OTEX
$39.34
Open Text Cp
($1.51)
(3.70%)
Earnings Details
Quarter June 2019
Thursday, August 01, 2019 4:01:00 PM
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Summary

Open Text Cp (OTEX) Recent Earnings

Open Text Cp (OTEX) reported Quarter June 2019 earnings of $0.27 per share on revenue of $747.2 million. The consensus earnings estimate was $0.37 per share on revenue of $762.4 million. Revenue fell 0.9% compared to the same quarter a year ago.

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
$0.27
Earnings Whisper
-
Consensus Estimate
$0.37
Reported Revenue
$747.2 Mil
Revenue Estimate
$762.4 Mil
Growth
Earnings Growth
Revenue Growth
Power Rating
Grade
Earnings Release

OpenText Reports Fourth Quarter and Fiscal Year 2019 Financial Results

Record Cloud and Annual Recurring Revenues (ARR)

Strong Margin Expansion

Record Operating Cash Flows

WATERLOO, Ontario, Aug. 1, 2019 /CNW/ --

Highlights

Fiscal Year 2019

  • Total Revenues of $2.87 billion, up 1.9%, and $2.92 billion in constant currency, up 3.8%
  • Annual Recurring Revenues (ARR) of $2.16 billion, up 4.6%, and $2.19 billion in constant currency, up 6.2%
  • Cloud Services and Subscriptions Revenues of $907.8 million, up 9.5%, and $918.6 million in constant currency, up 10.8%
  • GAAP net income attributable to OpenText of $285.5 million, up 17.9%
  • Adjusted EBITDA of $1.10 billion, up 7.8%, Margin of 38.4%, up 210 basis points
  • GAAP EPS, diluted of $1.06, up 16.5%
  • Non-GAAP EPS, diluted of $2.76, up 7.8%, and $2.79 in constant currency, up 9.0%
  • Record annual Operating Cash Flows of $876.3 million, up 23.8%.

Fourth Quarter

  • Total Revenues of $747.2 million, down 0.9%, and $769.3 million in constant currency, up 2.0%
  • Annual Recurring Revenues of $557.1 million, up 4.2%, and $572.0 million in constant currency, up 7.0%
  • Cloud Services and Subscriptions Revenues of $241.9 million, up 11.0%, and $246.5 million in constant currency, up 13.1%
  • GAAP net income attributable to OpenText of $72.0 million, up 16.6%
  • Adjusted EBITDA of $283.9 million, up 0.8%, Margin of 38.0%, up 60 basis points
  • GAAP EPS, diluted of $0.27, up 17.4%
  • Non-GAAP EPS, diluted of $0.72, no change, and $0.74 in constant currency, up 2.8%
  • Operating Cash Flows of $229.8 million, up 12.6%

Open Text Corporation (NASDAQ: OTEX), (TSX: OTEX), "The Information Company," today announced its financial results for the fourth quarter and year ended June 30, 2019

"Fiscal 2019 was a momentous year for OpenText as we delivered in constant currency $2.92 billion in total revenues, a record $918.6 million in cloud revenues, up 10.8% year-over-year growth and $2.19 billion in Annual Recurring Revenues, up 6.2% year-over-year growth, representing 75% of total revenues," said Mark J. Barrenechea, OpenText CEO & CTO. "We enter Fiscal 2020 with the strongest EIM offering in the industry, empowering customers to unlock their information advantage and win in Industry 4.0.  Our expanded partnerships with Google and SAP and recently announced next generation product line, OpenText Cloud Edition, will help revolutionize the way businesses capture, govern, exchange and use information in the cloud."

Barrenechea further added, "We delivered a solid fourth quarter with total revenues of $769.3 million, up 2.0% year-over-year, and cloud revenues of $246.5 million, up 13.1% year-over-year, each in constant currency.  Operating Cash Flows were $229.8 million, up 12.6% year-over-year. These solid results were delivered against the back drop of a $22 million foreign currency headwind to revenue during the quarter."

"During Fiscal 2019, we had record Adjusted EBITDA margin of 38.4%, delivered Operating Cash Flows of $876.3 million and deployed $381.4 million of capital to acquire Liaison Technologies & Catalyst Repository Systems," said Madhu Ranganathan, OpenText EVP and CFO.  "We ended the year with $941 million of Cash & Cash Equivalents and 1.5x Consolidated Net Leverage ratio, compared to 1.9x a year ago. As we look into Fiscal 2020 and beyond, we have never been stronger in our operating framework and balance sheet flexibility to continue our investments in product innovation, go-to-market and strategic acquisitions."

Financial Highlights for Fiscal 2019 with Year Over Year Comparisons

Summary of Annual Results








(in millions except per share data)

FY19

FY18

$ Change

% Change
(Y/Y)


FY19 in
CC*

% Change
in CC*

Revenues:








Cloud services and subscriptions

$907.8


$829.0


$78.8


9.5

%


$918.6


10.8

%

Customer support

1,247.9


1,232.5


15.4


1.3

%


1,271.1


3.1

%

Total annual recurring revenues**

$2,155.7


$2,061.5


$94.3


4.6

%


$2,189.7


6.2

%

License

428.1


437.5


(9.4)


(2.2)

%


439.3


0.4

%

Professional service and other

284.9


316.3


(31.3)


(9.9)

%


293.0


(7.4)

%

Total revenues

$2,868.8


$2,815.2


$53.5


1.9

%


$2,922.0


3.8

%

GAAP-based operating income

$567.0


$506.7


$60.3


11.9

%


N/A

N/A

Non-GAAP-based operating income (1)

$1,002.7


$933.5


$69.2


7.4

%


$1,013.4


8.6

%

GAAP-based EPS, diluted

$1.06


$0.91


$0.15


16.5

%


N/A

N/A

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

$2.76


$2.56


$0.20


7.8

%


$2.79


9.0

%

GAAP-based net income attributable to OpenText

$285.5


$242.2


$43.3


17.9

%


N/A

N/A

Adjusted EBITDA (1)

$1,100.3


$1,020.4


$79.9


7.8

%


$1,111.8


9.0

%

Operating cash flows

$876.3


$708.1


$168.2


23.8

%


N/A

N/A

 

Summary of Quarterly Results








(in millions except per share data)

Q4 FY19

Q4 FY18

$ Change

% Change
(Y/Y)


Q4 FY19
in CC*

% Change
in CC*

Revenues:








Cloud services and subscriptions

$241.9


$217.9


$24.0


11.0

%


$246.5


13.1

%

Customer support

315.2


316.8


(1.5)


(0.5)

%


325.4


2.7

%

Total annual recurring revenues**

$557.1


$534.6


$22.5


4.2

%


$572.0


7.0

%

License

119.7


139.9


(20.2)


(14.4)

%


124.1


(11.3)

%

Professional service and other

70.4


79.7


(9.3)


(11.7)

%


73.2


(8.1)

%

Total revenues

$747.2


$754.3


($7.0)


(0.9)

%


$769.3


2.0

%

GAAP-based operating income

$158.0


$149.4


$8.6


5.8

%


N/A

N/A

Non-GAAP-based operating income (1)

$259.0


$259.1


($0.1)


%


$266.9


3.0

%

GAAP-based EPS, diluted

$0.27


$0.23


$0.04


17.4

%


N/A

N/A

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

$0.72


$0.72


$—


%


$0.74


2.8

%

GAAP-based net income attributable to OpenText

$72.0


$61.7


$10.3


16.6

%


N/A

N/A

Adjusted EBITDA (1)

$283.9


$281.8


$2.1


0.8

%


$292.2


3.6

%

Operating cash flows

$229.8


$204.1


$25.7


12.6

%


N/A

N/A



(1) Please see note 2 "Use of Non-GAAP Financial Measures" below

(2) Please also see note 14 to the Company's Fiscal 2018 Consolidated Financial Statements on Form 10-K. Reflective of the amount of net tax benefit arising from the internal reorganization assumed to be allocable to the current period based on the forecasted utilization period.

Note: Individual line items in tables may be adjusted by non-material amounts to enable totals to align to published financial statements.



*CC: Constant currency for this purpose is defined as the current period reported revenues/expenses/earnings represented at the prior comparative period's foreign exchange rate.

**Annual recurring revenue is defined as the sum of Cloud services and subscriptions revenue and Customer support revenue.

Dividend Program

As part of our quarterly, non-cumulative cash dividend program, the Board declared on July 31, 2019 a cash dividend of $0.1746 per common share. The record date for this dividend is August 30, 2019 and the payment date is September 20, 2019. Future declarations of dividends and the establishment of future record and payment dates are subject to the final determination and discretion of the Board of Directors.

OpenText Quarterly Business Highlights

  • 26 customer transactions over $1 million, 13 in the OpenText Cloud and 13 off-cloud
  • Financial, Consumer Goods, Services, Technology and Public Sector industries saw the most demand in cloud and license
  • Key customer wins in the quarter included: BMW Group, Core-Mark Holding Company, Inc., Creative Foam Corporation, Credito Emiliano SpA, Lanxess Deutschland GmbH, Phillips Lytle LLP, Premier Healthcare Solutions, Inc. and Vertican Technologies, Inc.  
  • OpenText hosts largest Enterprise Information Management conference, OpenText Enterprise World, in Toronto
  • OpenText announces the next generation Enterprise Information Management Cloud at Enterprise World
  • OpenText announces strategic partnership with Google Cloud
  • OpenText and Mastercard Partner to Transform Financial Processes Across Global Supply Chains
  • OpenText named a Customer Communications Management leader in 2019 Aspire CCM leaderboard
  • OpenText AppWorks named a leader in Digital Process Automation for Deep Deployments
  • New OpenText Content Management Services to be delivered through SAP® Cloud Platform
  • OpenText releases new Cloud and Hybrid offerings for SAP® solutions
  • OpenText receives 2019 SAP® Pinnacle Award as the SAP Solution Extension Partner of the Year

Summary of Annual Results






FY19

FY18

% Change


Revenue (million)

$2,868.8


$2,815.2


1.9

%


GAAP-based gross margin

67.6

%

66.2

%

140


bps

GAAP-based EPS, diluted

$1.06


$0.91


16.5

%


Non-GAAP-based gross margin (1)

74.1

%

73.0

%

110


bps

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

$2.76


$2.56


7.8

%


 

Summary of Quarterly Results









Q4 FY19

Q3 FY19

Q4 FY18

% Change
(Q4 FY19 vs
Q3 FY19)


% Change
(Q4 FY19 vs
Q4 FY18)


Revenue (million)

$747.2


$719.1


$754.3


3.9

%


(0.9)

%


GAAP-based gross margin

68.3

%

66.7

%

67.5

%

160


bps

80


bps

GAAP-based EPS, diluted

$0.27


$0.27


$0.23


%


17.4

%


Non-GAAP-based gross margin (1)

74.2

%

73.0

%

74.0

%

120


bps

20


bps

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

$0.72


$0.64


$0.72


12.5

%


%



(1) Please see note 2 "Use of Non-GAAP Financial Measures" 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.

OpenText Capital Markets Day 2019

Institutional investors and equity research analysts are invited to attend OpenText's 2019 Capital Markets Day on Friday, September 6, 2019 at the Lotte New York Palace hotel in New York, NY. This event will include an annual strategic update with formal presentations by the OpenText executive team. To register, please contact investors@opentext.com.  Presentation material as well as listen-only teleconference and webcast details will be publicly available on the Investor Relations website at: http://investors.opentext.com/investor-events-and-presentations.

Conference Call Information

The public is invited to listen to the earnings conference call today at 5:00 p.m. ET (2:00 p.m. PT) by dialing 1-800-319-4610 (toll-free) or +1-604-638-5340 (international). Please dial-in 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 1, 2019 at 7:00 p.m. ET through 11:59 p.m. on August 15, 2019 and can be accessed by dialing 1-855-669-9658 (toll-free) or +1-604-674-8052 (international) and using passcode 3382 followed by the number sign.

Please see below note (2) for a reconciliation of U.S. GAAP-based financial measures used in this press release, to non-U.S. GAAP-based financial measures.  Additionally, "off-cloud" is a term we use to describe license transactions.

About OpenText

OpenText, The Information Company™, a market leader in Enterprise Information Management software and solutions, enabling companies to manage, leverage, secure and gain insight into their enterprise information, on premises or in the cloud. For more information about OpenText (NASDAQ/TSX: OTEX) visit www.opentext.com.

Cautionary Statement Regarding Forward-Looking Statements

Certain statements in this press release, including statements about the focus of Open Text Corporation ("OpenText" or "the Company") in our fiscal year ending June 30, 2020 (Fiscal 2020) on growth, anticipated benefits of our partnerships and next generation product lines, the strength of our operating framework and balance sheet flexibility, continued investments in product innovation, go-to-market and strategic acquisitions, M&A continuing to be our leading growth contributor, our capital allocation strategy, creating value through investments in broader Enterprise Information Management (EIM) capabilities, the Company's presence in the cloud and in growth markets, expected growth in our revenue lines, total growth from acquisitions, innovation and organic initiatives, the focus on recurring revenues, improving operational efficiency, expanding cash flow and strengthening the business, adjusted operating income and cash flow, its financial condition, the adjusted operating margin target range, results of operations and earnings, announced acquisitions, ongoing tax matters, the integration of the acquired businesses, declaration of quarterly dividends, future tax rates, new platform and product offerings, scaling OpenText to new levels in Fiscal 2020 and beyond, and other matters, may contain words such as "anticipates", "expects", "intends", "plans", "believes", "seeks", "estimates", "may", "could", "would", "might", "will" and variations of these words or similar expressions are considered forward-looking statements or information under applicable securities laws. In addition, any information or statements that refer to expectations, beliefs, plans, projections, objectives, performance or other characterizations of future events or circumstances, including any underlying assumptions, are forward-looking, and based on our current expectations, forecasts and projections about the operating environment, economies and markets in which we operate. Forward-looking statements reflect our current estimates, beliefs and assumptions, which are based on management's perception of historic trends, current conditions and expected future developments, as well as other factors it believes are appropriate in the circumstances, such as certain assumptions about the economy, as well as market, financial and operational assumptions. Management's estimates, beliefs and assumptions are inherently subject to significant business, economic, competitive and other uncertainties and contingencies regarding future events and, as such, are subject to change. We can give no assurance that such estimates, beliefs and assumptions will prove to be correct. Such forward-looking statements involve known and unknown risks, uncertainties and other factors and assumptions that may cause the actual results, performance or achievements to differ materially. Such factors include, but are not limited to: (i) the future performance, financial and otherwise, of OpenText; (ii) the ability of OpenText to bring new products and services to market and to increase sales; (iii) the strength of the Company's product development pipeline; (iv) the Company's growth and profitability prospects; (v) the estimated size and growth prospects of the EIM market including expected growth in the Artificial Intelligence market; (vi) the Company's competitive position in the EIM market and its ability to take advantage of future opportunities in this market; (vii) the benefits of the Company's products and services to be realized by customers; (viii) the demand for the Company's products and services and the extent of deployment of the Company's products and services in the EIM marketplace; (ix) downward pressure on our share price and dilutive effect of future sales or issuances of equity securities (including in connection with future acquisitions); (x) the Company's financial condition and capital requirements; and (xi) statements about the impact of product releases. The risks and uncertainties that may affect forward-looking statements include, but are not limited to: (i) integration of acquisitions and related restructuring efforts, including the quantum of restructuring charges and the timing thereof; (ii) the potential for the incurrence of or assumption of debt in connection with acquisitions and the impact on the ratings or outlooks of rating agencies on the Company's outstanding debt securities; (iii) the possibility that the Company may be unable to meet its future reporting requirements under the U.S. Securities Exchange Act of 1934, as amended, and the rules promulgated thereunder, or applicable Canadian securities regulation; (iv) the risks associated with bringing new products and services to market; (v) failure to comply with privacy laws and regulations that are extensive, open to various interpretations and complex to implement including General Data Protection Regulation (GDPR) and Country by Country Reporting (CBCR); (vi) fluctuations in currency exchange rates; (vii) delays in the purchasing decisions of the Company's customers; (viii) the competition the Company faces in its industry and/or marketplace; (ix) the final determination of litigation, tax audits (including tax examinations in the United States and elsewhere) and other legal proceedings; (x) potential exposure to greater than anticipated tax liabilities or expenses, including with respect to changes in Canadian, U.S. or international tax regimes including tax reform legislation enacted through the Tax Cuts and Jobs Act in the United States; (xi) the possibility of technical, logistical or planning issues in connection with the deployment of the Company's products or services; (xii) the continuous commitment of the Company's customers; and (xiii) demand for the Company's products and services. For additional information with respect to risks and other factors which could occur, see the Company's Annual Report on Form 10-K, Quarterly Reports on Form 10-Q and other securities filings with the Securities and Exchange Commission (SEC) and other securities regulators. Readers are cautioned not to place undue reliance upon any such forward-looking statements, which speak only as of the date made. Unless otherwise required by applicable securities laws, the Company disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

OTEX-F

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

Copyright ©2019 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, 2019


June 30, 2018

ASSETS




Cash and cash equivalents

$

941,009



$

682,942


Accounts receivable trade, net of allowance for doubtful accounts of $17,011 as of June 30, 2019 and $9,741 as of June 30, 2018

463,785



487,956


Contract assets

20,956




Income taxes recoverable

38,340



55,623


Prepaid expenses and other current assets

97,238



101,059


Total current assets

1,561,328



1,327,580


Property and equipment

249,453



264,205


Long-term contract assets

15,386




Goodwill

3,769,908



3,580,129


Acquired intangible assets

1,146,504



1,296,637


Deferred tax assets

1,004,450



1,122,729


Other assets

148,977



111,267


Deferred charges



38,000


Long-term income taxes recoverable

37,969



24,482


Total assets

$

7,933,975



$

7,765,029


LIABILITIES AND SHAREHOLDERS' EQUITY




Current liabilities:




Accounts payable and accrued liabilities

$

329,903



$

302,154


Current portion of long-term debt

10,000



10,000


Deferred revenues

641,656



644,211


Income taxes payable

33,158



38,234


Total current liabilities

1,014,717



994,599


Long-term liabilities:




Accrued liabilities

49,441



52,827


Deferred credits



2,727


Pension liability

75,239



65,719


Long-term debt

2,604,878



2,610,523


Deferred revenues

46,974



69,197


Long-term income taxes payable

202,184



172,241


Deferred tax liabilities

55,872



79,938


Total long-term liabilities

3,034,588



3,053,172


Shareholders' equity:




Share capital and additional paid-in capital




269,834,442 and 267,651,084 Common Shares issued and outstanding at June 30, 2019 and June 30, 2018, respectively; authorized Common Shares: unlimited

1,774,214



1,707,073


Accumulated other comprehensive income

24,124



33,645


Retained earnings

2,113,883



1,994,235


Treasury stock, at cost (802,871 shares at June 30, 2019 and 690,336 shares at June 30, 2018, respectively)

(28,766)



(18,732)


Total OpenText shareholders' equity

3,883,455



3,716,221


Non-controlling interests

1,215



1,037


Total shareholders' equity

3,884,670



3,717,258


Total liabilities and shareholders' equity

$

7,933,975



$

7,765,029


 

OPEN TEXT CORPORATION

CONSOLIDATED STATEMENTS OF INCOME

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




Year Ended June 30,



2019


2018


2017

Revenues:







License


$

428,092



$

437,512



$

369,144


Cloud services and subscriptions


907,812



828,968



705,495


Customer support


1,247,915



1,232,504



981,102


Professional service and other


284,936



316,257



235,316


Total revenues


2,868,755



2,815,241



2,291,057


Cost of revenues:







License


14,347



13,693



13,632


Cloud services and subscriptions


383,993



364,160



299,850


Customer support


124,343



133,889



122,565


Professional service and other


224,635



253,389



194,954


Amortization of acquired technology-based intangible assets


183,385



185,868



130,556


Total cost of revenues


930,703



950,999



761,557


Gross profit


1,938,052



1,864,242



1,529,500


Operating expenses:







Research and development


321,836



322,909



281,215


Sales and marketing


518,035



529,141



444,454


General and administrative


207,909



205,227



170,353


Depreciation


97,716



86,943



64,318


Amortization of acquired customer-based intangible assets


189,827



184,118



150,842


Special charges


35,719



29,211



63,618


Total operating expenses


1,371,042



1,357,549



1,174,800


Income from operations


567,010



506,693



354,700


Other income (expense), net


10,156



17,973



15,743


Interest and other related expense, net


(136,592)



(138,540)



(120,892)


Income before income taxes


440,574



386,126



249,551


Provision for (recovery of) income taxes


154,937



143,826



(776,364)


Net income for the period


$

285,637



$

242,300



$

1,025,915


Net (income) loss attributable to non-controlling interests


(136)



(76)



(256)


Net income attributable to OpenText


$

285,501



$

242,224



$

1,025,659


Earnings per share—basic attributable to OpenText


$

1.06



$

0.91



$

4.04


Earnings per share—diluted attributable to OpenText


$

1.06



$

0.91



$

4.01


Weighted average number of Common Shares outstanding—basic


268,784



266,085



253,879


Weighted average number of Common Shares outstanding—diluted


269,908



267,492



255,805


 

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,


2019


2018

Revenues:




License

$

119,728



$

139,924


Cloud services and subscriptions

241,889



217,892


Customer support

315,248



316,751


Professional service and other

70,356



79,703


Total revenues

747,221



754,270


Cost of revenues:




License

4,128



3,048


Cloud services and subscriptions

103,719



95,346


Customer support

30,761



34,232


Professional service and other

55,183



64,896


Amortization of acquired technology-based intangible assets

42,946



47,477


Total cost of revenues

236,737



244,999


Gross profit

510,484



509,271


Operating expenses:




Research and development

83,708



81,816


Sales and marketing

139,416



147,499


General and administrative

52,954



52,577


Depreciation

25,000



22,901


Amortization of acquired customer-based intangible assets

49,200



47,299


Special charges

2,232



7,821


Total operating expenses

352,510



359,913


Income from operations

157,974



149,358


Other income (expense), net

3,191



(8,938)


Interest and other related expense, net

(32,841)



(35,345)


Income before income taxes

128,324



105,075


Provision for (recovery of) income taxes

56,309



43,182


Net income for the period

$

72,015



$

61,893


Net (income) loss attributable to non-controlling interests

(32)



(170)


Net income attributable to OpenText

$

71,983



$

61,723


Earnings per share—basic attributable to OpenText

$

0.27



$

0.23


Earnings per share—diluted attributable to OpenText

$

0.27



$

0.23


Weighted average number of Common Shares outstanding—basic

269,446



267,489


Weighted average number of Common Shares outstanding—diluted

270,652



268,628


 

OPEN TEXT CORPORATION

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(In thousands of U.S. dollars)



Year Ended June 30,


2019


2018



Net income for the period

$

285,637



$

242,300



$

1,025,915


Other comprehensive income (loss)—net of tax:






Net foreign currency translation adjustments

(3,882)



(9,582)



(4,756)


Unrealized gain (loss) on cash flow hedges:






Unrealized gain (loss) - net of tax expense (recovery) effect of $6, ($171) and $34 for the year ended June 30, 2019, 2018 and 2017, respectively

16



(476)



95


(Gain) loss reclassified into net income - net of tax (expense) recovery effect of $539, ($489) and $67 for the year ended June 30, 2019, 2018 and 2017, respectively

1,494



(1,357)



186


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






Actuarial gain (loss) - net of tax expense (recovery) effect of ($2,004), ($1,846) and $840 for the year ended June 30, 2019, 2018 and 2017, respectively

(7,421)



(3,383)



6,216


Amortization of actuarial (gain) loss into net income - net of tax (expense) recovery effect of $292, $183 and $241 for the year ended June 30, 2019, 2018 and 2017, respectively

272



260



565


Unrealized net gain (loss) on marketable securities - net of tax effect of nil for the year ended June 30, 2019, 2018 and 2017 respectively





184


Release of unrealized gain on marketable securities - net of tax effect of nil for the year ended June 30, 2019, 2018 and 2017 respectively



(617)




Total other comprehensive income (loss) net, for the period

(9,521)



(15,155)



2,490


Total comprehensive income

276,116



227,145



1,028,405


Comprehensive (income) loss attributable to non-controlling interests

(136)



(76)



(256)


Total comprehensive income attributable to OpenText

$

275,980



$

227,069



$

1,028,149


 

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, 2016

242,810



$

965,068



(1,268)



$

(25,268)



$

992,546



$

46,310



$

541



$

1,979,197


Issuance of Common Shares
















Under employee stock option plans

1,012



20,732













20,732


Under employee stock purchase plans

427



11,604













11,604


Under the public Equity Offering

19,811



604,223













604,223


Income tax effect related to public Equity offering



5,077













5,077


Equity issuance costs



(19,574)













(19,574)


Share-based compensation



30,507













30,507


Income tax effect related to share-based compensation



1,534













1,534


Purchase of treasury stock





(244)



(8,198)









(8,198)


Issuance of treasury stock



(5,946)



410



5,946










Dividends declared

($0.4770 per Common Share)









(120,581)







(120,581)


Other comprehensive income - net











2,490





2,490


Non-controlling interest



229











164



393


Net income for the year









1,025,659





256



1,025,915


Balance as of June 30, 2017

264,060



$

1,613,454



(1,102)



$

(27,520)



$

1,897,624



$

48,800



$

961



$

3,533,319


Issuance of Common Shares
















Under employee stock option plans

2,870



54,355













54,355


Under employee stock purchase plans

721



20,458













20,458


Share-based compensation



27,594













27,594


Issuance of treasury stock



(8,788)



411



8,788










Dividends declared

($0.5478 per Common Share)









(145,613)







(145,613)


Other comprehensive income - net











(15,155)





(15,155)


Net income for the year









242,224





76



242,300


Balance as of June 30, 2018

267,651



$

1,707,073



(691)



$

(18,732)



$

1,994,235



$

33,645



$

1,037



$

3,717,258


Issuance of Common Shares
















Under employee stock option plans

1,472



35,626













35,626


Under employee stock purchase plans

711



21,835













21,835


Share-based compensation



26,770













26,770


Purchase of treasury stock





(726)



(26,499)









(26,499)


Issuance of treasury stock



(16,465)



614



16,465










Dividends declared

($0.6300 per Common Share)









(168,859)







(168,859)


Cumulative effect of ASU 2016-16









(26,780)







(26,780)


Cumulative effect of Topic 606









29,786







29,786


Other comprehensive income - net











(9,521)





(9,521)


Non-controlling interest



(625)











42



(583)


Net income for the year









285,501





136



285,637


Balance as of June 30, 2019

269,834



$

1,774,214



(803)



$

(28,766)



$

2,113,883



$

24,124



$

1,215



$

3,884,670


 

OPEN TEXT CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands of U.S. dollars)



Year Ended June 30,


2019


2018


2017

Cash flows from operating activities:






Net income for the period

$

285,637



$

242,300



$

1,025,915


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






Depreciation and amortization of intangible assets

470,928



456,929



345,715


Share-based compensation expense

26,770



27,594



30,507


Excess tax expense (benefits) on share-based compensation expense





(1,534)


Pension expense

4,624



3,738



3,893


Amortization of debt issuance costs

4,330



4,646



5,014


Amortization of deferred charges and credits



4,242



6,298


Loss on sale and write down of property and equipment

9,438



2,234



784


Release of unrealized gain on marketable securities to income



(841)




Deferred taxes

47,425



89,736



(871,195)


Share in net (income) loss of equity investees

(13,668)



(5,965)



(5,952)


Write off of unamortized debt issuance costs



155



833


Other non-cash charges





1,033


Changes in operating assets and liabilities:






Accounts receivable

75,508



(22,566)



(126,784)


Contract assets

(37,623)






Prepaid expenses and other current assets

(819)



(7,274)



(7,766)


Income taxes and deferred charges and credits

27,291



(31,323)



(1,683)


Accounts payable and accrued liabilities

(21,732)



(91,650)



53,490


Deferred revenue

(1,827)



35,629



3,484


Other assets

(4)



497



(21,699)


Net cash provided by operating activities

876,278



708,081



440,353


Cash flows from investing activities:






Additions of property and equipment

(63,837)



(105,318)



(79,592)


Proceeds from maturity of short-term investments





9,212


Purchase of Catalyst Repository Systems Inc.

(70,800)






Purchase of Liaison Technologies

(310,644)






Purchase of Hightail Inc.



(20,535)




Purchase of Guidance Software,  net of cash acquired

(2,279)



(229,275)




Purchase of Covisint Corporation, net of cash acquired



(71,279)




Purchase of ECD Business





(1,622,394)


Purchase of HP Inc. CCM Business





(315,000)


Purchase of Recommind, Inc.





(170,107)


Purchase consideration for prior period acquisitions





(7,146)


Other investing activities

(16,966)



(18,034)



(5,937)


Net cash used in investing activities

(464,526)



(444,441)



(2,190,964)


Cash flows from financing activities:






Excess tax (expense) benefits on share-based compensation expense





1,534


Proceeds from issuance of long-term debt and revolver



1,200,000



481,875


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

57,889



75,935



35,593


Proceeds from issuance of Common shares under public Equity Offering





604,223


Repayment of long-term debt and revolver

(10,000)



(1,149,620)



(57,880)


Debt issuance costs

(322)



(4,375)



(7,240)


Equity issuance costs





(19,574)


Purchase of treasury stock

(26,499)





(8,198)


Purchase of non-controlling interest

(583)





(208)


Payments of dividends to shareholders

(168,859)



(145,613)



(120,581)


Net cash provided by (used in) financing activities

(148,374)



(23,673)



909,544


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

(3,826)



(2,186)



1,767


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

259,552



237,781



(839,300)


Cash and cash equivalents at beginning of the period

683,991



446,210



1,285,510


Cash and cash equivalents at end of the period

$

943,543



$

683,991



$

446,210








Reconciliation of cash, cash equivalents and restricted cash:

June 30, 2019


June 30, 2018


June 30, 2017

Cash and cash equivalents

$

941,009



$

682,942



$

443,357


Restricted cash included in Other assets

2,534



1,049



2,853


Total cash, cash equivalents and restricted cash

$

943,543



$

683,991



$

446,210


 

OPEN TEXT CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands of U.S. dollars)

(unaudited)



Three Months Ended June 30,


2019


2018

Cash flows from operating activities:




Net income for the period

$

72,015



$

61,893


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




Depreciation and amortization of intangible assets

117,146



117,677


Share-based compensation expense

6,618



7,121


Pension expense

1,212



904


Amortization of debt issuance costs

1,096



811


Amortization of deferred charges and credits



1,067


Write off of unamortized debt issuance costs



155


Loss on sale and write down of property and equipment



1,745


Deferred taxes

36,118



27,096


Share in net (income) loss of equity investees

(3,016)



(6,468)


Changes in operating assets and liabilities:




Accounts receivable

22,731



33,132


Contract assets

(8,751)




Prepaid expenses and other current assets

(324)



3,261


Income taxes and deferred charges and credits

6,285



(9,255)


Accounts payable and accrued liabilities

8,912



628


Deferred revenue

(25,961)



(39,075)


Other assets

(4,304)



3,368


Net cash provided by operating activities

229,777



204,060


Cash flows from investing activities:




Additions of property and equipment

(13,405)



(22,280)


Purchase of Hightail Inc.



(69)


Other investing activities

(8,762)



(6,855)


Net cash used in investing activities

(22,167)



(29,204)


Cash flows from financing activities:




Proceeds from issuance of long-term debt and revolver



1,000,000


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

15,792



9,871


Repayment of long-term debt and revolver

(2,500)



(1,043,800)


Debt issuance costs



(4,375)


Payments of dividends to shareholders

(46,958)



(40,617)


Net cash provided by (used in) financing activities

(33,666)



(78,921)


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

83



(19,889)


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

174,027



76,046


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

769,516



607,945


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

$

943,543



$

683,991






Reconciliation of cash, cash equivalents and restricted cash:

June 30, 2019


June 30, 2018

Cash and cash equivalents

941,009



682,942


Restricted cash included in Other assets

2,534



1,049


Total Cash, cash equivalents and restricted cash

$

943,543



$

683,991


Notes

(1)

All dollar amounts in this press release are in U.S. Dollars unless otherwise indicated.



(2)

Use of Non-GAAP Financial Measures: In addition to reporting financial results in accordance with U.S. GAAP, the Company provides certain financial measures that are not in accordance with U.S. GAAP (Non-GAAP). These Non-GAAP financial measures have certain limitations in that they do not have a standardized meaning and thus the Company's definition may be different from similar Non-GAAP financial measures used by other companies and/or analysts and may differ from period to period. Thus, it may be more difficult to compare the Company's financial performance to that of other companies. However, the Company's management compensates for these limitations by providing the relevant disclosure of the items excluded in the calculation of these Non-GAAP financial measures both in its reconciliation to the U.S. GAAP financial measures and its consolidated financial statements, all of which should be considered when evaluating the Company's results.




The Company uses these Non-GAAP financial measures to supplement the information provided in its consolidated financial statements, which are presented in accordance with U.S. GAAP. The presentation of Non-GAAP financial measures are not meant to be a substitute for financial measures presented in accordance with U.S. GAAP, but rather should be evaluated in conjunction with and as a supplement to such U.S. GAAP measures. OpenText strongly encourages investors to review its financial information in its entirety and not to rely on a single financial measure. The Company therefore believes that despite these limitations, it is appropriate to supplement the disclosure of the U.S. GAAP measures with certain Non-GAAP measures defined below.




Non-GAAP-based net income and Non-GAAP-based EPS, attributable to OpenText, are consistently calculated as GAAP-based net income or earnings per share, attributable to OpenText, on a diluted basis, after giving effect to the amortization of acquired intangible assets, other income (expense), share-based compensation, and Special charges (recoveries), all net of tax and any tax benefits/expense items unrelated to current period income, as further described in the tables below. Non-GAAP-based gross profit is the arithmetical sum of GAAP-based gross profit and the amortization of acquired technology-based intangible assets and share-based compensation within cost of sales. Non-GAAP-based gross margin is calculated as Non-GAAP-based gross profit expressed as a percentage of total revenue. Non-GAAP-based income from operations is calculated as income from operations, excluding the amortization of acquired intangible assets, Special charges (recoveries), and share-based compensation expense.




Adjusted earnings (loss) 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).




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, 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-U.S. GAAP-based financial measures for the following periods presented. Results for reporting periods commencing July 1, 2018 are presented under the new Topic 606 revenue standard, while prior period results continue to be reported under the previous standard. For more details relating to our adoption of Topic 606 please see Note 1 "Basis of Presentation" and Note 3 "Revenues" to our Consolidated Financial Statements on Form 10-K.

 

Reconciliation of selected GAAP-based measures to Non-GAAP-based measures
for the three months ended June 30, 2019.
(In thousands except for per share amounts)


Three Months Ended June 30, 2019


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

$

103,719



$

(75)


(1)

$

103,644



Customer support

30,761



(361)


(1)

30,400



Professional service and other

55,183



(434)


(1)

54,749



Amortization of acquired technology-based intangible assets

42,946



(42,946)


(2)



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

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

510,484


68.3

%

43,816


(3)

554,300


74.2

%

Operating expenses







Research and development

83,708



(1,323)


(1)

82,385



Sales and marketing

139,416



(2,006)


(1)

137,410



General and administrative

52,954



(2,419)


(1)

50,535



Amortization of acquired customer-based intangible assets

49,200



(49,200)


(2)



Special charges (recoveries)

2,232



(2,232)


(4)



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

157,974



100,996


(5)

258,970



Other income (expense), net

3,191



(3,191)


(6)



Provision for (recovery of) income taxes

56,309



(24,651)


(7)

31,658



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

71,983



122,456


(8)

194,439



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

$

0.27



$

0.45


(8)

$

0.72




(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 non-marketable securities investments as a limited partner. We do not actively trade equity securities in these privately held companies nor do we plan our ongoing operations based around any anticipated fundings or distributions from these investments. We exclude gains and losses on these investments as we do not believe they are reflective of our ongoing business and operating results.

(7)

Adjustment relates to differences between the GAAP-based tax provision rate of approximately 44% 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, 2019



Per share diluted

GAAP-based net income, attributable to OpenText

$

71,983


$

0.27


Add:



Amortization

92,146


0.34


Share-based compensation

6,618


0.02


Special charges (recoveries)

2,232


0.01


Other (income) expense, net

(3,191)


(0.01)


GAAP-based provision for (recovery of) income taxes

56,309


0.21


Non-GAAP-based provision for income taxes

(31,658)


(0.12)


Non-GAAP-based net income, attributable to OpenText

$

194,439


$

0.72


 

Reconciliation of Adjusted EBITDA



Three Months Ended June 30, 2019

GAAP-based net income, attributable to OpenText

$

71,983


Add:


Provision for (recovery of) income taxes

56,309


Interest and other related expense, net

32,841


Amortization of acquired technology-based intangible assets

42,946


Amortization of acquired customer-based intangible assets

49,200


Depreciation

25,000


Share-based compensation

6,618


Special charges (recoveries)

2,232


Other (income) expense, net

(3,191)


Adjusted EBITDA

$

283,938


 

Reconciliation of selected GAAP-based measures to Non-GAAP-based measures
for the year ended June 30, 2019.
(In thousands except for per share amounts)


Year Ended June 30, 2019


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

$

383,993



$

(948)


(1)

$

383,045



Customer support

124,343



(1,242)


(1)

123,101



Professional service and other

224,635



(1,764)


(1)

222,871



Amortization of acquired technology-based intangible assets

183,385



(183,385)


(2)



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

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

1,938,052


67.6

%

187,339


(3)

2,125,391


74.1

%

Operating expenses







Research and development

321,836



(4,991)


(1)

316,845



Sales and marketing

518,035



(7,880)


(1)

510,155



General and administrative

207,909



(9,945)


(1)

197,964



Amortization of acquired customer-based intangible assets

189,827



(189,827)


(2)



Special charges (recoveries)

35,719



(35,719)


(4)



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

567,010



435,701


(5)

1,002,711



Other income (expense), net

10,156



(10,156)


(6)



Provision for (recovery of) income taxes

154,937



(33,680)


(7)

121,257



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

285,501



459,225


(8)

744,726



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

$

1.06



$

1.70


(8)

$

2.76




(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 non-marketable securities investments as a limited partner. We do not actively trade equity securities in these privately held companies nor do we plan our ongoing operations based around any anticipated fundings or distributions from these investments. We exclude gains and losses on these investments as we do not believe they are reflective of our ongoing business and operating results.

(7)

Adjustment relates to differences between the GAAP-based tax provision rate of approximately 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:

 


Year Ended June 30, 2019



Per share diluted 

GAAP-based net income, attributable to OpenText

$

285,501


$

1.06


Add:



Amortization

373,212


1.38


Share-based compensation

26,770


0.10


Special charges (recoveries)

35,719


0.13


Other (income) expense, net

(10,156)


(0.04)


GAAP-based provision for (recovery of) income taxes

154,937


0.57


Non-GAAP based provision for income taxes

(121,257)


(0.44)


Non-GAAP-based net income, attributable to OpenText

$

744,726


$

2.76


 

Reconciliation of Adjusted EBITDA



Year Ended June 30, 2019

GAAP-based net income, attributable to OpenText

$

285,501


Add:


Provision for (recovery of) income taxes

154,937


Interest and other related expense, net

136,592


Amortization of acquired technology-based intangible assets

183,385


Amortization of acquired customer-based intangible assets

189,827


Depreciation

97,716


Share-based compensation

26,770


Special charges (recoveries)

35,719


Other (income) expense, net

(10,156)


Adjusted EBITDA

$

1,100,291


 

Reconciliation of selected GAAP-based measures to Non-GAAP-based measures
for the three months ended March 31, 2019.
(In thousands except for per share amounts)


Three Months Ended March 31, 2019


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

$

103,873



$

(291)


(1)

$

103,582



Customer support

31,844



(310)


(1)

31,534



Professional service and other

56,626



(448)


(1)

56,178



Amortization of acquired technology-based intangible assets

44,596



(44,596)


(2)



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

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

479,515


66.7

%

45,645


(3)

525,160


73.0

%

Operating expenses







Research and development

84,905



(1,315)


(1)

83,590



Sales and marketing

132,244



(2,458)


(1)

129,786



General and administrative

51,833



(1,890)


(1)

49,943



Amortization of acquired customer-based intangible assets

48,832



(48,832)


(2)



Special charges (recoveries)

796



(796)


(4)



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

135,877



100,936


(5)

236,813



Other income (expense), net

5,065



(5,065)


(6)



Provision for (recovery of) income taxes

32,542



(4,373)


(7)

28,169



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

72,762



100,244


(8)

173,006



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

$

0.27



$

0.37


(8)

$

0.64




(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 non-marketable securities investments as a limited partner. We do not actively trade equity securities in these privately held companies nor do we plan our ongoing operations based around any anticipated fundings or distributions from these investments. We exclude gains and losses on these investments as we do not believe they are reflective of our ongoing business and operating results.

(7)

Adjustment relates to differences between the GAAP-based tax provision rate of approximately 31% 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, 2019



Per share diluted

GAAP-based net income, attributable to OpenText

$

72,762


$

0.27


Add:



Amortization

93,428


0.35


Share-based compensation

6,712


0.02


Special charges (recoveries)

796



Other (income) expense, net

(5,065)


(0.02)


GAAP-based provision for (recovery of) income taxes

32,542


0.12


Non-GAAP-based provision for income taxes

(28,169)


(0.10)


Non-GAAP-based net income, attributable to OpenText

$

173,006


$

0.64


 

Reconciliation of Adjusted EBITDA



Three Months Ended March 31, 2019

GAAP-based net income, attributable to OpenText

$

72,762


Add:


Provision for (recovery of) income taxes

32,542


Interest and other related expense, net

35,607


Amortization of acquired technology-based intangible assets

44,596


Amortization of acquired customer-based intangible assets

48,832


Depreciation

25,028


Share-based compensation

6,712


Special charges (recoveries)

796


Other (income) expense, net

(5,065)


Adjusted EBITDA

$

261,810


 

Reconciliation of selected GAAP-based measures to Non-GAAP-based measures
for the three months ended June 30, 2018.
(In thousands except for per share amounts)


Three Months Ended June 30, 2018


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

$

95,346



$

(310)


(1)

$

95,036



Customer support

34,232



(300)


(1)

33,932



Professional service and other

64,896



(516)


(1)

64,380



Amortization of acquired technology-based intangible assets

47,477



(47,477)


(2)



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

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

509,271


67.5

%

48,603


(3)

557,874


74.0

%

Operating expenses







Research and development

81,816



(1,453)


(1)

80,363



Sales and marketing

147,499



(2,552)


(1)

144,947



General and administrative

52,577



(1,990)


(1)

50,587



Amortization of acquired customer-based intangible assets

47,299



(47,299)


(2)



Special charges (recoveries)

7,821



(7,821)


(4)



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

149,358



109,718


(5)

259,076



Other income (expense), net

(8,938)



8,938


(6)



Provision for (recovery of) income taxes

43,182



(11,860)


(7)

31,322



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

61,723



130,516


(8)

192,239



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

$

0.23



$

0.49


(8)

$

0.72




(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 non-marketable securities investments as a limited partner. We do not actively trade equity securities in these privately held companies nor do we plan our ongoing operations based around any anticipated fundings or distributions from these investments. We exclude gains and losses on these investments as we do not believe they are reflective of our ongoing business and operating results.

(7)

Adjustment relates to differences between the GAAP-based tax provision rate of approximately 41% and a Non-GAAP-based tax rate of approximately 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. We also took into consideration changes in U.S. tax reform legislation that was enacted on December 22, 2017 through the Tax Cuts and Jobs Act.

(8)

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

 


Three Months Ended June 30, 2018



Per share diluted

GAAP-based net income, attributable to OpenText

$

61,723


$

0.23


Add:



Amortization

94,776


0.35


Share-based compensation

7,121


0.03


Special charges (recoveries)

7,821


0.03


Other (income) expense, net

8,938


0.03


GAAP-based provision for (recovery of) income taxes

43,182


0.16


Non-GAAP-based provision for income taxes

(31,322)


(0.11)


Non-GAAP-based net income, attributable to OpenText

$

192,239


$

0.72


 

Reconciliation of Adjusted EBITDA



Three Months Ended June 30, 2018

GAAP-based net income, attributable to OpenText

$

61,723


Add:


Provision for (recovery of) income taxes

43,182


Interest and other related expense, net

35,345


Amortization of acquired technology-based intangible assets

47,477


Amortization of acquired customer-based intangible assets

47,299


Depreciation

22,901


Share-based compensation

7,121


Special charges (recoveries)

7,821


Other (income) expense, net

8,938


Adjusted EBITDA

$

281,807


 

Reconciliation of selected GAAP-based measures to Non-GAAP-based measures
for the year ended June 30, 2018.
 
(In thousands except for per share amounts)


Year Ended June 30, 2018


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

$

364,160



$

(1,429)


(1)

$

362,731



Customer support

133,889



(1,233)


(1)

132,656



Professional service and other

253,389



(1,838)


(1)

251,551



Amortization of acquired technology-based intangible assets

185,868



(185,868)


(2)



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

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

1,864,242


66.2

%

190,368


(3)

2,054,610


73.0

%

Operating expenses







Research and development

322,909



(5,659)


(1)

317,250



Sales and marketing

529,141



(9,231)


(1)

519,910



General and administrative

205,227



(8,204)


(1)

197,023



Amortization of acquired customer-based intangible assets

184,118



(184,118)


(2)



Special charges (recoveries)

29,211



(29,211)


(4)



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

506,693



426,791


(5)

933,484



Other income (expense), net

17,973



(17,973)


(6)



Provision for (recovery of) income taxes

143,826



(32,534)


(7)

111,292



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

242,224



441,352


(8)

683,576



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

$

0.91



$

1.65


(8)

$

2.56




(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, and operating margin stated as a percentage of total revenue.

(6)

Adjustment relates to the exclusion of Other income (expense) from our Non-GAAP-based operating expenses as Other income (expense) 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 non-marketable securities investments as a limited partner. We do not actively trade equity securities in these privately held companies nor do we plan our ongoing operations based around any anticipated fundings or distributions from these investments. We exclude gains and losses on these investments as we do not believe they are reflective of our ongoing business and operating results.

(7)

Adjustment relates to differences between the GAAP-based tax provision rate of approximately 37% 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. We also took into consideration changes in US tax reform legislation that was enacted on December 22, 2017 through the Tax Cuts and Jobs Act.

(8)

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

 


Year Ended June 30, 2018



Per share diluted 

GAAP-based net income, attributable to OpenText

$

242,224


$

0.91


Add:



Amortization

369,986


1.38


Share-based compensation

27,594


0.10


Special charges (recoveries)

29,211


0.11


Other (income) expense, net

(17,973)


(0.07)


GAAP-based provision for (recovery of) income taxes

143,826


0.54


Non-GAAP based provision for income taxes

(111,292)


(0.41)


Non-GAAP-based net income, attributable to OpenText

$

683,576


$

2.56


 

Reconciliation of Adjusted EBITDA



Year Ended June 30, 2018

GAAP-based net income, attributable to OpenText

$

242,224


Add:


Provision for (recovery of) income taxes

143,826


Interest and other related expense, net

138,540


Amortization of acquired technology-based intangible assets

185,868


Amortization of acquired customer-based intangible assets

184,118


Depreciation

86,943


Share-based compensation

27,594


Special charges (recoveries)

29,211


Other (income) expense, net

(17,973)


Adjusted EBITDA

$

1,020,351



(3)

The following tables provide a composition of our major currencies for revenue and expenses, expressed as a percentage, for the three months and year ended June 30, 2019 and 2018:

 


Three Months Ended June 30, 2019


Three Months Ended June 30, 2018

Currencies

% of Revenue 

% of Expenses* 


% of Revenue 

% of Expenses* 

EURO

24

%

15

%


23

%

15

%

GBP

6

%

6

%


6

%

6

%

CAD

3

%

9

%


4

%

10

%

USD

58

%

53

%


58

%

52

%

Other

9

%

17

%


9

%

17

%

Total

100

%

100

%


100

%

100

%






Year Ended June 30, 2019


Year Ended June 30, 2018

Currencies

% of Revenue 

% of Expenses* 


% of Revenue 

% of Expenses* 

EURO

24

%

15

%


22

%

15

%

GBP

6

%

6

%


6

%

6

%

CAD

4

%

10

%


4

%

11

%

USD

58

%

51

%


58

%

51

%

Other

8

%

18

%


10

%

17

%

Total

100

%

100

%


100

%

100

%


*Expenses include all cost of revenues and operating expenses included within the Condensed Consolidated Statements of Income, except for amortization of intangible assets, share-based compensation and Special charges (recoveries).

 

Cision View original content:http://www.prnewswire.com/news-releases/opentext-reports-fourth-quarter-and-fiscal-year-2019-financial-results-300895233.html

SOURCE Open Text Corporation