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OpenText Reports Fourth Quarter and Fiscal Year 2021 Financial Results

08/05/2021

Record Annual Total Revenues with Cloud Revenue Growth of 21.6%

Repurchases 2.5 Million Common Shares and Increases Dividend by 10%

WATERLOO, ON, Aug. 5, 2021 /PRNewswire/ --

Fiscal 2021 Fourth Quarter Highlights Y/Y

Total Revenues

(in millions)


Annual Recurring Revenues

(in millions)


Cloud Revenues

(in millions)

Reported

Constant Currency


Reported

Constant Currency


Reported

Constant Currency

$893.5

$859.4


$694.4

$671.8


$360.2

$352.7

+8.1%

+4.0%


+5.6%

+2.2%


+8.3%

+6.0%

Annual Recurring Revenues represent 78% of Total Revenues

 

  • Operating cash flows were $296.2 million and free cash flows were $268.8 million
  • GAAP-based net income of $181.3 million, up 586.9% Y/Y, margin of 20.3%, up 1,710 basis points Y/Y
  • Adjusted EBITDA of $314.8 million, down 0.8%, margin of 35.2%, down 320 basis points Y/Y
  • GAAP-based diluted EPS of $0.66, up 560.0% Y/Y
  • Non-GAAP diluted EPS of $0.80, constant Y/Y
  • During the quarter, the company repurchased and cancelled 2.5 million common shares for $119.1 million under our Share Repurchase Plan
  • Quarterly cash dividend increased by 10%

 

Fiscal 2021 Annual Highlights Y/Y

Total Revenues

(in millions)


Annual Recurring Revenues

(in millions)


Cloud Revenues

(in millions)

Reported

Constant Currency


Reported

Constant Currency


Reported

Constant Currency

$3,386.1

$3,304.8


$2,741.5

$2,686.6


$1,407.4

$1,389.7

+8.9%

+6.3%


+12.7%

+10.4%


+21.6%

+20.0%

Annual Recurring Revenues represent 81% of Total Revenues

 

  • Operating cash flows were $876.1 million and free cash flows were $812.4 million, which include the IRS settlement payment of $299.6 million
  • GAAP-based net income of $310.7 million, up 32.6% Y/Y, margin of 9.2%, up 170 basis points Y/Y
  • Adjusted EBITDA of $1,315.0 million, up 14.5%, margin of 38.8%, up 190 basis points Y/Y
  • GAAP-based diluted EPS of $1.14, up 32.6% Y/Y
  • Non-GAAP diluted EPS of $3.39, up 17.3% Y/Y

Open Text Corporation (NASDAQ: OTEX), (TSX: OTEX), today announced its financial results for the fourth quarter and year ended June 30, 2021.

"Our robust fourth quarter results contributed to a record fiscal year, as we successfully helped our customers navigate the challenges of an evolving market and workforce," said Mark J. Barrenechea, OpenText CEO & CTO.  "In Fiscal 2021, OpenText delivered a record $3.39 billion in total revenues, up 8.9% year-over-year, supported by record Cloud revenues of $1.4 billion, up 21.6% from a year ago. Annual Recurring Revenues (ARR) reached a record $2.7 billion, up 12.7% year-over-year, representing 81% of total revenues."

"Information Management's time has come, and OpenText is perfectly positioned to lead the market as we digitally empower many of the most innovative global organizations, in nearly every vertical and line of business.  OpenText Cloud Editions enables customers to accelerate growth and stay ahead of the competition by maximizing the value of their information through our cloud-based Information Management platform." 

"I am very pleased with our fourth quarter and Fiscal 2021 results," said Madhu Ranganathan, OpenText EVP, CFO.  "In Fiscal 2021, we excelled in our operational performance, generating a record $1.3 billion of adjusted EBITDA, up 14.5% year-over-year, and free cash flows of $812.4 million which includes the IRS settlement payment of $299.6 million.  With approximately $1.6 billion of cash as of June 30, 2021, and a net leverage ratio of 1.5x, our balance sheet and liquidity position remain strong.  We are well positioned to drive our organic growth initiatives and to deploy capital that meet OpenText's growth and returns based metrics."

Financial Highlights for Q4 and Fiscal 2021 with Year Over Year Comparisons


Summary of Quarterly Results









(In millions, except per share data)

Q4 FY'21

Q4 FY'20

$ Change 

% Change 


Q4 FY'21 in CC*

% Change in CC*


Revenues:









Cloud services and subscriptions

$360.2


$332.6


$27.5


8.3

%


$352.7


6.0

%


Customer support

334.3


324.9


9.3


2.9

%


319.1


(1.8)

%


Total annual recurring revenues**

$694.4


$657.5


$36.9


5.6

%


$671.8


2.2

%


License

132.5


105.8


26.7


25.3

%


124.6


17.8

%


Professional service and other

66.6


63.3


3.3


5.2

%


63.0


(0.4)

%


Total revenues

$893.5


$826.6


$66.9


8.1

%


$859.4


4.0

%


GAAP-based operating income

$171.7


$91.2


$80.5


88.2

%


N/A


N/A



Non-GAAP-based operating income (1)

$293.9


$293.8


$0.1


%


$285.7


(2.7)

%


GAAP-based net income attributable to OpenText

$181.3


$26.4


$154.9


586.9

%


N/A


N/A



GAAP-based EPS, diluted

$0.66


$0.10


$0.56


560.0

%


N/A


N/A



Non-GAAP-based EPS, diluted (1)(2)

$0.80


$0.80


$—


%


$0.78


(2.5)

%


Adjusted EBITDA (1)

$314.8


$317.4


($2.6)


(0.8)

%


$306.3


(3.5)

%


Operating cash flows

$296.2


$280.3


$15.9


5.7

%


N/A


N/A



Free cash flows (1)

$268.8


$262.5


$6.2


2.4

%


N/A


N/A



 

Summary of Annual Results









(In millions, except per share data)

FY'21

FY'20

$ Change 

% Change 


FY'21 in CC*

% Change in CC*


Revenues:









Cloud services and subscriptions

$1,407.4


$1,157.7


$249.8


21.6

%


$1,389.7


20.0

%


Customer support

1,334.1


1,275.6


58.5


4.6

%


1,297.0


1.7

%


Total annual recurring revenues**

$2,741.5


$2,433.3


$308.2


12.7

%


$2,686.6


10.4

%


License

384.7


402.9


(18.1)


(4.5)

%


368.1


(8.6)

%


Professional service and other

259.9


273.6


(13.7)


(5.0)

%


250.0


(8.6)

%


Total revenues

$3,386.1


$3,109.7


$276.4


8.9

%


$3,304.8


6.3

%


GAAP-based operating income

$740.9


$503.5


$237.4


47.1

%


N/A


N/A



Non-GAAP-based operating income (1)

$1,230.0


$1,058.8


$171.2


16.2

%


$1,193.9


12.8

%


GAAP-based net income attributable to OpenText

$310.7


$234.2


$76.4


32.6

%


N/A


N/A



GAAP-based EPS, diluted

$1.14


$0.86


$0.28


32.6

%


N/A


N/A



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

$3.39


$2.89


$0.50


17.3

%


$3.28


13.5

%


Adjusted EBITDA (1)

$1,315.0


$1,148.1


$167.0


14.5

%


$1,278.2


11.3

%


Operating cash flows

$876.1


$954.5


($78.4)


(8.2)

%


N/A


N/A



Free cash flows (1)

$812.4


$881.8


($69.4)


(7.9)

%


N/A


N/A






(1)


Please see note 2 "Use of Non-GAAP Financial Measures" below.

(2)


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

Note:


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




*CC:


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

**


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

 

Dividend and Share Repurchases  

As part of our quarterly, non-cumulative cash dividend program, the Board declared on August 4, 2021, a cash dividend increase of 10% to $0.2209 per common share. The record date for this dividend is September 3, 2021 and the payment date is September 24, 2021. OpenText believes strongly in returning value to its shareholders and intends to maintain its dividend program. Any future declarations of dividends and the establishment of future record and payment dates are all subject to the final determination and discretion of the Board of Directors.

"Since Fiscal 2013, OpenText has delivered approximately $1.3 billion to shareholders through our dividend and share repurchase programs. In Fiscal 2021 we repurchased and cancelled 2.5 million common shares through our share repurchase plan, and in the next fiscal year, we expect to increase shareholder returns by allocating approximately 33% of free cash flows towards both our dividend and share repurchase programs," said Mark J. Barrenechea.

Quarterly Business Highlights

  • Key customer wins in the quarter included VMware, Wells Fargo, EDF, Cerner, Raytheon, Revlon, Froneri, DHL, Transport for London, Big Cart Holdings, California Department of State Hospitals, Enercon, Multibank Panama, Netherlands Police, Rapid Radiology and Services Australia
  • Cloud Editions 21.3 strengthens Information Management in the cloud at scale
  • OpenText partners with Google Cloud to extend availability of solution extensions for SAP® applications to the Asia Pacific Japan region
  • Industry-leading solutions from OpenText Complement RISE with SAP
  • OpenText launches Managed Detection and Response (MDR) Service
  • OpenText named a leader in Content Platforms by Forrester
  • OpenText recognized as an overall leader for fourth consecutive year in the 2021 Customer Communications Management Aspire Leaderboard
  • OpenText World Asia Pacific showcases OpenText Cloud Editions
  • Published our second Corporate Citizenship Report confirming our commitment to ESG

 

Summary of Quarterly Results







Q4 FY'21

Q3 FY'21

Q4 FY'20

% Change 

(Q4 FY'21 vs Q3 FY'21)


% Change

(Q4 FY'21 vs Q4 FY'20)


Revenue (millions)

$893.5


$832.9


$826.6


7.3

%


8.1

%


GAAP-based gross margin

69.6

%

68.6

%

68.5

%

100


bps

110


bps

Non-GAAP-based gross margin (1)

75.8

%

75.2

%

75.8

%

60


bps


bps

GAAP-based EPS, diluted

$0.66


$0.33


$0.10


100.0

%


560.0

%


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

$0.80


$0.75


$0.80


6.7

%


%


 

Summary of Annual Results






FY'21

FY'20

% Change


Revenue (millions)

$3,386.1


$3,109.7


8.9

%


GAAP-based gross margin

69.4

%

67.7

%

170


bps

Non-GAAP-based gross margin (1)

76.1

%

74.5

%

160


bps

GAAP-based EPS, diluted

$1.14


$0.86


32.6

%


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

$3.39


$2.89


17.3

%




(1) 

Please see note 2 "Use of Non-GAAP Financial Measures" below.

(2)

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

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 5, 2021 at 7:00 p.m. ET through 11:59 p.m. on August 19, 2021 and can be accessed by dialing 1-855-669-9658 (toll-free) or +1-604-674-8052 (international) and using passcode 7298 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-GAAP-based financial measures. Additionally, "off-cloud" is a term we use to describe license transactions.

About OpenText

OpenText, The Information Company™, enables organizations to gain insight through market leading information management solutions, powered by OpenText Cloud Editions. For more information about OpenText (NASDAQ: OTEX, TSX: OTEX) visit 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, 2022 (Fiscal 2022) on growth, future cloud growth and market share gains, future organic growth initiatives and deployment of capital, declaration of quarterly dividends, potential share repurchases pursuant to its Repurchase Plan, future tax rates, new platform and product offerings, scaling OpenText to new levels in Fiscal 2022 and beyond, and other matters, may contain words such as "anticipates", "expects", "intends", "plans", "believes", "seeks", "estimates", "may", "could", "would", "might", "will" and variations of these words or similar expressions are considered forward-looking statements or information under applicable securities laws. In addition, any information or statements that refer to expectations, beliefs, plans, projections, objectives, performance or other characterizations of future events or circumstances, including any underlying assumptions, are forward-looking, and based on our current expectations, forecasts and projections about the operating environment, economies and markets in which we operate. Forward-looking statements reflect our current estimates, beliefs and assumptions, which are based on management's perception of historic trends, current conditions and expected future developments, as well as other factors it believes are appropriate in the circumstances, such as certain assumptions about the economy, as well as market, financial and operational assumptions. Management's estimates, beliefs and assumptions are inherently subject to significant business, economic, competitive and other uncertainties and contingencies regarding future events and, as such, are subject to change. We can give no assurance that such estimates, beliefs and assumptions will prove to be correct. Such forward-looking statements involve known and unknown risks, uncertainties and other factors and assumptions that may cause the actual results, performance or achievements to differ materially which include, but are not limited to, actual and potential risks and uncertainties relating to the ultimate spread of COVID-19, the severity of the disease and the duration of the COVID-19 pandemic. For additional information with respect to risks and other factors which could occur, see the Company's Annual Report on Form 10-K, Quarterly Reports on Form 10-Q and other securities filings with the Securities and Exchange Commission (SEC) and other securities regulators. Readers are cautioned not to place undue reliance upon any such forward-looking statements, which speak only as of the date made. Unless otherwise required by applicable securities laws, the Company disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

OTEX-F

For more information, please contact:

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

Copyright ©2021 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, 2021


June 30, 2020

ASSETS




Cash and cash equivalents

$

1,607,306



$

1,692,850


Accounts receivable trade, net of allowance for credit losses of $22,151 as of June 30, 2021 and $20,906 as of June 30, 2020

438,547



466,357


Contract assets

25,344



29,570


Income taxes recoverable

32,312



61,186


Prepaid expenses and other current assets

98,551



136,436


Total current assets

2,202,060



2,386,399


Property and equipment

233,595



244,555


Operating lease right of use assets

234,532



207,869


Long-term contract assets

19,222



15,427


Goodwill

4,691,673



4,672,356


Acquired intangible assets

1,187,260



1,612,564


Deferred tax assets

796,738



911,565


Other assets

208,894



154,467


Long-term income taxes recoverable

35,362



29,620


Total assets

$

9,609,336



$

10,234,822


LIABILITIES AND SHAREHOLDERS' EQUITY




Current liabilities:




Accounts payable and accrued liabilities

$

423,592



$

373,314


Current portion of long-term debt

10,000



610,000


Operating lease liabilities

58,315



64,071


Deferred revenues

852,629



812,218


Income taxes payable

17,368



44,630


Total current liabilities

1,361,904



1,904,233


Long-term liabilities:




Accrued liabilities

28,830



34,955


Pension liability

74,511



73,129


Long-term debt

3,578,859



3,584,311


Long-term operating lease liabilities

224,453



217,165


Long-term deferred revenues

98,989



94,382


Long-term income taxes payable

34,113



171,200


Deferred tax liabilities

108,224



148,738


Total long-term liabilities

4,147,979



4,323,880


Shareholders' equity:




Share capital and additional paid-in capital




271,540,755 and 271,863,354 Common Shares issued and outstanding at June 30, 2021 and June 30, 2020, respectively; authorized Common Shares: unlimited

1,947,764



1,851,777


Accumulated other comprehensive income

66,238



17,825


Retained earnings

2,153,326



2,159,396


Treasury stock, at cost (1,567,664 and 622,297 shares at June 30, 2021 and June 30, 2020, respectively)

(69,386)



(23,608)


Total OpenText shareholders' equity

4,097,942



4,005,390


Non-controlling interests

1,511



1,319


Total shareholders' equity

4,099,453



4,006,709


Total liabilities and shareholders' equity

$

9,609,336



$

10,234,822


 

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,


2021


2020

Revenues:




Cloud services and subscriptions

$

360,160



$

332,618


Customer support

334,256



324,915


License

132,541



105,803


Professional service and other

66,570



63,276


Total revenues

893,527



826,612


Cost of revenues:




Cloud services and subscriptions

127,583



116,569


Customer support

32,938



32,568


License

4,315



3,404


Professional service and other

53,662



48,435


Amortization of acquired technology-based intangible assets

53,215



59,719


Total cost of revenues

271,713



260,695


Gross profit

621,814



565,917


Operating expenses:




Research and development

117,235



100,766


Sales and marketing

183,237



152,882


General and administrative

73,019



62,574


Depreciation

21,021



23,649


Amortization of acquired customer-based intangible assets

52,469



58,998


Special charges (recoveries)

3,152



75,849


Total operating expenses

450,133



474,718


Income from operations

171,681



91,199


Other income (expense), net

45,017



7,790


Interest and other related expense, net

(37,550)



(40,529)


Income before income taxes

179,148



58,460


Provision for (recovery of) income taxes

(2,215)



32,037


Net income for the period

$

181,363



$

26,423


Net (income) loss attributable to non-controlling interests

(80)



(31)


Net income attributable to OpenText

$

181,283



$

26,392


Earnings per share—basic attributable to OpenText

$

0.66



$

0.10


Earnings per share—diluted attributable to OpenText

$

0.66



$

0.10


Weighted average number of Common Shares outstanding—basic (in '000's)

272,892



271,717


Weighted average number of Common Shares outstanding—diluted (in '000's)

273,981



272,367


 

OPEN TEXT CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
(In thousands of U.S. dollars, except share and per share data)



Year Ended June 30,


2021


2020


2019

Revenues:






Cloud services and subscriptions

$

1,407,445



$

1,157,686



$

907,812


Customer support

1,334,062



1,275,586



1,247,915


License

384,711



402,851



428,092


Professional service and other

259,897



273,613



284,936


Total revenues

3,386,115



3,109,736



2,868,755


Cost of revenues:






Cloud services and subscriptions

481,818



449,940



383,993


Customer support

122,753



123,894



124,343


License

13,916



11,321



14,347


Professional service and other

197,183



212,903



224,635


Amortization of acquired technology-based intangible assets

218,796



205,717



183,385


Total cost of revenues

1,034,466



1,003,775



930,703


Gross profit

2,351,649



2,105,961



1,938,052


Operating expenses:






Research and development

421,447



370,411



321,836


Sales and marketing

622,221



585,044



518,035


General and administrative

263,521



237,532



207,909


Depreciation

85,265



89,458



97,716


Amortization of acquired customer-based intangible assets

216,544



219,559



189,827


Special charges (recoveries)

1,748



100,428



35,719


Total operating expenses

1,610,746



1,602,432



1,371,042


Income from operations

740,903



503,529



567,010


Other income (expense), net

61,434



(11,946)



10,156


Interest and other related expense, net

(151,567)



(146,378)



(136,592)


Income before income taxes

650,770



345,205



440,574


Provision for (recovery of) income taxes

339,906



110,837



154,937


Net income

$

310,864



$

234,368



$

285,637


Net (income) loss attributable to non-controlling interests

(192)



(143)



(136)


Net income attributable to OpenText

$

310,672



$

234,225



$

285,501


Earnings per share—basic attributable to OpenText

$

1.14



$

0.86



$

1.06


Earnings per share—diluted attributable to OpenText

$

1.14



$

0.86



$

1.06


Weighted average number of Common Shares outstanding—basic

(in '000's)

272,533



270,847



268,784


Weighted average number of Common Shares outstanding—diluted

(in '000's)

273,479



271,817



269,908


 

OPEN TEXT CORPORATION
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(In thousands of U.S. dollars)



Year Ended June 30,


2021


2020


2019

Net income

$

310,864



$

234,368



$

285,637


Other comprehensive income (loss)—net of tax:






Net foreign currency translation adjustments

42,440



(7,784)



(3,882)


Unrealized gain (loss) on cash flow hedges:






Unrealized gain (loss) - net of tax expense (recovery) effect of $1,532, ($599) and $6 for the year ended June 30, 2021, 2020 and 2019, respectively

4,246



(1,662)



16


(Gain) loss reclassified into net income - net of tax (expense) recovery effect of ($1,182), $355 and $539 for the year ended June 30, 2021, 2020 and 2019, respectively

(3,280)



985



1,494


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






Actuarial gain (loss) - net of tax expense (recovery) effect of $990, $1,219 and ($2,004) for the year ended June 30, 2021, 2020 and 2019, respectively

3,987



1,245



(7,421)


Amortization of actuarial (gain) loss into net income - net of tax (expense) recovery effect of $379, $520 and $292 for the year ended June 30, 2021, 2020 and 2019, respectively

1,020



917



272


Total other comprehensive income (loss) net

48,413



(6,299)



(9,521)


Total comprehensive income

359,277



228,069



276,116


Comprehensive (income) loss attributable to non-controlling interests

(192)



(143)



(136)


Total comprehensive income attributable to OpenText

$

359,085



$

227,926



$

275,980


 


OPEN TEXT CORPORATION
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
(In thousands of U.S. dollars and shares)



Common Shares and
Additional Paid in Capital


Treasury Stock


Retained

Earnings


Accumulated  Other

Comprehensive

Income


Non-Controlling Interests


Total


Shares


Amount


Shares


Amount


Balance as of June 30, 2018

267,651



$

1,707,073



(691)



$

(18,732)



$

1,994,235



$

33,645



$

1,037



$

3,717,258


Issuance of Common Shares
















Under employee stock option plans

1,472



35,626













35,626


Under employee stock purchase plans

711



21,835













21,835


Share-based compensation



26,770













26,770


Purchase of treasury stock





(726)



(26,499)









(26,499)


Issuance of treasury stock



(16,465)



614



16,465










Dividends declared

($0.6300 per Common Share)









(168,859)







(168,859)


Cumulative effect of ASU 2016-16









(26,780)







(26,780)


Cumulative effect of Topic 606









29,786







29,786


Other comprehensive income (loss) - net











(9,521)





(9,521)


Non-controlling interest



(625)











42



(583)


Net income









285,501





136



285,637


Balance as of June 30, 2019

269,834



$

1,774,214



(803)



$

(28,766)



$

2,113,883



$

24,124



$

1,215



$

3,884,670


Issuance of Common Shares
















Under employee stock option plans

1,530



41,282













41,282


Under employee stock purchase plans

499



17,757













17,757


Share-based compensation



29,532













29,532


Purchase of treasury stock





(300)



(12,424)









(12,424)


Issuance of treasury stock



(11,008)



481



17,582









6,574


Dividends declared

($0.6984 per Common Share)









(188,712)







(188,712)


Other comprehensive income (loss) - net











(6,299)





(6,299)


Non-controlling interest













(39)



(39)


Net income









234,225





143



234,368


Balance as of June 30, 2020

271,863



$

1,851,777



(622)



$

(23,608)



$

2,159,396



$

17,825



$

1,319



$

4,006,709


Adoption of ASU 2016-13 - cumulative effect, net









(2,450)







(2,450)


Issuance of Common Shares
















Under employee stock option plans

1,605



49,565













49,565


Under employee stock purchase plans

573



22,307



193



6,690









28,997


Share-based compensation



51,969













51,969


Purchase of treasury stock





(1,455)



(64,847)









(64,847)


Issuance of treasury stock



(12,379)



316



12,379










Repurchase of Common Shares

(2,500)



(15,475)







(103,630)







(119,105)


Dividends declared

($0.7770 per Common Share)









(210,662)







(210,662)


Other comprehensive income (loss) - net











48,413





48,413


Net income









310,672





192



310,864


Balance as of June 30, 2021

271,541



$

1,947,764



(1,568)



$

(69,386)



$

2,153,326



$

66,238



$

1,511



$

4,099,453


 

OPEN TEXT CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands of U.S. dollars)
(unaudited)



Three Months Ended June 30,


2021


2020

Cash flows from operating activities:




Net income for the period

$

181,363



$

26,423


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




Depreciation and amortization of intangible assets

126,705



142,366


Share-based compensation expense

13,350



8,002


Pension expense

1,946



1,479


Amortization of debt issuance costs

1,153



1,130


Accelerated amortization of right of use assets



36,864


Loss on sale and write down of property and equipment

792



9,714


Deferred taxes

(7,805)



14,677


Share in net (income) loss of equity investees

(42,877)



(2,225)


Changes in operating assets and liabilities:




Accounts receivable

(26,118)



(1,689)


Contract assets

(10,298)



(13,636)


Prepaid expenses and other current assets

40,261



458


Income taxes

(23,169)



(478)


Accounts payable and accrued liabilities

53,415



72,876


Deferred revenue

(23,305)



(12,974)


Other assets

11,149



(6,309)


Operating lease assets and liabilities, net

(373)



3,572


Net cash provided by operating activities

296,189



280,250


Cash flows from investing activities:




Additions of property and equipment

(27,408)



(17,704)


Purchase of Dynamic Solutions Group Inc.

(600)




Other investing activities

(2,550)



(2,783)


Net cash used in investing activities

(30,558)



(20,487)


Cash flows from financing activities:




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

34,287



13,493


Repayment of long-term debt and Revolver

(2,500)



(2,500)


Debt issuance costs



(3,636)


Repurchase of Common Shares

(119,105)




Payments of dividends to shareholders

(54,374)



(47,335)


Net cash provided by (used in) financing activities

(141,692)



(39,978)


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

7,181



19,882


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

131,120



239,667


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

1,478,680



1,457,596


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

$

1,609,800



$

1,697,263






Reconciliation of cash, cash equivalents and restricted cash:

June 30, 2021


June 30, 2020

Cash and cash equivalents

$

1,607,306



$

1,692,850


Restricted cash (1)

2,494



4,413


Total cash, cash equivalents and restricted cash

$

1,609,800



$

1,697,263



(1) Restricted cash is classified under the Prepaid expenses and other current assets and Other assets line items on the Consolidated Balance Sheets.

 

OPEN TEXT CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands of U.S. dollars)



Year Ended June 30,


2021


2020


2019

Cash flows from operating activities:






Net income

$

310,864



$

234,368



$

285,637


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






Depreciation and amortization of intangible assets

520,605



514,734



470,928


Share-based compensation expense

51,969



29,532



26,770


Pension expense

6,616



5,802



4,624


Amortization of debt issuance costs

4,548



4,633



4,330


Accelerated amortization of right of use assets



36,864




Loss on extinguishment of debt



17,854




Loss on sale and write down of property and equipment

2,771



9,714



9,438


Deferred taxes

73,039



51,388



47,425


Share in net (income) loss of equity investees

(62,897)



(8,700)



(13,668)


Changes in operating assets and liabilities:






Accounts receivable

60,954



84,499



75,508


Contract assets

(39,333)



(40,301)



(37,623)


Prepaid expenses and other current assets

37,733



(6,897)



(819)


Income taxes

(140,763)



(35,086)



27,291


Accounts payable and accrued liabilities

26,088



30,613



(21,732)


Deferred revenue

39,295



25,306



(1,827)


Other assets

11,914



1,127



(4)


Operating lease assets and liabilities, net

(27,283)



(914)




Net cash provided by operating activities

876,120



954,536



876,278


Cash flows from investing activities:






Additions of property and equipment

(63,675)



(72,709)



(63,837)


Purchase of XMedius

444



(73,335)




Purchase of Carbonite, Inc., net of cash and restricted cash acquired



(1,305,097)




Purchase of Dynamic Solutions Group Inc.

(971)



(4,149)




Purchase of Catalyst Repository Systems Inc.





(70,800)


Purchase of Liaison Technologies, Inc.





(310,644)


Purchase of Guidance Software, Inc., net of cash acquired





(2,279)


Other investing activities

(4,568)



(14,127)



(16,966)


Net cash used in investing activities

(68,770)



(1,469,417)



(464,526)


Cash flows from financing activities:






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

80,067



66,600



57,889


Proceeds from long-term debt and Revolver



3,150,000




Repayment of long-term debt and Revolver

(610,000)



(1,713,631)



(10,000)


Debt extinguishment costs



(11,248)




Debt issuance costs



(21,806)



(322)


Repurchase of Common Shares

(119,105)






Purchase of treasury stock

(64,847)



(12,424)



(26,499)


Purchase of non-controlling interest





(583)


Payments of dividends to shareholders

(210,662)



(188,712)



(168,859)


Net cash provided by (used in) financing activities

(924,547)



1,268,779



(148,374)


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

29,734



(178)



(3,826)


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

(87,463)



753,720



259,552


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

1,697,263



943,543



683,991


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

$

1,609,800



$

1,697,263



$

943,543


 

OPEN TEXT CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands of U.S. dollars)


Reconciliation of cash, cash equivalents and restricted cash:

June 30, 2021


June 30, 2020


June 30, 2019

Cash and cash equivalents

$

1,607,306



$

1,692,850



$

941,009


Restricted cash (1)

2,494



4,413



2,534


Total cash, cash equivalents and restricted cash

$

1,609,800



$

1,697,263



$

943,543








(1) Restricted cash is classified under the Prepaid expenses and other current assets and Other assets line items on the Consolidated Balance Sheets.

 


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


Non-GAAP-based net income and Non-GAAP-based EPS, attributable to OpenText, are consistently calculated as GAAP-based net income or earnings per share, attributable to OpenText, on a diluted basis, excluding the effects of 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 GAAP-based income from operations, excluding the amortization of acquired intangible assets, special charges (recoveries), and share-based compensation expense.


Adjusted earnings before interest, taxes, depreciation and amortization (Adjusted EBITDA) is consistently calculated as GAAP-based net income, attributable to OpenText, excluding interest income (expense), provision for income taxes, depreciation and amortization of acquired intangible assets, other income (expense), share-based compensation and special charges (recoveries). Adjusted EBITDA margin is calculated as adjusted EBITDA expressed as a percentage of total revenue.


The Company's management believes that the presentation of the above defined Non-GAAP financial measures provides useful information to investors because they portray the financial results of the Company before the impact of certain non-operational charges. The use of the term "non-operational charge" is defined for this purpose as an expense that does not impact the ongoing operating decisions taken by the Company's management. These items are excluded based upon the way the Company's management evaluates the performance of the Company's business for use in the Company's internal reports and are not excluded in the sense that they may be used under U.S. GAAP.


The Company does not acquire businesses on a predictable cycle, and therefore believes that the presentation of Non-GAAP measures, which in certain cases adjust for the impact of amortization of intangible assets and the related tax effects that are primarily related to acquisitions, will provide readers of financial statements with a more consistent basis for comparison across accounting periods and be more useful in helping readers understand the Company's operating results and underlying operational trends. Additionally, the Company has engaged in various restructuring activities over the past several years, primarily due to acquisitions and most recently in response to the COVID-19 pandemic, 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-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, 2021

(In thousands, except for per share data)


Three Months Ended June 30, 2021


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

$

127,583



$

(935)


(1)

$

126,648



Customer support

32,938



(505)


(1)

32,433



Professional service and other

53,662



(698)


(1)

52,964



Amortization of acquired technology-based intangible assets

53,215



(53,215)


(2)



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

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

621,814


69.6%

55,353


(3)

677,167


75.8%

Operating expenses







Research and development

117,235



(2,664)


(1)

114,571



Sales and marketing

183,237



(4,718)


(1)

178,519



General and administrative

73,019



(3,830)


(1)

69,189



Amortization of acquired customer-based intangible assets

52,469



(52,469)


(2)



Special charges (recoveries)

3,152



(3,152)


(4)



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

171,681



122,186


(5)

293,867



Other income (expense), net

45,017



(45,017)


(6)



Provision for (recovery of) income taxes

(2,215)



38,099


(7)

35,884



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

181,283



39,070


(8)

220,353



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

$

0.66



$

0.14


(8)

$

0.80





(1)

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



(2)

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



(3)

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



(4)

Adjustment relates to the exclusion of special charges (recoveries) from our Non-GAAP-based operating expenses as special charges (recoveries) are generally incurred in the periods relevant to an acquisition and include certain charges or recoveries that are not indicative or related to continuing operations, and are therefore excluded from our internal analysis of operating results.



(5)

  GAAP-based and Non-GAAP-based income from operations stated in dollars.



(6)

Adjustment relates to the exclusion of other income (expense) from our Non-GAAP-based operating expenses as other income (expense) generally relates to the transactional impact of foreign exchange and is generally not indicative or related to continuing operations and is therefore excluded from our internal analysis of operating results. Other income (expense) also includes our share of income (losses) from our holdings in investments as a limited partner. We do not actively trade equity securities in these privately held companies nor do we plan our ongoing operations based around any anticipated fundings or distributions from these investments. We exclude gains and losses on these investments as we do not believe they are reflective of our ongoing business and operating results.





(7)

Adjustment relates to differences between the GAAP-based tax recovery rate of approximately 1% and a Non-GAAP-based tax rate of approximately 14%; these rate differences are due to the income tax effects of items that are excluded for the purpose of calculating Non-GAAP-based adjusted net income. Such excluded items include amortization, share-based compensation, special charges (recoveries) and other income (expense), net. Also excluded are tax benefits/expense items unrelated to current period income such as changes in reserves for tax uncertainties and valuation allowance reserves, and "book to return" adjustments for tax return filings and tax assessments. Included is the amount of net tax benefits arising from the internal reorganization that occurred in Fiscal 2017 assumed to be allocable to the current period based on the forecasted utilization period. In arriving at our Non-GAAP-based tax rate of approximately 14%, we analyzed the individual adjusted expenses and took into consideration the impact of statutory tax rates from local jurisdictions incurring the expense.



(8)

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

 


Three Months Ended June 30, 2021



Per share diluted

GAAP-based net income, attributable to OpenText

$

181,283


$

0.66


Add:



Amortization

105,684


0.39


Share-based compensation

13,350


0.05


Special charges (recoveries)

3,152


0.01


Other (income) expense, net

(45,017)


(0.16)


GAAP-based provision for (recovery of) income taxes

(2,215)


(0.02)


Non-GAAP-based provision for income taxes

(35,884)


(0.13)


Non-GAAP-based net income, attributable to OpenText

$

220,353


$

0.80



 

Reconciliation of Adjusted EBITDA



Three Months Ended June 30, 2021

GAAP-based net income, attributable to OpenText

$

181,283


Add:


Provision for (recovery of) income taxes

(2,215)


Interest and other related expense, net

37,550


Amortization of acquired technology-based intangible assets

53,215


Amortization of acquired customer-based intangible assets

52,469


Depreciation

21,021


Share-based compensation

13,350


Special charges (recoveries)

3,152


Other (income) expense, net

(45,017)


Adjusted EBITDA

$

314,808




GAAP-based net income margin

20.3

%

Adjusted EBITDA margin

35.2

%

 

Reconciliation of Free cash flows



Three Months Ended June 30, 2021

GAAP-based cash flows provided by operating activities

$

296,189


Add:


Capital expenditures (1)

(27,408)


Free cash flows

$

268,781




(1) Defined as "Additions of property and equipment" in the Consolidated Statements of Cash Flows.

 


Reconciliation of selected GAAP-based measures to Non-GAAP-based measures

for the year ended June 30, 2021

(In thousands, except for per share data)


Year Ended June 30, 2021


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

$

481,818



$

(3,419)


(1)

$

478,399



Customer support

122,753



(1,910)


(1)

120,843



Professional service and other

197,183



(2,565)


(1)

194,618



Amortization of acquired technology-based intangible assets

218,796



(218,796)


(2)



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

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

2,351,649


69.4%

226,690


(3)

2,578,339


76.1%

Operating expenses







Research and development

421,447



(9,859)


(1)

411,588



Sales and marketing

622,221



(18,312)


(1)

603,909



General and administrative

263,521



(15,904)


(1)

247,617



Amortization of acquired customer-based intangible assets

216,544



(216,544)


(2)



Special charges (recoveries)

1,748



(1,748)


(4)



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

740,903



489,057


(5)

1,229,960



Other income (expense), net

61,434



(61,434)


(6)



Provision for (recovery of) income taxes

339,906



(188,931)


(7)

150,975



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

310,672



616,554


(8)

927,226



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

$

1.14



$

2.25


(8)

$

3.39





(1)

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



(2)

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



(3)

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



(4)

Adjustment relates to the exclusion of special charges (recoveries) from our Non-GAAP-based operating expenses as special charges (recoveries) are generally incurred in the periods relevant to an acquisition and include certain charges or recoveries that are not indicative or related to continuing operations, and are therefore excluded from our internal analysis of operating results.



(5)

GAAP-based and Non-GAAP-based income from operations stated in dollars.



(6)

Adjustment relates to the exclusion of other income (expense) from our Non-GAAP-based operating expenses as other income (expense) generally relates to the transactional impact of foreign exchange and is generally not indicative or related to continuing operations and is therefore excluded from our internal analysis of operating results. Other income (expense) also includes our share of income (losses) from our holdings in 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 52% and a Non-GAAP-based tax rate of approximately 14%; these rate differences are due to the income tax effects of items that are excluded for the purpose of calculating Non-GAAP-based adjusted net income. Such excluded items include amortization, share-based compensation, special charges (recoveries) and other income (expense), net. Also excluded are tax benefits/expense items unrelated to current period income such as changes in reserves for tax uncertainties and valuation allowance reserves, and "book to return" adjustments for tax return filings and tax assessments. Included is the amount of net tax benefits arising from the internal reorganization that occurred in Fiscal 2017 assumed to be allocable to the current period based on the forecasted utilization period. In arriving at our Non-GAAP-based tax rate of approximately 14%, we analyzed the individual adjusted expenses and took into consideration the impact of statutory tax rates from local jurisdictions incurring the expense. The GAAP-based tax provision rate for the year ended June 30, 2021 includes the income tax provision charge from the IRS settlement partially offset by a tax benefit from the release of unrecognized tax benefits due to the conclusion of relevant tax audits that was recognized during the second quarter of Fiscal 2021.



(8)

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

 


Year Ended June 30, 2021



Per share diluted

GAAP-based net income, attributable to OpenText

$

310,672


$

1.14


Add:



Amortization

435,340


1.59


Share-based compensation

51,969


0.19


Special charges (recoveries)

1,748


0.01


Other (income) expense, net

(61,434)


(0.22)


GAAP-based provision for (recovery of) income taxes

339,906


1.23


Non-GAAP-based provision for income taxes

(150,975)


(0.55)


Non-GAAP-based net income, attributable to OpenText

$

927,226


$

3.39


 

Reconciliation of Adjusted EBITDA



Year Ended June 30, 2021

GAAP-based net income, attributable to OpenText

$

310,672


Add:


Provision for (recovery of) income taxes

339,906


Interest and other related expense, net

151,567


Amortization of acquired technology-based intangible assets

218,796


Amortization of acquired customer-based intangible assets

216,544


Depreciation

85,265


Share-based compensation

51,969


Special charges (recoveries)

1,748


Other (income) expense, net

(61,434)


Adjusted EBITDA

$

1,315,033




GAAP-based net income margin

9.2

%

Adjusted EBITDA margin

38.8

%

 

Reconciliation of Free cash flows



Year Ended June 30, 2021

GAAP-based cash flows provided by operating activities

$

876,120


Add:


Capital expenditures (1)

(63,675)


Free cash flows

$

812,445




(1) Defined as "Additions of property and equipment" in the Consolidated Statements of Cash Flows.

 

Reconciliation of selected GAAP-based measures to Non-GAAP-based measures

for the three months ended March 31, 2021

(In thousands, except for per share data)


Three Months Ended March 31, 2021


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

$

123,729



$

(505)


(1)

$

123,224



Customer support

30,953



(464)


(1)

30,489



Professional service and other

50,321



(684)


(1)

49,637



Amortization of acquired technology-based intangible assets

53,453



(53,453)


(2)



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

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

571,665


68.6%

55,106


(3)

626,771


75.2%

Operating expenses







Research and development

110,071



(2,146)


(1)

107,925



Sales and marketing

158,687



(4,580)


(1)

154,107



General and administrative

71,548



(3,978)


(1)

67,570



Amortization of acquired customer-based intangible assets

54,156



(54,156)


(2)



Special charges (recoveries)

2,846



(2,846)


(4)



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

152,396



122,812


(5)

275,208



Other income (expense), net

8,283



(8,283)


(6)



Provision for (recovery of) income taxes

31,818



1,485


(7)

33,303



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

91,490



113,044


(8)

204,534



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

$

0.33



$

0.42


(8)

$

0.75





(1)

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



(2)

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



(3)

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



(4)

Adjustment relates to the exclusion of special charges (recoveries) from our Non-GAAP-based operating expenses as special charges (recoveries) are generally incurred in the periods relevant to an acquisition and include certain charges or recoveries that are not indicative or related to continuing operations, and are therefore excluded from our internal analysis of operating results.



(5)

GAAP-based and Non-GAAP-based income from operations stated in dollars.



(6)

Adjustment relates to the exclusion of other income (expense) from our Non-GAAP-based operating expenses as other income (expense) generally relates to the transactional impact of foreign exchange and is generally not indicative or related to continuing operations and is therefore excluded from our internal analysis of operating results. Other income (expense) also includes our share of income (losses) from our holdings in 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 that occurred in Fiscal 2017 assumed to be allocable to the current period based on the forecasted utilization period. In arriving at our Non-GAAP-based tax rate of approximately 14%, we analyzed the individual adjusted expenses and took into consideration the impact of statutory tax rates from local jurisdictions incurring the expense.



(8)

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

 


Three Months Ended March 31, 2021



Per share diluted

GAAP-based net income, attributable to OpenText

$

91,490


$

0.33


Add:



Amortization

107,609


0.39


Share-based compensation

12,357


0.05


Special charges (recoveries)

2,846


0.01


Other (income) expense, net

(8,283)


(0.03)


GAAP-based provision for (recovery of) income taxes

31,818


0.12


Non-GAAP-based provision for income taxes

(33,303)


(0.12)


Non-GAAP-based net income, attributable to OpenText

$

204,534


$

0.75


 

Reconciliation of Adjusted EBITDA



Three Months Ended March 31, 2021

GAAP-based net income, attributable to OpenText

$

91,490


Add:


Provision for (recovery of) income taxes

31,818


Interest and other related expense, net

37,333


Amortization of acquired technology-based intangible assets

53,453


Amortization of acquired customer-based intangible assets

54,156


Depreciation

21,961


Share-based compensation

12,357


Special charges (recoveries)

2,846


Other (income) expense, net

(8,283)


Adjusted EBITDA

$

297,131




GAAP-based net income margin

11.0

%

Adjusted EBITDA margin

35.7

%

 

Reconciliation of Free cash flows



Three Months Ended March 31, 2021

GAAP-based cash flows provided by operating activities

$

63,572


Add:


Capital expenditures (1)

(13,311)


Free cash flows

$

50,261




(1) Defined as "Additions of property and equipment" in the Consolidated Statements of Cash Flows.

 


Reconciliation of selected GAAP-based measures to Non-GAAP-based measures

for the three months ended June 30, 2020

(In thousands, except for per share data)


Three Months Ended June 30, 2020


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

$

116,569



$

(490)


(1)

$

116,079



Customer support

32,568



(310)


(1)

32,258



Professional service and other

48,435



(377)


(1)

48,058



Amortization of acquired technology-based intangible assets

59,719



(59,719)


(2)



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

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

565,917


68.5

%

60,896


(3)

626,813


75.8

%

Operating expenses







Research and development

100,766



(1,590)


(1)

99,176



Sales and marketing

152,882



(2,575)


(1)

150,307



General and administrative

62,574



(2,660)


(1)

59,914



Amortization of acquired customer-based intangible assets

58,998



(58,998)


(2)



Special charges (recoveries)

75,849



(75,849)


(4)



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

91,199



202,568


(5)

293,767



Other income (expense), net

7,790



(7,790)


(6)



Provision for (recovery of) income taxes

32,037



3,416


(7)

35,453



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

26,392



191,362


(8)

217,754



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

$

0.10



$

0.70


(8)

$

0.80




















(1)

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



(2)

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



(3)

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



(4)

Adjustment relates to the exclusion of special charges (recoveries) from our Non-GAAP-based operating expenses as special charges (recoveries) are generally incurred in the periods relevant to an acquisition and include certain charges or recoveries that are not indicative or related to continuing operations, and are therefore excluded from our internal analysis of operating results.



(5)

GAAP-based and Non-GAAP-based income from operations stated in dollars.



(6)

Adjustment relates to the exclusion of other income (expense) from our Non-GAAP-based operating expenses as other income (expense) generally relates to the transactional impact of foreign exchange and is generally not indicative or related to continuing operations and is therefore excluded from our internal analysis of operating results. Other income (expense) also includes our share of income (losses) from our holdings in 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 55% and a Non-GAAP-based tax rate of approximately 14%; these rate differences are due to the income tax effects of items that are excluded for the purpose of calculating Non-GAAP-based adjusted net income. Such excluded items include amortization, share-based compensation, special charges (recoveries) and other income (expense), net. Also excluded are tax benefits/expense items unrelated to current period income such as changes in reserves for tax uncertainties and valuation allowance reserves, and "book to return" adjustments for tax return filings and tax assessments. Included is the amount of net tax benefits arising from the internal reorganization that occurred in Fiscal 2017 assumed to be allocable to the current period based on the forecasted utilization period. In arriving at our Non-GAAP-based tax rate of approximately 14%, we analyzed the individual adjusted expenses and took into consideration the impact of statutory tax rates from local jurisdictions incurring the expense.



(8)

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

 


Three Months Ended June 30, 2020



Per share diluted

GAAP-based net income, attributable to OpenText

$

26,392


$

0.10


Add:



Amortization

118,717


0.44


Share-based compensation

8,002


0.03


Special charges (recoveries)

75,849


0.28


Other (income) expense, net

(7,790)


(0.03)


GAAP-based provision for (recovery of) income taxes

32,037


0.12


Non-GAAP-based provision for income taxes

(35,453)


(0.14)


Non-GAAP-based net income, attributable to OpenText

$

217,754


$

0.80


 

Reconciliation of Adjusted EBITDA



Three Months Ended June 30, 2020

GAAP-based net income, attributable to OpenText

$

26,392


Add:


Provision for (recovery of) income taxes

32,037


Interest and other related expense, net

40,529


Amortization of acquired technology-based intangible assets

59,719


Amortization of acquired customer-based intangible assets

58,998


Depreciation

23,649


Share-based compensation

8,002


Special charges (recoveries)

75,849


Other (income) expense, net

(7,790)


Adjusted EBITDA

$

317,385




GAAP-based net income margin

3.2

%

Adjusted EBITDA margin

38.4

%

 

Reconciliation of Free cash flows



Three Months Ended June 30, 2020

GAAP-based cash flows provided by operating activities

$

280,250


Add:


Capital expenditures (1)

(17,704)


Free cash flows

$

262,546




(1) Defined as "Additions of property and equipment" in the Consolidated Statements of Cash Flows.


 

Reconciliation of selected GAAP-based measures to Non-GAAP-based measures

for the year ended June 30, 2020

(In thousands, except for per share data)


Year Ended June 30, 2020


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

$

449,940



$

(1,642)


(1)

$

448,298



Customer support

123,894



(1,207)


(1)

122,687



Professional service and other

212,903



(1,294)


(1)

211,609



Amortization of acquired technology-based intangible assets

205,717



(205,717)


(2)



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

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

2,105,961


67.7

%

209,860


(3)

2,315,821


74.5

%

Operating expenses







Research and development

370,411



(5,309)


(1)

365,102



Sales and marketing

585,044



(9,335)


(1)

575,709



General and administrative

237,532



(10,745)


(1)

226,787



Amortization of acquired customer-based intangible assets

219,559



(219,559)


(2)



Special charges (recoveries)

100,428



(100,428)


(4)



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

503,529



555,236


(5)

1,058,765



Other income (expense), net

(11,946)



11,946


(6)



Provision for (recovery of) income taxes

110,837



16,897


(7)

127,734



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

234,225



550,285


(8)

784,510



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

$

0.86



$

2.03


(8)

$

2.89




















(1)

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



(2)

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



(3)

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



(4)

Adjustment relates to the exclusion of special charges (recoveries) from our Non-GAAP-based operating expenses as special charges (recoveries) are generally incurred in the periods relevant to an acquisition and include certain charges or recoveries that are not indicative or related to continuing operations, and are therefore excluded from our internal analysis of operating results.



(5)

GAAP-based and Non-GAAP-based income from operations stated in dollars.



(6)

Adjustment relates to the exclusion of other income (expense) from our Non-GAAP-based operating expenses as other income (expense) generally relates to the transactional impact of foreign exchange and is generally not indicative or related to continuing operations and is therefore excluded from our internal analysis of operating results. Other income (expense) also includes our share of income (losses) from our holdings in 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 32% and a Non-GAAP-based tax rate of approximately 14%; these rate differences are due to the income tax effects of items that are excluded for the purpose of calculating Non-GAAP-based adjusted net income. Such excluded items include amortization, share-based compensation, special charges (recoveries) and other income (expense), net. Also excluded are tax benefits/expense items unrelated to current period income such as changes in reserves for tax uncertainties and valuation allowance reserves, and "book to return" adjustments for tax return filings and tax assessments. Included is the amount of net tax benefits arising from the internal reorganization that occurred in Fiscal 2017 assumed to be allocable to the current period based on the forecasted utilization period. In arriving at our Non-GAAP-based tax rate of approximately 14%, we analyzed the individual adjusted expenses and took into consideration the impact of statutory tax rates from local jurisdictions incurring the expense.



(8)

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

 


Year Ended June 30, 2020



Per share diluted

GAAP-based net income, attributable to OpenText

$

234,225


$

0.86


Add:



Amortization

425,276


1.56


Share-based compensation

29,532


0.11


Special charges (recoveries)

100,428


0.37


Other (income) expense, net

11,946


0.04


GAAP-based provision for (recovery of) income taxes

110,837


0.41


Non-GAAP-based provision for income taxes

(127,734)


(0.46)


Non-GAAP-based net income, attributable to OpenText

$

784,510


$

2.89


 

Reconciliation of Adjusted EBITDA



Year Ended June 30, 2020

GAAP-based net income, attributable to OpenText

$

234,225


Add:


Provision for (recovery of) income taxes

110,837


Interest and other related expense, net

146,378


Amortization of acquired technology-based intangible assets

205,717


Amortization of acquired customer-based intangible assets

219,559


Depreciation

89,458


Share-based compensation

29,532


Special charges (recoveries)

100,428


Other (income) expense, net

11,946


Adjusted EBITDA

$

1,148,080




GAAP-based net income margin

7.5

%

Adjusted EBITDA margin

36.9

%

 

Reconciliation of Free cash flows



Year Ended June 30, 2020

GAAP-based cash flows provided by operating activities

$

954,536


Add:


Capital expenditures (1)

(72,709)


Free cash flows

$

881,827




(1) Defined as "Additions of property and equipment" in the Consolidated Statements of Cash Flows.

 


(3)

The following tables provide a composition of our major currencies for revenue and expenses, expressed as a percentage, for the three months and year ended June 30, 2021 and 2020:




Three Months Ended June 30, 2021


Three Months Ended June 30, 2020

Currencies

% of Revenue

% of Expenses(1)


% of Revenue

% of Expenses(1)

EURO

24

%

14

%


22

%

13

%

GBP

5

%

5

%


4

%

5

%

CAD

3

%

13

%


3

%

8

%

USD

60

%

53

%


63

%

57

%

Other

8

%

15

%


8

%

17

%

Total

100

%

100

%


100

%

100

%



Year Ended June 30, 2021


Year Ended June 30, 2020

Currencies

% of Revenue

% of Expenses(1)


% of Revenue

% of Expenses(1)

EURO

23

%

14

%


22

%

14

%

GBP

5

%

5

%


5

%

6

%

CAD

3

%

11

%


3

%

9

%

USD

61

%

54

%


61

%

55

%

Other

8

%

16

%


9

%

16

%

Total

100

%

100

%


100

%

100

%



(1)

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

 

Cision View original content:https://www.prnewswire.com/news-releases/opentext-reports-fourth-quarter-and-fiscal-year-2021-financial-results-301349782.html

SOURCE Open Text Corporation

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