Record Q1 Total Revenues, Cloud Revenues and
ARR
Fiscal 2024 First Quarter Highlights
Total
Revenues
(in
millions)
|
|
Annual Recurring
Revenues
(in
millions)
|
|
Cloud
Revenues
(in
millions)
|
Reported
|
Constant
Currency
|
|
Reported
|
Constant
Currency
|
|
Reported
|
Constant
Currency
|
$1,425
|
$1,410
|
|
$1,149
|
$1,137
|
|
$451
|
$449
|
+67.3 %
|
+65.4 %
|
|
+59.1 %
|
+57.5 %
|
|
+11.5 %
|
+10.9 %
|
Annual Recurring
Revenues represent 81% of Total Revenues
|
- Total revenues of $1.425 billion,
up 67.3% Y/Y or up 65.4% in constant currency (CC)
- Annual recurring revenues (ARR) of $1,149 million, up 59.1% Y/Y or up 57.5% in
CC
- Cloud revenues of $451 million,
up 11.5% Y/Y or up 10.9% in CC
- Quarterly enterprise cloud bookings(1) of
$121 million, up 8.2% Y/Y
- Operating cash flows were $47
million and free cash flows(3) were $10 million
- GAAP-based net income of $81
million
- Adjusted EBITDA(2) of $495
million, margin of 34.7%
- GAAP-based diluted earnings per share (EPS) of $0.30, Non-GAAP diluted EPS(2) of
$1.01
WATERLOO, ON, Nov. 2, 2023
/PRNewswire/ -- Open Text Corporation (NASDAQ: OTEX), (TSX:
OTEX), today announced its financial results for the first quarter
ended September 30, 2023.
"OpenText executed extremely well in a volatile world with
record Q1 revenues of $1.425 billion
and 67% growth year-over-year. These strong Q1 results are a
foundation for a strong Fiscal 2024," said Mark J. Barrenechea, OpenText CEO & CTO. "We
delivered Cloud revenues of $451
million with 11% growth year-over-year, driven by increased
cloud consumption in our top value areas. Annual recurring revenues
of $1.1 billion grew 59%
year-over-year, representing 81% of total revenues."
"For over a decade, OpenText has helped organizations manage
large data platforms and we are at the forefront for the next
generation of AI innovation driven by OpenText Aviator," added Mr.
Barrenechea. "The basis of great AI is great Information
Management. With practical and trusted AI capabilities, customers
trust OpenText to power and protect their information. OpenText
Aviator empowers organizations to swiftly act, make sharp decisions
and evolve with intelligent capabilities. Aviator differentiates
our information management automation so organizations can easily
make the AI pivot."
"We are delighted with our solid performance in the quarter,"
said Madhu Ranganathan, OpenText
EVP, CFO. "First quarter results reflect continued strength in the
operational integration of Micro Focus as we delivered $495 million of adjusted EBITDA. Our balance
sheet and liquidity position remain strong with approximately
$920 million in cash as of
September 30, 2023. We have made total debt repayments of
approximately $560 million since the
acquisition of Micro Focus and OpenText remains on track to realize
our growth targets and achieve our free cash flow aspirations."
(1)
|
Enterprise cloud
bookings is defined as the total value from cloud services and
subscription contracts, entered into in the period that are new,
committed and incremental to our existing contracts, entered into
with our enterprise based customers.
|
(2)
|
Please see Note 2 "Use
of Non-GAAP Financial Measures" to the consolidated financial
statements below.
|
Financial Highlights for Q1 Fiscal 2024 with Year Over Year
Comparisons
Summary of Quarterly
Results
|
|
|
|
|
|
|
|
|
(In millions, except
per share data)
|
Q1
FY'24
|
Q1
FY'23
|
$
Change
|
% Change
|
|
Q1
FY'24 in CC*
|
% Change
in CC*
|
|
Revenues:
|
|
|
|
|
|
|
|
|
Cloud services and
subscriptions
|
$451.0
|
$404.7
|
$46.4
|
11.5 %
|
|
$448.6
|
10.9 %
|
|
Customer
support
|
697.7
|
317.4
|
$380.4
|
119.9 %
|
|
688.5
|
116.9 %
|
|
Total annual
recurring revenues**
|
$1,148.7
|
$722.0
|
$426.7
|
59.1 %
|
|
$1,137.0
|
57.5 %
|
|
License
|
173.0
|
62.5
|
$110.5
|
176.6 %
|
|
170.7
|
172.8 %
|
|
Professional service
and other
|
103.7
|
67.5
|
$36.2
|
53.6 %
|
|
101.8
|
50.9 %
|
|
Total
revenues
|
$1,425.4
|
$852.0
|
$573.4
|
67.3 %
|
|
$1,409.5
|
65.4 %
|
|
GAAP-based operating
income
|
$212.9
|
$146.4
|
$66.5
|
45.5 %
|
|
N/A
|
N/A
|
|
Non-GAAP-based
operating income (1)
|
$460.8
|
$280.9
|
$179.9
|
64.0 %
|
|
$447.4
|
59.3 %
|
|
GAAP-based net income
(loss) attributable to OpenText
|
$80.9
|
($116.9)
|
$197.8
|
169.2 %
|
|
N/A
|
N/A
|
|
GAAP-based EPS,
diluted
|
$0.30
|
($0.43)
|
$0.73
|
169.8 %
|
|
N/A
|
N/A
|
|
Non-GAAP-based EPS,
diluted (1)(2)
|
$1.01
|
$0.77
|
$0.24
|
31.2 %
|
|
$0.97
|
26.0 %
|
|
Adjusted
EBITDA (1)
|
$494.8
|
$304.0
|
$190.8
|
62.8 %
|
|
$481.0
|
58.2 %
|
|
Operating cash
flows
|
$47.1
|
$132.0
|
($84.8)
|
(64.3) %
|
|
N/A
|
N/A
|
|
Free cash flows
(1)
|
$9.6
|
$95.6
|
($86.1)
|
(90.0) %
|
|
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
As part of our quarterly, non-cumulative cash dividend program,
the Board declared on November 1, 2023, a cash dividend of
$0.25 per common share. The record
date for this dividend is December 1, 2023 and the payment
date is December 20, 2023. OpenText believes strongly in
returning value to its shareholders and intends to maintain its
dividend program. Any future declarations of dividends and the
establishment of future record and payment dates are all subject to
the final determination and discretion of the Board of
Directors.
Quarterly Business Highlights
- OpenText introduced OpenText Aviator AI capabilities in Cloud
Editions 23.4 at OpenText World 2023
- OpenText welcomed Google Cloud and Deloitte as Innovator-level
sponsors at OpenText World 2023
- Key customer wins in the quarter include: Arm, Banobras,
Bombardier, CNP Assurances, Emirates Integrated Telecom, Hargreaves
Lansdown, Hong Kong Airport Authority, Infosys for Goods and
Services Tax Network, Kutak Rock, Novelis, Petroleum Development
Oman, Vodafone
- OpenText introduced new unified OpenText Partner Network
- OpenText hired Shannon Bell as
EVP & Chief Digital Officer to join the Executive Leadership
Team
- OpenText announced the addition of automated Business Process
and Project Management Solutions to the OpenText Content business
through the acquisition of KineMatik
- OpenText completed repricing of Acquisition Term Loan
Summary of Quarterly
Results
|
|
|
|
|
|
|
|
|
Q1
FY'24
|
Q4
FY'23
|
Q1
FY'23
|
% Change
(Q1 FY'24 vs
Q4 FY'23)
|
|
% Change
(Q1 FY'24 vs
Q1 FY'23)
|
|
Revenue
(millions)
|
$1,425.4
|
$1,490.8
|
$852.0
|
(4.4) %
|
|
67.3 %
|
|
GAAP-based gross
margin
|
71.4 %
|
71.4 %
|
69.7 %
|
—
|
bps
|
170
|
bps
|
Non-GAAP-based gross
margin (1)
|
77.3 %
|
76.9 %
|
75.2 %
|
40
|
bps
|
210
|
bps
|
GAAP-based earnings
(loss) per share, diluted
|
$0.30
|
($0.18)
|
($0.43)
|
266.7 %
|
|
169.8 %
|
|
Non-GAAP-based EPS,
diluted (1)(2)
|
$1.01
|
$0.91
|
$0.77
|
11.0 %
|
|
31.2 %
|
|
|
|
(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 November 2, 2023 at 7:00
p.m. ET through 11:59 p.m. on
November 16, 2023 and can be accessed
by dialing 1-855-669-9658 (toll-free) or +1-604-674-8052
(international) and using passcode 0458 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-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, X, formerly known as Twitter, account or LinkedIn account.
The information posted through such channels may be material.
Accordingly, readers should monitor such channels in addition to
our other forms of communication.
OTEX-F
Copyright ©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)
|
|
|
September 30,
2023
|
|
June 30,
2023
|
ASSETS
|
|
|
|
Cash and cash
equivalents
|
$
919,850
|
|
$
1,231,625
|
Accounts receivable
trade, net of allowance for credit losses of $11,501 as of
September 30, 2023 and $13,828 as of June 30,
2023
|
676,594
|
|
682,517
|
Contract
assets
|
78,562
|
|
71,196
|
Income taxes
recoverable
|
70,179
|
|
68,161
|
Prepaid expenses and
other current assets
|
199,917
|
|
221,732
|
Total current
assets
|
1,945,102
|
|
2,275,231
|
Property and
equipment
|
361,612
|
|
356,904
|
Operating lease right
of use assets
|
266,053
|
|
285,723
|
Long-term contract
assets
|
54,448
|
|
64,553
|
Goodwill
|
8,618,765
|
|
8,662,603
|
Acquired intangible
assets
|
3,888,217
|
|
4,080,879
|
Deferred tax
assets
|
996,514
|
|
926,719
|
Other assets
|
328,972
|
|
342,318
|
Long-term income taxes
recoverable
|
94,193
|
|
94,270
|
Total
assets
|
$
16,553,876
|
|
$
17,089,200
|
LIABILITIES AND
SHAREHOLDERS' EQUITY
|
|
|
|
Current
liabilities:
|
|
|
|
Accounts payable and
accrued liabilities
|
$
836,042
|
|
$
996,261
|
Current portion of
long-term debt
|
145,850
|
|
320,850
|
Operating lease
liabilities
|
90,418
|
|
91,425
|
Deferred
revenues
|
1,596,321
|
|
1,721,781
|
Income taxes
payable
|
153,396
|
|
89,297
|
Total current
liabilities
|
2,822,027
|
|
3,219,614
|
Long-term
liabilities:
|
|
|
|
Accrued
liabilities
|
49,333
|
|
51,961
|
Pension
liability
|
125,616
|
|
126,312
|
Long-term
debt
|
8,554,569
|
|
8,562,096
|
Long-term operating
lease liabilities
|
252,629
|
|
271,579
|
Long-term deferred
revenues
|
197,112
|
|
217,771
|
Long-term income taxes
payable
|
148,822
|
|
193,808
|
Deferred tax
liabilities
|
389,510
|
|
423,955
|
Total long-term
liabilities
|
9,717,591
|
|
9,847,482
|
Shareholders'
equity:
|
|
|
|
Share capital and
additional paid-in capital
|
|
|
|
271,227,929
and 270,902,571 Common Shares issued and
outstanding at September 30, 2023 and June 30, 2023,
respectively; authorized Common Shares: unlimited
|
2,216,921
|
|
2,176,947
|
Accumulated other
comprehensive income (loss)
|
(70,025)
|
|
(53,559)
|
Retained
earnings
|
2,062,107
|
|
2,048,984
|
Treasury stock, at
cost (4,753,281 and 3,536,375 shares at September 30, 2023 and
June 30, 2023, respectively)
|
(196,119)
|
|
(151,597)
|
Total OpenText
shareholders' equity
|
4,012,884
|
|
4,020,775
|
Non-controlling
interests
|
1,374
|
|
1,329
|
Total shareholders'
equity
|
4,014,258
|
|
4,022,104
|
Total liabilities
and shareholders' equity
|
$
16,553,876
|
|
$
17,089,200
|
OPEN TEXT
CORPORATION
|
CONSOLIDATED
STATEMENTS OF INCOME
|
(In thousands of
U.S. dollars, except share and per share data)
|
(unaudited)
|
|
|
Three Months Ended
September 30,
|
|
2023
|
|
2022
|
Revenues:
|
|
|
|
Cloud services and
subscriptions
|
$
451,014
|
|
$
404,651
|
Customer
support
|
697,713
|
|
317,351
|
License
|
173,026
|
|
62,548
|
Professional service
and other
|
103,676
|
|
67,486
|
Total
revenues
|
1,425,429
|
|
852,036
|
Cost of
revenues:
|
|
|
|
Cloud services and
subscriptions
|
171,412
|
|
131,799
|
Customer
support
|
75,014
|
|
27,354
|
License
|
3,839
|
|
2,758
|
Professional service
and other
|
79,922
|
|
53,800
|
Amortization of
acquired technology-based intangible assets
|
76,824
|
|
42,637
|
Total cost of
revenues
|
407,011
|
|
258,348
|
Gross profit
|
1,018,418
|
|
593,688
|
Operating
expenses:
|
|
|
|
Research and
development
|
234,437
|
|
110,198
|
Sales and
marketing
|
271,801
|
|
167,170
|
General and
administrative
|
131,211
|
|
78,074
|
Depreciation
|
34,091
|
|
23,174
|
Amortization of
acquired customer-based intangible assets
|
120,192
|
|
54,438
|
Special charges
(recoveries)
|
13,794
|
|
14,281
|
Total operating
expenses
|
805,526
|
|
447,335
|
Income
from operations
|
212,892
|
|
146,353
|
Other income (expense),
net
|
20,170
|
|
(189,231)
|
Interest and other
related expense, net
|
(141,764)
|
|
(40,382)
|
Income (loss)
before income taxes
|
91,298
|
|
(83,260)
|
Provision for
income taxes
|
10,352
|
|
33,625
|
Net income (loss) for
the period
|
$
80,946
|
|
$
(116,885)
|
Net (income)
attributable to non-controlling interests
|
(45)
|
|
(44)
|
Net income (loss)
attributable to OpenText
|
$
80,901
|
|
$
(116,929)
|
Earnings (loss) per
share—basic attributable to OpenText
|
$
0.30
|
|
$
(0.43)
|
Earnings (loss) per
share—diluted attributable to OpenText
|
$
0.30
|
|
$
(0.43)
|
Weighted average number
of Common Shares outstanding—basic (in '000's)
|
271,178
|
|
269,804
|
Weighted average number
of Common Shares outstanding—diluted (in '000's)
|
271,902
|
|
269,804
|
OPEN TEXT
CORPORATION
|
CONSOLIDATED
STATEMENTS OF COMPREHENSIVE INCOME
|
(In thousands of
U.S. dollars)
|
(unaudited)
|
|
|
Three Months Ended
September 30,
|
|
2023
|
|
2022
|
Net income (loss) for
the period
|
$
80,946
|
|
$
(116,885)
|
Other comprehensive
income (loss)—net of tax:
|
|
|
|
Net foreign currency
translation adjustments
|
(14,583)
|
|
(36,366)
|
Unrealized gain (loss)
on cash flow hedges:
|
|
|
|
Unrealized gain (loss)
- net of tax (1)
|
(1,841)
|
|
(3,340)
|
(Gain) loss
reclassified into net income - net of tax
(2)
|
9
|
|
588
|
Unrealized gain (loss)
on available-for-sale financial assets:
|
|
|
|
Unrealized gain (loss)
- net of tax (3)
|
(221)
|
|
—
|
Actuarial gain (loss)
relating to defined benefit pension plans:
|
|
|
|
Actuarial gain (loss)
- net of tax (4)
|
(19)
|
|
4,164
|
Amortization of
actuarial (gain) loss into net income - net of tax
(5)
|
189
|
|
37
|
Total other
comprehensive loss net
|
(16,466)
|
|
(34,917)
|
Total comprehensive
income (loss)
|
64,480
|
|
(151,802)
|
Comprehensive income
attributable to non-controlling interests
|
(45)
|
|
(44)
|
Total comprehensive
income (loss) attributable to OpenText
|
$
64,435
|
|
$
(151,846)
|
______________________________
(1)
|
Net of tax expense
(recovery) of ($664) and $(1,206) for the three months ended
September 30, 2023 and 2022, respectively.
|
(2)
|
Net of tax expense
(recovery) of $3 and $212 for the three months ended September 30,
2023 and 2022, respectively.
|
(3)
|
Net of tax expense
(recovery) of $59 and $— for the three months ended September 30,
2023 and 2022, respectively.
|
(4)
|
Net of tax expense
(recovery) of $19 and $1,104 for the three months ended September
30, 2023 and 2022, respectively.
|
(5)
|
Net of tax expense
(recovery) of $75 and $26 for the three months ended September 30,
2023 and 2022, respectively.
|
OPEN TEXT
CORPORATION
|
CONSOLIDATED
STATEMENTS OF SHAREHOLDERS' EQUITY
|
(In thousands of
U.S. dollars and shares)
|
(unaudited)
|
|
|
Three Months Ended
September 30, 2023
|
|
Common Shares
and
Additional Paid in Capital
|
|
Treasury
Stock
|
|
Retained
Earnings
|
|
Accumulated
Other
Comprehensive
Income
|
|
Non-
Controlling
Interests
|
|
Total
|
|
Shares
|
|
Amount
|
|
Shares
|
|
Amount
|
|
Balance as of June
30, 2023
|
270,903
|
|
$
2,176,947
|
|
(3,536)
|
|
$
(151,597)
|
|
$
2,048,984
|
|
$
(53,559)
|
|
$
1,329
|
|
$
4,022,104
|
Issuance of Common
Shares
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Under employee stock
option plans
|
85
|
|
2,892
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
2,892
|
Under employee stock
purchase plans
|
240
|
|
8,641
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
8,641
|
Share-based
compensation
|
—
|
|
37,004
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
37,004
|
Purchase of treasury
stock
|
—
|
|
—
|
|
(1,400)
|
|
(53,085)
|
|
—
|
|
—
|
|
—
|
|
(53,085)
|
Issuance of treasury
stock
|
—
|
|
(8,563)
|
|
183
|
|
8,563
|
|
—
|
|
—
|
|
—
|
|
—
|
Dividends
declared
($0.25 per Common
Share)
|
—
|
|
—
|
|
—
|
|
—
|
|
(67,778)
|
|
—
|
|
—
|
|
(67,778)
|
Other comprehensive
income (loss) - net
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
(16,466)
|
|
—
|
|
(16,466)
|
Net income (loss) for
the period
|
—
|
|
—
|
|
—
|
|
—
|
|
80,901
|
|
—
|
|
45
|
|
80,946
|
Balance as of
September 30, 2023
|
271,228
|
|
2,216,921
|
|
(4,753)
|
|
(196,119)
|
|
2,062,107
|
|
(70,025)
|
|
1,374
|
|
4,014,258
|
|
|
|
Three Months Ended
September 30, 2022
|
|
Common Shares
and
Additional Paid in Capital
|
|
Treasury
Stock
|
|
Retained
Earnings
|
|
Accumulated
Other
Comprehensive
Income
|
|
Non-
Controlling
Interests
|
|
Total
|
|
Shares
|
|
Amount
|
|
Shares
|
|
Amount
|
|
Balance as of June
30, 2022
|
269,523
|
|
$
2,038,674
|
|
(3,706)
|
|
$
(159,966)
|
|
$
2,160,069
|
|
$
(7,659)
|
|
$
1,142
|
|
$
4,032,260
|
Issuance of Common
Shares:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Under employee stock
option plans
|
72
|
|
1,994
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
1,994
|
Under employee stock
purchase plans
|
286
|
|
9,179
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
9,179
|
Share-based
compensation
|
—
|
|
23,208
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
23,208
|
Issuance of treasury
stock
|
—
|
|
(5,174)
|
|
120
|
|
5,174
|
|
—
|
|
—
|
|
—
|
|
—
|
Dividends
declared
($0.24299 per Common
Share)
|
—
|
|
—
|
|
—
|
|
—
|
|
(64,698)
|
|
—
|
|
—
|
|
(64,698)
|
Other comprehensive
income (loss) - net
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
(34,917)
|
|
—
|
|
(34,917)
|
Net income (loss) for
the period
|
—
|
|
—
|
|
—
|
|
—
|
|
(116,929)
|
|
—
|
|
44
|
|
(116,885)
|
Balance as of
September 30, 2022
|
269,881
|
|
2,067,881
|
|
(3,586)
|
|
(154,792)
|
|
1,978,442
|
|
(42,576)
|
|
1,186
|
|
3,850,141
|
OPEN TEXT
CORPORATION
|
CONSOLIDATED
STATEMENTS OF CASH FLOWS
|
(In thousands of
U.S. dollars)
|
(unaudited)
|
|
|
Three Months Ended
September 30,
|
|
2023
|
|
2022
|
Cash flows from
operating activities:
|
|
|
|
Net income (loss) for
the period
|
$
80,946
|
|
$
(116,885)
|
Adjustments to
reconcile net income (loss) to net cash provided by operating
activities:
|
|
|
|
Depreciation and
amortization of intangible assets
|
231,107
|
|
120,249
|
Share-based
compensation expense
|
37,095
|
|
23,208
|
Pension
expense
|
3,171
|
|
1,387
|
Amortization of debt
discount and issuance costs
|
5,496
|
|
1,480
|
Write-off of right of
use assets
|
4,715
|
|
2,827
|
Loss on sale and write
down of property and equipment
|
458
|
|
—
|
Deferred
taxes
|
(88,630)
|
|
(20,667)
|
Share in net loss of
equity investees
|
9,696
|
|
6,534
|
Changes in financial
instruments
|
(17,895)
|
|
181,461
|
Changes in operating
assets and liabilities:
|
|
|
|
Accounts
receivable
|
31,304
|
|
59,494
|
Contract
assets
|
(22,566)
|
|
(9,054)
|
Prepaid expenses and
other current assets
|
19,326
|
|
(2,934)
|
Income taxes
|
29,597
|
|
15,834
|
Accounts payable and
accrued liabilities
|
(124,214)
|
|
(27,179)
|
Deferred
revenue
|
(150,476)
|
|
(53,779)
|
Other assets
|
4,104
|
|
(47,749)
|
Operating lease assets
and liabilities, net
|
(6,113)
|
|
(2,268)
|
Net cash provided by
operating activities
|
47,121
|
|
131,959
|
Cash flows from
investing activities:
|
|
|
|
Additions of property
and equipment
|
(37,539)
|
|
(36,324)
|
Micro Focus
acquisition
|
(9,272)
|
|
—
|
Proceeds from net
investment hedge derivative contracts
|
1,966
|
|
—
|
Other investing
activities
|
(5,554)
|
|
—
|
Net cash used in
investing activities
|
(50,399)
|
|
(36,324)
|
Cash flows from
financing activities:
|
|
|
|
Proceeds from issuance
of Common Shares from exercise of stock options and ESPP
|
11,453
|
|
10,037
|
Repayment of long-term
debt and Revolver
|
(186,463)
|
|
(2,500)
|
Debt issuance
costs
|
(1,961)
|
|
—
|
Purchase of treasury
stock
|
(53,085)
|
|
—
|
Payments of dividends
to shareholders
|
(66,965)
|
|
(64,698)
|
Net cash used in
financing activities
|
(297,021)
|
|
(57,161)
|
Foreign exchange loss
on cash held in foreign currencies
|
(11,503)
|
|
(28,102)
|
Increase
(decrease) in cash, cash
equivalents and restricted cash during the period
|
(311,802)
|
|
10,372
|
Cash, cash equivalents
and restricted cash at beginning of the period
|
1,233,952
|
|
1,695,911
|
Cash, cash equivalents
and restricted cash at end of the period
|
$
922,150
|
|
$
1,706,283
|
OPEN TEXT
CORPORATION
|
CONSOLIDATED
STATEMENTS OF CASH FLOWS
|
(In thousands of
U.S. dollars)
|
(unaudited)
|
|
Reconciliation of
cash, cash equivalents and restricted cash:
|
September 30,
2023
|
|
September 30,
2022
|
Cash and cash
equivalents
|
$
919,850
|
|
$
1,704,385
|
Restricted cash
(1)
|
2,300
|
|
1,898
|
Total cash, cash
equivalents and restricted cash
|
$
922,150
|
|
$
1,706,283
|
|
|
|
|
(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 September 30, 2023
(In thousands,
except for per share data)
|
|
Three Months Ended
September 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
|
$
171,412
|
|
$ (2,991)
|
(1)
|
$
168,421
|
|
Customer
support
|
75,014
|
|
(1,058)
|
(1)
|
73,956
|
|
Professional service
and other
|
79,922
|
|
(1,882)
|
(1)
|
78,040
|
|
Amortization of
acquired technology-based intangible assets
|
76,824
|
|
(76,824)
|
(2)
|
—
|
|
GAAP-based gross
profit and gross margin (%) / Non-GAAP-based gross profit and gross
margin (%)
|
1,018,418
|
71.4 %
|
82,755
|
(3)
|
1,101,173
|
77.3 %
|
Operating
expenses
|
|
|
|
|
|
|
Research and
development
|
234,437
|
|
(11,734)
|
(1)
|
222,703
|
|
Sales and
marketing
|
271,801
|
|
(11,807)
|
(1)
|
259,994
|
|
General and
administrative
|
131,211
|
|
(7,623)
|
(1)
|
123,588
|
|
Amortization of
acquired customer-based intangible assets
|
120,192
|
|
(120,192)
|
(2)
|
—
|
|
Special charges
(recoveries)
|
13,794
|
|
(13,794)
|
(4)
|
—
|
|
GAAP-based income
from operations / Non-GAAP-based income from
operations
|
212,892
|
|
247,905
|
(5)
|
460,797
|
|
Other income (expense),
net
|
20,170
|
|
(20,170)
|
(6)
|
—
|
|
Provision for
income taxes
|
10,352
|
|
34,313
|
(7)
|
44,665
|
|
GAAP-based net
income / Non-GAAP-based net income, attributable to
OpenText
|
80,901
|
|
193,422
|
(8)
|
274,323
|
|
GAAP-based earnings
per share / Non-GAAP-based earnings per share-diluted, attributable
to OpenText
|
$
0.30
|
|
$
0.71
|
(8)
|
$
1.01
|
|
|
|
(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 11% and a Non-GAAP-based tax rate of approximately
14%; these rate differences are due to the income tax effects of
items that are excluded for the purpose of calculating
Non-GAAP-based net income. Such excluded items include
amortization, share-based compensation, special charges
(recoveries) and other income (expense), net. Also excluded are tax
benefits/expense items unrelated to current period income such as
changes in reserves for tax uncertainties and valuation allowance
reserves and "book to return" adjustments for tax return filings
and tax assessments. Included is the amount of net tax benefits
arising from the internal reorganization that occurred in Fiscal
2017 assumed to be allocable to the current period based on the
forecasted utilization period. In arriving at our Non-GAAP-based
tax rate of approximately 14%, we analyzed the individual
adjusted expenses and took into consideration the impact of
statutory tax rates from local jurisdictions incurring the
expense.
|
(8)
|
Reconciliation of
GAAP-based income to Non-GAAP-based net income:
|
|
|
|
Three Months Ended
September 30, 2023
|
|
|
Per share
diluted
|
GAAP-based net income,
attributable to OpenText
|
$
80,901
|
$
0.30
|
Add:
|
|
|
Amortization
|
197,016
|
0.72
|
Share-based
compensation
|
37,095
|
0.14
|
Special charges
(recoveries)
|
13,794
|
0.05
|
Other (income) expense,
net
|
(20,170)
|
(0.08)
|
GAAP-based provision
for income taxes
|
10,352
|
0.04
|
Non-GAAP-based
provision for income taxes
|
(44,665)
|
(0.16)
|
Non-GAAP-based net
income, attributable to OpenText
|
$
274,323
|
$
1.01
|
Reconciliation of
Adjusted EBITDA
|
|
|
Three Months Ended
September 30, 2023
|
GAAP-based net income,
attributable to OpenText
|
$
80,901
|
Add:
|
|
Provision for
income taxes
|
10,352
|
Interest and other
related expense, net
|
141,764
|
Amortization of
acquired technology-based intangible assets
|
76,824
|
Amortization of
acquired customer-based intangible assets
|
120,192
|
Depreciation
|
34,091
|
Share-based
compensation
|
37,095
|
Special charges
(recoveries)
|
13,794
|
Other (income) expense,
net
|
(20,170)
|
Adjusted
EBITDA
|
$
494,843
|
|
|
GAAP-based net income
margin
|
5.7 %
|
Adjusted EBITDA
margin
|
34.7 %
|
Reconciliation of
Free cash flows
|
|
|
Three Months Ended
September 30, 2023
|
GAAP-based cash flows
provided by operating activities
|
$
47,121
|
Add:
|
|
Capital expenditures
(1)
|
(37,539)
|
Free cash
flows
|
$
9,582
|
|
|
(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, 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
(loss) 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 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 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 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 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
provision for 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 three months
ended September 30, 2022
(In thousands,
except for per share data)
|
|
Three Months Ended
September 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
|
$
131,799
|
|
$ (2,033)
|
(1)
|
$
129,766
|
|
Customer
support
|
27,354
|
|
(567)
|
(1)
|
26,787
|
|
Professional service
and other
|
53,800
|
|
(1,525)
|
(1)
|
52,275
|
|
Amortization of
acquired technology-based intangible assets
|
42,637
|
|
(42,637)
|
(2)
|
—
|
|
GAAP-based gross
profit and gross margin (%) /Non-GAAP-based gross profit and gross
margin (%)
|
593,688
|
69.7 %
|
46,762
|
(3)
|
640,450
|
75.2 %
|
Operating
expenses
|
|
|
|
|
|
|
Research and
development
|
110,198
|
|
(6,854)
|
(1)
|
103,344
|
|
Sales and
marketing
|
167,170
|
|
(6,859)
|
(1)
|
160,311
|
|
General and
administrative
|
78,074
|
|
(5,370)
|
(1)
|
72,704
|
|
Amortization of
acquired customer-based intangible assets
|
54,438
|
|
(54,438)
|
(2)
|
—
|
|
Special charges
(recoveries)
|
14,281
|
|
(14,281)
|
(4)
|
—
|
|
GAAP-based income
from operations / Non-GAAP-based income from
operations
|
146,353
|
|
134,564
|
(5)
|
280,917
|
|
Other income (expense),
net
|
(189,231)
|
|
189,231
|
(6)
|
—
|
|
Provision for
income taxes
|
33,625
|
|
50
|
(7)
|
33,675
|
|
GAAP-based net loss
/ Non-GAAP-based net income, attributable to
OpenText
|
(116,929)
|
|
323,745
|
(8)
|
206,816
|
|
GAAP-based earnings
per share / Non-GAAP-based earnings per share-diluted, attributable
to OpenText
|
$
(0.43)
|
|
$
1.20
|
(8)
|
$
0.77
|
|
|
|
(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 40% 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 loss to Non-GAAP-based net income:
|
|
|
|
Three Months Ended
September 30, 2022
|
|
|
Per share
diluted
|
GAAP-based net loss,
attributable to OpenText
|
$
(116,929)
|
$
(0.43)
|
Add:
|
|
|
Amortization
|
97,075
|
0.36
|
Share-based
compensation
|
23,208
|
0.09
|
Special charges
(recoveries)
|
14,281
|
0.05
|
Other (income) expense,
net
|
189,231
|
0.70
|
GAAP-based provision
for income taxes
|
33,625
|
0.12
|
Non-GAAP-based
provision for income taxes
|
(33,675)
|
(0.12)
|
Non-GAAP-based net
income, attributable to OpenText
|
$
206,816
|
$
0.77
|
|
Reconciliation of
Adjusted EBITDA
|
|
|
Three Months Ended
September 30, 2022
|
GAAP-based net loss,
attributable to OpenText
|
$
(116,929)
|
Add:
|
|
Provision for
income taxes
|
33,625
|
Interest and other
related expense, net
|
40,382
|
Amortization of
acquired technology-based intangible assets
|
42,637
|
Amortization of
acquired customer-based intangible assets
|
54,438
|
Depreciation
|
23,174
|
Share-based
compensation
|
23,208
|
Special charges
(recoveries)
|
14,281
|
Other (income) expense,
net
|
189,231
|
Adjusted
EBITDA
|
$
304,047
|
|
|
GAAP-based net loss
margin
|
(13.7) %
|
Adjusted EBITDA
margin
|
35.7 %
|
Reconciliation of
Free cash flows
|
|
|
Three Months Ended
September 30, 2022
|
GAAP-based cash flows
provided by operating activities
|
$
131,959
|
Add:
|
|
Capital expenditures
(1)
|
(36,324)
|
Free cash
flows
|
$
95,635
|
|
|
(1) Defined
as "Additions of property and equipment" in the Consolidated
Statements of Cash Flows.
|
(3)
|
The following tables
provide a composition of our major currencies for revenue and
expenses, expressed as a percentage, for the three months ended
September 30, 2023 and 2022:
|
|
|
|
Three Months Ended
September 30, 2023
|
|
Three Months Ended
September 30, 2022
|
Currencies
|
% of Revenue
|
% of Expenses(1)
|
|
% of Revenue
|
% of Expenses(1)
|
EURO
|
21 %
|
11 %
|
|
20 %
|
11 %
|
GBP
|
5 %
|
8 %
|
|
4 %
|
5 %
|
CAD
|
3 %
|
10 %
|
|
3 %
|
14 %
|
USD
|
60 %
|
50 %
|
|
65 %
|
55 %
|
Other
|
11 %
|
21 %
|
|
8 %
|
15 %
|
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