Aug 2, 2018

OpenText Reports Fourth Quarter and Fiscal Year 2018 Financial Results

Q4 Revenue of $754 million, up 14% Y/Y

Annual Revenue of $2.82 billion, up 23% Y/Y

Annual Operating Cash Flows of $710 million, up 62% Y/Y

WATERLOO, Ontario, Aug. 2, 2018 /PRNewswire/ -- Open Text Corporation (NASDAQ: OTEX, TSX: OTEX), "The Information Company," today announced its financial results for the fourth quarter and fiscal year ended June 30, 2018.

"Our fourth quarter was a strong close to a record year, with $2.8 billion in total annual revenues and 23% year over year growth," said Mark J. Barrenechea, OpenText Vice Chair, CEO & CTO. "Fiscal 2018 demonstrates the strength of our Total Growth strategy that combines both acquisition and organic growth. Further, we completed 3 acquisitions in Fiscal 2018 (Covisint, Guidance Software and Hightail) and we enter Fiscal 2019 with a strong balance sheet."

Barrenechea added, "OpenText's Annual Recurring Revenue business grew 22% year over year to over $2 billion as we continued to expand our support, cloud, business networks and security product lines. We recently announced a new public SaaS platform, OpenText OT2, and Release 16 EP5, offering customers the next evolution of our products.  OpenText is increasingly becoming a strategic technology partner to Global 10,000 companies as we scale and expand our value proposition, which positions us well for Fiscal 2019 and beyond."

"In Fiscal 2018, we generated over $1 billion of adjusted EBITDA and $710 million in Operating Cash Flows, which was up 62% over the prior fiscal year," said OpenText EVP and CFO, Madhu Ranganathan. "As we start Fiscal 2019, we are taking steps to further improve our operational efficiency and expand margins, which reinforces our ability to execute our M&A strategy and advance the Company toward our Fiscal 2021 objectives."

Ms. Ranganathan added, "Looking at Fiscal 2019 and beyond, today we are also announcing a restructuring plan to further streamline our operations and increase our agility as we look to execute on our Total Growth strategy. We will undertake the restructuring initiatives during Fiscal 2019 and the expected size of the plan will be approximately $29 million. Savings are anticipated to ramp over the course of the year, with full benefits realized in Fiscal 2020 and beyond."

Financial Highlights for Fiscal 2018 with Year Over Year Comparisons

Summary of Annual Results









(in millions except per share data)

FY18

FY17

$ Change

% Change

(Y/Y)


FY18 in
CC*

% Change
in CC*


Revenues:









Cloud services and subscriptions

$829.0


$705.5


$123.5


17.5

%


$818.6


16.0

%


Customer support

1,232.5


981.1


251.4


25.6

%


1,195.4


21.8

%


Total annual recurring revenues**

$2,061.5


$1,686.6


$374.9


22.2

%


$2,013.9


19.4

%


License

437.5


369.1


68.4


18.5

%


423.6


14.8

%


Professional service and other

316.3


235.3


80.9


34.4

%


305.1


29.6

%


Total revenues

$2,815.2


$2,291.1


$524.2


22.9

%


$2,742.7


19.7

%


GAAP-based operating income

$505.4


$352.9


$152.5


43.2

%





Non-GAAP-based operating income (1)

$932.2


$728.5


$203.7


28.0

%


$901.7


23.8

%


GAAP-based operating margin

18.0

%

15.4

%

n/a


260


bps




Non-GAAP-based operating margin (1)

33.1

%

31.8

%

n/a


130


bps

32.9

%

110


bps

GAAP-based EPS, diluted (2)

$0.91


$4.01


($3.10)


(77.3)

%





Non-GAAP-based EPS, diluted (1)(3)

$2.56


$2.02


$0.54


26.7

%


$2.46


21.8

%


GAAP-based net income attributable to OpenText (2)

$242.2


$1,025.7


($783.4)


(76.4)

%





Adjusted EBITDA (1)

$1,019.1


$792.5


$226.5


28.6

%





Operating cash flows

$709.9


$439.3


$270.6


61.6

%




















 

Summary of Quarterly Results









(in millions except per share data)

Q4 FY18

Q4 FY17

$ Change

% Change

(Y/Y)


Q4 FY18 in
CC*

% Change
in CC*


Revenues:









Cloud services and subscriptions

$217.9


$183.6


$34.3


18.7

%


$212.5


15.7

%


Customer support

316.8


287.8


28.9


10.1

%


304.1


5.7

%


Total annual recurring revenues**

$534.6


$471.4


$63.2


13.4

%


$516.5


9.6

%


License

139.9


123.5


16.4


13.3

%


135.9


10.0

%


Professional service and other

79.7


68.6


11.1


16.2

%


77.4


12.8

%


Total revenues

$754.3


$663.6


$90.7


13.7

%


$729.8


10.0

%


GAAP-based operating income

$149.3


$106.5


$42.9


40.3

%





Non-GAAP-based operating income (1)

$259.1


$219.9


$39.1


17.8

%


$247.4


12.5

%


GAAP-based operating margin

19.8

%

16.0

%

n/a


380


bps




Non-GAAP-based operating margin (1)

34.3

%

33.1

%

n/a


120


bps

33.9

%

80


bps

GAAP-based EPS, diluted

$0.23


$0.17


$0.06


35.3

%





Non-GAAP-based EPS, diluted (1)(3)

$0.72


$0.60


$0.12


20.0

%


$0.68


13.3

%


GAAP-based net income attributable to OpenText

$61.7


$46.1


$15.6


33.8

%





Adjusted EBITDA (1)

$281.8


$237.0


$44.8


18.9

%





Operating cash flows

$205.5


$102.5


$103.0


100.5

%






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

(2) Recorded a significant tax benefit in Q1 FY17 of $876.1 million. This significant tax benefit is specifically tied to the Company's internal reorganization and applied to Q1 FY17 only and as a result does not continue in future periods.

(3) Please also see note 14 to the Company's 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.

OpenText Quarterly Business Highlights

  • 38 customer transactions over $1 million, 15 OpenText Cloud and 23 on-premise
  • Financial, Services, Consumer Goods, Technology and Healthcare industries saw the most demand in cloud and license
  • Key customer wins in the quarter included The United States Department of Energy, Ness A. T., US Navy SPAWAR Atlantic, Hydro Quebec, Salt River Project, GEMA, SecureWorks, Southern Company, US Defense Health Agency, Roy Hill, Netherlands Ministry of Education, BMW Group and Auto Club Group
  • OpenText Defines the Future of Enterprise Information Management with Next-Generation OpenText OT2 Platform
  • OpenText Announces Successful Repricing and Amendment of Credit Facilities
  • The OpenText Business Network Powers 23 of Gartner's Top 25 Supply Chains
  • OpenText Receives 2018 SAP® Pinnacle Award SAP Solution Extension Partner of the Year
  • OpenText Announces Availability of Two New Cloud Offerings for SAP® Solutions
  • Independent Research Firm Cites OpenText as a Leader in Digital Asset Management for Customer Experience

Dividend Program Highlights

As part of our quarterly, non-cumulative cash dividend program, the Board declared on August 1, 2018 a cash dividend of $0.1518 per common share. The record date for this dividend is August 31, 2018 and the payment date is September 21, 2018. 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.

Summary of Annual Results






FY18

FY17

% Change


Revenue (million)

$2,815.2


$2,291.1


22.9

%


GAAP-based gross margin

66.2

%

66.7

%

(50)


bps

GAAP-based operating margin

18.0

%

15.4

%

260


bps

GAAP-based EPS, diluted(2)

$0.91


$4.01


(77.3)

%


Non-GAAP-based gross margin (1)

73.0

%

72.6

%

40


bps

Non-GAAP-based operating margin (1)

33.1

%

31.8

%

130


bps

Non-GAAP-based EPS, diluted (1)(3)

$2.56


$2.02


26.7

%


 

Summary of Quarterly Results









Q4 FY18

Q3 FY18

Q4 FY17

% Change

(Q4 FY18 vs
Q3 FY18)


% Change

(Q4 FY18 vs
Q4 FY17)


Revenue (million)

$754.3


$685.9


$663.6


10.0

%


13.7

%


GAAP-based gross margin

67.5

%

64.6

%

66.9

%

290


bps

60


bps

GAAP-based operating margin

19.8

%

14.9

%

16.0

%

490


bps

380


bps

GAAP-based EPS, diluted

$0.23


$0.22


$0.17


4.5

%


35.3

%


Non-GAAP-based gross margin (1)

74.0

%

71.6

%

73.6

%

240


bps

40


bps

Non-GAAP-based operating margin (1)

34.3

%

29.8

%

33.1

%

450


bps

120


bps

Non-GAAP-based EPS, diluted (1)(3)

$0.72


$0.54


$0.60


33.3

%


20.0

%



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

(2) Recorded a significant tax benefit in Q1 FY17 of $876.1 million. This significant tax benefit is specifically tied to the Company's internal reorganization and applied to Q1 FY17 only and as a result does not continue in future periods.

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

Conference Call Information

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 2, 2018 at 7:00 p.m. ET through 11:59 p.m. on August 16, 2018 and can be accessed by dialing 1-855-669-9658 (toll-free) or +1-604-674-8052 (international) and using passcode 2420 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.

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, 2018 (Fiscal 2018) on growth in earnings and cash flows, creating value through investments in broader Enterprise Information Management (EIM) capabilities, distribution, 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, and distribution expansion, the focus on recurring revenues, improving 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, expected timing, charges and savings related to restructuring activities, declaration of quarterly dividends, future tax rates, new platform and product offerings, scaling OpenText to new levels in Fiscal 2019 and beyond, the anticipated size, benefits and timing related to our restructuring plan, 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 the new 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.

For more information, please contact:

Greg Secord
Vice President, Investor Relations
Open Text Corporation
415-963-0825
investors@opentext.com

OTEX-F

Copyright ©2018 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, 2018


June 30, 2017

ASSETS




Cash and cash equivalents

$

682,942



$

443,357


Accounts receivable trade, net of allowance for doubtful accounts of $9,741 as of June 30, 2018 and $6,319 as of June 30, 2017

487,956



445,812


Income taxes recoverable

55,623



32,683


Prepaid expenses and other current assets

101,059



81,625


Total current assets

1,327,580



1,003,477


Property and equipment

264,205



227,418


Goodwill

3,580,129



3,416,749


Acquired intangible assets

1,296,637



1,472,542


Deferred tax assets

1,122,729



1,215,712


Other assets

111,267



93,763


Deferred charges

38,000



42,344


Long-term income taxes recoverable

24,482



8,557


Total assets

$

7,765,029



$

7,480,562


LIABILITIES AND SHAREHOLDERS' EQUITY




Current liabilities:




Accounts payable and accrued liabilities

$

302,154



$

342,120


Current portion of long-term debt

10,000



182,760


Deferred revenues

644,211



570,328


Income taxes payable

38,234



31,835


Total current liabilities

994,599



1,127,043


Long-term liabilities:




Accrued liabilities

52,827



50,338


Deferred credits

2,727



5,283


Pension liability

65,719



58,627


Long-term debt

2,610,523



2,387,057


Deferred revenues

69,197



61,678


Long-term income taxes payable

172,241



162,493


Deferred tax liabilities

79,938



94,724


Total long-term liabilities

3,053,172



2,820,200


Shareholders' equity:




Share capital and additional paid-in capital




267,651,084 and 264,059,567 Common Shares issued and outstanding at June 30, 2018 and June 30, 2017, respectively; authorized Common Shares: unlimited

1,707,073



1,613,454


Accumulated other comprehensive income

33,645



48,800


Retained earnings

1,994,235



1,897,624


Treasury stock, at cost (690,336 shares at June 30, 2018 and 1,101,612 at June 30, 2017, respectively)

(18,732)



(27,520)


Total OpenText shareholders' equity

3,716,221



3,532,358


Non-controlling interests

1,037



961


Total shareholders' equity

3,717,258



3,533,319


Total liabilities and shareholders' equity

$

7,765,029



$

7,480,562


 

OPEN TEXT CORPORATION

CONSOLIDATED STATEMENTS OF INCOME

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




Year Ended June 30,



2018


2017


2016

Revenues:







License


$

437,512



$

369,144



$

283,710


Cloud services and subscriptions


828,968



705,495



601,018


Customer support


1,232,504



981,102



746,409


Professional service and other


316,257



235,316



193,091


Total revenues


2,815,241



2,291,057



1,824,228


Cost of revenues:







License


13,693



13,632



10,296


Cloud services and subscriptions


364,091



300,255



244,021


Customer support


134,089



122,753



89,861


Professional service and other


253,670



195,195



155,584


Amortization of acquired technology-based intangible assets


185,868



130,556



74,238


Total cost of revenues


951,411



762,391



574,000


Gross profit


1,863,830



1,528,666



1,250,228


Operating expenses:







Research and development


323,461



281,680



194,057


Sales and marketing


529,381



444,838



344,235


General and administrative


205,313



170,438



140,397


Depreciation


86,943



64,318



54,929


Amortization of acquired customer-based intangible assets


184,118



150,842



113,201


Special charges


29,211



63,618



34,846


Total operating expenses


1,358,427



1,175,734



881,665


Income from operations


505,403



352,932



368,563


Other income (expense), net


17,973



15,743



(1,423)


Interest and other related expense, net


(137,250)



(119,124)



(76,363)


Income before income taxes


386,126



249,551



290,777


Provision for (recovery of) income taxes


143,826



(776,364)



6,282


Net income for the period


$

242,300



$

1,025,915



$

284,495


Net (income) loss attributable to non-controlling interests


(76)



(256)



(18)


Net income attributable to OpenText


$

242,224



$

1,025,659



$

284,477


Earnings per share—basic attributable to OpenText


$

0.91



$

4.04



$

1.17


Earnings per share—diluted attributable to OpenText


$

0.91



$

4.01



$

1.17


Weighted average number of Common Shares outstanding—basic


266,085



253,879



242,926


Weighted average number of Common Shares outstanding—diluted


267,492



255,805



244,076


Dividends declared per Common Share


$

0.5478



$

0.4770



$

0.4150


 

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,


2018


2017

Revenues:




License

$

139,924



$

123,497


Cloud services and subscriptions

217,892



183,638


Customer support

316,751



287,804


Professional service and other

79,703



68,615


Total revenues

754,270



663,554


Cost of revenues:




License

3,048



3,388


Cloud services and subscriptions

95,079



79,588


Customer support

34,284



35,224


Professional service and other

64,980



58,028


Amortization of acquired technology-based intangible assets

47,477



43,288


Total cost of revenues

244,868



219,516


Gross profit

509,402



444,038


Operating expenses:




Research and development

82,006



81,301


Sales and marketing

147,430



129,541


General and administrative

52,596



47,499


Depreciation

22,901



17,190


Amortization of acquired customer-based intangible assets

47,299



42,594


Special charges

7,821



19,461


Total operating expenses

360,053



337,586


Income from operations

149,349



106,452


Other income (expense), net

(8,938)



11,178


Interest and other related expense, net

(35,336)



(32,372)


Income before income taxes

105,075



85,258


Provision for (recovery of) income taxes

43,182



39,000


Net income for the period

$

61,893



$

46,258


Net (income) loss attributable to non-controlling interests

(170)



(121)


Net income attributable to OpenText

$

61,723



$

46,137


Earnings per share—basic attributable to OpenText

$

0.23



$

0.17


Earnings per share—diluted attributable to OpenText

$

0.23



$

0.17


Weighted average number of Common Shares outstanding—basic

267,489



263,938


Weighted average number of Common Shares outstanding—diluted

268,628



265,818


Dividends declared per Common Share

$

0.1518



$

0.1320


 

OPEN TEXT CORPORATION

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(In thousands of U.S. dollars)




Year Ended June 30,



2018


2017


2016

Net income for the period


$

242,300



$

1,025,915



$

284,495


Other comprehensive income (loss) —net of tax:







Net foreign currency translation adjustments


(9,582)



(4,756)



(3,318)


Unrealized gain (loss) on cash flow hedges:







Unrealized gain (loss) - net of tax expense (recovery) effect of ($171), $34 and ($928) for the year ended June 30, 2018, 2017 and 2016, respectively


(476)



95



(2,574)


(Gain) loss reclassified into net income - net of tax (expense) recovery effect of ($489), $67 and $1,065 for the year ended June 30, 2018, 2017 and 2016, respectively


(1,357)



186



2,956


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







Actuarial gain (loss) - net of tax expense (recovery) effect of ($1,846), $840 and ($1,612) for the year ended June 30, 2018, 2017 and 2016, respectively


(3,383)



6,216



(3,374)


Amortization of actuarial (gain) loss into net income - net of tax (expense) recovery effect of $183, $241 and $132 for the year ended June 30, 2018, 2017 and 2016, respectively


260



565



347


Unrealized net gain (loss) on marketable securities - net of tax effect of nil for the year ended June 30, 2018, 2017 and 2016, respectively




184



445


Release of unrealized gain on marketable securities - net of tax effect of nil for the year ended June 30, 2018, 2017 and 2016, respectively


(617)






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


(15,155)



2,490



(5,518)


Total comprehensive income


227,145



1,028,405



278,977


Comprehensive (income) loss attributable to non-controlling interests


(76)



(256)



(18)


Total comprehensive income attributable to OpenText


$

227,069



$

1,028,149



$

278,959


 

OPEN TEXT CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands of U.S. dollars)




Year Ended June 30,



2018


2017


2016

Cash flows from operating activities:







Net income for the period


$

242,300



$

1,025,915



$

284,495


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







Depreciation and amortization of intangible assets


456,929



345,715



242,368


Share-based compensation expense


27,594



30,507



25,978


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




(1,534)



(230)


Pension expense


3,738



3,893



4,577


Amortization of debt issuance costs


4,646



5,014



4,678


Amortization of deferred charges and credits


4,242



6,298



9,903


Loss on sale and write down of property and equipment


2,234



784



1,108


Release of unrealized gain on marketable securities to income


(841)






Deferred taxes


89,736



(871,195)



(54,461)


Share in net (income) loss of equity investees


(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


(22,566)



(126,784)



8,985


Prepaid expenses and other current assets


(7,274)



(7,766)



316


Income taxes and deferred charges and credits


(31,323)



(1,683)



6,294


Accounts payable and accrued liabilities


(91,650)



53,490



(5,671)


Deferred revenue


35,629



3,484



(4,781)


Other assets


2,301



(22,799)



2,163


Net cash provided by operating activities


709,885



439,253



525,722


Cash flows from investing activities:







Additions of property and equipment


(105,318)



(79,592)



(70,009)


Proceeds from maturity of short-term investments




9,212



11,297


Purchase of Hightail Inc.


(20,535)






Purchase of Guidance Software,  net of cash acquired


(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)



(293,071)


Other investing activities


(18,034)



(5,937)



(9,393)


Net cash used in investing activities


(444,441)



(2,190,964)



(361,176)


Cash flows from financing activities:







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




1,534



230


Proceeds from issuance of long-term debt and revolver


1,200,000



481,875



600,000


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


75,935



35,593



20,097


Proceeds from issuance of Common shares under public Equity Offering




604,223




Repayment of long-term debt and revolver


(1,149,620)



(57,880)



(8,000)


Debt issuance costs


(4,375)



(7,240)



(6,765)


Equity issuance costs




(19,574)




Common Shares repurchased






(65,509)


Purchase of treasury stock




(8,198)



(10,627)


Purchase of non-controlling interest




(208)




Payments of dividends to shareholders


(145,613)



(120,581)



(99,262)


Net cash provided by (used in) financing activities


(23,673)



909,544



430,164


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


(2,186)



1,767



(10,952)


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


239,585



(840,400)



583,758


Cash and cash equivalents at beginning of the period


443,357



1,283,757



699,999


Cash and cash equivalents at end of the period


$

682,942



$

443,357



$

1,283,757


 

OPEN TEXT CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands of U.S. dollars)

(unaudited)



Three Months Ended June 30,


2018


2017

Cash flows from operating activities:




Net income for the period

$

61,893



$

46,258


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




Depreciation and amortization of intangible assets

117,677



103,071


Share-based compensation expense

7,121



8,134


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



52


Pension expense

904



940


Amortization of debt issuance costs

811



1,233


Amortization of deferred charges and credits

1,067



(140)


Loss on sale and write down of property and equipment

1,745



784


Deferred taxes

27,096



19,049


Share in net (income) loss of equity investees

(6,468)



201


Write off of unamortized debt issuance costs

155




Changes in operating assets and liabilities:




Accounts receivable

33,132



(89,689)


Prepaid expenses and other current assets

3,261



(1,532)


Income taxes and deferred charges and credits

(9,255)



(3,253)


Accounts payable and accrued liabilities

628



36,969


Deferred revenue

(39,075)



(3,433)


Other assets

4,767



(16,164)


Net cash provided by operating activities

205,459



102,480


Cash flows from investing activities:




Additions of property and equipment

(22,280)



(29,521)


Purchase of Hightail Inc.

(69)




Other investing activities

(6,855)



(2,924)


Net cash used in investing activities

(29,204)



(32,445)


Cash flows from financing activities:




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



(52)


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

9,871



8,925


Repayment of long-term debt and revolver

(1,043,800)



(51,940)


Debt issuance costs

(4,375)



(1,040)


Equity issuance costs



(102)


Purchase of treasury stock



(3,953)


Repurchase of non-controlling interest



(208)


Payments of dividends to shareholders

(40,617)



(34,628)


Net cash provided by (used in) financing activities

(78,921)



(82,998)


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

(19,889)



7,320


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

77,445



(5,643)


Cash and cash equivalents at beginning of the period

605,497



449,000


Cash and cash equivalents at end of the period

$

682,942



$

443,357


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 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. 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 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:

 

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

$

95,079



$

(310)


(1)

$

94,769



Customer support

34,284



(300)


(1)

33,984



Professional service and other

64,980



(516)


(1)

64,464



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 (%)

509,402


67.5

%

48,603


(3)

558,005


74.0

%

Operating expenses







Research and development

82,006



(1,453)


(1)

80,553



Sales and marketing

147,430



(2,552)


(1)

144,878



General and administrative

52,596



(1,990)


(1)

50,606



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 and operating margin (%) / Non-GAAP-based income from operations and operating margin (%)

149,349


19.8

%

109,718


(5)

259,067


34.3

%

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, 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 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 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:

 


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

35,336


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

$

281,798


 

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

$

364,091



$

(1,429)


(1)

$

362,662



Customer support

134,089



(1,233)


(1)

132,856



Professional service and other

253,670



(1,838)


(1)

251,832



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 (%)

1,863,830


66.2

%

190,368


(3)

2,054,198


73.0

%

Operating expenses







Research and development

323,461



(5,659)


(1)

317,802



Sales and marketing

529,381



(9,231)


(1)

520,150



General and administrative

205,313



(8,204)


(1)

197,109



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 and operating margin (%) / Non-GAAP-based income from operations and operating margin (%)

505,403


18.0

%

426,791


(5)

932,194


33.1

%

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 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

137,250


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

$

1,019,061


 

Reconciliation of selected GAAP-based measures to Non-GAAP-based measures for the three months ended March 31, 2018.

(In thousands except for per share amounts)


Three Months Ended March 31, 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

$

94,264



$

(135)


(1)

$

94,129



Customer support

33,820



(277)


(1)

33,543



Professional service and other

64,246



(122)


(1)

64,124



Amortization of acquired technology-based intangible assets

47,303



(47,303)


(2)



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

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

443,148


64.6

%

47,837


(3)

490,985


71.6

%

Operating expenses







Research and development

83,522



(993)


(1)

82,529



Sales and marketing

129,987



(1,496)


(1)

128,491



General and administrative

54,817



(2,057)


(1)

52,760



Amortization of acquired customer-based intangible assets

46,762



(46,762)


(2)



Special charges (recoveries)

2,644



(2,644)


(4)



GAAP-based income from operations and operating margin (%) / Non-GAAP-based income from operations and operating margin (%)

102,323


14.9

%

101,789


(5)

204,112


29.8

%

Other income (expense), net

11,140



(11,140)


(6)



Provision for (recovery of) income taxes

20,129



3,612


(7)

23,741



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

58,794



87,037


(8)

145,831



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

$

0.22



$

0.32


(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 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 26% 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 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:

 


Three Months Ended March 31, 2018



Per share diluted

GAAP-based net income, attributable to OpenText

$

58,794


$

0.22


Add:



Amortization

94,065


0.35


Share-based compensation

5,080


0.02


Special charges (recoveries)

2,644


0.01


Other (income) expense, net

(11,140)


(0.04)


GAAP-based provision for (recovery of) income taxes

20,129


0.07


Non-GAAP-based provision for income taxes

(23,741)


(0.09)


Non-GAAP-based net income, attributable to OpenText

$

145,831


$

0.54


 

Reconciliation of Adjusted EBITDA



Three Months Ended March 31, 2018

GAAP-based net income, attributable to OpenText

$

58,794


Add:


Provision for (recovery of) income taxes

20,129


Interest and other related expense, net

34,534


Amortization of acquired technology-based intangible assets

47,303


Amortization of acquired customer-based intangible assets

46,762


Depreciation

23,093


Share-based compensation

5,080


Special charges (recoveries)

2,644


Other (income) expense, net

(11,140)


Adjusted EBITDA

$

227,199


 

Reconciliation of selected GAAP-based measures to Non-GAAP-based measures for the three months ended June 30, 2017.

(In thousands except for per share amounts)


Three Months Ended June 30, 2017


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

$

79,588



$

(390)


(1)

$

79,198



Customer support

35,224



(313)


(1)

34,911



Professional service and other

58,028