May 9, 2018

OpenText Reports Third Quarter Fiscal Year 2018 Financial Results

Revenue of $686 million, up 16% Y/Y

Operating Cash Flows of $271 million, up 73% Y/Y

Quarterly Cash Dividend Increased by 15%

WATERLOO, Ontario, May 9, 2018 /PRNewswire/ -- Open Text Corporation (NASDAQ: OTEX, TSX: OTEX), "The Information Company," today announced its financial results for the third quarter ended March 31, 2018.

"We are pleased with our Q3 results, especially our Annual Recurring Revenues (ARR) of $521 million, up 18% y/y and our Operating Cash Flows (OCF) of $271 million, up 73% y/y," said OpenText Vice Chair, CEO and CTO, Mark J. Barrenechea. "We are making key investments in the OpenText Cloud that will drive growth and customer adoption, and these investments will help create even more predictability in our business model."

Barrenechea further added, "Based on the strength and trajectory of our recurring revenues and cash flows, we are setting an annual Operating Cash Flow target of $1 Billion as we exit Fiscal 2021."

"Supported by confidence in our long-term model and cash flow performance, we are announcing a 15% increase to our quarterly cash dividend to $0.1518 per share," said Barrenechea.

"OpenText has built a market leading business and I am excited to join such a highly talented team," said OpenText EVP and CFO, Madhu Ranganathan. "We will focus on recurring revenues, improving efficiency, expanding cash flow and strengthening the business as we to look to scale OpenText to new levels in the coming years."

Financial Highlights for Q3 Fiscal 2018 with Year Over Year Comparisons

Summary of Quarterly Results









(in millions except per share data)

Q3 FY18

Q3 FY17

$ Change

% Change

(Y/Y)


Q3 FY18 in
CC*

% Change
in CC*


Revenues:









Cloud services and subscriptions

$209.1


$177.1


$32.0


18.1

%


$204.0


15.2

%


Customer support

312.3


263.4


48.8


18.5

%


297.9


13.1

%


Total annual recurring revenues**

$521.4


$440.5


$80.8


18.3

%


$501.8


13.9

%


License

84.1


87.2


(3.1)


(3.6)

%


80.0


(8.3)

%


Professional service and other

80.4


65.4


15.0


23.0

%


75.3


15.3

%


Total revenues

$685.9


$593.1


$92.7


15.6

%


$657.1


10.8

%


GAAP-based operating income

$102.3


$65.3


$37.1


56.8

%





Non-GAAP-based operating income (1)

$204.1


$172.6


$31.5


18.2

%


$193.4


12.1

%


GAAP-based operating margin

14.9

%

11.0

%

n/a


390


bps




Non-GAAP-based operating margin (1)

29.8

%

29.1

%

n/a


70


bps

29.4

%

30


bps

GAAP-based EPS, diluted

$0.22


$0.08


$0.14


175.0

%





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

$0.54


$0.45


$0.09


20.0

%


$0.51


13.3

%


GAAP-based net income attributable to OpenText

$58.8


$21.6


$37.2


172.0

%





Adjusted EBITDA (1)

$227.2


$189.1


$38.1


20.2

%





Operating cash flows

$270.7


$156.3


$114.4


73.2

%





 

Summary of YTD Results









(in millions except per share data)

FY18 YTD

FY17 YTD

$ Change

% Change

(Y/Y)


FY18 YTD
in CC*

% Change
in CC*


Revenues:









Cloud services and subscriptions

$611.1


$521.9


$89.2


17.1

%


$606.1


16.1

%


Customer support

915.8


693.3


222.5


32.1

%


891.3


28.6

%


Total annual recurring revenues**

$1,526.8


$1,215.2


$311.7


25.6

%


$1,497.4


23.2

%


License

297.6


245.6


51.9


21.1

%


287.8


17.1

%


Professional service and other

236.6


166.7


69.9


41.9

%


227.7


36.6

%


Total revenues

$2,061.0


$1,627.5


$433.5


26.6

%


$2,012.9


23.7

%


GAAP-based operating income

$356.1


$246.5


$109.6


44.5

%





Non-GAAP-based operating income (1)

$673.1


$508.5


$164.6


32.4

%


$654.3


28.7

%


GAAP-based operating margin

17.3

%

15.1

%

n/a


220


bps




Non-GAAP-based operating margin (1)

32.7

%

31.2

%

n/a


150


bps

32.5

%

130


bps

GAAP-based EPS, diluted (2)

$0.68


$3.88


($3.20)


(82.5)

%





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

$1.84


$1.42


$0.42


29.6

%


$1.78


25.4

%


GAAP-based net income attributable to OpenText (2)

$180.5


$979.5


($799.0)


(81.6)

%





Adjusted EBITDA (1)

$737.3


$555.5


$181.7


32.7

%





Operating cash flows

$504.4


$336.8


$167.7


49.8

%






(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 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.

OpenText Quarterly Business Highlights

  • 22 customer transactions over $1 million, 10 OpenText Cloud and 12 on-premise
  • Financial, Consumer Goods, Services, Technology and Public Sector industries saw the most demand in cloud and license
  • Key customer wins in the quarter included All InBox, City of Philadelphia, Corsair, PFU Limited, Central Provident Fund Board, Airports of Thailand, Progressive Insurance, ADP, Massachusetts Bay Transportation Authority, Nidec Automotive, Blue Shield of California, MUFG Union Bank, Bank Mandiri, West Bend Mutual Insurance Company, National Grid UK, SwissLife, Tieto, McGill University, and United States Census Bureau
  • Madhu Ranganathan Joins OpenText as Chief Financial Officer
  • OpenText acquires Hightail, a leading cloud service for file sharing and creative collaboration
  • OpenText Release 16 EP4 extends security, artificial intelligence (AI), the internet of things (IoT), and cloud support into the market-leading OpenText EIM platform  
  • OpenText Enfuse 2018 to showcase the future of cybersecurity and digital investigations
  • OpenText Enterprise World 2018 to Showcase the Intelligent and Connected Enterprise

Dividend Program Highlights

As part of our quarterly, non-cumulative cash dividend program, the Board declared on May 8, 2018 a cash dividend of $0.1518 per common share. The record date for this dividend is June 8, 2018 and the payment date is June 29, 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 Quarterly Results









Q3 FY18

Q2 FY18

Q3 FY17

% Change

(Q3 FY18 vs
Q2 FY18)


% Change

(Q3 FY18 vs
Q3 FY17)


Revenue (million)

$685.9


$734.4


$593.1


(6.6)

%


15.6

%


GAAP-based gross margin

64.6

%

67.3

%

64.5

%

(270)


bps

10


bps

GAAP-based operating margin

14.9

%

22.7

%

11.0

%

(780)


bps

390


bps

GAAP-based EPS, diluted

$0.22


$0.32


$0.08


(31.3)

%


175.0

%


Non-GAAP-based gross margin (1)

71.6

%

73.9

%

71.2

%

(230)


bps

40


bps

Non-GAAP-based operating margin (1)

29.8

%

36.5

%

29.1

%

(670)


bps

70


bps

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

$0.54


$0.76


$0.45


(28.9)

%


20.0

%


 

Summary of Year to Date Results






Q3 FY18 YTD

Q3 FY17 YTD

% Change


Revenue (million)

$2,061.0


$1,627.5


26.6

%


GAAP-based gross margin

65.7

%

66.6

%

(90)


bps

GAAP-based operating margin

17.3

%

15.1

%

220


bps

GAAP-based EPS, diluted(2)

$0.68


$3.88


(82.5)

%


Non-GAAP-based gross margin (1)

72.6

%

72.2

%

40


bps

Non-GAAP-based operating margin (1)

32.7

%

31.2

%

150


bps

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

$1.84


$1.42


29.6

%



(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 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 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 May 9, 2018 at 7:00 p.m. ET through 11:59 p.m. on May 23, 2018 and can be accessed by dialing 1-855-669-9658 (toll-free) or +1-604-674-8052 (international) and using passcode 2119 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, 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); (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

CONDENSED CONSOLIDATED BALANCE SHEETS

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



March 31, 2018


June 30, 2017

ASSETS

(unaudited)



Cash and cash equivalents

$

605,497



$

443,357


Accounts receivable trade, net of allowance for doubtful accounts of $9,007 as of March 31, 2018 and $6,319 as of June 30, 2017

515,012



445,812


Income taxes recoverable

42,880



32,683


Prepaid expenses and other current assets

105,657



81,625


Total current assets

1,269,046



1,003,477


Property and equipment

264,859



227,418


Goodwill

3,592,598



3,416,749


Acquired intangible assets

1,391,413



1,472,542


Deferred tax assets

1,142,385



1,215,712


Other assets

99,732



93,763


Deferred charges

39,148



42,344


Long-term income taxes recoverable

21,696



8,557


Total assets

$

7,820,877



$

7,480,562


LIABILITIES AND SHAREHOLDERS' EQUITY




Current liabilities:




Accounts payable and accrued liabilities

$

295,165



$

342,120


Current portion of long-term debt

282,760



182,760


Deferred revenues

689,189



570,328


Income taxes payable

33,685



31,835


Total current liabilities

1,300,799



1,127,043


Long-term liabilities:




Accrued liabilities

52,688



50,338


Deferred credits

3,366



5,283


Pension liability

62,996



58,627


Long-term debt

2,385,322



2,387,057


Deferred revenues

72,176



61,678


Long-term income taxes payable

171,174



162,493


Deferred tax liabilities

75,376



94,724


Total long-term liabilities

2,823,098



2,820,200


Shareholders' equity:




Share capital and additional paid-in capital




267,266,442 and 264,059,567 Common Shares issued and outstanding at March 31, 2018 and June 30, 2017, respectively; authorized Common Shares: unlimited

1,689,997



1,613,454


Accumulated other comprehensive income

51,810



48,800


Retained earnings

1,973,129



1,897,624


Treasury stock, at cost (694,169 shares at March 31, 2018 and 1,101,612 at June 30, 2017, respectively)

(18,823)



(27,520)


Total OpenText shareholders' equity

3,696,113



3,532,358


Non-controlling interests

867



961


Total shareholders' equity

3,696,980



3,533,319


Total liabilities and shareholders' equity

$

7,820,877



$

7,480,562


 

OPEN TEXT CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

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

(unaudited)



Three Months Ended March 31,


Nine Months Ended March 31,


2018


2017


2018


2017

Revenues:








License

$

84,113



$

87,227



$

297,588



$

245,647


Cloud services and subscriptions

209,102



177,109



611,076



521,857


Customer support

312,279



263,436



915,753



693,298


Professional service and other

80,385



65,358



236,554



166,701


Total revenues

685,879



593,130



2,060,971



1,627,503


Cost of revenues:








License

3,098



4,008



10,645



10,244


Cloud services and subscriptions

94,264



77,225



269,012



220,667


Customer support

33,820



34,442



99,805



87,529


Professional service and other

64,246



55,529



188,690



137,167


Amortization of acquired technology-based intangible assets

47,303



39,285



138,391



87,268


Total cost of revenues

242,731



210,489



706,543



542,875


Gross profit

443,148



382,641



1,354,428



1,084,628


Operating expenses:








Research and development

83,522



77,086



241,455



200,379


Sales and marketing

129,987



117,498



381,951



315,297


General and administrative

54,817



44,828



152,717



122,939


Depreciation

23,093



16,557



64,042



47,128


Amortization of acquired customer-based intangible assets

46,762



40,825



136,819



108,248


Special charges

2,644



20,586



21,390



44,157


Total operating expenses

340,825



317,380



998,374



838,148


Income from operations

102,323



65,261



356,054



246,480


Other income (expense), net

11,140



1,424



26,911



4,565


Interest and other related expense, net

(34,534)



(31,734)



(101,914)



(86,752)


Income before income taxes

78,929



34,951



281,051



164,293


Provision for (recovery of) income taxes

20,129



13,239



100,644



(815,364)


Net income for the period

$

58,800



$

21,712



$

180,407



$

979,657


Net (income) loss attributable to non-controlling interests

(6)



(96)



94



(135)


Net income attributable to OpenText

$

58,794



$

21,616



$

180,501



$

979,522


Earnings per share—basic attributable to OpenText

$

0.22



$

0.08



$

0.68



$

3.91


Earnings per share—diluted attributable to OpenText

$

0.22



$

0.08



$

0.68



$

3.88


Weighted average number of Common Shares outstanding—basic

266,572



263,329



265,619



250,538


Weighted average number of Common Shares outstanding—diluted

267,764



265,440



266,954



252,469


Dividends declared per Common Share

$

0.1320



$

0.1150



$

0.3960



$

0.3450


 

OPEN TEXT CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(In thousands of U.S. dollars)

(unaudited)




Three Months Ended March 31,


Nine Months Ended March 31,



2018


2017


2018


2017

Net income for the period


$

58,800



$

21,712



$

180,407



$

979,657


Other comprehensive income (loss) —net of tax:









Net foreign currency translation adjustments


3,823



2,725



3,283



(7,582)


Unrealized gain (loss) on cash flow hedges:









Unrealized gain (loss) - net of tax expense (recovery) effect of ($338) and $125 for the three months ended March 31, 2018 and 2017, respectively; $65 and ($254) for the nine months ended March 31, 2018 and 2017, respectively


(935)



348



182



(705)


(Gain) loss reclassified into net income - net of tax (expense) recovery effect of ($112) and $14 for the three months ended March 31, 2018 and 2017, respectively; ($540) and ($24) for the nine months ended March 31, 2018 and 2017, respectively


(311)



40



(1,499)



(68)


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









Actuarial gain (loss) - net of tax expense (recovery) effect of $413 and ($64) for the three months ended March 31, 2018 and 2017, respectively; $177 and $420 for the nine months ended March 31, 2018 and 2017, respectively


1,648



686



1,485



5,047


Amortization of actuarial (gain) loss into net income - net of tax (expense) recovery effect of $45 and $59 for the three months ended March 31, 2018 and 2017, respectively; $130 and $178 for the nine months ended March 31, 2018 and 2017, respectively


64



139



176



420


Unrealized net gain (loss) on marketable securities - net of tax effect of nil for the three and nine months ended March 31, 2018 and 2017, respectively




(541)





(141)


Release of unrealized gain on marketable securities - net of tax effect of nil for the three and nine months ended March 31, 2018 and 2017, respectively






(617)




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


4,289



3,397



3,010



(3,029)


Total comprehensive income


63,089



25,109



183,417



976,628


Comprehensive (income) loss attributable to non-controlling interests


(6)



(96)



94



(135)


Total comprehensive income attributable to OpenText


$

63,083



$

25,013



$

183,511



$

976,493


 

OPEN TEXT CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands of U.S. dollars)

(unaudited)



Three Months Ended March 31,


Nine Months Ended March 31,


2018


2017


2018


2017

Cash flows from operating activities:








Net income for the period

$

58,800



$

21,712



$

180,407



$

979,657


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








Depreciation and amortization of intangible assets

117,158



96,667



339,252



242,644


Share-based compensation expense

5,080



6,661



20,473



22,373


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



(1,044)





(1,586)


Pension expense

965



892



2,834



2,953


Amortization of debt issuance costs

1,303



1,127



3,835



3,781


Amortization of deferred charges and credits

941



2,146



3,175



6,438


Loss on sale and write down of property and equipment

326





489




Release of unrealized gain on marketable securities to income





(841)




Deferred taxes

18,266



(22,011)



62,640



(890,244)


Share in net (income) loss of equity investees

307



(160)



503



(6,153)


Write off of unamortized debt issuance costs



833





833


Other non-cash charges







1,033


Changes in operating assets and liabilities:








Accounts receivable

(6,240)



(37,551)



(55,698)



(37,095)


Prepaid expenses and other current assets

(5,152)



(18,119)



(10,535)



(6,234)


Income taxes and deferred charges and credits

(23,651)



11,190



(22,068)



1,570


Accounts payable and accrued liabilities

(19,779)



40,516



(92,278)



16,521


Deferred revenue

123,550



54,659



74,704



6,917


Other assets

(1,197)



(1,215)



(2,466)



(6,635)


Net cash provided by operating activities

270,677



156,303



504,426



336,773


Cash flows from investing activities:








Additions of property and equipment

(27,101)



(17,797)



(83,038)



(50,071)


Proceeds from maturity of short-term investments







9,212


Purchase of Hightail Inc.

(20,466)





(20,466)




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)





(1,622,394)


Purchase of HP Inc. CCM Business







(315,000)


Purchase of Recommind, Inc.







(170,107)


Purchase consideration for acquisitions completed prior to Fiscal 2017







(7,146)


Other investing activities

(3,118)



(2,450)



(11,179)



(3,013)


Net cash used in investing activities

(50,685)



(1,642,641)



(415,237)



(2,158,519)


Cash flows from financing activities:








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



1,044





1,586


Proceeds from issuance of long-term debt and revolver



225,000



200,000



481,875


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

36,442



15,967



66,064



26,668


Proceeds from issuance of Common shares under public Equity Offering







604,223


Repayment of long-term debt and revolver

(101,940)



(1,940)



(105,820)



(5,940)


Debt issuance costs



(2,045)





(6,200)


Equity issuance costs



(1,345)





(19,472)


Purchase of treasury stock



(4,245)





(4,245)


Payments of dividends to shareholders

(35,168)



(30,303)



(104,996)



(85,953)


Net cash provided by (used in) financing activities

(100,666)



202,133



55,248



992,542


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

10,157



10,714



17,703



(5,553)


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

129,483



(1,273,491)



162,140



(834,757)


Cash and cash equivalents at beginning of the period

476,014



1,722,491



443,357



1,283,757


Cash and cash equivalents at end of the period

$

605,497



$

449,000



$

605,497



$

449,000


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 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 U.S. GAAP.




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 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 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 26% and a Non-GAAP-based tax rate of approximately 14%; 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 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 nine months ended March 31, 2018.

(In thousands except for per share amounts)


Nine 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

$

269,012



$

(1,119)


(1)

$

267,893



Customer support

99,805



(933)


(1)

98,872



Professional service and other

188,690



(1,322)


(1)

187,368



Amortization of acquired technology-based intangible assets

138,391



(138,391)


(2)



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

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

1,354,428


65.7

%

141,765


(3)

1,496,193


72.6

%

Operating expenses







Research and development

241,455



(4,206)


(1)

237,249



Sales and marketing

381,951



(6,679)


(1)

375,272



General and administrative

152,717



(6,214)


(1)

146,503



Amortization of acquired customer-based intangible assets

136,819



(136,819)


(2)



Special charges (recoveries)

21,390



(21,390)


(4)



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

356,054


17.3

%

317,073


(5)

673,127


32.7

%

Other income (expense), net

26,911



(26,911)


(6)



Provision for (recovery of) income taxes

100,644



(20,674)


(7)

79,970



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

180,501



310,836


(8)

491,337



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

$

0.68



$

1.16


(8)

$

1.84





(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 36% and a Non-GAAP-based tax rate of approximately 14%; 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 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:

 


Nine Months Ended March 31, 2018



Per share diluted

GAAP-based net income, attributable to OpenText

$

180,501


$

0.68


Add:



Amortization

275,210


1.03


Share-based compensation

20,473


0.08


Special charges (recoveries)

21,390


0.08


Other (income) expense, net

(26,911)


(0.10)


GAAP-based provision for (recovery of) income taxes

100,644


0.37


Non-GAAP based provision for income taxes

(79,970)


(0.30)


Non-GAAP-based net income, attributable to OpenText

$

491,337


$

1.84


 

Reconciliation of Adjusted EBITDA



Nine Months Ended March 31, 2018

GAAP-based net income, attributable to OpenText

$

180,501


Add:


Provision for (recovery of) income taxes

100,644


Interest and other related expense, net

101,914


Amortization of acquired technology-based intangible assets

138,391


Amortization of acquired customer-based intangible assets

136,819


Depreciation

64,042


Share-based compensation

20,473


Special charges (recoveries)

21,390


Other (income) expense, net

(26,911)


Adjusted EBITDA

$

737,263


 

Reconciliation of selected GAAP-based measures to Non-GAAP-based measures for the three months ended December 31, 2017.

(In thousands except for per share amounts)


Three Months Ended December 31, 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

$

90,418



$

(462)


(1)

$

89,956



Customer support

33,194



(327)


(1)

32,867



Professional service and other

64,985



(603)


(1)

64,382



Amortization of acquired technology-based intangible assets

47,128



(47,128)


(2)



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

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

494,093


67.3

%

48,520


(3)

542,613


73.9

%

Operating expenses







Research and development

80,304



(1,587)


(1)

78,717



Sales and marketing

129,142



(2,095)


(1)

127,047



General and administrative

48,985



(2,084)


(1)

46,901



Amortization of acquired customer-based intangible assets

46,268



(46,268)


(2)



Special charges (recoveries)

715



(715)


(4)



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

166,608


22.7

%

101,269


(5)

267,877


36.5

%

Other income (expense), net

5,547



(5,547)


(6)



Provision for (recovery of) income taxes

53,146



(22,095)


(7)

31,051



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

85,111



117,817


(8)

202,928



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

$

0.32



$

0.44


(8)

$

0.76





(1)

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

(2)

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

(3)

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

(4)

Adjustment relates to the exclusion of Special charges (recoveries) from our Non-GAAP-based operating expenses as Special charges (recoveries) are generally incurred in the periods relevant to an acquisition and include 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 38% and a Non-GAAP-based tax rate of approximately 13%; 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 13%, we analyzed the individual adjusted expenses and took into consideration the impact of statutory tax rates from local jurisdictions incurring the expense. In addition, as a result of the changes in US tax reform legislation that was enacted on December 22, 2017 through the Tax Cuts and Jobs Act, the Company has reassessed its Non-GAAP-based tax rate to be approximately 14% for the six months ended December 31, 2017, down from 15%. Pursuant to this, the Non-GAAP-based tax rate of approximately 13% for the three months ended December 31, 2017 includes a one-time cumulative catch up of recoveries and charges, as though the Company's Non-GAAP-based tax rate was 14% as of July 1, 2017.

(8)

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

 


Three Months Ended December 31, 2017



Per share diluted

GAAP-based net income, attributable to OpenText

$

85,111


$

0.32


Add:



Amortization

93,396


0.35


Share-based compensation

7,158


0.03


Special charges (recoveries)

715



Other (income) expense, net

(5,547)


(0.02)


GAAP-based provision for (recovery of) income taxes

53,146


0.20


Non-GAAP-based provision for income taxes

(31,051)


(0.12)


Non-GAAP-based net income, attributable to OpenText

$

202,928


$

0.76


 

Reconciliation of Adjusted EBITDA



Three Months Ended December 31, 2017

GAAP-based net income, attributable to OpenText

$

85,111


Add:


Provision for (recovery of) income taxes

53,146


Interest and other related expense, net

34,092


Amortization of acquired technology-based intangible assets

47,128


Amortization of acquired customer-based intangible assets

46,268


Depreciation

22,071


Share-based compensation

7,158


Special charges (recoveries)

715


Other (income) expense, net

(5,547)


Adjusted EBITDA

$

290,142


 

Reconciliation of selected GAAP-based measures to Non-GAAP-based measures for the three months ended March 31, 2017.

(In thousands except for per share amounts)


Three Months Ended March 31, 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

$

77,225



$

(268)


(1)

$

76,957



Customer support

34,442



(261)


(1)

34,181



Professional service and other

55,529



(89)


(1)

55,440



Amortization of acquired technology-based intangible assets

39,285



(39,285)


(2)



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

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

382,641


64.5

%

39,903


(3)

422,544


71.2

%

Operating expenses







Research and development

77,086



(1,634)


(1)

75,452



Sales and marketing

117,498



(2,081)


(1)

115,417



General and administrative

44,828



(2,328)


(1)

42,500



Amortization of acquired customer-based intangible assets

40,825



(40,825)


(2)



Special charges (recoveries)

20,586



(20,586)


(4)



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

65,261


11.0

%

107,357


(5)

172,618


29.1

%

Other income (expense), net

1,424



(1,424)


(6)



Provision for (recovery of) income taxes

13,239



7,798


(7)

21,037



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

21,616



98,135


(8)

119,751



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

$

0.08



$

0.37


(8)

$

0.45





(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 38% 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 March 31, 2017



Per share diluted

GAAP-based net income, attributable to OpenText

$

21,616


$

0.08


Add:



Amortization

80,110


0.30


Share-based compensation

6,661


0.03


Special charges (recoveries)

20,586


0.08


Other (income) expense, net

(1,424)


(0.01)


GAAP-based provision for (recovery of) income taxes

13,239


0.05


Non-GAAP-based provision for income taxes

(21,037)


(0.08)


Non-GAAP-based net income, attributable to OpenText

$

119,751


$

0.45


 

Reconciliation of Adjusted EBITDA



Three months ended March 31, 2017

GAAP-based net income, attributable to OpenText

$

21,616


Add:


Provision for (recovery of) income taxes

13,239


Interest and other related expense, net

31,734


Amortization of acquired technology-based intangible assets

39,285


Amortization of acquired customer-based intangible assets

40,825


Depreciation

16,557


Share-based compensation

6,661


Special charges (recoveries)

20,586


Other (income) expense, net

(1,424)


Adjusted EBITDA

$

189,079


 

Reconciliation of selected GAAP-based measures to Non-GAAP-based measures for the nine months ended March 31, 2017.

(In thousands except for per share amounts)


Nine Months Ended March 31, 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: