OpenText Reports First Quarter Fiscal Year 2021 Financial Results

   Total Revenues   

  (in millions)  

   Annual Recurring Revenues   

  (in millions)  

   Cloud Revenues   

  (in millions)  

   Reported   

   Constant Currency   

   Reported   

   Constant Currency   

   Reported   

   Constant Currency   

  $804.0  

  $798.0  

  $670.4  

  $667.3  

  $341.0  

  $340.2  

  +15.4%  

  +14.5%  

  +22.0%  

  +21.4%  

  +43.7%  

  +43.4%  

  Annual Recurring Revenues represents 83% of Total Revenues  

    Summary of Quarterly Results    

   (in millions except per share data)   

   Q1 FY21   

   Q1 FY20   

   $ Change   

   % Change  
(Y/Y)   

   Q1 FY21
in CC*   

   % Change
in CC*   

   Revenues:   

  Cloud services and subscriptions  

  $341.0  

  $237.3  

  $103.7  

  43.7  

  %  

  $340.2  

  43.4  

  %  

  Customer support  

  329.4  

  312.3  

  17.1  

  5.5  

  %  

  327.1  

  4.8  

  %  

   Total annual recurring revenues**   

   $670.4   

   $549.6   

   $120.8   

   22.0   

   %   

   $667.3   

   21.4   

   %   

  License  

  68.5  

  77.9  

  (9.4)  

  (12.0)  

  %  

  67.1  

  (13.8)  

  %  

  Professional service and other  

  65.1  

  69.4  

  (4.3)  

  (6.2)  

  %  

  63.6  

  (8.5)  

  %  

   Total revenues   

   $804.0   

   $696.9   

   $107.1   

   15.4   

   %   

   $798.0   

   14.5   

   %   

  GAAP-based operating income  

  $182.4  

  $132.5  

  $49.8  

  37.6  

  %  

  N/A  

  N/A  

  Non-GAAP-based operating income ⁽¹⁾  

  $320.4  

  $234.0  

  $86.4  

  36.9  

  %  

  $313.9  

  34.2  

  %  

  GAAP-based EPS, diluted  

  $0.38  

  $0.27  

  $0.11  

  40.7  

  %  

  N/A  

  N/A  

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

  $0.89  

  $0.64  

  $0.25  

  39.1  

  %  

  $0.87  

  35.9  

  %  

  GAAP-based net income attributable to OpenText  

  $103.4  

  $74.4  

  $29.0  

  38.9  

  %  

  N/A  

  N/A  

  Adjusted EBITDA ⁽¹⁾  

  $342.3  

  $254.2  

  $88.1  

  34.7  

  %  

  $335.7  

  32.1  

  %  

  Operating cash flows  

  $233.9  

  $137.4  

  $96.5  

  70.2  

  %  

  N/A  

  N/A  

  Free cash flows ⁽¹⁾  

  $218.6  

  $118.8  

  $99.8  

  84.0  

  %  

  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.  

    Summary of Quarterly Results    

   Q1 FY21   

   Q4 FY20   

   Q1 FY20   

   % Change  
(Q1 FY21 vs
Q4 FY20)   

   % Change  
(Q1 FY21 vs
Q1 FY20)   

  Revenue (millions)  

  $804.0  

  $826.6  

  $696.9  

  (2.7)  

  %  

  15.4  

  %  

  GAAP-based gross margin  

  69.0  

  %  

  68.5  

  %  

  67.2  

  %  

  50  

  bps  

  180  

  bps  

  GAAP-based EPS, diluted  

  $0.38  

  $0.10  

  $0.27  

  280.0  

  %  

  40.7  

  %  

  Non-GAAP-based gross margin ⁽¹⁾  

  76.5  

  %  

  75.8  

  %  

  73.1  

  %  

  70  

  bps  

  340  

  bps  

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

  $0.89  

  $0.80  

  $0.64  

  11.3  

  %  

  39.1  

  %  

   ⁽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.  

   OPEN TEXT CORPORATION
  CONDENSED CONSOLIDATED BALANCE SHEETS
(   In thousands of U.S. dollars, except share data)   

   September 30, 2020   

   June 30, 2020   

   ASSETS   

   (unaudited)   

  Cash and cash equivalents  

  $  

  1,845,582  

  $  

  1,692,850  

  Accounts receivable trade, net of allowance for credit losses of $22,366 as of September 30, 2020 and $20,906 as of June 30, 2020  

  396,897  

  466,357  

  Contract assets  

  26,236  

  29,570  

  Income taxes recoverable  

  26,869  

  61,186  

  Prepaid expenses and other current assets  

  140,474  

  136,436  

  Total current assets  

  2,436,058  

  2,386,399  

  Property and equipment  

  235,498  

  244,555  

  Operating lease right of use assets  

  196,884  

  207,869  

  Long-term contract assets  

  19,066  

  15,427  

  Goodwill  

  4,682,784  

  4,672,356  

  Acquired intangible assets  

  1,506,407  

  1,612,564  

  Deferred tax assets  

  893,256  

  911,565  

  Other assets  

  161,142  

  154,467  

  Long-term income taxes recoverable  

  30,719  

  29,620  

   Total assets   

  $  

  10,161,814  

  $  

  10,234,822  

   LIABILITIES AND SHAREHOLDERS' EQUITY   

  Current liabilities:  

  Accounts payable and accrued liabilities  

  $  

  313,468  

  $  

  373,314  

  Current portion of long-term debt  

  610,000  

  610,000  

  Operating lease liabilities  

  60,447  

  64,071  

  Deferred revenues  

  770,919  

  812,218  

  Income taxes payable  

  29,666  

  44,630  

  Total current liabilities  

  1,784,500  

  1,904,233  

  Long-term liabilities:  

  Accrued liabilities  

  42,081  

  34,955  

  Pension liability  

  78,536  

  73,129  

  Long-term debt  

  3,582,923  

  3,584,311  

  Long-term operating lease liabilities  

  207,723  

  217,165  

  Long-term deferred revenues  

  96,180  

  94,382  

  Long-term income taxes payable  

  176,396  

  171,200  

  Deferred tax liabilities  

  125,755  

  148,738  

  Total long-term liabilities  

  4,309,594  

  4,323,880  

  Shareholders' equity:  

  Share capital and additional paid-in capital  

  272,173,923 and 271,863,354 Common Shares issued and outstanding at September 30, 2020 and June 30, 2020, respectively; authorized Common Shares: unlimited  

  1,872,411  

  1,851,777  

  Accumulated other comprehensive income  

  39,695  

  17,825  

  Retained earnings  

  2,213,053  

  2,159,396  

  Treasury stock, at cost (1,393,771 and 622,297 shares at September 30, 2020 and June 30, 2020, respectively)  

  (58,788)  

  (23,608)  

  Total OpenText shareholders' equity  

  4,066,371  

  4,005,390  

  Non-controlling interests  

  1,349  

  1,319  

  Total shareholders' equity  

  4,067,720  

  4,006,709  

   Total liabilities and shareholders' equity   

  $  

  10,161,814  

  $  

  10,234,822  

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

   Three Months Ended September 30,   

   2020   

   2019   

  Revenues:  

  Cloud services and subscriptions  

  $  

  340,986  

  $  

  237,265  

  Customer support  

  329,399  

  312,298  

  License  

  68,523  

  77,898  

  Professional service and other  

  65,105  

  69,427  

  Total revenues  

  804,013  

  696,888  

  Cost of revenues:  

  Cloud services and subscriptions  

  112,624  

  102,162  

  Customer support  

  29,194  

  29,387  

  License  

  2,489  

  2,323  

  Professional service and other  

  46,581  

  54,338  

  Amortization of acquired technology-based intangible assets  

  58,037  

  40,298  

  Total cost of revenues  

  248,925  

  228,508  

  Gross profit  

  555,088  

  468,380  

  Operating expenses:  

  Research and development  

  93,903  

  81,178  

  Sales and marketing  

  132,400  

  128,618  

  General and administrative  

  56,189  

  51,535  

  Depreciation  

  22,003  

  20,277  

  Amortization of acquired customer-based intangible assets  

  54,993  

  49,158  

  Special charges (recoveries)  

  13,244  

  5,101  

  Total operating expenses  

  372,732  

  335,867  

  Income from operations  

  182,356  

  132,513  

  Other income (expense), net  

  2,883  

  (2,785)  

  Interest and other related expense, net  

  (39,089)  

  (32,210)  

  Income before income taxes  

  146,150  

  97,518  

  Provision for (recovery of) income taxes  

  42,744  

  23,091  

  Net income for the period  

  $  

  103,406  

  $  

  74,427  

  Net (income) loss attributable to non-controlling interests  

  (30)  

  (26)  

  Net income attributable to OpenText  

  $  

  103,376  

  $  

  74,401  

  Earnings per share—basic attributable to OpenText  

  $  

  0.38  

  $  

  0.28  

  Earnings per share—diluted attributable to OpenText  

  $  

  0.38  

  $  

  0.27  

  Weighted average number of Common Shares outstanding—basic  

  (in '000's)  

  271,986  

  270,013  

  Weighted average number of Common Shares outstanding—diluted  

  (in '000's)  

  272,847  

  271,251  

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

   Three Months Ended September 30,   

   2020   

   2019   

  Net income for the period  

  $  

  103,406  

  $  

  74,427  

  Other comprehensive income (loss)—net of tax:  

  Net foreign currency translation adjustments  

  22,645  

  (5,611)  

  Unrealized gain (loss) on cash flow hedges:  

  Unrealized gain (loss) - net of tax expense (recovery) effect of $305 and $(206) for the three months ended September 30, 2020 and 2019, respectively  

  845  

  (572)  

  (Gain) loss reclassified into net income - net of tax (expense) recovery effect of $(56) and $3 for the three months ended September 30, 2020 and 2019, respectively  

  (156)  

  8  

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

  Actuarial gain (loss) - net of tax expense (recovery) effect of $(916) and $(1,249) for the three months ended September 30, 2020 and 2019, respectively  

  (1,705)  

  (3,084)  

  Amortization of actuarial (gain) loss into net income - net of tax (expense) recovery effect of $87 and $146 for the three months ended September 30, 2020 and 2019, respectively  

  241  

  231  

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

  21,870  

  (9,028)  

  Total comprehensive income  

  125,276  

  65,399  

  Comprehensive (income) loss attributable to non-controlling interests  

  (30)  

  (26)  

  Total comprehensive income attributable to OpenText  

  $  

  125,246  

  $  

  65,373  

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

   Three Months Ended September 30, 2020   

   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, net  

  —  

  —  

  —  

  —  

  (2,450)  

  —  

  —  

  (2,450)  

  Issuance of Common Shares  

  Under employee stock option plans  

  311  

  8,605  

  —  

  —  

  —  

  —  

  —  

  8,605  

  Under employee stock purchase plans  

  —  

  293  

  193  

  6,690  

  —  

  —  

  —  

  6,983  

  Share-based compensation  

  —  

  11,736  

  —  

  —  

  —  

  —  

  —  

  11,736  

  Purchase of treasury stock  

  —  

  —  

  (965)  

  (41,870)  

  —  

  —  

  —  

  (41,870)  

  Dividends declared
($0.1746 per Common Share)  

  —  

  —  

  —  

  —  

  (47,269)  

  —  

  —  

  (47,269)  

  Other comprehensive income - net  

  —  

  —  

  —  

  —  

  —  

  21,870  

  —  

  21,870  

  Net income for the quarter  

  —  

  —  

  —  

  —  

  103,376  

  —  

  30  

  103,406  

   Balance as of September 30, 2020   

   272,174   

   $   

   1,872,411   

   (1,394)   

   $   

   (58,788)   

   $   

   2,213,053   

   $   

   39,695   

   $   

   1,349   

   $   

   4,067,720   

   Three Months Ended September 30, 2019   

   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, 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  

  184  

  4,576  

  —  

  —  

  —  

  —  

  —  

  4,576  

  Under employee stock purchase plans  

  172  

  6,008  

  —  

  —  

  —  

  —  

  —  

  6,008  

  Share-based compensation  

  —  

  6,891  

  —  

  —  

  —  

  —  

  —  

  6,891  

  Purchase of treasury stock  

  —  

  —  

  (300)  

  (12,424)  

  —  

  —  

  —  

  (12,424)  

  Dividends declared
($0.1746 per Common Share)  

  —  

  —  

  —  

  —  

  (47,006)  

  —  

  —  

  (47,006)  

  Other comprehensive income - net  

  —  

  —  

  —  

  —  

  —  

  (9,028)  

  —  

  (9,028)  

  Net income for the quarter  

  —  

  —  

  —  

  —  

  74,401  

  —  

  26  

  74,427  

   Balance as of September 30, 2019   

   270,190   

   $   

   1,791,689   

   (1,103)   

   $   

   (41,190)   

   $   

   2,141,278   

   $   

   15,096   

   $   

   1,241   

   $   

   3,908,114   

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

   Three Months Ended September 30,   

   2020   

   2019   

  Cash flows from operating activities:  

  Net income for the period  

  $  

  103,406  

  $  

  74,427  

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

  Depreciation and amortization of intangible assets  

  135,033  

  109,733  

  Share-based compensation expense  

  11,736  

  6,891  

  Pension expense  

  1,505  

  1,436  

  Amortization of debt issuance costs  

  1,112  

  1,127  

  Loss on sale and write down of property and equipment  

  573  

  —  

  Deferred taxes  

  (1,180)  

  6,244  

  Share in net (income) loss of equity investees  

  (6,221)  

  (682)  

  Changes in operating assets and liabilities:  

  Accounts receivable  

  74,842  

  58,431  

  Contract assets  

  (9,838)  

  (7,201)  

  Prepaid expenses and other current assets  

  (3,491)  

  (1,612)  

  Income taxes  

  21,032  

  7,053  

  Accounts payable and accrued liabilities  

  (51,429)  

  (62,979)  

  Deferred revenue  

  (41,268)  

  (61,169)  

  Other assets  

  549  

  5,684  

  Operating lease assets and liabilities, net  

  (2,457)  

  64  

  Net cash provided by operating activities  

  233,904  

  137,447  

  Cash flows from investing activities:  

  Additions of property and equipment  

  (15,305)  

  (18,614)  

  Other investing activities  

  (2,237)  

  (2,036)  

  Net cash used in investing activities  

  (17,542)  

  (20,650)  

  Cash flows from financing activities:  

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

  15,839  

  11,117  

  Repayment of long-term debt and Revolver  

  (2,500)  

  (2,500)  

  Purchase of treasury stock  

  (41,870)  

  (12,424)  

  Payments of dividends to shareholders  

  (47,269)  

  (47,006)  

  Net cash provided by (used in) financing activities  

  (75,800)  

  (50,813)  

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

  10,792  

  (7,711)  

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

  151,354  

  58,273  

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

  1,697,263  

  943,543  

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

  $  

  1,848,617  

  $  

  1,001,816  

   Reconciliation of cash, cash equivalents and restricted cash:   

   September 30, 2020   

   September 30, 2019   

  Cash and cash equivalents  

  $  

  1,845,582  

  $  

  999,298  

  Restricted cash ⁽¹⁾  

  3,035  

  2,518  

  Total cash, cash equivalents and restricted cash  

  $  

  1,848,617  

  $  

  1,001,816  

   ⁽¹⁾ Restricted cash is classified under the Prepaid expenses and other current assets and Other assets line items on the Condensed 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 are not meant to be a substitute for financial measures presented in accordance with U.S. GAAP, but rather should be evaluated in conjunction with and as a supplement to such U.S. GAAP measures. OpenText strongly encourages investors to review its financial information in its entirety and not to rely on a single financial measure. The Company therefore believes that despite these limitations, it is appropriate to supplement the disclosure of the U.S. GAAP measures with certain Non-GAAP measures defined below.  

  Non-GAAP-based net income and Non-GAAP-based EPS, attributable to OpenText, are 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 income from operations, excluding the amortization of acquired intangible assets, Special charges (recoveries), and share-based compensation expense.  

  Adjusted earnings (loss) 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, that have resulted in costs associated with reductions in headcount, consolidation of leased facilities and related costs, all which are recorded under the Company's "Special charges (recoveries)" caption on the Consolidated Statements of Income. Each restructuring activity is a discrete event based on a unique set of business objectives or circumstances, and each differs in terms of its operational implementation, business impact and scope, and the size of each restructuring plan can vary significantly from period to period. Therefore, the Company believes that the exclusion of these special charges (recoveries) will also better aid readers of financial statements in the understanding and comparability of the Company's operating results and underlying operational trends.  

  In summary the Company believes the provision of supplemental Non-GAAP measures allow investors to evaluate the operational and financial performance of the Company's core business using the same evaluation measures that management uses, and is therefore a useful indication of OpenText's performance or expected performance of future operations and facilitates period-to-period comparison of operating performance (although prior performance is not necessarily indicative of future performance). As a result, the Company considers it appropriate and reasonable to provide, in addition to U.S. GAAP measures, supplementary Non-GAAP financial measures that exclude certain items from the presentation of its financial results.  

  The following charts provide (unaudited) reconciliations of U.S. GAAP-based financial measures to Non-U.S. GAAP-based financial measures for the following periods presented.  

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

    for the three months ended September 30, 2020.    

    (In thousands except for per share amounts)    

   Three Months Ended September 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  

  $  

  112,624  

  $  

  (836)  

  (1)  

  $  

  111,788  

  Customer support  

  29,194  

  (442)  

  (1)  

  28,752  

  Professional service and other  

  46,581  

  (517)  

  (1)  

  46,064  

  Amortization of acquired technology-based intangible assets  

  58,037  

  (58,037)  

  (2)  

  —  

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

  555,088  

  69.0%  

  59,832  

  (3)  

  614,920  

  76.5%  

   Operating expenses   

  Research and development  

  93,903  

  (2,342)  

  (1)  

  91,561  

  Sales and marketing  

  132,400  

  (4,057)  

  (1)  

  128,343  

  General and administrative  

  56,189  

  (3,542)  

  (1)  

  52,647  

  Amortization of acquired customer-based intangible assets  

  54,993  

  (54,993)  

  (2)  

  —  

  Special charges (recoveries)  

  13,244  

  (13,244)  

  (4)  

  —  

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

  182,356  

  138,010  

  (5)  

  320,366  

  Other income (expense), net  

  2,883  

  (2,883)  

  (6)  

  —  

  Provision for (recovery of) income taxes  

  42,744  

  (3,365)  

  (7)  

  39,379  

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

  103,376  

  138,492  

  (8)  

  241,868  

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

  $0.38  

  $0.51  

  (8)  

  $0.89  

  (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 29% 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 September 30, 2020   

   Per share diluted   

  GAAP-based net income, attributable to OpenText  

  $  

  103,376  

  $  

  0.38  

  Add:  

  Amortization  

  113,030  

  0.41  

  Share-based compensation  

  11,736  

  0.04  

  Special charges (recoveries)  

  13,244  

  0.05  

  Other (income) expense, net  

  (2,883)  

  (0.01)  

  GAAP-based provision for (recovery of) income taxes  

  42,744  

  0.16  

  Non-GAAP-based provision for income taxes  

  (39,379)  

  (0.14)  

  Non-GAAP-based net income, attributable to OpenText  

  $  

  241,868  

  $  

  0.89  

   Reconciliation of Adjusted EBITDA   

   Three Months Ended September 30, 2020   

  GAAP-based net income, attributable to OpenText  

  $  

  103,376  

  Add:  

  Provision for (recovery of) income taxes  

  42,744  

  Interest and other related expense, net  

  39,089  

  Amortization of acquired technology-based intangible assets  

  58,037  

  Amortization of acquired customer-based intangible assets  

  54,993  

  Depreciation  

  22,003  

  Share-based compensation  

  11,736  

  Special charges (recoveries)  

  13,244  

  Other (income) expense, net  

  (2,883)  

  Adjusted EBITDA  

  $  

  342,339  

   Reconciliation of Free cash flows   

   Three Months Ended September 30, 2020   

  GAAP cash flows provided by operating activities  

  $  

  233,904  

  Add:  

  Capital expenditures ⁽¹⁾  

  (15,305)  

  Free cash flows  

  $  

  218,599  

   ⁽¹⁾ Defined as "Additions of property & equipment" in the Condensed 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 amounts)    

   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  

   Reconciliation of Free cash flows   

   Three Months Ended June 30, 2020   

  GAAP 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 & equipment" in the Condensed Consolidated Statements of Cash Flows  

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

    for the three months ended September 30, 2019.    

    (In thousands except for per share amounts)    

   Three Months Ended September 30, 2019   

   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  

  $  

  102,162  

  $  

  (383)  

  (1)  

  $  

  101,779  

  Customer support  

  29,387  

  (316)  

  (1)  

  29,071  

  Professional service and other  

  54,338  

  (243)  

  (1)  

  54,095  

  Amortization of acquired technology-based intangible assets  

  40,298  

  (40,298)  

  (2)  

  —  

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

  468,380  

  67.2  

  %  

  41,240  

  (3)  

  509,620  

  73.1  

  %  

   Operating expenses   

  Research and development  

  81,178  

  (1,221)  

  (1)  

  79,957  

  Sales and marketing  

  128,618  

  (2,116)  

  (1)  

  126,502  

  General and administrative  

  51,535  

  (2,612)  

  (1)  

  48,923  

  Amortization of acquired customer-based intangible assets  

  49,158  

  (49,158)  

  (2)  

  —  

  Special charges (recoveries)  

  5,101  

  (5,101)  

  (4)  

  —  

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

  132,513  

  101,448  

  (5)  

  233,961  

  Other income (expense), net  

  (2,785)  

  2,785  

  (6)  

  —  

  Provision for (recovery of) income taxes  

  23,091  

  5,154  

  (7)  

  28,245  

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

  74,401  

  99,079  

  (8)  

  173,480  

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

  $  

  0.27  

  $  

  0.37  

  (8)  

  $  

  0.64  

  (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 24% 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 September 30, 2019   

   Per share diluted   

  GAAP-based net income, attributable to OpenText  

  $  

  74,401  

  $  

  0.27  

  Add:  

  Amortization  

  89,456  

  0.33  

  Share-based compensation  

  6,891  

  0.03  

  Special charges (recoveries)  

  5,101  

  0.02  

  Other (income) expense, net  

  2,785  

  0.01  

  GAAP-based provision for (recovery of) income taxes  

  23,091  

  0.09  

  Non-GAAP-based provision for income taxes  

  (28,245)  

  (0.11)  

  Non-GAAP-based net income, attributable to OpenText  

  $  

  173,480  

  $  

  0.64  

   Reconciliation of Adjusted EBITDA   

   Three Months Ended September 30, 2019   

  GAAP-based net income, attributable to OpenText  

  $  

  74,401  

  Add:  

  Provision for (recovery of) income taxes  

  23,091  

  Interest and other related expense, net  

  32,210  

  Amortization of acquired technology-based intangible assets  

  40,298  

  Amortization of acquired customer-based intangible assets  

  49,158  

  Depreciation  

  20,277  

  Share-based compensation  

  6,891  

  Special charges (recoveries)  

  5,101  

  Other (income) expense, net  

  2,785  

  Adjusted EBITDA  

  $  

  254,212  

   Reconciliation of Free cash flows