OTEX
$27.02
Open Text Cp
($.54)
(1.96%)
Earnings Details
Quarter June 2022
Thursday, August 04, 2022 4:01:00 PM
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Summary

Open Text Cp (OTEX) Recent Earnings

Open Text Cp (OTEX) reported Quarter June 2022 earnings of $0.73 per share on revenue of $902.5 million. The consensus earnings estimate was $0.75 per share on revenue of $1.2 billion. Revenue grew 1.0% on a year-over-year basis.

Open Text Corp provides software products & services. It assist organizations in finding, utilizing, & sharing business information. It is engaged in the design, development, marketing & sales of Enterprise Information Management software and solutions.

Results
Reported Earnings
$0.73
Earnings Whisper
-
Consensus Estimate
$0.75
Reported Revenue
$902.5 Mil
Revenue Estimate
$1.18 Bil
Growth
Earnings Growth
Revenue Growth
Power Rating
Grade
Earnings Release

OpenText Reports Fourth Quarter and Fiscal Year 2022 Financial Results

Record Total Revenues, Annual Cloud Revenues and Annual Recurring Revenues

Fiscal 2022 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









$3,494

$3,533


$2,866

$2,892


$1,535

$1,545

+3.2 %

+4.3 %


+4.5 %

+5.5 %


+9.1 %

+9.8 %


Annual Recurring Revenues represent 82% of Total Revenues

  • Record Total revenues of $3.5 billion up 3.2% Y/Y or up 4.3% Y/Y in constant currency
  • Record Annual recurring revenues of $2.9 billion, up 4.5% Y/Y or up 5.5% Y/Y in constant currency
  • Record Cloud revenues of $1.5 billion up 9.1% Y/Y or up 9.8% in constant currency, becomes our largest revenue contributor
  • Record FY'22 Enterprise cloud bookings(1) of $466 million
  • Operating cash flows were $982 million and free cash flows(1) were $889 million, up 9.4% Y/Y
  • GAAP-based net income of $397 million, up 27.8% Y/Y, margin of 11.4%, up 220 basis points Y/Y
  • Adjusted EBITDA(1) of $1.3 billion, margin of 36.2% while making key investments in cloud, edge and security
  • Record capital returns of $415 million via dividends and share repurchases
  • GAAP-based diluted earnings per share (EPS) of $1.46, Non-GAAP diluted EPS of $3.22
  • Quarterly cash dividend increased by 10%

Fiscal 2022 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









$902

$935


$740

$762


$412

$420

+1.0 %

+4.7 %


+6.6 %

+9.8 %


+14.3 %

+16.6 %


Annual Recurring Revenues represent 82% of Total Revenues

  • Total revenues of $902 million, up 1.0% Y/Y or up 4.7% in constant currency
  • Annual recurring revenues of $740 million, up 6.6% Y/Y or up 9.8% in constant currency
  • Cloud revenues of $412 million, up 14.3% Y/Y or up 16.6% in constant currency
  • Operating cash flows were $252 million and free cash flows(1) were $214 million
  • GAAP-based net income of $102 million, down 43.6% Y/Y, margin of 11.3%, down 900 basis points Y/Y
  • Adjusted EBITDA(2) of $314 million, margin of 34.8%
  • GAAP-based diluted earnings per share (EPS) of $0.38, Non-GAAP diluted EPS(1) of $0.80
  • During the quarter, the Company repurchased and cancelled 1.0 million shares for $41 million under our share repurchase plans

WATERLOO, ON, Aug. 4, 2022 /CNW/ -- Open Text Corporation (NASDAQ: OTEX), (TSX: OTEX), today announced its financial results for the fourth quarter and year ended June 30, 2022.

"Our strong fourth quarter and year-end results reflect customers' accelerating journey to the OpenText Cloud," said Mark J. Barrenechea, OpenText CEO & CTO. "In Fiscal 2022, OpenText delivered a record $3.5 billion of total revenues, led by record cloud revenues and cloud bookings. Fiscal 2022 annual recurring revenues reached record $2.9 billion, representing 82% of total revenues."

"OpenText is more relevant than ever before as we help customers build and own their digital fabrics to transform their organizations and do more with less," added Mr. Barrenechea. "Through our recently unveiled Project Titanium, we have taken a massive step forward in strengthening the OpenText Cloud as a foundation of modern work, digital supply chains, customer experiences and secure computing. OpenText is ready for all economic scenarios, and our outlook for Fiscal 2023 focuses on continued cloud and free cash flow growth."

"Let me thank our entire team for their amazing efforts to keep one another safe and well while delivering outstanding service to our customers. The team continues to raise their game each quarter amidst a dynamic environment."

"OpenText delivered an exceptional year," said Madhu Ranganathan, OpenText EVP, CFO. "Our team delivered a solid Fiscal 2022 with adjusted EBITDA of $1.3 billion and strong free cash flows of $889 million. With approximately $1.7 billion in cash as of June 30, 2022 and a net leverage ratio of 2.0x, our balance sheet and liquidity position remain strong. Our strategic investments in product innovation and go-to-market initiatives continue to position us well to win in the cloud."

(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, excluding the impact of Carbonite and Zix.

(2) Please see Note 2 "Use of Non-GAAP Financial Measures" to the consolidated financial statements below.

Financial Highlights for Fiscal 2022 and Q4 with Year Over Year Comparisons

Summary of Annual Results









(In millions, except per share data)

FY'22

FY'21

$ Change 

% Change 


FY'22 in
CC*

% Change
in CC*


Revenues:









Cloud services and subscriptions

$1,535.0

$1,407.4

$127.6

9.1 %


$1,544.7

9.8 %


Customer support

1,331.0

1,334.1

($3.1)

(0.2) %


1,347.3

1.0 %


Total annual recurring revenues**

$2,866.0

$2,741.5

$124.5

4.5 %


$2,892.0

5.5 %


License

358.4

384.7

($26.4)

(6.9) %


367.0

(4.6) %


Professional service and other

269.5

259.9

$9.6

3.7 %


274.3

5.5 %


Total revenues

$3,493.8

$3,386.1

$107.7

3.2 %


$3,533.3

4.3 %


GAAP-based operating income

$     644.8

$740.9

($96.1)

(13.0) %


N/A

N/A


Non-GAAP-based operating income (1)

$1,176.9

$1,230.0

($53.0)

(4.3) %


$1,199.9

(2.4) %


GAAP-based net income attributable to OpenText

$397.1

$310.7

$86.4

27.8 %


N/A

N/A


GAAP-based EPS, diluted

$1.46

$1.14

$0.32

28.1 %


N/A

N/A


Non-GAAP-based EPS, diluted (1)(2)

$3.22

$3.39

($0.17)

(5.0) %


$3.35

(1.2) %


Adjusted EBITDA (1)

$1,265.0

$1,315.0

($50.0)

(3.8) %


$1,288.1

(2.1) %


Operating cash flows

$981.8

$876.1

$105.7

12.1 %


N/A

N/A


Free cash flows (1)

$888.7

$812.4

$76.3

9.4 %


N/A

N/A



Summary of Quarterly Results









(In millions, except per share data)

Q4 FY'22

Q4 FY'21

$ Change 

% Change 


Q4 FY'22
in CC*

% Change
in CC*


Revenues:









Cloud services and subscriptions

$411.6

$360.2

$51.4

14.3 %


$420.0

16.6 %


Customer support

328.3

334.3

($5.9)

(1.8) %


342.3

2.4 %


Total annual recurring revenues**

$739.9

$694.4

$45.5

6.6 %


$762.2

9.8 %


License

94.7

132.5

($37.9)

(28.6) %


101.3

(23.6) %


Professional service and other

67.8

66.6

$1.3

1.9 %


71.9

7.9 %


Total revenues

$902.5

$893.5

$8.9

1.0 %


$935.4

4.7 %


GAAP-based operating income

$137.6

$171.7

($34.1)

(19.9) %


N/A

N/A


Non-GAAP-based operating income (1)

$291.0

$293.9

($2.9)

(1.0) %


$303.9

3.4 %


GAAP-based net income attributable to OpenText

$102.2

$181.3

($79.1)

(43.6) %


N/A

N/A


GAAP-based EPS, diluted

$0.38

$0.66

($0.28)

(42.4) %


N/A

N/A


Non-GAAP-based EPS, diluted (1)(2)

$0.80

$0.80

$—

— %


$0.89

11.3 %


Adjusted EBITDA (1)

$313.6

$314.8

($1.2)

(0.4) %


$326.7

3.8 %


Operating cash flows

$251.9

$296.2

($44.2)

(14.9) %


N/A

N/A


Free cash flows (1)

$213.8

$268.8

($55.0)

(20.5) %


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 and Share Repurchases

As part of our quarterly, non-cumulative cash dividend program, the Board declared on August 3, 2022, a cash dividend increase of 10% to $0.24299 per common share. The record date for this dividend is September 2, 2022 and the payment date is September 23, 2022. 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

  • Key customer wins in the quarter include: Carl Zeiss AG, Citgo Petroleum Corporation, Close Brothers, Evermark, Hydro Quebec, Legal Aid Western Australia, MUFG Bank, One World Apparel, Phillips Lytle, Region Skane, Salt River Project, Sysmex
  • OpenText accelerates cloud investments with Project Titanium
  • OpenText powers the Information Advantage with Cloud Editions 22.2
  • OpenText extends reach of its Information Management solutions in DACH region through partnership with Scheer Group
  • OpenText showcases Business-to-Anything integration at Gartner® Supply Chain Symposium/Xpo 2022
  • OpenText unveils new threat intelligence technology and other security advancements at RSA Conference
  • OpenText partners with Girl Scouts to help members become cyber resilient
  • OpenText World EMEA 2022 showcases innovations enabling the Information Advantage

Summary of Annual Results






FY'22

FY'21

% Change


Revenue (millions)

$3,493.8

$3,386.1

3.2 %


GAAP-based gross margin

69.6 %

69.4 %

15

bps

Non-GAAP-based gross margin (1)

75.6 %

76.1 %

(54)

bps

GAAP-based EPS, diluted

$1.46

$1.14

28.1 %


Non-GAAP-based EPS, diluted (1)(2)

$3.22

$3.39

(5.0) %



Summary of Quarterly Results









Q4 FY'22

Q3 FY'22

Q4 FY'21

% Change 

(Q4 FY'22 vs
Q3 FY'22)


% Change

(Q4 FY'22 vs
Q4 FY'21)


Revenue (millions)

$902.5

$882.3

$893.5

2.3 %


1.0 %


GAAP-based gross margin

70.2 %

68.9 %

69.6 %

130

bps

60

bps

Non-GAAP-based gross margin (1)

75.9 %

74.5 %

75.8 %

140

bps

10

bps

GAAP-based EPS, diluted

$0.38

$0.28

$0.66

35.7 %


(42.4) %


Non-GAAP-based EPS, diluted (1)(2)

$0.80

$0.70

$0.80

14.3 %


— %



(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 our quarterly shareholder letter and 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 4, 2022 at 7:00 p.m. ET through 11:59 p.m. on August 18, 2022 and can be accessed by dialing 1-855-669-9658 (toll-free) or +1-604-674-8052 (international) and using passcode 9157 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") in our fiscal year ending June 30, 2023 (Fiscal 2023) on growth, future cloud growth and market share gains, future organic growth initiatives and deployment of capital, intention to maintain a dividend program, potential share repurchases pursuant to its share repurchase plans, future tax rates, new platform and product offerings and associated benefits to customers, 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 considered forward-looking statements or information under applicable securities laws. In addition, any information or statements that refer to expectations, beliefs, plans, projections, objectives, performance or other characterizations of future events or circumstances, including any underlying assumptions, are forward-looking, and based on our current expectations, forecasts and projections about the operating environment, economies and markets in which we operate. Forward-looking statements reflect our current estimates, beliefs and assumptions, which are based on management's perception of historic trends, current conditions and expected future developments, as well as other factors it believes are appropriate in the circumstances, such as certain assumptions about the economy, as well as market, financial and operational assumptions. Management's estimates, beliefs and assumptions are inherently subject to significant business, economic, competitive and other uncertainties and contingencies regarding future events and, as such, are subject to change. We can give no assurance that such estimates, beliefs and assumptions will prove to be correct. Such forward-looking statements involve known and unknown risks and uncertainties such as those relating to the duration and severity of the COVID-19 pandemic, including any new strains or resurgences, as well as 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 Reports on Form 10-Q and other securities filings with the Securities and Exchange Commission (SEC) and other securities regulators. Readers are cautioned not to place undue reliance upon any such forward-looking statements, which speak only as of the date made. Unless otherwise required by applicable securities laws, the Company disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

OTEX-F

For more information, please contact:
Harry E. Blount
Senior Vice President, Global Head of Investor Relations
Open Text Corporation
415-963-0825
investors@opentext.com

Copyright ©2022 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, 2022


June 30, 2021

ASSETS




Cash and cash equivalents

$             1,693,741


$             1,607,306

Accounts receivable trade, net of allowance for credit losses of $16,473 as of June 30, 2022 and $22,151 as of June 30, 2021

426,652


438,547

Contract assets

26,167


25,344

Income taxes recoverable

18,255


32,312

Prepaid expenses and other current assets

120,552


98,551

Total current assets

2,285,367


2,202,060

Property and equipment

244,709


233,595

Operating lease right of use assets

198,132


234,532

Long-term contract assets

19,719


19,222

Goodwill

5,244,653


4,691,673

Acquired intangible assets

1,075,208


1,187,260

Deferred tax assets

810,154


796,738

Other assets

256,987


208,894

Long-term income taxes recoverable

44,044


35,362

Total assets

$          10,178,973


$             9,609,336

LIABILITIES AND SHAREHOLDERS' EQUITY




Current liabilities:




Accounts payable and accrued liabilities

$                448,607


$                423,592

Current portion of long-term debt

10,000


10,000

Operating lease liabilities

56,380


58,315

Deferred revenues

902,202


852,629

Income taxes payable

51,069


17,368

Total current liabilities

1,468,258


1,361,904

Long-term liabilities:




Accrued liabilities

18,208


28,830

Pension liability

60,951


74,511

Long-term debt

4,209,567


3,578,859

Long-term operating lease liabilities

198,695


224,453

Long-term deferred revenues

91,144


98,989

Long-term income taxes payable

34,003


34,113

Deferred tax liabilities

65,887


108,224

Total long-term liabilities

4,678,455


4,147,979

Shareholders' equity:




Share capital and additional paid-in capital




269,522,639 and 271,540,755 Common Shares issued and outstanding at June 30, 2022 and June 30, 2021, respectively; authorized Common Shares: unlimited

2,038,674


1,947,764

Accumulated other comprehensive income (loss)

(7,659)


66,238

Retained earnings

2,160,069


2,153,326

Treasury stock, at cost (3,706,420 and 1,567,664 shares at June 30, 2022 and June 30, 2021, respectively)

(159,966)


(69,386)

Total OpenText shareholders' equity

4,031,118


4,097,942

Non-controlling interests

1,142


1,511

Total shareholders' equity

4,032,260


4,099,453

Total liabilities and shareholders' equity

$          10,178,973


$             9,609,336

 

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,


2022


2021

Revenues:




Cloud services and subscriptions

$                411,595


$                360,160

Customer support

328,339


334,256

License

94,688


132,541

Professional service and other

67,832


66,570

Total revenues

902,454


893,527

Cost of revenues:




Cloud services and subscriptions

133,785


127,583

Customer support

30,571


32,938

License

2,595


4,315

Professional service and other

55,436


53,662

Amortization of acquired technology-based intangible assets

46,274


53,215

Total cost of revenues

268,661


271,713

Gross profit

633,793


621,814

Operating expenses:




Research and development

118,931


117,235

Sales and marketing

185,985


183,237

General and administrative

85,958


73,019

Depreciation

22,706


21,021

Amortization of acquired customer-based intangible assets

56,341


52,469

Special charges (recoveries)

26,281


3,152

Total operating expenses

496,202


450,133

Income from operations

137,591


171,681

Other income (expense), net

(19)


45,017

Interest and other related expense, net

(40,342)


(37,550)

Income before income taxes

97,230


179,148

Provision for income taxes

(5,005)


(2,215)

Net income for the period

$                102,235


$                181,363

Net (income) loss attributable to non-controlling interests

(39)


(80)

Net income attributable to OpenText

$                102,196


$                181,283

Earnings per share—basic attributable to OpenText

$                       0.38


$                       0.66

Earnings per share—diluted attributable to OpenText

$                       0.38


$                       0.66

Weighted average number of Common Shares outstanding—basic (in '000's)

270,152


272,892

Weighted average number of Common Shares outstanding—diluted (in '000's)

270,394


273,981

 

OPEN TEXT CORPORATION

 CONSOLIDATED STATEMENTS OF INCOME

(In thousands of U.S. dollars, except share and per share data)



Year Ended June 30,


2022


2021


2020

Revenues:






Cloud services and subscriptions

$        1,535,017


$        1,407,445


$        1,157,686

Customer support

1,330,965


1,334,062


1,275,586

License

358,351


384,711


402,851

Professional service and other

269,511


259,897


273,613

Total revenues

3,493,844


3,386,115


3,109,736

Cost of revenues:






Cloud services and subscriptions

511,713


481,818


449,940

Customer support

121,485


122,753


123,894

License

13,501


13,916


11,321

Professional service and other

216,895


197,183


212,903

Amortization of acquired technology-based intangible assets

198,607


218,796


205,717

Total cost of revenues

1,062,201


1,034,466


1,003,775

Gross profit

2,431,643


2,351,649


2,105,961

Operating expenses:






Research and development

440,448


421,447


370,411

Sales and marketing

677,118


622,221


585,044

General and administrative

317,085


263,521


237,532

Depreciation

88,241


85,265


89,458

Amortization of acquired customer-based intangible assets

217,105


216,544


219,559

Special charges (recoveries)

46,873


1,748


100,428

Total operating expenses

1,786,870


1,610,746


1,602,432

Income from operations

644,773


740,903


503,529

Other income (expense), net

29,118


61,434


(11,946)

Interest and other related expense, net

(157,880)


(151,567)


(146,378)

Income before income taxes

516,011


650,770


345,205

Provision for (recovery of) income taxes

118,752


339,906


110,837

Net income

$           397,259


$           310,864


$           234,368

Net loss attributable to non-controlling interests

(169)


(192)


(143)

Net income attributable to OpenText

$           397,090


$           310,672


$           234,225

Earnings per share—basic attributable to OpenText

$                  1.46


$                  1.14


$                  0.86

Earnings per share—diluted attributable to OpenText

$                  1.46


$                  1.14


$                  0.86

Weighted average number of Common Shares outstanding—basic

(in '000's)

271,271


272,533


270,847

Weighted average number of Common Shares outstanding—diluted

(in '000's)

271,909


273,479


271,817

 

OPEN TEXT CORPORATION

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(In thousands of U.S. dollars)



Year Ended June 30,


2022


2021


2020

Net income

$           397,259


$           310,864


$           234,368

Other comprehensive income (loss)—net of tax:






Net foreign currency translation adjustments

(78,724)


42,440


(7,784)

Unrealized gain (loss) on cash flow hedges:






Unrealized gain (loss) - net of tax expense (recovery) effect of  ($671), $1,532, and ($599) for the year ended June 30, 2022,  2021 and 2020, respectively

(1,859)


4,246


(1,662)

(Gain) loss reclassified into net income - net of tax (expense) recovery effect of $134, ($1,182) and $355 for the year ended June 30, 2022, 2021 and 2020, respectively

373


(3,280)


985

Actuarial gain (loss) relating to defined benefit pension plans:






Actuarial gain (loss) - net of tax expense (recovery) effect of $1,866, $990 and $1,219 for the year ended June 30, 2022, 2021 and 2020, respectively

5,595


3,987


1,245

Amortization of actuarial (gain) loss into net income - net of tax (expense) recovery effect of $290, $379 and $520 for the year ended June 30, 2022, 2021 and 2020, respectively

718


1,020


917

Total other comprehensive income (loss) net

(73,897)


48,413


(6,299)

Total comprehensive income

323,362


359,277


228,069

Comprehensive (income) loss attributable to non-controlling interests

(169)


(192)


(143)

Total comprehensive income attributable to OpenText

$           323,193


$           359,085


$           227,926

 

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, 2019

269,834


$  1,774,214


(803)


$ (28,766)


$  2,113,883


$          24,124


$      1,215


$  3,884,670

Issuance of Common Shares
















Under employee stock option plans

1,530


41,282







41,282

Under employee stock purchase plans

499


17,757







17,757

Share-based compensation


29,532







29,532

Purchase of treasury stock



(300)


(12,424)





(12,424)

Issuance of treasury stock


(11,008)


481


17,582





6,574

Dividends declared

($0.6984 per Common Share)





(188,712)




(188,712)

Other comprehensive income - net






(6,299)



(6,299)

Non-controlling interest







(39)


(39)

Net income





234,225



143


234,368

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

($0.7770 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 income (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

 

OPEN TEXT CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands of U.S. dollars)

(unaudited)



Three Months Ended June 30,


2022


2021

Cash flows from operating activities:




Net income for the period

$                  102,235


$                  181,363

Adjustments to reconcile net income to net cash provided by operating activities:




Depreciation and amortization of intangible assets

125,321


126,705

Share-based compensation expense

24,464


13,350

Pension expense

1,723


1,946

Amortization of debt issuance costs

1,486


1,153

Write off of right of use assets

17,707


Loss on sale and write down of property and equipment

198


792

Deferred taxes

(79,420)


(7,805)

Share in net (income) loss of equity investees

401


(42,877)

Changes in operating assets and liabilities:




Accounts receivable

13,413


(26,118)

Contract assets

(10,758)


(10,298)

Prepaid expenses and other current assets

1,768


40,261

Income taxes

45,824


(23,169)

Accounts payable and accrued liabilities

41,561


53,415

Deferred revenue

(30,878)


(23,305)

Other assets

771


11,149

Operating lease assets and liabilities, net

(3,876)


(373)

Net cash provided by operating activities

251,940


296,189

Cash flows from investing activities:




Additions of property and equipment

(38,172)


(27,408)

Purchase of Bricata Inc.

174


Purchase of Dynamic Solutions Group Inc.


(600)

Other investing activities


(2,550)

Net cash used in investing activities

(37,998)


(30,558)

Cash flows from financing activities:




Proceeds from issuance of Common Shares from exercise of stock options and ESPP

10,738


34,287

Repayment of long-term debt and Revolver

(2,500)


(2,500)

Debt issuance costs


Repurchase of Common Shares

(40,869)


(119,105)

Purchase of treasury stock

(35,933)


Payments of dividends to shareholders

(59,042)


(54,374)

Net cash provided by (used in) financing activities

(127,606)


(141,692)

Foreign exchange gain (loss) on cash held in foreign currencies

(26,276)


7,181

Increase (decrease) in cash, cash equivalents and restricted cash during the period

60,060


131,120

Cash, cash equivalents and restricted cash at beginning of the period

1,635,851


1,478,680

Cash, cash equivalents and restricted cash at end of the period

$               1,695,911


$               1,609,800

 

OPEN TEXT CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands of U.S. dollars)


Reconciliation of cash, cash equivalents and restricted cash:

June 30, 2022


June 30, 2021

Cash and cash equivalents

$               1,693,741


$               1,607,306

Restricted cash (1)

2,170


2,494

Total cash, cash equivalents and restricted cash

$               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.

 

OPEN TEXT CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands of U.S. dollars)



Year Ended June 30,


2022


2021


2020

Cash flows from operating activities:






Net income for the period

$             397,259


$             310,864


$             234,368

Adjustments to reconcile net income to net cash provided by operating activities:






Depreciation and amortization of intangible assets

503,953


520,605


514,734

Share-based compensation expense

69,556


51,969


29,532

Pension expense

6,606


6,616


5,802

Amortization of debt issuance costs

5,422


4,548


4,633

Write off of right of use assets

17,707



36,864

Loss on extinguishment of debt

27,413



17,854

Loss on sale and write down of property and equipment

294


2,771


9,714

Deferred taxes

(36,088)


73,039


51,388

Share in net (income) loss of equity investees

(58,702)


(62,897)


(8,700)

Changes in operating assets and liabilities:






Accounts receivable

81,841


60,954


84,499

Contract assets

(37,966)


(39,333)


(40,301)

Prepaid expenses and other current assets

(13,954)


37,733


(6,897)

Income taxes

34,589


(140,763)


(35,086)

Accounts payable and accrued liabilities

(24,177)


26,088


30,613

Deferred revenue

(5,236)


39,295


25,306

Other assets

17,297


11,914


1,127

Operating lease assets and liabilities, net

(4,004)


(27,283)


(914)

Net cash provided by operating activities

981,810


876,120


954,536

Cash flows from investing activities:






Additions of property and equipment

(93,109)


(63,675)


(72,709)

Purchase of Zix Corporation, net of cash acquired

(856,175)



Purchase of Bricata Inc.

(17,753)



Purchase of XMedius


444


(73,335)

Purchase of Carbonite, Inc., net of cash and restricted cash acquired



(1,305,097)

Purchase of Dynamic Solutions Group Inc.


(971)


(4,149)

Other investing activities

(3,922)


(4,568)


(14,127)

Net cash used in investing activities

(970,959)


(68,770)


(1,469,417)

Cash flows from financing activities:






Proceeds from issuance of Common Shares from exercise of stock options and ESPP

67,215


80,067


66,600

Proceeds from long-term debt and Revolver

1,500,000



3,150,000

Repayment of long-term debt and Revolver

(860,000)


(610,000)


(1,713,631)

Debt extinguishment costs

(24,969)



(11,248)

Debt issuance costs

(17,159)



(21,806)

Repurchase of Common Shares

(176,987)


(119,105)


Purchase of treasury stock

(111,593)


(64,847)


(12,424)

Distribution to non-controlling interest

(396)



Payments of dividends to shareholders

(237,655)


(210,662)


(188,712)

Net cash provided by (used in) financing activities

138,456


(924,547)


1,268,779

Foreign exchange gain (loss) on cash held in foreign currencies

(63,196)


29,734


(178)

Increase (decrease) in cash, cash equivalents and restricted cash during the period

86,111


(87,463)


753,720

Cash, cash equivalents and restricted cash at beginning of the period

1,609,800


1,697,263


943,543

Cash, cash equivalents and restricted cash at end of the period

$          1,695,911


$          1,609,800


$          1,697,263

 

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, 2022


June 30, 2021


June 30, 2020

Cash and cash equivalents

$        1,693,741


$        1,607,306


$        1,692,850

Restricted cash (1)

2,170


2,494


4,413

Total cash, cash equivalents and restricted cash

$        1,695,911


$        1,609,800


$        1,697,263








(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 or earnings 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, attributable to OpenText, excluding interest income (expense), provision for 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 most recently 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.

The following charts provide unaudited reconciliations of U.S. GAAP-based financial measures to Non-GAAP-based financial measures for the following periods presented.

Reconciliation of selected GAAP-based measures to Non-GAAP-based measures

for the three months ended 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 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 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 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 provision for income taxes

(5,005)

(0.02)

Non-GAAP-based provision for 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:


Provision for 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 provision for 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.

 

Reconciliation of selected GAAP-based measures to Non-GAAP-based measures

for the three months ended March 31, 2022

(In thousands, except for per share data)


Three Months Ended March 31, 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

$   136,020


$      (1,268)

(1)

$   134,752


Customer support

31,763


(501)

(1)

31,262


Professional service and other

56,693


(907)

(1)

55,786


Amortization of acquired technology-based intangible assets

46,564


(46,564)

(2)


GAAP-based gross profit and gross margin (%) /Non-GAAP-based gross profit and gross margin (%)

608,047

68.9 %

49,240

(3)

657,287

74.5 %

Operating expenses







Research and development

117,730


(4,350)

(1)

113,380


Sales and marketing

180,955


(5,761)

(1)

175,194


General and administrative

88,137


(3,961)

(1)

84,176


Amortization of acquired customer-based intangible assets

56,215


(56,215)

(2)


Special charges (recoveries)

11,031


(11,031)

(4)


GAAP-based income from operations / Non-GAAP-based income from operations

131,609


130,558

(5)

262,167


Other income (expense), net

24,392


(24,392)

(6)


Provision for income taxes

41,041


(9,971)

(7)

31,070


GAAP-based net income / Non-GAAP-based net income, attributable to OpenText

74,681


116,137

(8)

190,818


GAAP-based earnings per share / Non-GAAP-based earnings per share-diluted, attributable to OpenText

$          0.28


$          0.42

(8)

$          0.70




(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 35% 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, 2022



Per share diluted

GAAP-based net income, attributable to OpenText

$                     74,681

$                          0.28

Add:



Amortization

102,779

0.38

Share-based compensation

16,748

0.06

Special charges (recoveries)

11,031

0.04

Other (income) expense, net

(24,392)

(0.09)

GAAP-based provision for income taxes

41,041

0.15

Non-GAAP-based provision for income taxes

(31,070)

(0.12)

Non-GAAP-based net income, attributable to OpenText

$                   190,818

$                          0.70

 

Reconciliation of Adjusted EBITDA



Three Months Ended March 31, 2022

GAAP-based net income, attributable to OpenText

$                                                        74,681

Add:


Provision for income taxes

41,041

Interest and other related expense, net

40,238

Amortization of acquired technology-based intangible assets

46,564

Amortization of acquired customer-based intangible assets

56,215

Depreciation

22,370

Share-based compensation

16,748

Special charges (recoveries)

11,031

Other (income) expense, net

(24,392)

Adjusted EBITDA

$                                                      284,496



GAAP-based net income margin

8.5 %

Adjusted EBITDA margin

32.2 %

 

Reconciliation of Free cash flows



Three Months Ended March 31, 2022

GAAP-based cash flows provided by operating activities

$                                                         323,557

Add:


Capital expenditures (1)

(17,590)

Free cash flows

$                                                         305,967



(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, 2021

(In thousands, except for per share data)


Three Months Ended June 30, 2021


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

$   127,583


$         (935)

(1)

$   126,648


Customer support

32,938


(505)

(1)

32,433


Professional service and other

53,662


(698)

(1)

52,964


Amortization of acquired technology-based intangible assets

53,215


(53,215)

(2)


GAAP-based gross profit and gross margin (%) /Non-GAAP-based gross profit and gross margin (%)

621,814

69.6 %

55,353

(3)

677,167

75.8 %

Operating expenses







Research and development

117,235


(2,664)

(1)

114,571


Sales and marketing

183,237


(4,718)

(1)

178,519


General and administrative

73,019


(3,830)

(1)

69,189


Amortization of acquired customer-based intangible assets

52,469


(52,469)

(2)


Special charges (recoveries)

3,152


(3,152)

(4)


GAAP-based income from operations / Non-GAAP-based income from operations

171,681


122,186

(5)

293,867


Other income (expense), net

45,017


(45,017)

(6)


Provision for income taxes

(2,215)


38,099

(7)

35,884


GAAP-based net income / Non-GAAP-based net income, attributable to OpenText

181,283


39,070

(8)

220,353


GAAP-based earnings per share / Non-GAAP-based earnings per share-diluted, attributable to OpenText

$          0.66


$          0.14

(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 1% 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 June 30, 2021



Per share diluted

GAAP-based net income, attributable to OpenText

$                   181,283

$                          0.66

Add:



Amortization

105,684

0.39

Share-based compensation

13,350

0.05

Special charges (recoveries)

3,152

0.01

Other (income) expense, net

(45,017)

(0.16)

GAAP-based provision for income taxes

(2,215)

(0.02)

Non-GAAP-based provision for income taxes

(35,884)

(0.13)

Non-GAAP-based net income, attributable to OpenText

$                   220,353

$                          0.80


 

Reconciliation of Adjusted EBITDA



Three Months Ended June 30, 2021

GAAP-based net income, attributable to OpenText

$                                                      181,283

Add:


Provision for income taxes

(2,215)

Interest and other related expense, net

37,550

Amortization of acquired technology-based intangible assets

53,215

Amortization of acquired customer-based intangible assets

52,469

Depreciation

21,021

Share-based compensation

13,350

Special charges (recoveries)

3,152

Other (income) expense, net

(45,017)

Adjusted EBITDA

$                                                      314,808



GAAP-based net income margin

20.3 %

Adjusted EBITDA margin

35.2 %

 

Reconciliation of Free cash flows



Three Months Ended June 30, 2021

GAAP-based cash flows provided by operating activities

$                                                         296,189

Add:


Capital expenditures (1)

(27,408)

Free cash flows

$                                                         268,781



(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, 2021

(In thousands, except for per share data)


Year Ended June 30, 2021


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

$   481,818


$      (3,419)

(1)

$   478,399


Customer support

122,753


(1,910)

(1)

120,843


Professional service and other

197,183


(2,565)

(1)

194,618


Amortization of acquired technology-based intangible assets

218,796


(218,796)

(2)


GAAP-based gross profit and gross margin (%) / Non-GAAP-based gross profit and gross margin (%)

2,351,649

69.4 %

226,690

(3)

2,578,339

76.1 %

Operating expenses







Research and development

421,447


(9,859)

(1)

411,588


Sales and marketing

622,221


(18,312)

(1)

603,909


General and administrative

263,521


(15,904)

(1)

247,617


Amortization of acquired customer-based intangible assets

216,544


(216,544)

(2)


Special charges (recoveries)

1,748


(1,748)

(4)


GAAP-based income from operations / Non-GAAP-based income from operations

740,903


489,057

(5)

1,229,960


Other income (expense), net

61,434


(61,434)

(6)


Provision for income taxes

339,906


(188,931)

(7)

150,975


GAAP-based net income / Non-GAAP-based net income, attributable to OpenText

310,672


616,554

(8)

927,226


GAAP-based earnings per share / Non-GAAP-based earnings per share-diluted, attributable to OpenText

$          1.14


$          2.25

(8)

$          3.39




(1)

Adjustment relates to the exclusion of share-based compensation expense from our Non-GAAP-based operating expenses as this expense is excluded from our internal analysis of operating results.

(2)

Adjustment relates to the exclusion of amortization expense from our Non-GAAP-based operating expenses as the timing and frequency of amortization expense is dependent on our acquisitions and is hence excluded from our internal analysis of operating results.

(3)

GAAP-based and Non-GAAP-based gross profit stated in dollars and gross margin stated as a percentage of total revenue.

(4)

Adjustment relates to the exclusion of special charges (recoveries) from our Non-GAAP-based operating expenses as special charges (recoveries) are generally incurred in the periods relevant to an acquisition and include certain charges or recoveries that are not indicative or related to continuing operations, and are therefore excluded from our internal analysis of operating results.

(5)

GAAP-based and Non-GAAP-based income from operations stated in dollars.

(6)

Adjustment relates to the exclusion of other income (expense) from our Non-GAAP-based operating expenses as other income (expense) generally relates to the transactional impact of foreign exchange and is generally not indicative or related to continuing operations and is therefore excluded from our internal analysis of operating results. Other income (expense) also includes our share of income (losses) from our holdings in investments as a limited partner. We do not actively trade equity securities in these privately held companies nor do we plan our ongoing operations based around any anticipated fundings or distributions from these investments. We exclude gains and losses on these investments as we do not believe they are reflective of our ongoing business and operating results.

(7)

Adjustment relates to differences between the GAAP-based tax provision rate of approximately 52% 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. The GAAP-based tax provision rate for the year ended June 30, 2021 includes an income tax provision charge from IRS settlements partially offset by a tax benefit from the release of unrecognized tax benefits due to the conclusion of relevant tax audits that was recognized during the second quarter of Fiscal 2021.

(8)

Reconciliation of GAAP-based net income to Non-GAAP-based net income:




Year Ended June 30, 2021



Per share diluted

GAAP-based net income, attributable to OpenText

$                   310,672

$                          1.14

Add:



Amortization

435,340

1.59

Share-based compensation

51,969

0.19

Special charges (recoveries)

1,748

0.01

Other (income) expense, net

(61,434)

(0.22)

GAAP-based provision for income taxes

339,906

1.23

Non-GAAP-based provision for income taxes

(150,975)

(0.55)

Non-GAAP-based net income, attributable to OpenText

$                   927,226

$                          3.39

 

Reconciliation of Adjusted EBITDA



Year Ended June 30, 2021

GAAP-based net income, attributable to OpenText

$                                                      310,672

Add:


Provision for income taxes

339,906

Interest and other related expense, net

151,567

Amortization of acquired technology-based intangible assets

218,796

Amortization of acquired customer-based intangible assets

216,544

Depreciation

85,265

Share-based compensation

51,969

Special charges (recoveries)

1,748

Other (income) expense, net

(61,434)

Adjusted EBITDA

$                                                   1,315,033



GAAP-based net income margin

9.2 %

Adjusted EBITDA margin

38.8 %

 

Reconciliation of Free cash flows



Year Ended June 30, 2021

GAAP-based cash flows provided by operating activities

$                                                         876,120

Add:


Capital expenditures (1)

(63,675)

Free cash flows

$                                                         812,445



(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, 2022 and 2021:


Three Months Ended June 30, 2022


Three Months Ended June 30, 2021

Currencies

% of Revenue

% of Expenses(1)


% of Revenue

% of Expenses(1)

EURO

22 %

12 %


24 %

14 %

GBP

3 %

5 %


5 %

5 %

CAD

3 %

14 %


3 %

13 %

USD

63 %

54 %


60 %

53 %

Other

9 %

15 %


8 %

15 %

Total

100 %

100 %


100 %

100 %



Year Ended June 30, 2022


Year Ended June 30, 2021

Currencies

% of Revenue

% of Expenses(1)


% of Revenue

% of Expenses(1)

EURO

23 %

13 %


23 %

14 %

GBP

4 %

6 %


5 %

6 %

CAD

3 %

14 %


3 %

9 %

USD

62 %

53 %


61 %

55 %

Other

8 %

14 %


8 %

16 %

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).

 

Cision View original content:https://www.prnewswire.com/news-releases/opentext-reports-fourth-quarter-and-fiscal-year-2022-financial-results-301600383.html

SOURCE Open Text Corporation