|
Non-GAAP-based
operating income (1)
|
$431.7
|
$291.0
|
$140.8
|
48.4 %
|
|
$421.5
|
44.9 %
|
|
GAAP-based net income
attributable to OpenText
|
($48.7)
|
$102.2
|
($150.9)
|
(147.7) %
|
|
N/A
|
N/A
|
|
GAAP-based EPS,
diluted
|
($0.18)
|
$0.38
|
($0.56)
|
(147.4) %
|
|
N/A
|
N/A
|
|
Non-GAAP-based EPS,
diluted (1)(2)
|
$0.91
|
$0.80
|
$0.11
|
13.8 %
|
|
$0.88
|
10.0 %
|
|
Adjusted
EBITDA (1)
|
$462.8
|
$313.6
|
$149.2
|
47.6 %
|
|
$452.7
|
44.3 %
|
|
Operating cash
flows
|
$115.3
|
$251.9
|
($136.6)
|
(54.2) %
|
|
N/A
|
N/A
|
|
Free cash flows
(1)
|
$91.2
|
$213.8
|
($122.5)
|
(57.3) %
|
|
N/A
|
N/A
|
|
|
|
(1)
|
Please see Note 2 "Use
of Non-GAAP Financial Measures" to the 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 Program
As part of our quarterly, non-cumulative cash dividend program,
the Board declared on August 2, 2023,
a quarterly cash dividend of $0.25
per common share. The record date for this dividend is September 1, 2023, and the payment date is
September 22, 2023. 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.
Quarterly Business Highlights
- Key customer wins in the quarter include: BNP Paribas, Carl
Zeiss AG, CNA Insurance, Daiken, DHL eCommerce Benelux, Elevance
Health, Engie Italia, FEMA (US
Department of Homeland Security), ID Logistics, Investors Heritage
Life Insurance Company, Renesas, RS Component, Swedbank,
TechMahindra, Warta
- OpenText and Anritsu Service Assurance signed a new deal for 5G
network capabilities and next-generation architecture
- Today we are announcing opentext.ai, our AI strategy, and
initial AI products including OpenText Aviator™ and IDOL, to
be the trusted partner for our customers' AI journey
- OpenText powers organizations to achieve digital success in a
multi-cloud world with Cloud Editions 23.3
- OpenText has been recognized as a Leader in the 2023 Gartner
Magic Quadrant review for Application Security Testing (AST) for
the 10th consecutive year
- OpenText received a 2023 SAP® Pinnacle Award in the Partner
Solution Success category, which recognizes its outstanding
contributions as an SAP partner
Summary of Annual
Results
|
|
|
|
|
|
FY'23
|
FY'22
|
% Change
|
|
Revenue
(millions)
|
$4,485.0
|
$3,493.8
|
28.4 %
|
|
GAAP-based gross
margin
|
70.6 %
|
69.6 %
|
105
|
bps
|
Non-GAAP-based gross
margin (1)
|
76.1 %
|
75.6 %
|
49
|
bps
|
GAAP-based EPS,
diluted
|
$0.56
|
$1.46
|
(61.6) %
|
|
Non-GAAP-based EPS,
diluted (1)(2)
|
$3.29
|
$3.22
|
2.2 %
|
|
Summary of Quarterly
Results
|
|
|
|
|
|
|
|
|
Q4
FY'23
|
Q3
FY'23
|
Q4
FY'22
|
% Change
(Q4 FY'23 vs
Q3 FY'23)
|
|
% Change
(Q4 FY'23 vs
Q4 FY'22)
|
|
Revenue
(millions)
|
$1,490.8
|
$1,244.7
|
$902.5
|
19.8 %
|
|
65.2 %
|
|
GAAP-based gross
margin
|
71.4 %
|
70.3 %
|
70.2 %
|
110
|
bps
|
120
|
bps
|
Non-GAAP-based gross
margin (1)
|
76.9 %
|
75.8 %
|
75.9 %
|
110
|
bps
|
100
|
bps
|
GAAP-based EPS,
diluted
|
($0.18)
|
$0.21
|
$0.38
|
(185.7) %
|
|
(147.4) %
|
|
Non-GAAP-based EPS,
diluted (1)(2)
|
$0.91
|
$0.73
|
$0.80
|
24.7 %
|
|
13.8 %
|
|
|
|
(1)
|
Please see Note 2 "Use
of Non-GAAP Financial Measures" to the 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 at http://investors.opentext.com and invites the
public 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 10
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/investor-events-and-presentations.
A replay of the call will be available beginning August 3,
2023, at 7:00 p.m. ET through
11:59 p.m. on August 17, 2023, and can be accessed by dialing
1-855-669-9658 (toll-free) or +1-604-674-8052 (international) and
using passcode 0296 followed by the number sign.
Please see Note 2 "Use of Non-GAAP Financial Measures" to the
consolidated financial statements below 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 the focus of Open Text Corporation ("OpenText" or "the
Company") on growth, future cloud growth and market share gains,
future organic growth initiatives and deployment of capital,
intention to maintain a dividend program, including any targeted
annualized dividend, the associated benefits of the Micro Focus
acquisition, future tax rates, new platform and product offerings
and associated benefits to customers, our announcement of
opentext.ai and OpenText Aviator™, including our AI strategy,
vision and initial AI products, scaling OpenText, 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 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, financing plans, business strategy, budgets,
capital expenditures, competitive positions, growth opportunities,
plans and objectives of management, including any anticipated
synergy benefits; our ability to integrate successfully Micro
Focus' operations and programs, including incurring unanticipated
costs, delays or difficulties; 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. For additional information with respect to risks and other
factors which could occur, see the Company's Annual Report on Form
10-K, Quarterly Report 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, 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 ©2023 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/who-we-are/copyright-information.
OPEN TEXT
CORPORATION CONSOLIDATED BALANCE SHEETS
(In thousands of U.S. dollars, except share data)
|
|
|
June 30,
2023
|
|
June 30,
2022
|
ASSETS
|
|
|
|
Cash and cash
equivalents
|
$
1,231,625
|
|
$
1,693,741
|
Accounts receivable
trade, net of allowance for credit losses of $13,828 as of
June 30, 2023 and $16,473 as of June 30, 2022
|
682,517
|
|
426,652
|
Contract
assets
|
71,196
|
|
26,167
|
Income taxes
recoverable
|
68,161
|
|
18,255
|
Prepaid expenses and
other current assets
|
221,732
|
|
120,552
|
Total current
assets
|
2,275,231
|
|
2,285,367
|
Property and
equipment
|
356,904
|
|
244,709
|
Operating lease right
of use assets
|
285,723
|
|
198,132
|
Long-term contract
assets
|
64,553
|
|
19,719
|
Goodwill
|
8,662,603
|
|
5,244,653
|
Acquired intangible
assets
|
4,080,879
|
|
1,075,208
|
Deferred tax
assets
|
926,719
|
|
810,154
|
Other assets
|
342,318
|
|
256,987
|
Long-term income taxes
recoverable
|
94,270
|
|
44,044
|
Total
assets
|
$
17,089,200
|
|
$
10,178,973
|
LIABILITIES AND
SHAREHOLDERS' EQUITY
|
|
|
|
Current
liabilities:
|
|
|
|
Accounts payable and
accrued liabilities
|
$
996,261
|
|
$
448,607
|
Current portion of
long-term debt
|
320,850
|
|
10,000
|
Operating lease
liabilities
|
91,425
|
|
56,380
|
Deferred
revenues
|
1,721,781
|
|
902,202
|
Income taxes
payable
|
89,297
|
|
51,069
|
Total current
liabilities
|
3,219,614
|
|
1,468,258
|
Long-term
liabilities:
|
|
|
|
Accrued
liabilities
|
51,961
|
|
18,208
|
Pension
liability
|
126,312
|
|
60,951
|
Long-term
debt
|
8,562,096
|
|
4,209,567
|
Long-term operating
lease liabilities
|
271,579
|
|
198,695
|
Long-term deferred
revenues
|
217,771
|
|
91,144
|
Long-term income taxes
payable
|
193,808
|
|
34,003
|
Deferred tax
liabilities
|
423,955
|
|
65,887
|
Total long-term
liabilities
|
9,847,482
|
|
4,678,455
|
Shareholders'
equity:
|
|
|
|
Share capital and
additional paid-in capital
|
|
|
|
270,902,571
and 269,522,639 Common Shares issued and
outstanding at
June 30, 2023 and June 30, 2022, respectively; authorized
Common Shares:
unlimited
|
2,176,947
|
|
2,038,674
|
Accumulated other
comprehensive income (loss)
|
(53,559)
|
|
(7,659)
|
Retained
earnings
|
2,048,984
|
|
2,160,069
|
Treasury stock, at
cost (3,536,375 and 3,706,420 shares at June 30, 2023 and
June 30, 2022, respectively)
|
(151,597)
|
|
(159,966)
|
Total OpenText
shareholders' equity
|
4,020,775
|
|
4,031,118
|
Non-controlling
interests
|
1,329
|
|
1,142
|
Total shareholders'
equity
|
4,022,104
|
|
4,032,260
|
Total liabilities
and shareholders' equity
|
$
17,089,200
|
|
$
10,178,973
|
OPEN TEXT
CORPORATION CONSOLIDATED STATEMENTS OF
INCOME (In thousands of U.S. dollars, except share and
per share data) (unaudited)
|
|
|
Three Months Ended
June 30,
|
|
2023
|
|
2022
|
Revenues:
|
|
|
|
Cloud services and
subscriptions
|
$
451,659
|
|
$
411,595
|
Customer
support
|
705,277
|
|
328,339
|
License
|
228,796
|
|
94,688
|
Professional service
and other
|
105,098
|
|
67,832
|
Total
revenues
|
1,490,830
|
|
902,454
|
Cost of
revenues:
|
|
|
|
Cloud services and
subscriptions
|
166,394
|
|
133,785
|
Customer
support
|
86,695
|
|
30,571
|
License
|
6,184
|
|
2,595
|
Professional service
and other
|
90,498
|
|
55,436
|
Amortization of
acquired technology-based intangible assets
|
77,045
|
|
46,274
|
Total cost of
revenues
|
426,816
|
|
268,661
|
Gross profit
|
1,064,014
|
|
633,793
|
Operating
expenses:
|
|
|
|
Research and
development
|
249,958
|
|
118,931
|
Sales and
marketing
|
333,244
|
|
185,985
|
General and
administrative
|
136,866
|
|
85,958
|
Depreciation
|
31,152
|
|
22,706
|
Amortization of
acquired customer-based intangible assets
|
121,285
|
|
56,341
|
Special charges
(recoveries)
|
70,222
|
|
26,281
|
Total operating
expenses
|
942,727
|
|
496,202
|
Income
from operations
|
121,287
|
|
137,591
|
Other income (expense),
net
|
(25,355)
|
|
(19)
|
Interest and other
related expense, net
|
(145,829)
|
|
(40,342)
|
Income (loss)
before income taxes
|
(49,897)
|
|
97,230
|
Provision for (recovery
of) income taxes
|
(1,212)
|
|
(5,005)
|
Net income (loss) for
the period
|
$
(48,685)
|
|
$
102,235
|
Net (income)
attributable to non-controlling interests
|
(49)
|
|
(39)
|
Net income (loss)
attributable to OpenText
|
$
(48,734)
|
|
$
102,196
|
Earnings per
share—basic attributable to OpenText
|
$
(0.18)
|
|
$
0.38
|
Earnings per
share—diluted attributable to OpenText
|
$
(0.18)
|
|
$
0.38
|
Weighted average number
of Common Shares outstanding—basic (in '000's)
|
270,772
|
|
270,152
|
Weighted average number
of Common Shares outstanding—diluted (in '000's)
|
270,772
|
|
270,394
|
OPEN TEXT
CORPORATION CONSOLIDATED STATEMENTS OF
INCOME (In thousands of U.S. dollars, except share and
per share data)
|
|
|
Year Ended June
30,
|
|
2023
|
|
2022
|
|
2021
|
Revenues:
|
|
|
|
|
|
Cloud services and
subscriptions
|
$
1,700,433
|
|
$
1,535,017
|
|
$
1,407,445
|
Customer
support
|
1,915,020
|
|
1,330,965
|
|
1,334,062
|
License
|
539,026
|
|
358,351
|
|
384,711
|
Professional service
and other
|
330,501
|
|
269,511
|
|
259,897
|
Total
revenues
|
4,484,980
|
|
3,493,844
|
|
3,386,115
|
Cost of
revenues:
|
|
|
|
|
|
Cloud services and
subscriptions
|
590,165
|
|
511,713
|
|
481,818
|
Customer
support
|
209,705
|
|
121,485
|
|
122,753
|
License
|
16,645
|
|
13,501
|
|
13,916
|
Professional service
and other
|
276,888
|
|
216,895
|
|
197,183
|
Amortization of
acquired technology-based intangible assets
|
223,184
|
|
198,607
|
|
218,796
|
Total cost of
revenues
|
1,316,587
|
|
1,062,201
|
|
1,034,466
|
Gross profit
|
3,168,393
|
|
2,431,643
|
|
2,351,649
|
Operating
expenses:
|
|
|
|
|
|
Research and
development
|
680,587
|
|
440,448
|
|
421,447
|
Sales and
marketing
|
948,598
|
|
677,118
|
|
622,221
|
General and
administrative
|
419,590
|
|
317,085
|
|
263,521
|
Depreciation
|
107,761
|
|
88,241
|
|
85,265
|
Amortization of
acquired customer-based intangible assets
|
326,406
|
|
217,105
|
|
216,544
|
Special charges
(recoveries)
|
169,159
|
|
46,873
|
|
1,748
|
Total operating
expenses
|
2,652,101
|
|
1,786,870
|
|
1,610,746
|
Income
from operations
|
516,292
|
|
644,773
|
|
740,903
|
Other income (expense),
net
|
34,469
|
|
29,118
|
|
61,434
|
Interest and other
related expense, net
|
(329,428)
|
|
(157,880)
|
|
(151,567)
|
Income
before income taxes
|
221,333
|
|
516,011
|
|
650,770
|
Provision for (recovery
of) income taxes
|
70,767
|
|
118,752
|
|
339,906
|
Net income
|
$
150,566
|
|
$
397,259
|
|
$
310,864
|
Net (income)
attributable to non-controlling interests
|
(187)
|
|
(169)
|
|
(192)
|
Net income attributable
to OpenText
|
$
150,379
|
|
$
397,090
|
|
$
310,672
|
Earnings per
share—basic attributable to OpenText
|
$
0.56
|
|
$
1.46
|
|
$
1.14
|
Earnings per
share—diluted attributable to OpenText
|
$
0.56
|
|
$
1.46
|
|
$
1.14
|
Weighted average number
of Common Shares outstanding—basic
(in
'000's)
|
270,299
|
|
271,271
|
|
272,533
|
Weighted average number
of Common Shares outstanding—diluted
(in
'000's)
|
270,451
|
|
271,909
|
|
273,479
|
OPEN TEXT
CORPORATION CONSOLIDATED STATEMENTS OF COMPREHENSIVE
INCOME
(In thousands of U.S. dollars)
|
|
|
Year Ended June
30,
|
|
2023
|
|
2022
|
|
2021
|
Net income
|
$
150,566
|
|
$
397,259
|
|
$
310,864
|
Other comprehensive
income (loss)—net of tax:
|
|
|
|
|
|
Net foreign currency
translation adjustments
|
(40,798)
|
|
(78,724)
|
|
42,440
|
Unrealized gain (loss)
on cash flow hedges:
|
|
|
|
|
|
Unrealized gain (loss)
- net of tax (1)
|
(941)
|
|
(1,859)
|
|
4,246
|
(Gain) loss
reclassified into net income - net of tax
(2)
|
2,721
|
|
373
|
|
(3,280)
|
Unrealized gain (loss)
on available-for-sale financial assets:
|
|
|
|
|
|
Unrealized gain (loss)
- net of tax (3)
|
(602)
|
|
—
|
|
—
|
Actuarial gain (loss)
relating to defined benefit pension plans:
|
|
|
|
|
|
Actuarial gain (loss)
- net of tax (4)
|
(6,605)
|
|
5,595
|
|
3,987
|
Amortization of
actuarial (gain) loss into net income - net of tax
(5)
|
325
|
|
718
|
|
1,020
|
Total other
comprehensive income (loss) net
|
(45,900)
|
|
(73,897)
|
|
48,413
|
Total comprehensive
income
|
104,666
|
|
323,362
|
|
359,277
|
Comprehensive income
attributable to non-controlling interests
|
(187)
|
|
(169)
|
|
(192)
|
Total comprehensive
income attributable to OpenText
|
$
104,479
|
|
$
323,193
|
|
$
359,085
|
|
|
(1)
|
Net of tax expense
(recovery) of ($339), ($671), and $1,532 for the year ended June
30, 2023, 2022 and 2021, respectively.
|
(2)
|
Net of tax expense
(recovery) of $981, $134 and ($1,182) for the year ended June 30,
2023, 2022 and 2021, respectively.
|
(3)
|
Net of tax expense
(recovery) of $159, nil, and nil for the year ended June 30, 2023,
2022 and 2021, respectively.
|
(4)
|
Net of tax expense
(recovery) of ($1,961), $1,866 and $990 for the year ended June 30,
2023, 2022 and 2021, respectively.
|
(5)
|
Net of tax expense
(recovery) of $143, $290 and $379 for the year ended June 30, 2023,
2022 and 2021, respectively.
|
OPEN TEXT
CORPORATION CONSOLIDATED STATEMENTS OF SHAREHOLDERS'
EQUITY (In thousands of U.S. dollars and
shares)
|
|
|
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, 2020
|
271,863
|
|
$
1,851,777
|
|
(622)
|
|
$
(23,608)
|
|
$
2,159,396
|
|
$
17,825
|
|
$
1,319
|
|
$
4,006,709
|
Adoption of ASU 2016-13
- cumulative effect
|
—
|
|
—
|
|
—
|
|
—
|
|
(2,450)
|
|
—
|
|
—
|
|
(2,450)
|
Issuance of Common
Shares
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Under employee stock
option plans
|
1,605
|
|
49,565
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
49,565
|
Under employee stock
purchase plans
|
573
|
|
22,307
|
|
193
|
|
6,690
|
|
—
|
|
—
|
|
—
|
|
28,997
|
Share-based
compensation
|
—
|
|
51,969
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
51,969
|
Purchase of treasury
stock
|
—
|
|
—
|
|
(1,455)
|
|
(64,847)
|
|
—
|
|
—
|
|
—
|
|
(64,847)
|
Issuance of treasury
stock
|
—
|
|
(12,379)
|
|
316
|
|
12,379
|
|
—
|
|
—
|
|
—
|
|
—
|
Common Shares
repurchased
|
(2,500)
|
|
(15,475)
|
|
—
|
|
—
|
|
(103,630)
|
|
—
|
|
—
|
|
(119,105)
|
Dividends
declared
($0.777 per Common
Share)
|
—
|
|
—
|
|
—
|
|
—
|
|
(210,662)
|
|
—
|
|
—
|
|
(210,662)
|
Non-controlling
interest
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
Other comprehensive
income - net
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
48,413
|
|
—
|
|
48,413
|
Net income
|
—
|
|
—
|
|
—
|
|
—
|
|
310,672
|
|
—
|
|
192
|
|
310,864
|
Balance as of June
30, 2021
|
271,541
|
|
$
1,947,764
|
|
(1,568)
|
|
$
(69,386)
|
|
$
2,153,326
|
|
$
66,238
|
|
$
1,511
|
|
$
4,099,453
|
Issuance of Common
Shares
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Under employee stock
option plans
|
950
|
|
32,714
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
32,714
|
Under employee stock
purchase plans
|
842
|
|
33,806
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
33,806
|
Share-based
compensation
|
—
|
|
69,556
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
69,556
|
Purchase of treasury
stock
|
—
|
|
—
|
|
(2,630)
|
|
(111,593)
|
|
—
|
|
—
|
|
—
|
|
(111,593)
|
Issuance of treasury
stock
|
—
|
|
(21,013)
|
|
492
|
|
21,013
|
|
—
|
|
—
|
|
—
|
|
—
|
Common Shares
repurchased
|
(3,810)
|
|
(24,295)
|
|
—
|
|
—
|
|
(152,692)
|
|
—
|
|
—
|
|
(176,987)
|
Dividends
declared
($0.8836 per Common
Share)
|
—
|
|
—
|
|
—
|
|
—
|
|
(237,655)
|
|
—
|
|
—
|
|
(237,655)
|
Non-controlling
interest
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
Other comprehensive
loss - net
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
(73,897)
|
|
—
|
|
(73,897)
|
Distribution to
non-controlling interest
|
—
|
|
142
|
|
—
|
|
—
|
|
—
|
|
—
|
|
(538)
|
|
(396)
|
Net income
|
—
|
|
—
|
|
—
|
|
—
|
|
397,090
|
|
—
|
|
169
|
|
397,259
|
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
|
245
|
|
7,830
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
7,830
|
Under employee stock
purchase plans
|
1,135
|
|
31,679
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
31,679
|
Share-based
compensation
|
—
|
|
130,119
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
130,119
|
Purchase of treasury
stock
|
—
|
|
—
|
|
(521)
|
|
(21,919)
|
|
—
|
|
—
|
|
—
|
|
(21,919)
|
Issuance of treasury
stock
|
—
|
|
(31,355)
|
|
691
|
|
30,288
|
|
—
|
|
—
|
|
—
|
|
(1,067)
|
Common Shares
repurchased
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
Dividends declared
($0.9720 per Common Share)
|
—
|
|
—
|
|
—
|
|
—
|
|
(261,464)
|
|
—
|
|
—
|
|
(261,464)
|
Non-controlling
interest
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
Other comprehensive
loss - net
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
(45,900)
|
|
—
|
|
(45,900)
|
Net income
|
—
|
|
—
|
|
—
|
|
—
|
|
150,379
|
|
—
|
|
187
|
|
150,566
|
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
|
OPEN TEXT
CORPORATION CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands of U.S.
dollars) (unaudited)
|
|
|
Three Months Ended
June 30,
|
|
2023
|
|
2022
|
Cash flows from
operating activities:
|
|
|
|
Net income (loss) for
the period
|
$
(48,685)
|
|
$
102,235
|
Adjustments to
reconcile net income (loss) to net cash provided by operating
activities:
|
|
|
|
Depreciation and
amortization of intangible assets
|
229,482
|
|
125,321
|
Share-based
compensation expense
|
41,904
|
|
24,464
|
Pension
expense
|
3,401
|
|
1,723
|
Amortization of debt
discount and issuance costs
|
8,257
|
|
1,486
|
Write-off of right of
use assets
|
2,507
|
|
17,707
|
Loss on extinguishment
of debt
|
—
|
|
—
|
Loss on sale and write
down of property and equipment
|
903
|
|
198
|
Deferred
taxes
|
29,140
|
|
(79,420)
|
Share in net (income)
loss of equity investees
|
11,530
|
|
401
|
Changes in financial
instruments
|
16,274
|
|
—
|
Changes in operating
assets and liabilities:
|
|
|
|
Accounts
receivable
|
27,335
|
|
13,413
|
Contract
assets
|
(43,643)
|
|
(10,758)
|
Prepaid expenses and
other current assets
|
42,151
|
|
1,768
|
Income taxes
|
(116,569)
|
|
45,824
|
Accounts payable and
accrued liabilities
|
10,582
|
|
41,561
|
Deferred
revenue
|
(85,764)
|
|
(30,878)
|
Other assets
|
(5,299)
|
|
771
|
Operating lease assets
and liabilities, net
|
(8,205)
|
|
(3,876)
|
Net cash provided by
operating activities
|
115,301
|
|
251,940
|
Cash flows from
investing activities:
|
|
|
|
Additions of property
and equipment
|
(24,060)
|
|
(38,172)
|
Purchase of Micro Focus
International PLC, net of cash acquired
|
(2,357)
|
|
—
|
Purchase of Bricata
Inc.
|
—
|
|
174
|
Net cash used in
investing activities
|
(26,417)
|
|
(37,998)
|
Cash flows from
financing activities:
|
|
|
|
Proceeds from issuance
of Common Shares from exercise of stock options and ESPP
|
14,159
|
|
10,738
|
Repayment of long-term
debt and Revolver
|
(186,463)
|
|
(2,500)
|
Debt issuance
costs
|
(690)
|
|
—
|
Repurchase of Common
Shares
|
—
|
|
(40,869)
|
Purchase of treasury
stock
|
(21,919)
|
|
(35,933)
|
Payments of dividends
to shareholders
|
(65,068)
|
|
(59,042)
|
Other financing
activities
|
758
|
|
—
|
Net cash used in
financing activities
|
(259,223)
|
|
(127,606)
|
Foreign exchange gain
(loss) on cash held in foreign currencies
|
4,571
|
|
(26,276)
|
Increase
(decrease) in cash, cash
equivalents and restricted cash during the period
|
(165,768)
|
|
60,060
|
Cash, cash equivalents
and restricted cash at beginning of the period
|
1,399,720
|
|
1,635,851
|
Cash, cash equivalents
and restricted cash at end of the period
|
$
1,233,952
|
|
$
1,695,911
|
OPEN TEXT
CORPORATION CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands of U.S. dollars)
|
|
Reconciliation of
cash, cash equivalents and restricted cash:
|
June 30,
2023
|
|
June 30,
2022
|
Cash and cash
equivalents
|
$
1,231,625
|
|
$
1,693,741
|
Restricted cash
(1)
|
2,327
|
|
2,170
|
Total cash, cash
equivalents and restricted cash
|
$
1,233,952
|
|
$
1,695,911
|
|
|
|
|
|
|
(1)
|
Restricted cash is
classified under the Prepaid expenses and other current assets and
Other assets line items on the Consolidated Balance
Sheets.
|
OPEN TEXT
CORPORATION CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands of U.S. dollars)
|
|
|
Year Ended June
30,
|
|
2023
|
|
2022
|
|
2021
|
Cash flows from
operating activities:
|
|
|
|
|
|
Net income for the
period
|
$
150,566
|
|
$
397,259
|
|
$
310,864
|
Adjustments to
reconcile net income to net cash provided by operating
activities:
|
|
|
|
|
|
Depreciation and
amortization of intangible assets
|
657,351
|
|
503,953
|
|
520,605
|
Share-based
compensation expense
|
130,302
|
|
69,556
|
|
51,969
|
Pension
expense
|
9,207
|
|
6,606
|
|
6,616
|
Amortization of debt
discount and issuance costs
|
16,753
|
|
5,422
|
|
4,548
|
Write-off of right of
use assets
|
9,626
|
|
17,707
|
|
—
|
Loss on extinguishment
of debt
|
8,152
|
|
27,413
|
|
—
|
Loss on sale and write
down of property and equipment
|
2,331
|
|
294
|
|
2,771
|
Deferred
taxes
|
(149,560)
|
|
(36,088)
|
|
73,039
|
Share in net (income)
loss of equity investees
|
23,077
|
|
(58,702)
|
|
(62,897)
|
Changes in financial
instruments
|
128,841
|
|
—
|
|
—
|
Changes in operating
assets and liabilities:
|
|
|
|
|
|
Accounts
receivable
|
168,604
|
|
81,841
|
|
60,954
|
Contract
assets
|
(73,539)
|
|
(37,966)
|
|
(39,333)
|
Prepaid expenses and
other current assets
|
(23,035)
|
|
(13,954)
|
|
37,733
|
Income taxes
|
14,948
|
|
34,589
|
|
(140,763)
|
Accounts payable and
accrued liabilities
|
(127,092)
|
|
(24,177)
|
|
26,088
|
Deferred
revenue
|
(128,395)
|
|
(5,236)
|
|
39,295
|
Other assets
|
(11,297)
|
|
17,297
|
|
11,914
|
Operating lease assets
and liabilities, net
|
(27,635)
|
|
(4,004)
|
|
(27,283)
|
Net cash provided by
operating activities
|
779,205
|
|
981,810
|
|
876,120
|
Cash flows from
investing activities:
|
|
|
|
|
|
Additions of property
and equipment
|
(123,832)
|
|
(93,109)
|
|
(63,675)
|
Purchase of Micro Focus
International PLC, net of cash acquired
|
(5,657,963)
|
|
—
|
|
—
|
Purchase of Zix
Corporation, net of cash acquired
|
—
|
|
(856,175)
|
|
—
|
Purchase of Bricata
Inc.
|
—
|
|
(17,753)
|
|
—
|
Purchase of
XMedius
|
—
|
|
—
|
|
444
|
Purchase of Dynamic
Solutions Group Inc.
|
—
|
|
—
|
|
(971)
|
Realized gain (loss) on
financial instruments
|
131,248
|
|
—
|
|
—
|
Other investing
activities
|
(873)
|
|
(3,922)
|
|
(4,568)
|
Net cash used in
investing activities
|
(5,651,420)
|
|
(970,959)
|
|
(68,770)
|
Cash flows from
financing activities:
|
|
|
|
|
|
Proceeds from issuance
of Common Shares from exercise of stock options and ESPP
|
39,331
|
|
67,215
|
|
80,067
|
Proceeds from
long-term debt and Revolver
|
4,927,450
|
|
1,500,000
|
|
—
|
Repayment of long-term
debt and Revolver
|
(202,926)
|
|
(860,000)
|
|
(610,000)
|
Debt extinguishment
costs
|
—
|
|
(24,969)
|
|
—
|
Debt issuance
costs
|
(77,899)
|
|
(17,159)
|
|
—
|
Repurchase of Common
Shares
|
—
|
|
(176,987)
|
|
(119,105)
|
Purchase of treasury
stock
|
(21,919)
|
|
(111,593)
|
|
(64,847)
|
Distribution to
non-controlling interest
|
—
|
|
(396)
|
|
—
|
Payments of dividends
to shareholders
|
(259,549)
|
|
(237,655)
|
|
(210,662)
|
Other financing
activities
|
(1,435)
|
|
—
|
|
—
|
Net cash provided by
(used in) financing activities
|
4,403,053
|
|
138,456
|
|
(924,547)
|
Foreign exchange gain
(loss) on cash held in foreign currencies
|
7,203
|
|
(63,196)
|
|
29,734
|
Increase
(decrease) in cash, cash
equivalents and restricted cash during the period
|
(461,959)
|
|
86,111
|
|
(87,463)
|
Cash, cash equivalents
and restricted cash at beginning of the period
|
1,695,911
|
|
1,609,800
|
|
1,697,263
|
Cash, cash equivalents
and restricted cash at end of the period
|
$
1,233,952
|
|
$
1,695,911
|
|
$
1,609,800
|
OPEN TEXT
CORPORATION CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands of U.S.
dollars) (unaudited)
|
|
Reconciliation of
cash, cash equivalents and restricted cash:
|
June 30,
2023
|
|
June 30,
2022
|
|
June 30,
2021
|
Cash and cash
equivalents
|
$
1,231,625
|
|
$
1,693,741
|
|
$
1,607,306
|
Restricted cash
(1)
|
2,327
|
|
2,170
|
|
2,494
|
Total cash, cash
equivalents and restricted cash
|
$
1,233,952
|
|
$
1,695,911
|
|
$
1,609,800
|
|
|
|
|
|
|
(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
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 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.
|
|
|
|
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 June 30, 2023
(In thousands,
except for per share data)
|
|
Three Months Ended
June 30, 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
|
$
166,394
|
|
$ (2,876)
|
(1)
|
$
163,518
|
|
Customer
support
|
86,695
|
|
(1,213)
|
(1)
|
85,482
|
|
Professional service
and other
|
90,498
|
|
(1,826)
|
(1)
|
88,672
|
|
Amortization of
acquired technology-based intangible assets
|
77,045
|
|
(77,045)
|
(2)
|
—
|
|
GAAP-based gross
profit and gross margin (%) / Non-GAAP-based gross profit and gross
margin (%)
|
1,064,014
|
71.4 %
|
82,960
|
(3)
|
1,146,974
|
76.9 %
|
Operating
expenses
|
|
|
|
|
|
|
Research and
development
|
249,958
|
|
(13,584)
|
(1)
|
236,374
|
|
Sales and
marketing
|
333,244
|
|
(13,467)
|
(1)
|
319,777
|
|
General and
administrative
|
136,866
|
|
(8,938)
|
(1)
|
127,928
|
|
Amortization of
acquired customer-based intangible assets
|
121,285
|
|
(121,285)
|
(2)
|
—
|
|
Special charges
(recoveries)
|
70,222
|
|
(70,222)
|
(4)
|
—
|
|
GAAP-based income
from operations / Non-GAAP-based income from
operations
|
121,287
|
|
310,456
|
(5)
|
431,743
|
|
Other income (expense),
net
|
(25,355)
|
|
25,355
|
(6)
|
—
|
|
Provision for (recovery
of) income taxes
|
(1,212)
|
|
41,240
|
(7)
|
40,028
|
|
GAAP-based net loss
/ Non-GAAP-based net income, attributable to
OpenText
|
(48,734)
|
|
294,571
|
(8)
|
245,837
|
|
GAAP-based earnings
per share / Non-GAAP-based earnings per share-diluted, attributable
to OpenText
|
$
(0.18)
|
|
$
1.09
|
(8)
|
$
0.91
|
|
|
|
(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 2% 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 loss to Non-GAAP-based net income:
|
|
Three Months Ended
June 30, 2023
|
|
|
Per share
diluted
|
GAAP-based net loss,
attributable to OpenText
|
$
(48,734)
|
$
(0.18)
|
Add:
|
|
|
Amortization
|
198,330
|
0.73
|
Share-based
compensation
|
41,904
|
0.15
|
Special charges
(recoveries)
|
70,222
|
0.26
|
Other (income) expense,
net
|
25,355
|
0.10
|
GAAP-based recovery of
income taxes
|
(1,212)
|
—
|
Non-GAAP-based recovery
of income taxes
|
(40,028)
|
(0.15)
|
Non-GAAP-based net
income, attributable to OpenText
|
$
245,837
|
$
0.91
|
Reconciliation of
Adjusted EBITDA
|
|
|
Three Months Ended
June 30, 2023
|
GAAP-based net loss,
attributable to OpenText
|
$
(48,734)
|
Add:
|
|
Recovery of
income taxes
|
(1,212)
|
Interest and other
related expense, net
|
145,829
|
Amortization of
acquired technology-based intangible assets
|
77,045
|
Amortization of
acquired customer-based intangible assets
|
121,285
|
Depreciation
|
31,152
|
Share-based
compensation
|
41,904
|
Special charges
(recoveries)
|
70,222
|
Other (income) expense,
net
|
25,355
|
Adjusted
EBITDA
|
$
462,846
|
|
|
GAAP-based net loss
margin
|
(3.3) %
|
Adjusted EBITDA
margin
|
31.0 %
|
Reconciliation of
Free cash flows
|
|
|
Three Months Ended
June 30, 2023
|
GAAP-based cash flows
provided by operating activities
|
$
115,301
|
Add:
|
|
Capital expenditures
(1)
|
(24,060)
|
Free cash
flows
|
$
91,241
|
|
|
(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 year ended
June 30, 2023
(In thousands,
except for per share data)
|
|
Year Ended June 30,
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
|
$
590,165
|
|
$
(10,664)
|
(1)
|
$
579,501
|
|
Customer
support
|
209,705
|
|
(3,627)
|
(1)
|
206,078
|
|
Professional service
and other
|
276,888
|
|
(6,998)
|
(1)
|
269,890
|
|
Amortization of
acquired technology-based intangible assets
|
223,184
|
|
(223,184)
|
(2)
|
—
|
|
GAAP-based gross
profit and gross margin (%) / Non-GAAP-based gross profit and gross
margin (%)
|
3,168,393
|
70.6 %
|
244,473
|
(3)
|
3,412,866
|
76.1 %
|
Operating
expenses
|
|
|
|
|
|
|
Research and
development
|
680,587
|
|
(39,065)
|
(1)
|
641,522
|
|
Sales and
marketing
|
948,598
|
|
(41,710)
|
(1)
|
906,888
|
|
General and
administrative
|
419,590
|
|
(28,238)
|
(1)
|
391,352
|
|
Amortization of
acquired customer-based intangible assets
|
326,406
|
|
(326,406)
|
(2)
|
—
|
|
Special charges
(recoveries)
|
169,159
|
|
(169,159)
|
(4)
|
—
|
|
GAAP-based income
from operations / Non-GAAP-based income from
operations
|
516,292
|
|
849,051
|
(5)
|
1,365,343
|
|
Other income (expense),
net
|
34,469
|
|
(34,469)
|
(6)
|
—
|
|
Provision for
income taxes
|
70,767
|
|
74,261
|
(7)
|
145,028
|
|
GAAP-based net
income / Non-GAAP-based net income, attributable to
OpenText
|
150,379
|
|
740,321
|
(8)
|
890,700
|
|
GAAP-based earnings
per share / Non-GAAP-based earnings per share-diluted, attributable
to OpenText
|
$
0.56
|
|
$
2.73
|
(8)
|
$
3.29
|
|
|
|
(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 32% 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:
|
|
Year Ended June 30,
2023
|
|
|
Per share
diluted
|
GAAP-based net income,
attributable to OpenText
|
$
150,379
|
$
0.56
|
Add:
|
|
|
Amortization
|
549,590
|
2.03
|
Share-based
compensation
|
130,302
|
0.48
|
Special charges
(recoveries)
|
169,159
|
0.63
|
Other (income) expense,
net
|
(34,469)
|
(0.13)
|
GAAP-based provision
for income taxes
|
70,767
|
0.26
|
Non-GAAP-based recovery
of income taxes
|
(145,028)
|
(0.54)
|
Non-GAAP-based net
income, attributable to OpenText
|
$
890,700
|
$
3.29
|
Reconciliation of
Adjusted EBITDA
|
|
|
Year Ended June 30,
2023
|
GAAP-based net income,
attributable to OpenText
|
$
150,379
|
Add:
|
|
Provision for
income taxes
|
70,767
|
Interest and other
related expense, net
|
329,428
|
Amortization of
acquired technology-based intangible assets
|
223,184
|
Amortization of
acquired customer-based intangible assets
|
326,406
|
Depreciation
|
107,761
|
Share-based
compensation
|
130,302
|
Special charges
(recoveries)
|
169,159
|
Other (income) expense,
net
|
(34,469)
|
Adjusted
EBITDA
|
$
1,472,917
|
|
|
GAAP-based net income
margin
|
3.4 %
|
Adjusted EBITDA
margin
|
32.8 %
|
Reconciliation of
Free cash flows
|
|
|
Year Ended June 30,
2023
|
GAAP-based cash flows
provided by operating activities
|
$
779,205
|
Add:
|
|
Capital expenditures
(1)
|
(123,832)
|
Free cash
flows
|
$
655,373
|
|
|
(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
(loss) 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 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 on 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 adjusted 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:
|
|
|
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 recovery
of 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:
|
|
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 three months
ended June 30, 2022
(In thousands,
except for per share data)
|
|
Three Months Ended
June 30, 2022
|
|
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
|
$
133,785
|
|
$ (2,213)
|
(1)
|
$
131,572
|
|
Customer
support
|
30,571
|
|
(768)
|
(1)
|
29,803
|
|
Professional service
and other
|
55,436
|
|
(1,465)
|
(1)
|
53,971
|
|
Amortization of
acquired technology-based intangible assets
|
46,274
|
|
(46,274)
|
(2)
|
—
|
|
GAAP-based gross
profit and gross margin (%) /Non-GAAP-based gross profit and gross
margin (%)
|
633,793
|
70.2 %
|
50,720
|
(3)
|
684,513
|
75.9 %
|
Operating
expenses
|
|
|
|
|
|
|
Research and
development
|
118,931
|
|
(7,186)
|
(1)
|
111,745
|
|
Sales and
marketing
|
185,985
|
|
(7,251)
|
(1)
|
178,734
|
|
General and
administrative
|
85,958
|
|
(5,582)
|
(1)
|
80,376
|
|
Amortization of
acquired customer-based intangible assets
|
56,341
|
|
(56,341)
|
(2)
|
—
|
|
Special charges
(recoveries)
|
26,281
|
|
(26,281)
|
(4)
|
—
|
|
GAAP-based income
from operations / Non-GAAP-based income from
operations
|
137,591
|
|
153,361
|
(5)
|
290,952
|
|
Other income (expense),
net
|
(19)
|
|
19
|
(6)
|
—
|
|
Provision for (recovery
of) income taxes
|
(5,005)
|
|
40,090
|
(7)
|
35,085
|
|
GAAP-based net
income / Non-GAAP-based net income, attributable to
OpenText
|
102,196
|
|
113,290
|
(8)
|
215,486
|
|
GAAP-based earnings
per share / Non-GAAP-based earnings per share-diluted, attributable
to OpenText
|
$
0.38
|
|
$
0.42
|
(8)
|
$
0.80
|
|
|
|
(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.
|
|
|
(7)
|
Adjustment relates to
differences between the GAAP-based tax provision rate of
approximately 5% and a Non-GAAP-based tax rate of approximately
26%; these rate differences are due to the income tax effects of
items that are excluded for the purpose of calculating
Non-GAAP-based adjusted 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 26%, 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
June 30, 2022
|
|
|
Per share
diluted
|
GAAP-based net income,
attributable to OpenText
|
$
102,196
|
$
0.38
|
Add:
|
|
|
Amortization
|
102,615
|
0.38
|
Share-based
compensation
|
24,465
|
0.09
|
Special charges
(recoveries)
|
26,281
|
0.10
|
Other (income) expense,
net
|
19
|
—
|
GAAP-based recovery of
income taxes
|
(5,005)
|
(0.02)
|
Non-GAAP-based recovery
of income taxes
|
(35,085)
|
(0.13)
|
Non-GAAP-based net
income, attributable to OpenText
|
$
215,486
|
$
0.80
|
|
Reconciliation of
Adjusted EBITDA
|
|
|
Three Months Ended
June 30, 2022
|
GAAP-based net income,
attributable to OpenText
|
$
102,196
|
Add:
|
|
Recovery of
income taxes
|
(5,005)
|
Interest and other
related expense, net
|
40,342
|
Amortization of
acquired technology-based intangible assets
|
46,274
|
Amortization of
acquired customer-based intangible assets
|
56,341
|
Depreciation
|
22,706
|
Share-based
compensation
|
24,464
|
Special charges
(recoveries)
|
26,281
|
Other (income) expense,
net
|
19
|
Adjusted
EBITDA
|
$
313,618
|
|
|
GAAP-based net income
margin
|
11.3 %
|
Adjusted EBITDA
margin
|
34.8 %
|
Reconciliation of
Free cash flows
|
|
|
Three Months Ended
June 30, 2022
|
GAAP-based cash flows
provided by operating activities
|
$
251,940
|
Add:
|
|
Capital expenditures
(1)
|
(38,172)
|
Free cash
flows
|
$
213,768
|
|
|
(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 year ended
June 30, 2022
(In thousands,
except for per share data)
|
|
Year Ended June 30,
2022
|
|
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
|
$
511,713
|
|
$ (5,285)
|
(1)
|
$
506,428
|
|
Customer
support
|
121,485
|
|
(2,399)
|
(1)
|
119,086
|
|
Professional service
and other
|
216,895
|
|
(3,740)
|
(1)
|
213,155
|
|
Amortization of
acquired technology-based intangible assets
|
198,607
|
|
(198,607)
|
(2)
|
—
|
|
GAAP-based gross
profit and gross margin (%) / Non-GAAP-based gross profit and gross
margin (%)
|
2,431,643
|
69.6 %
|
210,031
|
(3)
|
2,641,674
|
75.6 %
|
Operating
expenses
|
|
|
|
|
|
|
Research and
development
|
440,448
|
|
(17,122)
|
(1)
|
423,326
|
|
Sales and
marketing
|
677,118
|
|
(22,628)
|
(1)
|
654,490
|
|
General and
administrative
|
317,085
|
|
(18,382)
|
(1)
|
298,703
|
|
Amortization of
acquired customer-based intangible assets
|
217,105
|
|
(217,105)
|
(2)
|
—
|
|
Special charges
(recoveries)
|
46,873
|
|
(46,873)
|
(4)
|
—
|
|
GAAP-based income
from operations / Non-GAAP-based income from
operations
|
644,773
|
|
532,141
|
(5)
|
1,176,914
|
|
Other income (expense),
net
|
29,118
|
|
(29,118)
|
(6)
|
—
|
|
Provision for
income taxes
|
118,752
|
|
23,913
|
(7)
|
142,665
|
|
GAAP-based net
income / Non-GAAP-based net income, attributable to
OpenText
|
397,090
|
|
479,110
|
(8)
|
876,200
|
|
GAAP-based earnings
per share / Non-GAAP-based earnings per share-diluted, attributable
to OpenText
|
$
1.46
|
|
$
1.76
|
(8)
|
$
3.22
|
|
|
|
(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.
|
|
|
(7)
|
Adjustment relates to
differences between the GAAP-based tax provision rate of
approximately 23% 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 adjusted 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:
|
|
Year Ended June 30,
2022
|
|
|
Per share
diluted
|
GAAP-based net income,
attributable to OpenText
|
$
397,090
|
$
1.46
|
Add:
|
|
|
Amortization
|
415,712
|
1.52
|
Share-based
compensation
|
69,556
|
0.26
|
Special charges
(recoveries)
|
46,873
|
0.17
|
Other (income) expense,
net
|
(29,118)
|
(0.11)
|
GAAP-based provision
for income taxes
|
118,752
|
0.44
|
Non-GAAP-based recovery
of income taxes
|
(142,665)
|
(0.52)
|
Non-GAAP-based net
income, attributable to OpenText
|
$
876,200
|
$
3.22
|
Reconciliation of
Adjusted EBITDA
|
|
|
Year Ended June 30,
2022
|
GAAP-based net income,
attributable to OpenText
|
$
397,090
|
Add:
|
|
Provision for
income taxes
|
118,752
|
Interest and other
related expense, net
|
157,880
|
Amortization of
acquired technology-based intangible assets
|
198,607
|
Amortization of
acquired customer-based intangible assets
|
217,105
|
Depreciation
|
88,241
|
Share-based
compensation
|
69,556
|
Special charges
(recoveries)
|
46,873
|
Other (income) expense,
net
|
(29,118)
|
Adjusted
EBITDA
|
$
1,264,986
|
|
|
GAAP-based net income
margin
|
11.4 %
|
Adjusted EBITDA
margin
|
36.2 %
|
Reconciliation of
Free cash flows
|
|
|
Year Ended June 30,
2022
|
GAAP-based cash flows
provided by operating activities
|
$
981,810
|
Add:
|
|
Capital expenditures
(1)
|
(93,109)
|
Free cash
flows
|
$
888,701
|
|
|
(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 year ended June
30, 2023 and 2022:
|
|
|
Three Months Ended
June 30, 2023
|
|
Three Months Ended
June 30, 2022
|
Currencies
|
% of Revenue
|
% of Expenses(1)
|
|
% of Revenue
|
% of Expenses(1)
|
EURO
|
21 %
|
12 %
|
|
22 %
|
12 %
|
GBP
|
5 %
|
9 %
|
|
3 %
|
5 %
|
CAD
|
3 %
|
10 %
|
|
3 %
|
14 %
|
USD
|
60 %
|
48 %
|
|
63 %
|
54 %
|
Other
|
11 %
|
21 %
|
|
9 %
|
15 %
|
Total
|
100 %
|
100 %
|
|
100 %
|
100 %
|
|
|
Year Ended June 30,
2023
|
|
Year Ended June 30,
2022
|
Currencies
|
% of Revenue
|
% of Expenses(1)
|
|
% of Revenue
|
% of Expenses(1)
|
EURO
|
20 %
|
12 %
|
|
23 %
|
13 %
|
GBP
|
5 %
|
7 %
|
|
4 %
|
6 %
|
CAD
|
3 %
|
11 %
|
|
3 %
|
14 %
|
USD
|
62 %
|
51 %
|
|
62 %
|
53 %
|
Other
|
10 %
|
19 %
|
|
8 %
|
14 %
|
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