Open Text Reports First Quarter Fiscal 2011 Financial Results
Waterloo, ON - 2010-10-27 - Open Text Corporation (NASDAQ:OTEX) (TSX: OTC), today announced unaudited financial results for its first quarter ended September 30, 2010. (1)
Total revenue for the first quarter of fiscal 2011 was $217.4 million, up 3% compared to $211.4 million for the same period in the prior fiscal year. License revenue for the first quarter of fiscal 2011 was $42.6 million, down 10% compared to $47.3 million for the same period in the prior fiscal year.
Adjusted net income for the first quarter of fiscal 2011 was $50.0 million or $0.86 per share on a diluted basis, up 52% compared to $32.8 million or $0.58 per share on a diluted basis for the same period in the prior fiscal year. Net income in accordance with U.S. generally accepted accounting principles ("US GAAP") was $21.7 million or $0.37 per share on a diluted basis, compared to $1.7 million or $0.03 per share on a diluted basis for the same period in the prior fiscal year. (2)
Operating cash flow in the first quarter of fiscal 2011 was $48.9 million, compared to $4.5 million for the same period in the prior fiscal year.
The cash and cash equivalents balance as of September 30, 2010 was $384.7 million. Accounts receivable as of September 30, 2010, totaled $104.4 million, compared to $132.1 million as of June 30, 2010 and Days Sales Outstanding (DSO) was 43 days in the first quarter of fiscal 2011, compared to 58 days in the first quarter of fiscal 2010.
"While our cash flow and earnings results were strong, I am disappointed with our license revenue this quarter. Europe was especially impacted, with current economic challenges slowing the pace of our customers IT spending cycles," said John Shackleton, President and Chief Executive Officer of Open Text. "However, we are confident that we will meet our growth targets for the year, while continuing to focus on our bottom line performance."
Please see note (2) below for a reconciliation of non-US GAAP based financial measures used in this press release, to US GAAP based financial measures.
Open Text Renews Stock Repurchase Program
The Company also announced the renewal of its stock repurchase program on NASDAQ Global Select Market ("NASDAQ"). The Company proposes to purchase, from time to time, up to an aggregate of 2,849,964 common shares (representing approximately 5% of the Company's outstanding common shares) in the open market through the facilities of the NASDAQ.
The specific timing and number of common shares purchased pursuant to the repurchase program will vary based on market conditions, regulatory requirements and other factors. The price that the Company will pay for any common shares will be the prevailing market price of such shares on NASDAQ at the time of acquisition. The purchases will be made by the Company in accordance with Rule 10b-18 of the Securities Exchange Act of 1934, as amended. All common shares purchased by the Company pursuant to the repurchase program will be cancelled.
The Board of Directors of the Company believes that the repurchase program is in the best interests of the Company and is a desirable use of corporate funds.
Purchases made pursuant to the repurchase program may commence in November 2010 if desirable and will expire on November 1, 2011. As of October 26, 2010, the Company had 56,999,274 issued and outstanding common shares. The Company has not purchased any common shares in the last 12 months under the previously announced stock repurchase program .
Open Text will host a conference call on October 27, 2010 at 5:00 p.m. ET to discuss its financial results.
|Date:||Wednesday, October 27, 2010|
|Time:||5:00 p.m. ET/2:00 p.m. PT|
800-814-4861 (Toll Free)
Investors should dial in approximately 10 minutes before the teleconference is scheduled to begin. A replay of the call will be available beginning October 27, 2010 at 7:00 p.m. ET through 11:59 p.m. on November 10, 2010 and can be accessed by dialing 416-640-1917 and using passcode 4372356 followed by the number sign.
For more information or to listen to the call via web cast, please use the following link: http://www.opentext.com/2/global/ex_event.html?evtype=events&id=70120000000Uei7AAC
Open Text is the world's largest independent provider of Enterprise Content Management software. The company's solutions manage information for all types of business, compliance and industry requirements in large companies, government agencies and professional service firms. Open Text supports approximately 46,000 customers in 114 countries and 12 languages. For more information about Open Text, visit www.opentext.com.
Certain statements in this press release, including statements about the financial conditions, and results of operations and earnings for Open Text Corporation ("Open Text" or "the Company"), may contain words such as "could", "expects", "may", "should", "will", "anticipates", "believes", "intends", "estimates", "targets", "plans", "envisions", "seeks" and other similar language and are considered forward-looking statements or information under applicable securities laws. These statements are based on the Company s current expectations, estimates, forecasts and projections about the operating environment, economies and markets in which the Company operates. These statements are subject to important assumptions, risks and uncertainties that are difficult to predict, and the actual outcome may be materially different. The Company s assumptions, although considered reasonable by the Company at the date of this press release, may provide to be inaccurate and consequently the Company s actual results could differ materially from the expectations set out herein.
Actual results or events could differ materially from those contemplated in forward-looking statements as a result of the following: (i) the future performance, financial and otherwise, of Open Text; (ii) the ability of Open Text to bring new products 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 ECM market; (vi) the Company's competitive position in the ECM market and its ability to take advantage of future opportunities in this market; (vii) the benefits of the Company's products to be realized by customers; and (viii) the demand for the Company's product and the extent of deployment of the company's products in the ECM marketplace. Forward-looking statements may also include, without limitation, any statement relating to future events, conditions or circumstances. 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 possibility that the Company may be unable to meet its future reporting requirements under the Securities Exchange Act of 1934, as amended, and the rules promulgated there under; (iii) the risks associated with bringing new products to market; (iv) fluctuations in currency exchange rates; (v) delays in the purchasing decisions of the Company's customers; (vi) the competition the Company faces in its industry and/or marketplace; (vii) the possibility of technical, logistical or planning issues in connection with the deployment of the Company's products or services; (viii) the continuous commitment of the Company's customers; and (ix) demand for the Company's products.
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 SEC and other securities regulators. Unless otherwise required by applicable securities laws, the Company disclaims any intention or obligations to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.
Copyright © 2010 by Open Text Corporation. "OPEN TEXT", "OPEN TEXT EVERYWHERE" and the "OPEN TEXT ECM SUITE" are trademarks or registered trademarks of Open Text Corporation in the United States of America, Canada, the European Union and/or other countries. This list of trademarks is not exhaustive. Other trademarks, registered trademarks, product names, company names, brands and service names mentioned herein are property of Open Text Corporation or other respective owners.
(1) Based on comparison of historical revenue figures publicly disseminated by companies in the Enterprise Content Management ("ECM") sector. All dollar amounts in this press release are in US Dollars unless otherwise indicated.
(2) Use of US Non-GAAP financial measures In addition to reporting financial results in accordance with US GAAP, the Company provides certain non-US GAAP financial measures that are not in accordance with US GAAP. These non-US 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-US 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 adjusted net income and adjusted EPS both in its reconciliation to the US GAAP financial measures of net income and EPS and its consolidated financial statements, all of which should be considered when evaluating the Company s results. The Company uses the financial measures adjusted EPS and adjusted net income to supplement the information provided in its consolidated financial statements, which are presented in accordance with US GAAP. The presentation of adjusted net income and adjusted EPS is not meant to be a substitute for net income or net income per share presented in accordance with US GAAP, but rather should be evaluated in conjunction with and as a supplement to such US GAAP measures. Open Text 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 US GAAP measures with certain non-US GAAP measures for the reasons set forth below. Adjusted net income and adjusted EPS are calculated as net income or net income per share on a diluted basis, excluding, where applicable, the amortization of acquired intangible assets, other income (expense), share-based compensation, and restructuring, all net of tax. The Company's management believes that the presentation of adjusted net income and adjusted EPS provides useful information to investors because it excludes non-operational charges. The use of the term "non-operational charge" is defined by the Company as those that do not impact operating decisions taken by the Company s management and is based upon the way the Company s management evaluates the performance of the Company s business for use in the Company s internal reports. In the course of such evaluation and for the purpose of making operating decisions, the Company s management excludes certain items from its analysis, such as amortization of acquired intangibles, restructuring costs, share-based compensation, other income (expense) and the taxation impact of these items. These items are excluded based upon the manner in which management evaluates the business of the Company and are not excluded in the sense that they may be used under US GAAP. The Company believes the provision of supplemental non-US GAAP measures allows 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 Open Text's performance or expected performance of recurring operations and facilitates period-to-period comparison of operating performance. As a result, the Company considers it appropriate and reasonable to provide, in addition to US GAAP measures, supplementary non-US GAAP financial measures that exclude certain items from the presentation of its financial results in this press release.
The following charts provide (unaudited) reconciliations of US GAAP based financial measures to non-US GAAP based financial measures referred to in this press release:
Vice President, Investor Relations
Open Text Corporation