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OpenText Reports Fourth Quarter and Fiscal Year 2023 Financial Results

08/03/2023

Reports Record Total Revenues of $4.5 Billion with 28% Growth

Fiscal 2023 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

$4,485

$4,617


$3,615

$3,718


$1,700

$1,739

+28.4 %

+32.2 %


+26.2 %

+29.7 %


+10.8 %

+13.3 %

Annual Recurring Revenues represent 81% of Total Revenues

 

  • Total revenues of $4.5 billion up 28.4% Y/Y or up 32.2% Y/Y in constant currency (CC)
  • Annual Recurring Revenues (ARR) of $3.6 billion, up 26.2% Y/Y or up 29.7% Y/Y in CC
  • Cloud revenues of $1.7 billion up 10.8% Y/Y or up 13.3% Y/Y in CC
  • FY'23 enterprise cloud bookings(1) of $528 million, up 9.5% Y/Y
  • 10 consecutive quarters of cloud and ARR organic growth in constant currency
  • Operating cash flows were $779 million and free cash flows(2) were $655 million
  • GAAP-based net income of $150 million, down 62.1% Y/Y, margin of 3.4%
  • Adjusted EBITDA(2) of $1.5 billion, margin of 32.8% while making key investments in cloud, AI and Security
  • Record capital returns of $260 million via dividends
  • GAAP-based diluted earnings per share (EPS) of $0.56, Non-GAAP diluted EPS(2) of $3.29
  • Increased annualized dividend to $1.00 per share, subject to quarterly Board approval. Declared quarterly dividend of $0.25 per share.
  • Includes Micro Focus results from February 1, 2023 to June 30, 2023

 

Fiscal 2023 Fourth Quarter Highlights

Total Revenues

(in millions)


Annual Recurring Revenues

(in millions)


Cloud Revenues

(in millions)

Reported

Constant
Currency


Reported

Constant
Currency


Reported

Constant
Currency

$1,491

$1,502


$1,157

$1,167


$452

$455

+65.2 %

+66.5 %


+56.4 %

+57.7 %


+9.7 %

+10.6 %

Annual Recurring Revenues represent 78% of Total Revenues

 

  • Total revenues of $1.5 billion, up 65.2% Y/Y or up 66.5% in CC
  • Annual recurring revenues of $1.2 billion, up 56.4% Y/Y or up 57.7% in CC
  • Cloud revenues of $452 million, up 9.7% Y/Y or up 10.6% Y/Y in CC
  • Quarterly enterprise cloud bookings(1) of $164 million, up 12.3%
  • Operating cash flows were $115 million and free cash flows(2) were $91 million
  • GAAP-based net loss of ($49) million, down (147.7)% Y/Y, margin of (3.3)%, due to acquisition expenses
  • Adjusted EBITDA(2) of $463 million, margin of 31.0%
  • GAAP-based diluted earnings per share (EPS) of ($0.18), Non-GAAP diluted EPS(2) of $0.91

 

WATERLOO, ON, Aug. 3, 2023 /PRNewswire/ -- Open Text Corporation (NASDAQ: OTEX), (TSX: OTEX), today announced its financial results for the fourth quarter and year ended June 30, 2023.

"OpenText Fiscal 2023 progress and results are exceptional and record setting, with 28% total revenue growth. OpenText delivered record total revenues of $4.5 billion of which 81%, or $3.6 billion, is annually recurring," said Mark J. Barrenechea, OpenText CEO & CTO. "Our mission to empower individuals and organizations of all sizes to achieve the Information Advantage. Looking ahead, Fiscal 2024 will be another year of outstanding growth for OpenText led by Cloud and our expanded Information Management mission, with Micro Focus products contributing organic growth."

"OpenText holds a distinctive position as a leader in Information Management. Our comprehensive range of products, effective go-to-market strategies, and talented employees position us favorably for sustained growth and profitability," added Mr. Barrenechea. "Today we are announcing opentext.ai and OpenText Aviator™, our vision and initial AI products, to be the trusted partner for our customer's AI journey. I am extremely optimistic about the future of OpenText, and helping our customers unlock the value of their information."

"OpenText delivered an exceptional operating performance in Fiscal 2023 with adjusted EBITDA of $1.5 billion and free cash flows of $655 million. Our balance sheet and liquidity position remain strong with approximately $1.2 billion in cash as of June 30, 2023, and a net leverage ratio of 3.5x," said Madhu Ranganathan, OpenText EVP, CFO. "The value we are generating through the OpenText Business System of Total Growth is truly remarkable. We accelerated our initial integration of Micro Focus operations ahead of schedule, we remain on track to meet our near-term and long-term operating goals." 

(1)

Enterprise cloud bookings is defined as the total value from cloud services and subscription contracts, entered into in the fiscal year that are new, committed and incremental to our existing contracts, entered into with our enterprise based customers.

(2)

Please see Note 2 "Use of Non-GAAP Financial Measures" to the consolidated financial statements below.

 

Financial Highlights for Fiscal 2023 and Q4 with Year Over Year Comparisons

Summary of Annual Results









(In millions, except per share data)

FY'23

FY'22

$ Change 

% Change 


FY'23  
in CC*

% Change
in CC*


Revenues:









Cloud services and subscriptions

$1,700.4

$1,535.0

$165.4

10.8 %


$1,739.1

13.3 %


Customer support

1,915.0

1,331.0

$584.1

43.9 %


1,978.8

48.7 %


Total annual recurring revenues**

$3,615.5

$2,866.0

$749.5

26.2 %


$3,717.9

29.7 %


License

539.0

358.4

$180.7

50.4 %


555.4

55.0 %


Professional service and other

330.5

269.5

$61.0

22.6 %


344.1

27.7 %


Total revenues

$4,485.0

$3,493.8

$991.1

28.4 %


$4,617.4

32.2 %


GAAP-based operating income

$     516.3

$644.8

($128.5)

(19.9) %


N/A

N/A


Non-GAAP-based operating income (1)

$1,365.3

$1,176.9

$188.4

16.0 %


$1,387.5

17.9 %


GAAP-based net income attributable to OpenText

$150.4

$397.1

($246.7)

(62.1) %


N/A

N/A


GAAP-based EPS, diluted

$0.56

$1.46

($0.90)

(61.6) %


N/A

N/A


Non-GAAP-based EPS, diluted (1)(2)

$3.29

$3.22

$0.07

2.2 %


$3.37

4.7 %


Adjusted EBITDA (1)

$1,472.9

$1,265.0

$207.9

16.4 %


$1,495.8

18.2 %


Operating cash flows

$779.2

$981.8

($202.6)

(20.6) %


N/A

N/A


Free cash flows (1)

$655.4

$888.7

($233.3)

(26.3) %


N/A

N/A


 

Summary of Quarterly Results









(In millions, except per share data)

Q4 FY'23

Q4 FY'22

$ Change 

% Change 


Q4 FY'23  
in CC*

% Change
in CC*


Revenues:









Cloud services and subscriptions

$451.7

$411.6

$40.1

9.7 %


$455.4

10.6 %


Customer support

705.3

328.3

$376.9

114.8 %


711.4

116.7 %


Total annual recurring revenues**

$1,156.9

$739.9

$417.0

56.4 %


$1,166.8

57.7 %


License

228.8

94.7

$134.1

141.6 %


229.2

142.0 %


Professional service and other

105.1

67.8

$37.3

54.9 %


106.3

56.7 %


Total revenues

$1,490.8

$902.5

$588.4

65.2 %


$1,502.3

66.5 %


GAAP-based operating income

$121.3

$137.6

($16.3)

(11.8) %


N/A

N/A


Non-GAAP-based operating income (1)

$431.7

$291.0

$140.8

48.4 %


$421.5

44.9 %


GAAP-based net income attributable to OpenText

($48.7)

$102.2

($150.9)

(147.7) %


N/A

N/A


GAAP-based EPS, diluted

($0.18)

$0.38

($0.56)

(147.4) %


N/A

N/A


Non-GAAP-based EPS, diluted (1)(2)

$0.91

$0.80

$0.11

13.8 %


$0.88

10.0 %


Adjusted EBITDA (1)

$462.8

$313.6

$149.2

47.6 %


$452.7

44.3 %


Operating cash flows

$115.3

$251.9

($136.6)

(54.2) %


N/A

N/A


Free cash flows (1)

$91.2

$213.8

($122.5)

(57.3) %


N/A

N/A




(1)

Please see Note 2 "Use of Non-GAAP Financial Measures" to the consolidated financial statements 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 Program

As part of our quarterly, non-cumulative cash dividend program, the Board declared on August 2, 2023, a quarterly cash dividend of $0.25 per common share. The record date for this dividend is September 1, 2023, and the payment date is September 22, 2023. 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.

Quarterly Business Highlights

  • Key customer wins in the quarter include: BNP Paribas, Carl Zeiss AG, CNA Insurance, Daiken, DHL eCommerce Benelux, Elevance Health, Engie Italia, FEMA (US Department of Homeland Security), ID Logistics, Investors Heritage Life Insurance Company, Renesas, RS Component, Swedbank, TechMahindra, Warta
  • OpenText and Anritsu Service Assurance signed a new deal for 5G network capabilities and next-generation architecture
  • Today we are announcing opentext.ai, our AI strategy, and initial AI products including OpenText Aviator™ and IDOL, to be the trusted partner for our customers' AI journey
  • OpenText powers organizations to achieve digital success in a multi-cloud world with Cloud Editions 23.3
  • OpenText has been recognized as a Leader in the 2023 Gartner Magic Quadrant review for Application Security Testing (AST) for the 10th consecutive year
  • OpenText received a 2023 SAP® Pinnacle Award in the Partner Solution Success category, which recognizes its outstanding contributions as an SAP partner

 

Summary of Annual Results






FY'23

FY'22

% Change


Revenue (millions)

$4,485.0

$3,493.8

28.4 %


GAAP-based gross margin

70.6 %

69.6 %

105

bps

Non-GAAP-based gross margin (1)

76.1 %

75.6 %

49

bps

GAAP-based EPS, diluted

$0.56

$1.46

(61.6) %


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

$3.29

$3.22

2.2 %


 

Summary of Quarterly Results









Q4 FY'23

Q3 FY'23

Q4 FY'22

% Change 

(Q4 FY'23 vs
Q3 FY'23)


% Change

(Q4 FY'23 vs
Q4 FY'22)


Revenue (millions)

$1,490.8

$1,244.7

$902.5

19.8 %


65.2 %


GAAP-based gross margin

71.4 %

70.3 %

70.2 %

110

bps

120

bps

Non-GAAP-based gross margin (1)

76.9 %

75.8 %

75.9 %

110

bps

100

bps

GAAP-based EPS, diluted

($0.18)

$0.21

$0.38

(185.7) %


(147.4) %


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

$0.91

$0.73

$0.80

24.7 %


13.8 %




(1)

Please see Note 2 "Use of Non-GAAP Financial Measures" to the consolidated financial statements 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

OpenText posted an investor presentation on its Investor Relations website at http://investors.opentext.com and invites the public 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 3, 2023, at 7:00 p.m. ET through 11:59 p.m. on August 17, 2023, and can be accessed by dialing 1-855-669-9658 (toll-free) or +1-604-674-8052 (international) and using passcode 0296 followed by the number sign.

Please see Note 2 "Use of Non-GAAP Financial Measures" to the consolidated financial statements below for a reconciliation of U.S. GAAP-based financial measures used in this press release to Non-GAAP-based financial measures.

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") on growth, future cloud growth and market share gains, future organic growth initiatives and deployment of capital, intention to maintain a dividend program, including any targeted annualized dividend, the associated benefits of the Micro Focus acquisition, future tax rates, new platform and product offerings and associated benefits to customers, our announcement of opentext.ai and OpenText Aviator™, including our AI strategy, vision and initial AI products, scaling OpenText, and other matters, which 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 intended to identify forward-looking statements or information under applicable securities laws (forward-looking statements). In addition, any statements or information that refer to expectations, beliefs, plans, projections, objectives, performance or other characterizations of future events or circumstances, including any underlying assumptions, are forward-looking statements, 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. Future declarations of dividends are also subject to the final determination and discretion of the Board of Directors, and an annualized dividend has not been approved or declared by the Board. Forward-looking statements involve known and unknown risks and uncertainties such as those relating to: all statements regarding the expected future financial position, results of operations, cash flows, dividends, financing plans, business strategy, budgets, capital expenditures, competitive positions, growth opportunities, plans and objectives of management, including any anticipated synergy benefits; our ability to integrate successfully Micro Focus' operations and programs, including incurring unanticipated costs, delays or difficulties; and our ability to develop, protect and maintain our intellectual property and proprietary technology and to operate without infringing on the proprietary rights of others. For additional information with respect to risks and other factors which could occur, see the Company's Annual Report on Form 10-K, Quarterly Report 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. Further, readers should note that we may announce information using our website, press releases, securities law filings, public conference calls, webcasts and the social media channels identified on the Investors section of our website (https://investors.opentext.com). Such social media channels may include the Company's or our CEO's blog, Twitter account or LinkedIn account. The information posted through such channels may be material. Accordingly, readers should monitor such channels in addition to our other forms of communication.

OTEX-F

Copyright ©2023 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, 2023


June 30, 2022

ASSETS




Cash and cash equivalents

$             1,231,625


$             1,693,741

Accounts receivable trade, net of allowance for credit losses of $13,828 as of
June 30, 2023 and $16,473 as of June 30, 2022

682,517


426,652

Contract assets

71,196


26,167

Income taxes recoverable

68,161


18,255

Prepaid expenses and other current assets

221,732


120,552

Total current assets

2,275,231


2,285,367

Property and equipment

356,904


244,709

Operating lease right of use assets

285,723


198,132

Long-term contract assets

64,553


19,719

Goodwill

8,662,603


5,244,653

Acquired intangible assets

4,080,879


1,075,208

Deferred tax assets

926,719


810,154

Other assets

342,318


256,987

Long-term income taxes recoverable

94,270


44,044

Total assets

$          17,089,200


$          10,178,973

LIABILITIES AND SHAREHOLDERS' EQUITY




Current liabilities:




Accounts payable and accrued liabilities

$                996,261


$                448,607

Current portion of long-term debt

320,850


10,000

Operating lease liabilities

91,425


56,380

Deferred revenues

1,721,781


902,202

Income taxes payable

89,297


51,069

Total current liabilities

3,219,614


1,468,258

Long-term liabilities:




Accrued liabilities

51,961


18,208

Pension liability

126,312


60,951

Long-term debt

8,562,096


4,209,567

Long-term operating lease liabilities

271,579


198,695

Long-term deferred revenues

217,771


91,144

Long-term income taxes payable

193,808


34,003

Deferred tax liabilities

423,955


65,887

Total long-term liabilities

9,847,482


4,678,455

Shareholders' equity:




Share capital and additional paid-in capital




270,902,571 and 269,522,639 Common Shares issued and outstanding at
June 30, 2023 and June 30, 2022, respectively; authorized Common Shares:
unlimited

2,176,947


2,038,674

Accumulated other comprehensive income (loss)

(53,559)


(7,659)

Retained earnings

2,048,984


2,160,069

Treasury stock, at cost (3,536,375 and 3,706,420 shares at June 30, 2023 and
June 30, 2022, respectively)

(151,597)


(159,966)

Total OpenText shareholders' equity

4,020,775


4,031,118

Non-controlling interests

1,329


1,142

Total shareholders' equity

4,022,104


4,032,260

Total liabilities and shareholders' equity

$          17,089,200


$          10,178,973

 

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,


2023


2022

Revenues:




Cloud services and subscriptions

$                451,659


$                411,595

Customer support

705,277


328,339

License

228,796


94,688

Professional service and other

105,098


67,832

Total revenues

1,490,830


902,454

Cost of revenues:




Cloud services and subscriptions

166,394


133,785

Customer support

86,695


30,571

License

6,184


2,595

Professional service and other

90,498


55,436

Amortization of acquired technology-based intangible assets

77,045


46,274

Total cost of revenues

426,816


268,661

Gross profit

1,064,014


633,793

Operating expenses:




Research and development

249,958


118,931

Sales and marketing

333,244


185,985

General and administrative

136,866


85,958

Depreciation

31,152


22,706

Amortization of acquired customer-based intangible assets

121,285


56,341

Special charges (recoveries)

70,222


26,281

Total operating expenses

942,727


496,202

Income from operations

121,287


137,591

Other income (expense), net

(25,355)


(19)

Interest and other related expense, net

(145,829)


(40,342)

Income (loss) before income taxes

(49,897)


97,230

Provision for (recovery of) income taxes

(1,212)


(5,005)

Net income (loss) for the period

$                (48,685)


$                102,235

Net (income) attributable to non-controlling interests

(49)


(39)

Net income (loss) attributable to OpenText

$                (48,734)


$                102,196

Earnings per share—basic attributable to OpenText

$                     (0.18)


$                       0.38

Earnings per share—diluted attributable to OpenText

$                     (0.18)


$                       0.38

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

270,772


270,152

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

270,772


270,394

 

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



Year Ended June 30,


2023


2022


2021

Revenues:






Cloud services and subscriptions

$        1,700,433


$        1,535,017


$        1,407,445

Customer support

1,915,020


1,330,965


1,334,062

License

539,026


358,351


384,711

Professional service and other

330,501


269,511


259,897

Total revenues

4,484,980


3,493,844


3,386,115

Cost of revenues:






Cloud services and subscriptions

590,165


511,713


481,818

Customer support

209,705


121,485


122,753

License

16,645


13,501


13,916

Professional service and other

276,888


216,895


197,183

Amortization of acquired technology-based intangible assets

223,184


198,607


218,796

Total cost of revenues

1,316,587


1,062,201


1,034,466

Gross profit

3,168,393


2,431,643


2,351,649

Operating expenses:






Research and development

680,587


440,448


421,447

Sales and marketing

948,598


677,118


622,221

General and administrative

419,590


317,085


263,521

Depreciation

107,761


88,241


85,265

Amortization of acquired customer-based intangible assets

326,406


217,105


216,544

Special charges (recoveries)

169,159


46,873


1,748

Total operating expenses

2,652,101


1,786,870


1,610,746

Income from operations

516,292


644,773


740,903

Other income (expense), net

34,469


29,118


61,434

Interest and other related expense, net

(329,428)


(157,880)


(151,567)

Income before income taxes

221,333


516,011


650,770

Provision for (recovery of) income taxes

70,767


118,752


339,906

Net income

$           150,566


$           397,259


$           310,864

Net (income) attributable to non-controlling interests

(187)


(169)


(192)

Net income attributable to OpenText

$           150,379


$           397,090


$           310,672

Earnings per share—basic attributable to OpenText

$                  0.56


$                  1.46


$                  1.14

Earnings per share—diluted attributable to OpenText

$                  0.56


$                  1.46


$                  1.14

Weighted average number of Common Shares outstanding—basic

(in '000's)

270,299


271,271


272,533

Weighted average number of Common Shares outstanding—diluted

(in '000's)

270,451


271,909


273,479

 

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



Year Ended June 30,


2023


2022


2021

Net income

$           150,566


$           397,259


$           310,864

Other comprehensive income (loss)—net of tax:






Net foreign currency translation adjustments

(40,798)


(78,724)


42,440

Unrealized gain (loss) on cash flow hedges:






Unrealized gain (loss) - net of tax (1)

(941)


(1,859)


4,246

(Gain) loss reclassified into net income - net of tax (2)

2,721


373


(3,280)

Unrealized gain (loss) on available-for-sale financial assets:






Unrealized gain (loss) - net of tax (3)

(602)



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






Actuarial gain (loss) - net of tax (4)

(6,605)


5,595


3,987

Amortization of actuarial (gain) loss into net income - net of tax (5)

325


718


1,020

Total other comprehensive income (loss) net

(45,900)


(73,897)


48,413

Total comprehensive income

104,666


323,362


359,277

Comprehensive income attributable to non-controlling interests

(187)


(169)


(192)

Total comprehensive income attributable to OpenText

$           104,479


$           323,193


$           359,085



(1)

Net of tax expense (recovery) of ($339), ($671), and $1,532 for the year ended June 30, 2023, 2022 and 2021, respectively.

(2)

Net of tax expense (recovery) of $981, $134 and ($1,182) for the year ended June 30, 2023, 2022 and 2021, respectively.

(3)

Net of tax expense (recovery) of $159, nil, and nil for the year ended June 30, 2023, 2022 and 2021, respectively.

(4)

Net of tax expense (recovery) of ($1,961), $1,866 and $990 for the year ended June 30, 2023, 2022 and 2021, respectively.

(5)

Net of tax expense (recovery) of $143, $290 and $379 for the year ended June 30, 2023, 2022 and 2021, respectively.

 

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, 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





(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





Common Shares repurchased

(2,500)


(15,475)




(103,630)




(119,105)

Dividends declared

($0.777 per Common Share)





(210,662)




(210,662)

Non-controlling interest








Other comprehensive income - 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

Issuance of Common Shares
















Under employee stock option plans

950


32,714







32,714

Under employee stock purchase plans

842


33,806







33,806

Share-based compensation


69,556







69,556

Purchase of treasury stock



(2,630)


(111,593)





(111,593)

Issuance of treasury stock


(21,013)


492


21,013





Common Shares repurchased

(3,810)


(24,295)




(152,692)




(176,987)

Dividends declared

($0.8836 per Common Share)





(237,655)




(237,655)

Non-controlling interest








Other comprehensive loss - net






(73,897)



(73,897)

Distribution to non-controlling interest


142






(538)


(396)

Net income





397,090



169


397,259

Balance as of June 30, 2022

269,523


$  2,038,674


(3,706)


$ (159,966)


$  2,160,069


$          (7,659)


$      1,142


$  4,032,260

Issuance of Common Shares
















Under employee stock option plans

245


7,830







7,830

Under employee stock purchase plans

1,135


31,679







31,679

Share-based compensation


130,119







130,119

Purchase of treasury stock



(521)


(21,919)





(21,919)

Issuance of treasury stock


(31,355)


691


30,288





(1,067)

Common Shares repurchased








Dividends declared ($0.9720 per Common Share)





(261,464)




(261,464)

Non-controlling interest








Other comprehensive loss - net






(45,900)



(45,900)

Net income





150,379



187


150,566

Balance as of June 30, 2023

270,903


$  2,176,947


(3,536)


$ (151,597)


$  2,048,984


$        (53,559)


$      1,329


$  4,022,104

 

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



Three Months Ended June 30,


2023


2022

Cash flows from operating activities:




Net income (loss) for the period

$                  (48,685)


$                  102,235

Adjustments to reconcile net income (loss) to net cash provided by operating activities:




Depreciation and amortization of intangible assets

229,482


125,321

Share-based compensation expense

41,904


24,464

Pension expense

3,401


1,723

Amortization of debt discount and issuance costs

8,257


1,486

Write-off of right of use assets

2,507


17,707

Loss on extinguishment of debt


Loss on sale and write down of property and equipment

903


198

Deferred taxes

29,140


(79,420)

Share in net (income) loss of equity investees

11,530


401

Changes in financial instruments

16,274


Changes in operating assets and liabilities:




Accounts receivable

27,335


13,413

Contract assets

(43,643)


(10,758)

Prepaid expenses and other current assets

42,151


1,768

Income taxes

(116,569)


45,824

Accounts payable and accrued liabilities

10,582


41,561

Deferred revenue

(85,764)


(30,878)

Other assets

(5,299)


771

Operating lease assets and liabilities, net

(8,205)


(3,876)

Net cash provided by operating activities

115,301


251,940

Cash flows from investing activities:




Additions of property and equipment

(24,060)


(38,172)

Purchase of Micro Focus International PLC, net of cash acquired

(2,357)


Purchase of Bricata Inc.


174

Net cash used in investing activities

(26,417)


(37,998)

Cash flows from financing activities:




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

14,159


10,738

Repayment of long-term debt and Revolver

(186,463)


(2,500)

Debt issuance costs

(690)


Repurchase of Common Shares


(40,869)

Purchase of treasury stock

(21,919)


(35,933)

Payments of dividends to shareholders

(65,068)


(59,042)

Other financing activities

758


Net cash used in financing activities

(259,223)


(127,606)

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

4,571


(26,276)

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

(165,768)


60,060

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

1,399,720


1,635,851

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

$               1,233,952


$               1,695,911

 

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


Reconciliation of cash, cash equivalents and restricted cash:

June 30, 2023


June 30, 2022

Cash and cash equivalents

$               1,231,625


$               1,693,741

Restricted cash (1)

2,327


2,170

Total cash, cash equivalents and restricted cash

$               1,233,952


$               1,695,911







(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,


2023


2022


2021

Cash flows from operating activities:






Net income for the period

$             150,566


$             397,259


$             310,864

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






Depreciation and amortization of intangible assets

657,351


503,953


520,605

Share-based compensation expense

130,302


69,556


51,969

Pension expense

9,207


6,606


6,616

Amortization of debt discount and issuance costs

16,753


5,422


4,548

Write-off of right of use assets

9,626


17,707


Loss on extinguishment of debt

8,152


27,413


Loss on sale and write down of property and equipment

2,331


294


2,771

Deferred taxes

(149,560)


(36,088)


73,039

Share in net (income) loss of equity investees

23,077


(58,702)


(62,897)

Changes in financial instruments

128,841



Changes in operating assets and liabilities:






Accounts receivable

168,604


81,841


60,954

Contract assets

(73,539)


(37,966)


(39,333)

Prepaid expenses and other current assets

(23,035)


(13,954)


37,733

Income taxes

14,948


34,589


(140,763)

Accounts payable and accrued liabilities

(127,092)


(24,177)


26,088

Deferred revenue

(128,395)


(5,236)


39,295

Other assets

(11,297)


17,297


11,914

Operating lease assets and liabilities, net

(27,635)


(4,004)


(27,283)

Net cash provided by operating activities

779,205


981,810


876,120

Cash flows from investing activities:






Additions of property and equipment

(123,832)


(93,109)


(63,675)

Purchase of Micro Focus International PLC, net of cash acquired

(5,657,963)



Purchase of Zix Corporation, net of cash acquired


(856,175)


Purchase of Bricata Inc.


(17,753)


Purchase of XMedius



444

Purchase of Dynamic Solutions Group Inc.



(971)

Realized gain (loss) on financial instruments

131,248



Other investing activities

(873)


(3,922)


(4,568)

Net cash used in investing activities

(5,651,420)


(970,959)


(68,770)

Cash flows from financing activities:






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

39,331


67,215


80,067

Proceeds from long-term debt and Revolver

4,927,450


1,500,000


Repayment of long-term debt and Revolver

(202,926)


(860,000)


(610,000)

Debt extinguishment costs


(24,969)


Debt issuance costs

(77,899)


(17,159)


Repurchase of Common Shares


(176,987)


(119,105)

Purchase of treasury stock

(21,919)


(111,593)


(64,847)

Distribution to non-controlling interest


(396)


Payments of dividends to shareholders

(259,549)


(237,655)


(210,662)

Other financing activities

(1,435)



Net cash provided by (used in) financing activities

4,403,053


138,456


(924,547)

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

7,203


(63,196)


29,734

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

(461,959)


86,111


(87,463)

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

1,695,911


1,609,800


1,697,263

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

$          1,233,952


$          1,695,911


$          1,609,800

 

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


Reconciliation of cash, cash equivalents and restricted cash:

June 30, 2023


June 30, 2022


June 30, 2021

Cash and cash equivalents

$        1,231,625


$        1,693,741


$        1,607,306

Restricted cash (1)

2,327


2,170


2,494

Total cash, cash equivalents and restricted cash

$        1,233,952


$        1,695,911


$        1,609,800







(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 (loss) or earnings (loss) 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 (loss), attributable to OpenText, excluding interest income (expense), provision for (recovery of) 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 in response to our return to office planning, 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. Information reconciling certain forward-looking GAAP measures to non-GAAP measures related to F'24 targets and F'26 aspirations, including A-EBITDA is not available without unreasonable effort due to high variability, complexity and uncertainty with respect to forecasting and quantifying certain amounts that are necessary for such reconciliations.




The following charts provide unaudited reconciliations of U.S. GAAP-based financial measures to Non-GAAP-based financial measures for the following periods presented. The Micro Focus Acquisition significantly impacts period-over-period comparability.

 

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

for the three months ended June 30, 2023

(In thousands, except for per share data)


Three Months Ended June 30, 2023


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

$  166,394


$     (2,876)

(1)

$   163,518


Customer support

86,695


(1,213)

(1)

85,482


Professional service and other

90,498


(1,826)

(1)

88,672


Amortization of acquired technology-based intangible assets

77,045


(77,045)

(2)


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

1,064,014

71.4 %

82,960

(3)

1,146,974

76.9 %

Operating expenses







Research and development

249,958


(13,584)

(1)

236,374


Sales and marketing

333,244


(13,467)

(1)

319,777


General and administrative

136,866


(8,938)

(1)

127,928


Amortization of acquired customer-based intangible assets

121,285


(121,285)

(2)


Special charges (recoveries)

70,222


(70,222)

(4)


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

121,287


310,456

(5)

431,743


Other income (expense), net

(25,355)


25,355

(6)


Provision for (recovery of) income taxes

(1,212)


41,240

(7)

40,028


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

(48,734)


294,571

(8)

245,837


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

$       (0.18)


$          1.09

(8)

$          0.91




(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. Other income (expense) also includes unrealized and realized gains (losses) on our derivatives which are not designated as hedges. We exclude gains and losses on these derivatives 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 2% 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 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 loss to Non-GAAP-based net income:

 


Three Months Ended June 30, 2023



Per share diluted

GAAP-based net loss, attributable to OpenText

$                   (48,734)

$                        (0.18)

Add:



Amortization

198,330

0.73

Share-based compensation

41,904

0.15

Special charges (recoveries)

70,222

0.26

Other (income) expense, net

25,355

0.10

GAAP-based recovery of income taxes

(1,212)

Non-GAAP-based recovery of income taxes

(40,028)

(0.15)

Non-GAAP-based net income, attributable to OpenText

$                   245,837

$                          0.91

 

Reconciliation of Adjusted EBITDA



Three Months Ended June 30, 2023

GAAP-based net loss, attributable to OpenText

$                                                      (48,734)

Add:


Recovery of income taxes

(1,212)

Interest and other related expense, net

145,829

Amortization of acquired technology-based intangible assets

77,045

Amortization of acquired customer-based intangible assets

121,285

Depreciation

31,152

Share-based compensation

41,904

Special charges (recoveries)

70,222

Other (income) expense, net

25,355

Adjusted EBITDA

$                                                       462,846



GAAP-based net loss margin

(3.3) %

Adjusted EBITDA margin

31.0 %

 

Reconciliation of Free cash flows



Three Months Ended June 30, 2023

GAAP-based cash flows provided by operating activities

$                                                         115,301

Add:


Capital expenditures (1)

(24,060)

Free cash flows

$                                                           91,241



(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, 2023

(In thousands, except for per share data)


Year Ended June 30, 2023


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

$   590,165


$   (10,664)

(1)

$   579,501


Customer support

209,705


(3,627)

(1)

206,078


Professional service and other

276,888


(6,998)

(1)

269,890


Amortization of acquired technology-based intangible assets

223,184


(223,184)

(2)


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

3,168,393

70.6 %

244,473

(3)

3,412,866

76.1 %

Operating expenses







Research and development

680,587


(39,065)

(1)

641,522


Sales and marketing

948,598


(41,710)

(1)

906,888


General and administrative

419,590


(28,238)

(1)

391,352


Amortization of acquired customer-based intangible assets

326,406


(326,406)

(2)


Special charges (recoveries)

169,159


(169,159)

(4)


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

516,292


849,051

(5)

1,365,343


Other income (expense), net

34,469


(34,469)

(6)


Provision for income taxes

70,767


74,261

(7)

145,028


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

150,379


740,321

(8)

890,700


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

$          0.56


$          2.73

(8)

$          3.29




(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. Other income (expense) also includes unrealized and realized gains (losses) on our derivatives which are not designated as hedges. We exclude gains and losses on these derivatives 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 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, 2023



Per share diluted

GAAP-based net income, attributable to OpenText

$                   150,379

$                          0.56

Add:



Amortization

549,590

2.03

Share-based compensation

130,302

0.48

Special charges (recoveries)

169,159

0.63

Other (income) expense, net

(34,469)

(0.13)

GAAP-based provision for income taxes

70,767

0.26

Non-GAAP-based recovery of income taxes

(145,028)

(0.54)

Non-GAAP-based net income, attributable to OpenText

$                   890,700

$                          3.29

 

Reconciliation of Adjusted EBITDA



Year Ended June 30, 2023

GAAP-based net income, attributable to OpenText

$                                                       150,379

Add:


Provision for income taxes

70,767

Interest and other related expense, net

329,428

Amortization of acquired technology-based intangible assets

223,184

Amortization of acquired customer-based intangible assets

326,406

Depreciation

107,761

Share-based compensation

130,302

Special charges (recoveries)

169,159

Other (income) expense, net

(34,469)

Adjusted EBITDA

$                                                    1,472,917



GAAP-based net income margin

3.4 %

Adjusted EBITDA margin

32.8 %

 

Reconciliation of Free cash flows



Year Ended June 30, 2023

GAAP-based cash flows provided by operating activities

$                                                         779,205

Add:


Capital expenditures (1)

(123,832)

Free cash flows

$                                                         655,373



(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, 2023

(In thousands, except for per share data)


Three Months Ended March 31, 2023


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

$   157,658


$     (2,943)

(1)

$   154,715


Customer support

67,067


(1,157)

(1)

65,910


Professional service and other

78,526


(1,884)

(1)

76,642


Amortization of acquired technology-based intangible assets

62,639


(62,639)

(2)


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

874,944

70.3 %

68,623

(3)

943,567

75.8 %

Operating expenses







Research and development

210,731


(10,801)

(1)

199,930


Sales and marketing

271,013


(11,947)

(1)

259,066


General and administrative

127,047


(7,636)

(1)

119,411


Amortization of acquired customer-based intangible assets

97,237


(97,237)

(2)


Special charges (recoveries)

74,350


(74,350)

(4)


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

63,989


270,594

(5)

334,583


Other income (expense), net

85,706


(85,706)

(6)


Provision for (recovery of) income taxes

(12,420)


44,631

(7)

32,211


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

57,556


140,257

(8)

197,813


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

$          0.21


$          0.52

(8)

$          0.73




(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. Other income (expense) also includes unrealized gains (losses) on our derivatives which are not designated as hedges. We exclude gains and losses on these derivatives as we do not believe they are reflective on our ongoing business and operating results.



(7)

Adjustment relates to differences between the GAAP-based tax provision rate of approximately 27% 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, 2023



Per share diluted

GAAP-based net income, attributable to OpenText

$                     57,556

$                          0.21

Add:



Amortization

159,876

0.59

Share-based compensation

36,368

0.13

Special charges (recoveries)

74,350

0.28

Other (income) expense, net

(85,706)

(0.32)

GAAP-based recovery of income taxes

(12,420)

(0.04)

Non-GAAP-based recovery of income taxes

(32,211)

(0.12)

Non-GAAP-based net income, attributable to OpenText

$                   197,813

$                          0.73

 

Reconciliation of Adjusted EBITDA


Three Months Ended March 31, 2023

GAAP-based net income, attributable to OpenText

$                                                        57,556

Add:


Recovery of income taxes

(12,420)

Interest and other related expense, net

104,502

Amortization of acquired technology-based intangible assets

62,639

Amortization of acquired customer-based intangible assets

97,237

Depreciation

30,577

Share-based compensation

36,368

Special charges (recoveries)

74,350

Other (income) expense, net

(85,706)

Adjusted EBITDA

$                                                      365,103



GAAP-based net income margin

4.6 %

Adjusted EBITDA margin

29.3 %

 

Reconciliation of Free cash flows



Three Months Ended March 31, 2023

GAAP-based cash flows provided by operating activities

$                                                         336,775

Add:


Capital expenditures (1)

(31,233)

Free cash flows

$                                                         305,542



(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, 2022

(In thousands, except for per share data)


Three Months Ended June 30, 2022


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

$   133,785


$     (2,213)

(1)

$   131,572


Customer support

30,571


(768)

(1)

29,803


Professional service and other

55,436


(1,465)

(1)

53,971


Amortization of acquired technology-based intangible assets

46,274


(46,274)

(2)


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

633,793

70.2 %

50,720

(3)

684,513

75.9 %

Operating expenses







Research and development

118,931


(7,186)

(1)

111,745


Sales and marketing

185,985


(7,251)

(1)

178,734


General and administrative

85,958


(5,582)

(1)

80,376


Amortization of acquired customer-based intangible assets

56,341


(56,341)

(2)


Special charges (recoveries)

26,281


(26,281)

(4)


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

137,591


153,361

(5)

290,952


Other income (expense), net

(19)


19

(6)


Provision for (recovery of) income taxes

(5,005)


40,090

(7)

35,085


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

102,196


113,290

(8)

215,486


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

$          0.38


$          0.42

(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 5% and a Non-GAAP-based tax rate of approximately 26%; 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 26%, 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, 2022



Per share diluted

GAAP-based net income, attributable to OpenText

$                   102,196

$                          0.38

Add:



Amortization

102,615

0.38

Share-based compensation

24,465

0.09

Special charges (recoveries)

26,281

0.10

Other (income) expense, net

19

GAAP-based recovery of income taxes

(5,005)

(0.02)

Non-GAAP-based recovery of income taxes

(35,085)

(0.13)

Non-GAAP-based net income, attributable to OpenText

$                   215,486

$                          0.80


 

Reconciliation of Adjusted EBITDA



Three Months Ended June 30, 2022

GAAP-based net income, attributable to OpenText

$                                                      102,196

Add:


Recovery of income taxes

(5,005)

Interest and other related expense, net

40,342

Amortization of acquired technology-based intangible assets

46,274

Amortization of acquired customer-based intangible assets

56,341

Depreciation

22,706

Share-based compensation

24,464

Special charges (recoveries)

26,281

Other (income) expense, net

19

Adjusted EBITDA

$                                                      313,618



GAAP-based net income margin

11.3 %

Adjusted EBITDA margin

34.8 %

 

Reconciliation of Free cash flows



Three Months Ended June 30, 2022

GAAP-based cash flows provided by operating activities

$                                                         251,940

Add:


Capital expenditures (1)

(38,172)

Free cash flows

$                                                         213,768



(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, 2022

(In thousands, except for per share data)


Year Ended June 30, 2022


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

$   511,713


$     (5,285)

(1)

$   506,428


Customer support

121,485


(2,399)

(1)

119,086


Professional service and other

216,895


(3,740)

(1)

213,155


Amortization of acquired technology-based intangible assets

198,607


(198,607)

(2)


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

2,431,643

69.6 %

210,031

(3)

2,641,674

75.6 %

Operating expenses







Research and development

440,448


(17,122)

(1)

423,326


Sales and marketing

677,118


(22,628)

(1)

654,490


General and administrative

317,085


(18,382)

(1)

298,703


Amortization of acquired customer-based intangible assets

217,105


(217,105)

(2)


Special charges (recoveries)

46,873


(46,873)

(4)


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

644,773


532,141

(5)

1,176,914


Other income (expense), net

29,118


(29,118)

(6)


Provision for income taxes

118,752


23,913

(7)

142,665


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

397,090


479,110

(8)

876,200


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

$          1.46


$          1.76

(8)

$          3.22




(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 23% 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, 2022



Per share diluted

GAAP-based net income, attributable to OpenText

$                   397,090

$                          1.46

Add:



Amortization

415,712

1.52

Share-based compensation

69,556

0.26

Special charges (recoveries)

46,873

0.17

Other (income) expense, net

(29,118)

(0.11)

GAAP-based provision for income taxes

118,752

0.44

Non-GAAP-based recovery of income taxes

(142,665)

(0.52)

Non-GAAP-based net income, attributable to OpenText

$                   876,200

$                          3.22

 

Reconciliation of Adjusted EBITDA



Year Ended June 30, 2022

GAAP-based net income, attributable to OpenText

$                                                      397,090

Add:


Provision for income taxes

118,752

Interest and other related expense, net

157,880

Amortization of acquired technology-based intangible assets

198,607

Amortization of acquired customer-based intangible assets

217,105

Depreciation

88,241

Share-based compensation

69,556

Special charges (recoveries)

46,873

Other (income) expense, net

(29,118)

Adjusted EBITDA

$                                                   1,264,986



GAAP-based net income margin

11.4 %

Adjusted EBITDA margin

36.2 %

 

Reconciliation of Free cash flows



Year Ended June 30, 2022

GAAP-based cash flows provided by operating activities

$                                                         981,810

Add:


Capital expenditures (1)

(93,109)

Free cash flows

$                                                         888,701



(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 year ended June 30, 2023 and 2022:



Three Months Ended June 30, 2023


Three Months Ended June 30, 2022

Currencies

% of Revenue

% of Expenses(1)


% of Revenue

% of Expenses(1)

EURO

21 %

12 %


22 %

12 %

GBP

5 %

9 %


3 %

5 %

CAD

3 %

10 %


3 %

14 %

USD

60 %

48 %


63 %

54 %

Other

11 %

21 %


9 %

15 %

Total

100 %

100 %


100 %

100 %



Year Ended June 30, 2023


Year Ended June 30, 2022

Currencies

% of Revenue

% of Expenses(1)


% of Revenue

% of Expenses(1)

EURO

20 %

12 %


23 %

13 %

GBP

5 %

7 %


4 %

6 %

CAD

3 %

11 %


3 %

14 %

USD

62 %

51 %


62 %

53 %

Other

10 %

19 %


8 %

14 %

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).

 

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SOURCE Open Text Corporation