
OpenText Reports First Quarter Fiscal Year 2018 Financial Results
Total revenue of
Named as a Leader in Gartner Magic Quadrant for Content Services Platforms
"OpenText delivered strong first quarter results growing total revenue to
"During the quarter, we completed the acquisition of
Barrenechea concluded, "We start with a customer's business needs, and work backwards on a strategy to meet those needs. OpenText has evolved into "
Financial Highlights for Q1 2018 with Year Over Year Comparisons
Summary of Quarterly Results |
||||||||||||||
(in millions except per share data) |
Q1 FY18 |
Q1 FY17 |
$ Change |
% Change |
Q1 FY18 in |
% Change in |
||||||||
Revenues: |
||||||||||||||
Cloud services and subscriptions |
|
|
|
14.2 |
% |
|
14.8 |
% |
||||||
Customer support |
295.4 |
210.2 |
85.2 |
40.5 |
% |
292.3 |
39.0 |
% |
||||||
Total annual recurring revenues** |
|
|
|
28.8 |
% |
|
28.2 |
% |
||||||
License |
78.2 |
60.7 |
17.6 |
29.0 |
% |
77.2 |
27.3 |
% |
||||||
Professional service and other |
73.2 |
51.1 |
22.1 |
43.2 |
% |
71.6 |
40.1 |
% |
||||||
Total revenues |
|
|
|
30.3 |
% |
|
29.3 |
% |
||||||
GAAP-based operating income |
|
|
|
17.6 |
% |
|||||||||
Non-GAAP-based operating income (1) |
|
|
|
32.9 |
% |
|
31.4 |
% |
||||||
GAAP-based operating margin |
13.6 |
% |
15.1 |
% |
n/a |
(150) |
bps |
|||||||
Non-GAAP-based operating margin (1) |
31.4 |
% |
30.8 |
% |
n/a |
60 |
bps |
31.3 |
% |
50 |
bps | |||
GAAP-based EPS, diluted (2)(3) |
|
|
( |
(96.2) |
% |
|||||||||
Non-GAAP-based EPS, diluted (1)(2)(4) |
|
|
|
25.6 |
% |
|
23.3 |
% |
||||||
GAAP-based net income attributable to OpenText (3) |
|
|
( |
(96.0) |
% |
|||||||||
Adjusted EBITDA (1) |
|
|
|
32.0 |
% |
|||||||||
Operating cash flows |
|
|
( |
(8.6) |
% |
(1) Please see note 2 "Use of Non-GAAP Financial Measures" below |
(2) As a result of the two-for-one share split, effected |
(3) Recorded a significant tax benefit in Q1 FY17 of |
(4) Please also see note 14 to the Company's Condensed Consolidated Financial Statements on Form 10-Q. 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. |
"We entered Fiscal 2018 with a solid performance in Q1 and are tracking to our annual targets. We have a strong balance sheet giving us the flexibility to support future growth initiatives," said OpenText CFO
OpenText Quarterly Business Highlights
- 14 customer transactions over
$1 million , 7 OpenText Cloud and 7 on-premise - Financial, Services, and Technology industries saw the most demand in cloud and license
- Customers wins in the quarter included Nestlé, BNY Mellon, SBI Card,
Tata Power , Intuit, At Home, SOFINEL,First National Bank of Omaha , Grupo Sancor Seguros, Health andHuman Services Agency of San Diego County ,City of Phoenix ,Public Works Authority of Qatar , Spire Healthcare, Interplex Holdings, andQatar Foundation - OpenText Named as a Leader in Gartner Magic Quadrant for Content Services Platform
OpenText Buys Guidance Software OpenText Buys Covisint Corporation - OpenText releases new AI Magellan platform, and announces first customer,
E. & J. Gallo Winery
Dividend Program Highlights
Cash Dividend
As part of our quarterly, non-cumulative cash dividend program, the Board declared on
Summary of Quarterly Results |
||||||||||||
Q1 FY18 |
Q4 FY17 |
Q1 FY17 |
% Change (Q1 FY18 vs |
% Change (Q1 FY18 vs |
||||||||
Revenue (million) |
|
|
|
(3.4) |
% |
30.3 |
% |
|||||
GAAP-based gross margin |
65.1 |
% |
66.9 |
% |
66.6 |
% |
(180) |
bps |
(150) |
bps | ||
GAAP-based operating margin |
13.6 |
% |
16.0 |
% |
15.1 |
% |
(240) |
bps |
(150) |
bps | ||
GAAP-based EPS, diluted(1)(2) |
|
|
|
(17.6) |
% |
(96.2) |
% |
|||||
Non-GAAP-based gross margin (3) |
72.2 |
% |
73.6 |
% |
71.5 |
% |
(140) |
bps |
70 |
bps | ||
Non-GAAP-based operating margin (3) |
31.4 |
% |
33.1 |
% |
30.8 |
% |
(170) |
bps |
60 |
bps | ||
Non-GAAP-based EPS, diluted (2)(3)(4) |
|
|
|
(10.0) |
% |
25.6 |
% |
(1) Recorded a significant tax benefit in Q1 FY17 of |
(2) As a result of the two-for-one share split, effected |
(3) Please see note 2 "Use of Non-GAAP Financial Measures" below |
(4) Please also see note 14 to the Company's Condensed Consolidated Financial Statements on Form 10-Q. 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
The public is invited to listen to the earnings conference call today at
A replay of the call will be available beginning
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.
About OpenText
OpenText, The Information Company™, enables organizations to gain insight through market leading information systems, on premises or in the cloud. For more information about
Cautionary Statement Regarding Forward-Looking Statements
Certain statements in this press release, including statements about the focus of
This communication does not constitute an offer to sell or the solicitation of an offer to buy any securities, nor shall there be any sale of securities in any state or jurisdiction in which such an offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such state or jurisdiction.
OTEX-F
Copyright ©2017 Open Text. OpenText is a trademark or registered trademark of
| |||||||
CONDENSED CONSOLIDATED BALANCE SHEETS | |||||||
(In thousands of | |||||||
|
| ||||||
ASSETS |
(unaudited) |
||||||
Cash and cash equivalents |
$ |
376,390 |
$ |
443,357 |
|||
Accounts receivable trade, net of allowance for doubtful accounts of |
457,758 |
445,812 |
|||||
Income taxes recoverable |
25,972 |
32,683 |
|||||
Prepaid expenses and other current assets |
98,526 |
81,625 |
|||||
Total current assets |
958,646 |
1,003,477 |
|||||
Property and equipment |
245,378 |
227,418 |
|||||
|
3,576,224 |
3,416,749 |
|||||
Acquired intangible assets |
1,560,370 |
1,472,542 |
|||||
Deferred tax assets |
1,214,631 |
1,215,712 |
|||||
Other assets |
94,718 |
93,763 |
|||||
Deferred charges |
40,588 |
42,344 |
|||||
Long-term income taxes recoverable |
5,865 |
8,557 |
|||||
Total assets |
$ |
7,696,420 |
$ |
7,480,562 |
|||
LIABILITIES AND SHAREHOLDERS' EQUITY |
|||||||
Current liabilities: |
|||||||
Accounts payable and accrued liabilities |
$ |
323,261 |
$ |
342,120 |
|||
Current portion of long-term debt |
382,760 |
182,760 |
|||||
Deferred revenues |
567,475 |
570,328 |
|||||
Income taxes payable |
30,524 |
31,835 |
|||||
Total current liabilities |
1,304,020 |
1,127,043 |
|||||
Long-term liabilities: |
|||||||
Accrued liabilities |
46,689 |
50,338 |
|||||
Deferred credits |
4,644 |
5,283 |
|||||
Pension liability |
61,235 |
58,627 |
|||||
Long-term debt |
2,386,415 |
2,387,057 |
|||||
Deferred revenues |
68,963 |
61,678 |
|||||
Long-term income taxes payable |
167,484 |
162,493 |
|||||
Deferred tax liabilities |
92,034 |
94,724 |
|||||
Total long-term liabilities |
2,827,464 |
2,820,200 |
|||||
Shareholders' equity: |
|||||||
Share capital and additional paid-in capital |
|||||||
265,288,304 and 264,059,567 Common Shares issued and outstanding at |
1,642,502 |
1,613,454 |
|||||
Accumulated other comprehensive income |
49,518 |
48,800 |
|||||
Retained earnings |
1,899,203 |
1,897,624 |
|||||
|
(27,342) |
(27,520) |
|||||
Total OpenText shareholders' equity |
3,563,881 |
3,532,358 |
|||||
Non-controlling interests |
1,055 |
961 |
|||||
Total shareholders' equity |
3,564,936 |
3,533,319 |
|||||
Total liabilities and shareholders' equity |
$ |
7,696,420 |
$ |
7,480,562 |
| |||||||
CONDENSED CONSOLIDATED STATEMENTS OF INCOME | |||||||
(In thousands of | |||||||
(Unaudited) | |||||||
Three Months Ended | |||||||
2017 |
2016 | ||||||
Revenues: |
|||||||
License |
$ |
78,231 |
$ |
60,656 |
|||
Cloud services and subscriptions |
193,853 |
169,687 |
|||||
Customer support |
295,404 |
210,206 |
|||||
Professional service and other |
73,199 |
51,115 |
|||||
Total revenues |
640,687 |
491,664 |
|||||
Cost of revenues: |
|||||||
License |
2,960 |
3,845 |
|||||
Cloud services and subscriptions |
84,330 |
70,292 |
|||||
Customer support |
32,791 |
25,738 |
|||||
Professional service and other |
59,459 |
41,343 |
|||||
Amortization of acquired technology-based intangible assets |
43,960 |
23,135 |
|||||
Total cost of revenues |
223,500 |
164,353 |
|||||
Gross profit |
417,187 |
327,311 |
|||||
Operating expenses: |
|||||||
Research and development |
77,629 |
58,572 |
|||||
Sales and marketing |
122,822 |
95,148 |
|||||
General and administrative |
48,915 |
38,197 |
|||||
Depreciation |
18,878 |
15,270 |
|||||
Amortization of acquired customer-based intangible assets |
43,789 |
33,608 |
|||||
Special charges |
18,031 |
12,454 |
|||||
Total operating expenses |
330,064 |
253,249 |
|||||
Income from operations |
87,123 |
74,062 |
|||||
Other income (expense), net |
10,224 |
6,699 |
|||||
Interest and other related expense, net |
(33,288) |
(27,275) |
|||||
Income before income taxes |
64,059 |
53,486 |
|||||
Provision for (recovery of) income taxes |
27,369 |
(859,425) |
|||||
Net income for the period |
$ |
36,690 |
$ |
912,911 |
|||
Net (income) loss attributable to non-controlling interests |
(94) |
(27) |
|||||
Net income attributable to OpenText |
$ |
36,596 |
$ |
912,884 |
|||
Earnings per share—basic attributable to OpenText |
$ |
0.14 |
$ |
3.76 |
|||
Earnings per share—diluted attributable to OpenText |
$ |
0.14 |
$ |
3.73 |
|||
Weighted average number of Common Shares outstanding—basic |
264,802 |
242,910 |
|||||
Weighted average number of Common Shares outstanding—diluted |
266,235 |
244,742 |
|||||
Dividends declared per Common Share |
$ |
0.1320 |
$ |
0.1150 |
As a result of the two-for-one share split, effected |
| ||||||||
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME | ||||||||
(In thousands of | ||||||||
(Unaudited) | ||||||||
Three Months Ended | ||||||||
2017 |
2016 | |||||||
Net income for the period |
$ |
36,690 |
$ |
912,911 |
||||
Other comprehensive income—net of tax: |
||||||||
Net foreign currency translation adjustments |
906 |
1,219 |
||||||
Unrealized gain (loss) on cash flow hedges: |
||||||||
Unrealized gain (loss) - net of tax expense (recovery) effect of |
1,285 |
(355) |
||||||
(Gain) loss reclassified into net income - net of tax (expense) recovery effect of ( |
(797) |
(17) |
||||||
Actuarial gain (loss) relating to defined benefit pension plans: |
||||||||
Actuarial gain (loss) - net of tax expense (recovery) effect of ( |
(115) |
1,538 |
||||||
Amortization of actuarial (gain) loss into net income - net of tax (expense) recovery effect of |
56 |
147 |
||||||
Unrealized net gain (loss) on marketable securities - net of tax effect of nil for the three months ended |
— |
(112) |
||||||
Release of unrealized gain on marketable securities - net of tax effect of nil for the three months ended |
(617) |
— |
||||||
Total other comprehensive income (loss), net, for the period |
718 |
2,420 |
||||||
Total comprehensive income |
37,408 |
915,331 |
||||||
Comprehensive (income) loss attributable to non-controlling interests |
(94) |
(27) |
||||||
Total comprehensive income attributable to OpenText |
$ |
37,314 |
$ |
915,304 |
| |||||||
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS | |||||||
(In thousands of | |||||||
(Unaudited) | |||||||
Three Months Ended | |||||||
2017 |
2016 | ||||||
Cash flows from operating activities: |
|||||||
Net income for the period |
$ |
36,690 |
$ |
912,911 |
|||
Adjustments to reconcile net income to net cash provided by operating activities: |
|||||||
Depreciation and amortization of intangible assets |
106,627 |
72,013 |
|||||
Share-based compensation expense |
8,235 |
8,140 |
|||||
Excess tax expense (benefits) on share-based compensation expense |
— |
(5) |
|||||
Pension expense |
1,035 |
1,190 |
|||||
Amortization of debt issuance costs |
1,298 |
1,323 |
|||||
Amortization of deferred charges and credits |
1,117 |
2,146 |
|||||
Loss on sale and write down of property and equipment |
163 |
— |
|||||
Release of unrealized gain on marketable securities to income |
(841) |
— |
|||||
Deferred taxes |
5,947 |
(875,824) |
|||||
Share in net (income) loss of equity investees |
512 |
(5,529) |
|||||
Other non-cash charges |
— |
1,033 |
|||||
Changes in operating assets and liabilities: |
|||||||
Accounts receivable |
5,162 |
16,169 |
|||||
Prepaid expenses and other current assets |
(2,808) |
(1,189) |
|||||
Income taxes and deferred charges and credits |
9,148 |
3,221 |
|||||
Accounts payable and accrued liabilities |
(64,476) |
(30,599) |
|||||
Deferred revenue |
(38,480) |
(26,109) |
|||||
Other assets |
(2,227) |
(5,440) |
|||||
Net cash provided by operating activities |
67,102 |
73,451 |
|||||
Cash flows from investing activities: |
|||||||
Additions of property and equipment |
(30,449) |
(20,665) |
|||||
Proceeds from maturity of short-term investments |
— |
9,212 |
|||||
Purchase of |
(220,765) |
— |
|||||
Purchase of |
(71,279) |
— |
|||||
Purchase of HP Inc. CCM Business |
— |
(312,198) |
|||||
Purchase of |
— |
(170,107) |
|||||
Purchase of HP Inc. CEM Business |
— |
(7,289) |
|||||
Other investing activities |
(4,206) |
(123) |
|||||
Net cash used in investing activities |
(326,699) |
(501,170) |
|||||
Cash flows from financing activities: |
|||||||
Excess tax (expense) benefits on share-based compensation expense |
— |
5 |
|||||
Proceeds from Revolver |
200,000 |
— |
|||||
Proceeds from issuance of Common Shares from exercise of stock options and ESPP |
21,825 |
5,310 |
|||||
Repayment of long-term debt and revolver |
(1,940) |
(2,000) |
|||||
Debt issuance costs |
— |
(1,330) |
|||||
Payments of dividends to shareholders |
(35,017) |
(27,791) |
|||||
Net cash provided by (used in) financing activities |
184,868 |
(25,806) |
|||||
Foreign exchange gain (loss) on cash held in foreign currencies |
7,762 |
4,712 |
|||||
Increase (decrease) in cash and cash equivalents during the period |
(66,967) |
(448,813) |
|||||
Cash and cash equivalents at beginning of the period |
443,357 |
1,283,757 |
|||||
Cash and cash equivalents at end of the period |
$ |
376,390 |
$ |
834,944 |
Notes
(1) |
All dollar amounts in this press release are in |
(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 |
The Company uses these Non-GAAP financial measures to supplement the information provided in its consolidated financial statements, which are presented in accordance with | |
Non-GAAP-based net income and Non-GAAP-based EPS, attributable to OpenText, are 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. Non-GAAP-based operating margin is calculated as Non-GAAP-based income from operations expressed as a percentage of total revenue. | |
Adjusted earnings (loss) before interest, taxes, depreciation and amortization (Adjusted EBITDA) is 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 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, including amortization of acquired intangible assets, Special charges (recoveries), 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 | |
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: |
Reconciliation of selected GAAP-based measures to Non-GAAP-based measures for the three months ended (In thousands except for per share amounts) | ||||||||||||||
Three Months Ended | ||||||||||||||
GAAP-based Measures |
GAAP-based |
Adjustments |
Note |
Non-GAAP- Measures |
Non-GAAP- % of Total | |||||||||
Cost of revenues |
||||||||||||||
Cloud services and subscriptions |
$ |
84,330 |
$ |
(522) |
(1) |
$ |
83,808 |
|||||||
Customer support |
32,791 |
(329) |
(1) |
32,462 |
||||||||||
Professional service and other |
59,459 |
(597) |
(1) |
58,862 |
||||||||||
Amortization of acquired technology-based intangible assets |
43,960 |
(43,960) |
(2) |
— |
||||||||||
GAAP-based gross profit and gross margin (%) / |
417,187 |
65.1 |
% |
45,408 |
(3) |
462,595 |
72.2 |
% | ||||||
Operating expenses |
||||||||||||||
Research and development |
77,629 |
(1,626) |
(1) |
76,003 |
||||||||||
Sales and marketing |
122,822 |
(3,088) |
(1) |
119,734 |
||||||||||
General and administrative |
48,915 |
(2,073) |
(1) |
46,842 |
||||||||||
Amortization of acquired customer-based intangible assets |
43,789 |
(43,789) |
(2) |
— |
||||||||||
Special charges (recoveries) |
18,031 |
(18,031) |
(4) |
— |
||||||||||
GAAP-based income from operations and operating margin (%) / Non-GAAP-based income from operations and operating margin (%) |
87,123 |
13.6 |
% |
114,015 |
(5) |
201,138 |
31.4 |
% | ||||||
Other income (expense), net |
10,224 |
(10,224) |
(6) |
— |
||||||||||
Provision for (recovery of) income taxes |
27,369 |
(2,191) |
(7) |
25,178 |
||||||||||
GAAP-based net income / Non-GAAP-based net income, attributable to OpenText |
36,596 |
105,982 |
(8) |
142,578 |
||||||||||
GAAP-based earnings per share / Non-GAAP-based earnings per share-diluted, attributable to OpenText |
$ |
0.14 |
$ |
0.40 |
(8) |
$ |
0.54 |
(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 one-time, non-recurring 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) relates primarily 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 43% and a Non-GAAP-based tax rate of approximately 15%; these rate differences are due to the income tax effects of expenses that are excluded for the purpose of calculating Non-GAAP-based adjusted net income. Such excluded expenses 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 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 15%, 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 | ||||||
Per share diluted | ||||||
GAAP-based net income, attributable to OpenText |
$ |
36,596 |
$ |
0.14 |
||
Add: |
||||||
Amortization |
87,749 |
0.33 |
||||
Share-based compensation |
8,235 |
0.03 |
||||
Special charges (recoveries) |
18,031 |
0.07 |
||||
Other (income) expense, net |
(10,224) |
(0.04) |
||||
GAAP-based provision for (recovery of ) income taxes |
27,369 |
0.10 |
||||
Non-GAAP-based provision for income taxes |
(25,178) |
(0.09) |
||||
Non-GAAP-based net income, attributable to OpenText |
$ |
142,578 |
$ |
0.54 |
Reconciliation of Adjusted EBITDA | |||
Three Months Ended | |||
GAAP-based net income, attributable to OpenText |
$ |
36,596 |
|
Add: |
|||
Provision for (recovery of) income taxes |
27,369 |
||
Interest and other related expense, net |
33,288 |
||
Amortization of acquired technology-based intangible assets |
43,960 |
||
Amortization of acquired customer-based intangible assets |
43,789 |
||
Depreciation |
18,878 |
||
Share-based compensation |
8,235 |
||
Special charges (recoveries) |
18,031 |
||
Other (income) expense, net |
(10,224) |
||
Adjusted EBITDA |
$ |
219,922 |
Reconciliation of selected GAAP-based measures to Non-GAAP-based measures for the three months ended (In thousands except for per share amounts) | ||||||||||||||
Three Months Ended | ||||||||||||||
GAAP-based Measures |
GAAP-based |
Adjustments |
Note |
Non-GAAP- Measures |
Non-GAAP- % of Total | |||||||||
Cost of revenues |
||||||||||||||
Cloud services and subscriptions |
$ |
79,588 |
$ |
(390) |
(1) |
$ |
79,198 |
|||||||
Customer support |
35,224 |
(313) |
(1) |
34,911 |
||||||||||
Professional service and other |
58,028 |
(449) |
(1) |
57,579 |
||||||||||
Amortization of acquired technology-based intangible assets |
43,288 |
(43,288) |
(2) |
— |
||||||||||
GAAP-based gross profit and gross margin (%) / |
444,038 |
66.9 |
% |
44,440 |
(3) |
488,478 |
73.6 |
% | ||||||
Operating expenses |
||||||||||||||
Research and development |
81,301 |
(1,777) |
(1) |
79,524 |
||||||||||
Sales and marketing |
129,541 |
(2,450) |
(1) |
127,091 |
||||||||||
General and administrative |
47,499 |
(2,755) |
(1) |
44,744 |
||||||||||
Amortization of acquired customer-based intangible assets |
42,594 |
(42,594) |
(2) |
— |
||||||||||
Special charges (recoveries) |
19,461 |
(19,461) |
(4) |
— |
||||||||||
GAAP-based income from operations and operating margin (%) / Non-GAAP-based income from operations and operating margin (%) |
106,452 |
16.0 |
% |
113,477 |
(5) |
219,929 |
33.1 |
% | ||||||
Other income (expense), net |
11,178 |
(11,178) |
(6) |
— |
||||||||||
Provision for (recovery of) income taxes |
39,000 |
(10,731) |
(7) |
28,269 |
||||||||||
GAAP-based net income / Non-GAAP-based net income, attributable to OpenText |
46,137 |
113,030 |
(8) |
159,167 |
||||||||||
GAAP-based earnings per share / Non-GAAP-based earnings per share-diluted, attributable to OpenText |
$ |
0.17 |
$ |
0.43 |
(8) |
$ |
0.60 |
(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 one-time, non-recurring 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) relates primarily 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 46% and a Non-GAAP-based tax rate of approximately 15%; these rate differences are due to the income tax effects of expenses that are excluded for the purpose of calculating Non-GAAP-based adjusted net income. Such excluded expenses 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 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 15%, 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 | ||||||
Per share diluted | ||||||
GAAP-based net income, attributable to OpenText |
$ |
46,137 |
$ |
0.17 |
||
Add: |
||||||
Amortization |
85,882 |
0.32 |
||||
Share-based compensation |
8,134 |
0.03 |
||||
Special charges (recoveries) |
19,461 |
0.07 |
||||
Other (income) expense, net |
(11,178) |
(0.04) |
||||
GAAP-based provision for (recovery of ) income taxes |
39,000 |
0.15 |
||||
Non-GAAP-based provision for income taxes |
(28,269) |
(0.10) |
||||
Non-GAAP-based net income, attributable to OpenText |
$ |
159,167 |
$ |
0.60 |
Reconciliation of Adjusted EBITDA | |||
Three months ended | |||
GAAP-based net income, attributable to OpenText |
$ |
46,137 |
|
Add: |
|||
Provision for (recovery of) income taxes |
39,000 |
||
Interest and other related expense, net |
32,372 |
||
Amortization of acquired technology-based intangible assets |
43,288 |
||
Amortization of acquired customer-based intangible assets |
42,594 |
||
Depreciation |
17,190 |
||
Share-based compensation |
8,134 |
||
Special charges (recoveries) |
19,461 |
||
Other (income) expense, net |
(11,178) |
||
Adjusted EBITDA |
$ |
236,998 |
Reconciliation of selected GAAP-based measures to Non-GAAP-based measures for the three months ended (In thousands except for per share amounts) | ||||||||||||||
Three Months Ended | ||||||||||||||
GAAP-based Measures |
GAAP-based |
Adjustments |
Note |
Non-GAAP- Measures |
Non-GAAP- % of Total | |||||||||
Cost of revenues |
||||||||||||||
Cloud services and subscriptions |
$ |
70,292 |
$ |
(360) |
(1) |
$ |
69,932 |
|||||||
Customer support |
25,738 |
(235) |
(1) |
25,503 |
||||||||||
Professional service and other |
41,343 |
(445) |
(1) |
40,898 |
||||||||||
Amortization of acquired technology-based intangible assets |
23,135 |
(23,135) |
(2) |
— |
||||||||||
GAAP-based gross profit and gross margin (%) / |
327,311 |
66.6 |
% |
24,175 |
(3) |
351,486 |
71.5 |
% | ||||||
Operating expenses |
||||||||||||||
Research and development |
58,572 |
(1,743) |
(1) |
56,829 |
||||||||||
Sales and marketing |
95,148 |
(2,820) |
(1) |
92,328 |
||||||||||
General and administrative |
38,197 |
(2,537) |
(1) |
35,660 |
||||||||||
Amortization of acquired customer-based intangible assets |
33,608 |
(33,608) |
(2) |
— |
||||||||||
Special charges (recoveries) |
12,454 |
(12,454) |
(4) |
— |
||||||||||
GAAP-based income from operations and operating margin (%) / Non-GAAP-based income from operations and operating margin (%) |
74,062 |
15.1 |
% |
77,337 |
(5) |
151,399 |
30.8 |
% | ||||||
Other income (expense), net |
6,699 |
(6,699) |
(6) |
— |
||||||||||
Provision for (recovery of) income taxes |
(859,425) |
878,017 |
(7) |
18,592 |
||||||||||
GAAP-based net income / Non-GAAP-based net income, attributable to OpenText |
912,884 |
(807,379) |
(8) |
105,505 |
||||||||||
GAAP-based earnings per share / Non-GAAP-based earnings per share-diluted, attributable to OpenText |
$ |
3.73 |
$ |
(3.30) |
(8) |
$ |
0.43 |
(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 one-time, non-recurring 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) relates primarily 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 recovery rate of approximately 1,607% and a Non-GAAP-based tax rate of approximately 15%; these rate differences are due to the income tax effects of expenses that are excluded for the purpose of calculating Non-GAAP-based adjusted net income. Such excluded expenses 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 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 15%, 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 | ||||||
Per share diluted | ||||||
GAAP-based net income, attributable to OpenText |
$ |
912,884 |
$ |
3.73 |
||
Add: |
||||||
Amortization |
56,743 |
0.23 |
||||
Share-based compensation |
8,140 |
0.03 |
||||
Special charges (recoveries) |
12,454 |
0.05 |
||||
Other (income) expense, net |
(6,699) |
(0.02) |
||||
GAAP-based provision for (recovery of ) income taxes |
(859,425) |
(3.51) |
||||
Non-GAAP-based provision for income taxes |
(18,592) |
(0.08) |
||||
Non-GAAP-based net income, attributable to OpenText |
$ |
105,505 |
$ |
0.43 |
Reconciliation of Adjusted EBITDA | |||
Three months ended | |||
GAAP-based net income, attributable to OpenText |
$ |
912,884 |
|
Add: |
|||
Provision for (recovery of) income taxes |
(859,425) |
||
Interest and other related expense, net |
27,275 |
||
Amortization of acquired technology-based intangible assets |
23,135 |
||
Amortization of acquired customer-based intangible assets |
33,608 |
||
Depreciation |
15,270 |
||
Share-based compensation |
8,140 |
||
Special charges (recoveries) |
12,454 |
||
Other (income) expense, net |
(6,699) |
||
Adjusted EBITDA |
$ |
166,642 |
(3) |
The following tables provide a composition of our major currencies for revenue and expenses, expressed as a percentage, for the three months ended |
Three Months Ended |
Three Months Ended | ||||||||
Currencies |
% of Revenue |
% of Expenses* |
% of Revenue |
% of Expenses* | |||||
EURO |
21 |
% |
14 |
% |
22 |
% |
14 |
% | |
GBP |
6 |
% |
6 |
% |
7 |
% |
7 |
% | |
CAD |
4 |
% |
11 |
% |
4 |
% |
12 |
% | |
USD |
60 |
% |
52 |
% |
58 |
% |
53 |
% | |
Other |
9 |
% |
17 |
% |
9 |
% |
14 |
% | |
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). |
View original content:http://www.prnewswire.com/news-releases/opentext-reports-first-quarter-fiscal-year-2018-financial-results-300548807.html
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