OpenText Reports Fourth Quarter and Fiscal Year 2021 Financial Results

- August 5th, 2021

Record Annual Total Revenues with Cloud Revenue Growth of 21.6% Repurchases 2.5 Million Common Shares and Increases Dividend by 10% – Fiscal 2021 Fourth Quarter Highlights YY Operating cash flows were $296.2 million and free cash flows were $268.8 million GAAP-based net income of $181.3 million up 586.9% YY, margin of 20.3%, up 1,710 basis points YY Adjusted EBITDA of $314.8 million down 0.8%, margin of 35.2%, down …

Record Annual Total Revenues with Cloud Revenue Growth of 21.6%

Repurchases 2.5 Million Common Shares and Increases Dividend by 10%

Fiscal 2021 Fourth Quarter Highlights Y/Y

Total Revenues

(in millions)

Annual Recurring Revenues

(in millions)

Cloud Revenues

(in millions)

Reported

Constant Currency

Reported

Constant Currency

Reported

Constant Currency

$893.5

$859.4

$694.4

$671.8

$360.2

$352.7

+8.1%

+4.0%

+5.6%

+2.2%

+8.3%

+6.0%

Annual Recurring Revenues represent 78% of Total Revenues

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

Fiscal 2021 Annual Highlights Y/Y

Total Revenues

(in millions)

Annual Recurring Revenues

(in millions)

Cloud Revenues

(in millions)

Reported

Constant Currency

Reported

Constant Currency

Reported

Constant Currency

$3,386.1

$3,304.8

$2,741.5

$2,686.6

$1,407.4

$1,389.7

+8.9%

+6.3%

+12.7%

+10.4%

+21.6%

+20.0%

Annual Recurring Revenues represent 81% of Total Revenues

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

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

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

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

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

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

Summary of Quarterly Results

(In millions, except per share data)

Q4 FY’21

Q4 FY’20

$ Change

% Change

Q4 FY’21 in CC*

% Change in CC*

Revenues:

Cloud services and subscriptions

$360.2

$332.6

$27.5

8.3

%

$352.7

6.0

%

Customer support

334.3

324.9

9.3

2.9

%

319.1

(1.8)

%

Total annual recurring revenues**

$694.4

$657.5

$36.9

5.6

%

$671.8

2.2

%

License

132.5

105.8

26.7

25.3

%

124.6

17.8

%

Professional service and other

66.6

63.3

3.3

5.2

%

63.0

(0.4)

%

Total revenues

$893.5

$826.6

$66.9

8.1

%

$859.4

4.0

%

GAAP-based operating income

$171.7

$91.2

$80.5

88.2

%

N/A

N/A

Non-GAAP-based operating income (1)

$293.9

$293.8

$0.1

%

$285.7

(2.7)

%

GAAP-based net income attributable to OpenText

$181.3

$26.4

$154.9

586.9

%

N/A

N/A

GAAP-based EPS, diluted

$0.66

$0.10

$0.56

560.0

%

N/A

N/A

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

$0.80

$0.80

$—

%

$0.78

(2.5)

%

Adjusted EBITDA (1)

$314.8

$317.4

($2.6)

(0.8)

%

$306.3

(3.5)

%

Operating cash flows

$296.2

$280.3

$15.9

5.7

%

N/A

N/A

Free cash flows (1)

$268.8

$262.5

$6.2

2.4

%

N/A

N/A

Summary of Annual Results

(In millions, except per share data)

FY’21

FY’20

$ Change

% Change

FY’21 in CC*

% Change in CC*

Revenues:

Cloud services and subscriptions

$1,407.4

$1,157.7

$249.8

21.6

%

$1,389.7

20.0

%

Customer support

1,334.1

1,275.6

58.5

4.6

%

1,297.0

1.7

%

Total annual recurring revenues**

$2,741.5

$2,433.3

$308.2

12.7

%

$2,686.6

10.4

%

License

384.7

402.9

(18.1)

(4.5)

%

368.1

(8.6)

%

Professional service and other

259.9

273.6

(13.7)

(5.0)

%

250.0

(8.6)

%

Total revenues

$3,386.1

$3,109.7

$276.4

8.9

%

$3,304.8

6.3

%

GAAP-based operating income

$740.9

$503.5

$237.4

47.1

%

N/A

N/A

Non-GAAP-based operating income (1)

$1,230.0

$1,058.8

$171.2

16.2

%

$1,193.9

12.8

%

GAAP-based net income attributable to OpenText

$310.7

$234.2

$76.4

32.6

%

N/A

N/A

GAAP-based EPS, diluted

$1.14

$0.86

$0.28

32.6

%

N/A

N/A

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

$3.39

$2.89

$0.50

17.3

%

$3.28

13.5

%

Adjusted EBITDA (1)

$1,315.0

$1,148.1

$167.0

14.5

%

$1,278.2

11.3

%

Operating cash flows

$876.1

$954.5

($78.4)

(8.2)

%

N/A

N/A

Free cash flows (1)

$812.4

$881.8

($69.4)

(7.9)

%

N/A

N/A

(1)

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

(2)

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

Note:

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

*CC:

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

**

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

Dividend and Share Repurchases

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

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

Quarterly Business Highlights

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

Summary of Quarterly Results

Q4 FY’21

Q3 FY’21

Q4 FY’20

% Change

(Q4 FY’21 vs Q3 FY’21)

% Change

(Q4 FY’21 vs Q4 FY’20)

Revenue (millions)

$893.5

$832.9

$826.6

7.3

%

8.1

%

GAAP-based gross margin

69.6

%

68.6

%

68.5

%

100

bps

110

bps

Non-GAAP-based gross margin (1)

75.8

%

75.2

%

75.8

%

60

bps

bps

GAAP-based EPS, diluted

$0.66

$0.33

$0.10

100.0

%

560.0

%

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

$0.80

$0.75

$0.80

6.7

%

%

Summary of Annual Results

FY’21

FY’20

% Change

Revenue (millions)

$3,386.1

$3,109.7

8.9

%

GAAP-based gross margin

69.4

%

67.7

%

170

bps

Non-GAAP-based gross margin (1)

76.1

%

74.5

%

160

bps

GAAP-based EPS, diluted

$1.14

$0.86

32.6

%

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

$3.39

$2.89

17.3

%

(1)

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

(2)

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

Conference Call Information

The public is invited to listen to the earnings conference call today at 5:00 p.m. ET ( 2:00 p.m. PT ) by dialing 1-800-319-4610 (toll-free) or +1-604-638-5340 (international). Please dial-in 10 minutes ahead of time to ensure proper connection. Alternatively, a live webcast of the earnings conference call will be available on the Investor Relations section of the Company’s website at http://investors.opentext.com/investor-events-and-presentations .

A replay of the call will be available beginning August 5, 2021 at 7:00 p.m. ET through 11:59 p.m. on August 19, 2021 and can be accessed by dialing 1-855-669-9658 (toll-free) or +1-604-674-8052 (international) and using passcode 7298 followed by the number sign.

Please see below note (2) for a reconciliation of U.S. GAAP-based financial measures used in this press release, to Non-GAAP-based financial measures. Additionally, “off-cloud” is a term we use to describe license transactions.

About OpenText

OpenText, The Information Company™, enables organizations to gain insight through market leading information management solutions, powered by OpenText Cloud Editions. For more information about OpenText (NASDAQ: OTEX, TSX: OTEX) visit opentext.com.

Cautionary Statement Regarding Forward-Looking Statements

Certain statements in this press release, including statements about the focus of Open Text Corporation (“OpenText” or “the Company”) in our fiscal year ending June 30, 2022 (Fiscal 2022) on growth, future cloud growth and market share gains, future organic growth initiatives and deployment of capital, declaration of quarterly dividends, potential share repurchases pursuant to its Repurchase Plan, future tax rates, new platform and product offerings, scaling OpenText to new levels in Fiscal 2022 and beyond, and other matters, may contain words such as “anticipates”, “expects”, “intends”, “plans”, “believes”, “seeks”, “estimates”, “may”, “could”, “would”, “might”, “will” and variations of these words or similar expressions are considered forward-looking statements or information under applicable securities laws. In addition, any information or statements that refer to expectations, beliefs, plans, projections, objectives, performance or other characterizations of future events or circumstances, including any underlying assumptions, are forward-looking, and based on our current expectations, forecasts and projections about the operating environment, economies and markets in which we operate. Forward-looking statements reflect our current estimates, beliefs and assumptions, which are based on management’s perception of historic trends, current conditions and expected future developments, as well as other factors it believes are appropriate in the circumstances, such as certain assumptions about the economy, as well as market, financial and operational assumptions. Management’s estimates, beliefs and assumptions are inherently subject to significant business, economic, competitive and other uncertainties and contingencies regarding future events and, as such, are subject to change. We can give no assurance that such estimates, beliefs and assumptions will prove to be correct. Such forward-looking statements involve known and unknown risks, uncertainties and other factors and assumptions that may cause the actual results, performance or achievements to differ materially which include, but are not limited to, actual and potential risks and uncertainties relating to the ultimate spread of COVID-19, the severity of the disease and the duration of the COVID-19 pandemic. For additional information with respect to risks and other factors which could occur, see the Company’s Annual Report on Form 10-K, Quarterly Reports on Form 10-Q and other securities filings with the Securities and Exchange Commission (SEC) and other securities regulators. Readers are cautioned not to place undue reliance upon any such forward-looking statements, which speak only as of the date made. Unless otherwise required by applicable securities laws, the Company disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

OTEX-F

For more information, please contact:

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

Copyright ©2021 Open Text. OpenText is a trademark or registered trademark of Open Text. The list of trademarks is not exhaustive of other trademarks. Registered trademarks, product names, company names, brands and service names mentioned herein are property of Open Text. All rights reserved. For more information, visit: http://www.opentext.com/who-we-are/copyright-information .

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

June 30, 2021

June 30, 2020

ASSETS

Cash and cash equivalents

$

1,607,306

$

1,692,850

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

438,547

466,357

Contract assets

25,344

29,570

Income taxes recoverable

32,312

61,186

Prepaid expenses and other current assets

98,551

136,436

Total current assets

2,202,060

2,386,399

Property and equipment

233,595

244,555

Operating lease right of use assets

234,532

207,869

Long-term contract assets

19,222

15,427

Goodwill

4,691,673

4,672,356

Acquired intangible assets

1,187,260

1,612,564

Deferred tax assets

796,738

911,565

Other assets

208,894

154,467

Long-term income taxes recoverable

35,362

29,620

Total assets

$

9,609,336

$

10,234,822

LIABILITIES AND SHAREHOLDERS’ EQUITY

Current liabilities:

Accounts payable and accrued liabilities

$

423,592

$

373,314

Current portion of long-term debt

10,000

610,000

Operating lease liabilities

58,315

64,071

Deferred revenues

852,629

812,218

Income taxes payable

17,368

44,630

Total current liabilities

1,361,904

1,904,233

Long-term liabilities:

Accrued liabilities

28,830

34,955

Pension liability

74,511

73,129

Long-term debt

3,578,859

3,584,311

Long-term operating lease liabilities

224,453

217,165

Long-term deferred revenues

98,989

94,382

Long-term income taxes payable

34,113

171,200

Deferred tax liabilities

108,224

148,738

Total long-term liabilities

4,147,979

4,323,880

Shareholders’ equity:

Share capital and additional paid-in capital

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

1,947,764

1,851,777

Accumulated other comprehensive income

66,238

17,825

Retained earnings

2,153,326

2,159,396

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

(69,386)

(23,608)

Total OpenText shareholders’ equity

4,097,942

4,005,390

Non-controlling interests

1,511

1,319

Total shareholders’ equity

4,099,453

4,006,709

Total liabilities and shareholders’ equity

$

9,609,336

$

10,234,822

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

Three Months Ended June 30,

2021

2020

Revenues:

Cloud services and subscriptions

$

360,160

$

332,618

Customer support

334,256

324,915

License

132,541

105,803

Professional service and other

66,570

63,276

Total revenues

893,527

826,612

Cost of revenues:

Cloud services and subscriptions

127,583

116,569

Customer support

32,938

32,568

License

4,315

3,404

Professional service and other

53,662

48,435

Amortization of acquired technology-based intangible assets

53,215

59,719

Total cost of revenues

271,713

260,695

Gross profit

621,814

565,917

Operating expenses:

Research and development

117,235

100,766

Sales and marketing

183,237

152,882

General and administrative

73,019

62,574

Depreciation

21,021

23,649

Amortization of acquired customer-based intangible assets

52,469

58,998

Special charges (recoveries)

3,152

75,849

Total operating expenses

450,133

474,718

Income from operations

171,681

91,199

Other income (expense), net

45,017

7,790

Interest and other related expense, net

(37,550)

(40,529)

Income before income taxes

179,148

58,460

Provision for (recovery of) income taxes

(2,215)

32,037

Net income for the period

$

181,363

$

26,423

Net (income) loss attributable to non-controlling interests

(80)

(31)

Net income attributable to OpenText

$

181,283

$

26,392

Earnings per share—basic attributable to OpenText

$

0.66

$

0.10

Earnings per share—diluted attributable to OpenText

$

0.66

$

0.10

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

272,892

271,717

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

273,981

272,367

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

Year Ended June 30,

2021

2020

2019

Revenues:

Cloud services and subscriptions

$

1,407,445

$

1,157,686

$

907,812

Customer support

1,334,062

1,275,586

1,247,915

License

384,711

402,851

428,092

Professional service and other

259,897

273,613

284,936

Total revenues

3,386,115

3,109,736

2,868,755

Cost of revenues:

Cloud services and subscriptions

481,818

449,940

383,993

Customer support

122,753

123,894

124,343

License

13,916

11,321

14,347

Professional service and other

197,183

212,903

224,635

Amortization of acquired technology-based intangible assets

218,796

205,717

183,385

Total cost of revenues

1,034,466

1,003,775

930,703

Gross profit

2,351,649

2,105,961

1,938,052

Operating expenses:

Research and development

421,447

370,411

321,836

Sales and marketing

622,221

585,044

518,035

General and administrative

263,521

237,532

207,909

Depreciation

85,265

89,458

97,716

Amortization of acquired customer-based intangible assets

216,544

219,559

189,827

Special charges (recoveries)

1,748

100,428

35,719

Total operating expenses

1,610,746

1,602,432

1,371,042

Income from operations

740,903

503,529

567,010

Other income (expense), net

61,434

(11,946)

10,156

Interest and other related expense, net

(151,567)

(146,378)

(136,592)

Income before income taxes

650,770

345,205

440,574

Provision for (recovery of) income taxes

339,906

110,837

154,937

Net income

$

310,864

$

234,368

$

285,637

Net (income) loss attributable to non-controlling interests

(192)

(143)

(136)

Net income attributable to OpenText

$

310,672

$

234,225

$

285,501

Earnings per share—basic attributable to OpenText

$

1.14

$

0.86

$

1.06

Earnings per share—diluted attributable to OpenText

$

1.14

$

0.86

$

1.06

Weighted average number of Common Shares outstanding—basic

(in ‘000’s)

272,533

270,847

268,784

Weighted average number of Common Shares outstanding—diluted

(in ‘000’s)

273,479

271,817

269,908

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

Year Ended June 30,

2021

2020

2019

Net income

$

310,864

$

234,368

$

285,637

Other comprehensive income (loss)—net of tax:

Net foreign currency translation adjustments

42,440

(7,784)

(3,882)

Unrealized gain (loss) on cash flow hedges:

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

4,246

(1,662)

16

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

(3,280)

985

1,494

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

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

3,987

1,245

(7,421)

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

1,020

917

272

Total other comprehensive income (loss) net

48,413

(6,299)

(9,521)

Total comprehensive income

359,277

228,069

276,116

Comprehensive (income) loss attributable to non-controlling interests

(192)

(143)

(136)

Total comprehensive income attributable to OpenText

$

359,085

$

227,926

$

275,980


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

Common Shares and
Additional Paid in Capital

Treasury Stock

Retained

Earnings

Accumulated  Other

Comprehensive

Income

Non-Controlling Interests

Total

Shares

Amount

Shares

Amount

Balance as of June 30, 2018

267,651

$

1,707,073

(691)

$

(18,732)

$

1,994,235

$

33,645

$

1,037

$

3,717,258

Issuance of Common Shares

Under employee stock option plans

1,472

35,626

35,626

Under employee stock purchase plans

711

21,835

21,835

Share-based compensation

26,770

26,770

Purchase of treasury stock

(726)

(26,499)

(26,499)

Issuance of treasury stock

(16,465)

614

16,465

Dividends declared

($0.6300 per Common Share)

(168,859)

(168,859)

Cumulative effect of ASU 2016-16

(26,780)

(26,780)

Cumulative effect of Topic 606

29,786

29,786

Other comprehensive income (loss) – net

(9,521)

(9,521)

Non-controlling interest

(625)

42

(583)

Net income

285,501

136

285,637

Balance as of June 30, 2019

269,834

$

1,774,214

(803)

$

(28,766)

$

2,113,883

$

24,124

$

1,215

$

3,884,670

Issuance of Common Shares

Under employee stock option plans

1,530

41,282

41,282

Under employee stock purchase plans

499

17,757

17,757

Share-based compensation

29,532

29,532

Purchase of treasury stock

(300)

(12,424)

(12,424)

Issuance of treasury stock

(11,008)

481

17,582

6,574

Dividends declared

($0.6984 per Common Share)

(188,712)

(188,712)

Other comprehensive income (loss) – net

(6,299)

(6,299)

Non-controlling interest

(39)

(39)

Net income

234,225

143

234,368

Balance as of June 30, 2020

271,863

$

1,851,777

(622)

$

(23,608)

$

2,159,396

$

17,825

$

1,319

$

4,006,709

Adoption of ASU 2016-13 – cumulative effect, net

(2,450)

(2,450)

Issuance of Common Shares

Under employee stock option plans

1,605

49,565

49,565

Under employee stock purchase plans

573

22,307

193

6,690

28,997

Share-based compensation

51,969

51,969

Purchase of treasury stock

(1,455)

(64,847)

(64,847)

Issuance of treasury stock

(12,379)

316

12,379

Repurchase of Common Shares

(2,500)

(15,475)

(103,630)

(119,105)

Dividends declared

($0.7770 per Common Share)

(210,662)

(210,662)

Other comprehensive income (loss) – net

48,413

48,413

Net income

310,672

192

310,864

Balance as of June 30, 2021

271,541

$

1,947,764

(1,568)

$

(69,386)

$

2,153,326

$

66,238

$

1,511

$

4,099,453

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

Three Months Ended June 30,

2021

2020

Cash flows from operating activities:

Net income for the period

$

181,363

$

26,423

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

Depreciation and amortization of intangible assets

126,705

142,366

Share-based compensation expense

13,350

8,002

Pension expense

1,946

1,479

Amortization of debt issuance costs

1,153

1,130

Accelerated amortization of right of use assets

36,864

Loss on sale and write down of property and equipment

792

9,714

Deferred taxes

(7,805)

14,677

Share in net (income) loss of equity investees

(42,877)

(2,225)

Changes in operating assets and liabilities:

Accounts receivable

(26,118)

(1,689)

Contract assets

(10,298)

(13,636)

Prepaid expenses and other current assets

40,261

458

Income taxes

(23,169)

(478)

Accounts payable and accrued liabilities

53,415

72,876

Deferred revenue

(23,305)

(12,974)

Other assets

11,149

(6,309)

Operating lease assets and liabilities, net

(373)

3,572

Net cash provided by operating activities

296,189

280,250

Cash flows from investing activities:

Additions of property and equipment

(27,408)

(17,704)

Purchase of Dynamic Solutions Group Inc.

(600)

Other investing activities

(2,550)

(2,783)

Net cash used in investing activities

(30,558)

(20,487)

Cash flows from financing activities:

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

34,287

13,493

Repayment of long-term debt and Revolver

(2,500)

(2,500)

Debt issuance costs

(3,636)

Repurchase of Common Shares

(119,105)

Payments of dividends to shareholders

(54,374)

(47,335)

Net cash provided by (used in) financing activities

(141,692)

(39,978)

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

7,181

19,882

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

131,120

239,667

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

1,478,680

1,457,596

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

$

1,609,800

$

1,697,263

Reconciliation of cash, cash equivalents and restricted cash:

June 30, 2021

June 30, 2020

Cash and cash equivalents

$

1,607,306

$

1,692,850

Restricted cash (1)

2,494

4,413

Total cash, cash equivalents and restricted cash

$

1,609,800

$

1,697,263

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

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

Year Ended June 30,

2021

2020

2019

Cash flows from operating activities:

Net income

$

310,864

$

234,368

$

285,637

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

Depreciation and amortization of intangible assets

520,605

514,734

470,928

Share-based compensation expense

51,969

29,532

26,770

Pension expense

6,616

5,802

4,624

Amortization of debt issuance costs

4,548

4,633

4,330

Accelerated amortization of right of use assets

36,864

Loss on extinguishment of debt

17,854

Loss on sale and write down of property and equipment

2,771

9,714

9,438

Deferred taxes

73,039

51,388

47,425

Share in net (income) loss of equity investees

(62,897)

(8,700)

(13,668)

Changes in operating assets and liabilities:

Accounts receivable

60,954

84,499

75,508

Contract assets

(39,333)

(40,301)

(37,623)

Prepaid expenses and other current assets

37,733

(6,897)

(819)

Income taxes

(140,763)

(35,086)

27,291

Accounts payable and accrued liabilities

26,088

30,613

(21,732)

Deferred revenue

39,295

25,306

(1,827)

Other assets

11,914

1,127

(4)

Operating lease assets and liabilities, net

(27,283)

(914)

Net cash provided by operating activities

876,120

954,536

876,278

Cash flows from investing activities:

Additions of property and equipment

(63,675)

(72,709)

(63,837)

Purchase of XMedius

444

(73,335)

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

(1,305,097)

Purchase of Dynamic Solutions Group Inc.

(971)

(4,149)

Purchase of Catalyst Repository Systems Inc.

(70,800)

Purchase of Liaison Technologies, Inc.

(310,644)

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

(2,279)

Other investing activities

(4,568)

(14,127)

(16,966)

Net cash used in investing activities

(68,770)

(1,469,417)

(464,526)

Cash flows from financing activities:

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

80,067

66,600

57,889

Proceeds from long-term debt and Revolver

3,150,000

Repayment of long-term debt and Revolver

(610,000)

(1,713,631)

(10,000)

Debt extinguishment costs

(11,248)

Debt issuance costs

(21,806)

(322)

Repurchase of Common Shares

(119,105)

Purchase of treasury stock

(64,847)

(12,424)

(26,499)

Purchase of non-controlling interest

(583)

Payments of dividends to shareholders

(210,662)

(188,712)

(168,859)

Net cash provided by (used in) financing activities

(924,547)

1,268,779

(148,374)

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

29,734

(178)

(3,826)

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

(87,463)

753,720

259,552

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

1,697,263

943,543

683,991

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

$

1,609,800

$

1,697,263

$

943,543

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

Reconciliation of cash, cash equivalents and restricted cash:

June 30, 2021

June 30, 2020

June 30, 2019

Cash and cash equivalents

$

1,607,306

$

1,692,850

$

941,009

Restricted cash (1)

2,494

4,413

2,534

Total cash, cash equivalents and restricted cash

$

1,609,800

$

1,697,263

$

943,543

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


Notes

(1)  All dollar amounts in this press release are in U.S. Dollars unless otherwise indicated.

(2)  Use of Non-GAAP Financial Measures: In addition to reporting financial results in accordance with U.S. GAAP, the Company provides certain financial measures that are not in accordance with U.S. GAAP (Non-GAAP). These Non-GAAP financial measures have certain limitations in that they do not have a standardized meaning and thus the Company’s definition may be different from similar Non-GAAP financial measures used by other companies and/or analysts and may differ from period to period. Thus it may be more difficult to compare the Company’s financial performance to that of other companies. However, the Company’s management compensates for these limitations by providing the relevant disclosure of the items excluded in the calculation of these Non-GAAP financial measures both in its reconciliation to the U.S. GAAP financial measures and its consolidated financial statements, all of which should be considered when evaluating the Company’s results.

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

Non-GAAP-based net income and Non-GAAP-based EPS, attributable to OpenText, are consistently calculated as GAAP-based net income or earnings per share, attributable to OpenText, on a diluted basis, excluding the effects of the amortization of acquired intangible assets, other income (expense), share-based compensation, and special charges (recoveries), all net of tax and any tax benefits/expense items unrelated to current period income, as further described in the tables below. Non-GAAP-based gross profit is the arithmetical sum of GAAP-based gross profit and the amortization of acquired technology-based intangible assets and share-based compensation within cost of sales. Non-GAAP-based gross margin is calculated as Non-GAAP-based gross profit expressed as a percentage of total revenue. Non-GAAP-based income from operations is calculated as GAAP-based income from operations, excluding the amortization of acquired intangible assets, special charges (recoveries), and share-based compensation expense.

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

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

The Company does not acquire businesses on a predictable cycle, and therefore believes that the presentation of Non-GAAP measures, which in certain cases adjust for the impact of amortization of intangible assets and the related tax effects that are primarily related to acquisitions, will provide readers of financial statements with a more consistent basis for comparison across accounting periods and be more useful in helping readers understand the Company’s operating results and underlying operational trends. Additionally, the Company has engaged in various restructuring activities over the past several years, primarily due to acquisitions and most recently in response to the COVID-19 pandemic, that have resulted in costs associated with reductions in headcount, consolidation of leased facilities and related costs, all which are recorded under the Company’s “Special charges (recoveries)” caption on the Consolidated Statements of Income. Each restructuring activity is a discrete event based on a unique set of business objectives or circumstances, and each differs in terms of its operational implementation, business impact and scope, and the size of each restructuring plan can vary significantly from period to period. Therefore, the Company believes that the exclusion of these special charges (recoveries) will also better aid readers of financial statements in the understanding and comparability of the Company’s operating results and underlying operational trends.

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

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

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

for the three months ended June 30, 2021

(In thousands, except for per share data)

Three Months Ended June 30, 2021

GAAP-based Measures

GAAP-based Measures

% of Total Revenue

Adjustments

Note

Non-GAAP-based Measures

Non-GAAP-based  Measures

% of Total Revenue

Cost of revenues

Cloud services and subscriptions

$

127,583

$

(935)

(1)

$

126,648

Customer support

32,938

(505)

(1)

32,433

Professional service and other

53,662

(698)

(1)

52,964

Amortization of acquired technology-based intangible assets

53,215

(53,215)

(2)

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

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

621,814

69.6%

55,353

(3)

677,167

75.8%

Operating expenses

Research and development

117,235

(2,664)

(1)

114,571

Sales and marketing

183,237

(4,718)

(1)

178,519

General and administrative

73,019

(3,830)

(1)

69,189

Amortization of acquired customer-based intangible assets

52,469

(52,469)

(2)

Special charges (recoveries)

3,152

(3,152)

(4)

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

171,681

122,186

(5)

293,867

Other income (expense), net

45,017

(45,017)

(6)

Provision for (recovery of) income taxes

(2,215)

38,099

(7)

35,884

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

181,283

39,070

(8)

220,353

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

$

0.66

$

0.14

(8)

$

0.80

(1)

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

(2)

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

(3)

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

(4)

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

(5)

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

(6)

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

(7)

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

(8)

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

Three Months Ended June 30, 2021

Per share diluted

GAAP-based net income, attributable to OpenText

$

181,283

$

0.66

Add:

Amortization

105,684

0.39

Share-based compensation

13,350

0.05

Special charges (recoveries)

3,152

0.01

Other (income) expense, net

(45,017)

(0.16)

GAAP-based provision for (recovery of) income taxes

(2,215)

(0.02)

Non-GAAP-based provision for income taxes

(35,884)

(0.13)

Non-GAAP-based net income, attributable to OpenText

$

220,353

$

0.80

Reconciliation of Adjusted EBITDA

Three Months Ended June 30, 2021

GAAP-based net income, attributable to OpenText

$

181,283

Add:

Provision for (recovery of) income taxes

(2,215)

Interest and other related expense, net

37,550

Amortization of acquired technology-based intangible assets

53,215

Amortization of acquired customer-based intangible assets

52,469

Depreciation

21,021

Share-based compensation

13,350

Special charges (recoveries)

3,152

Other (income) expense, net

(45,017)

Adjusted EBITDA

$

314,808

GAAP-based net income margin

20.3

%

Adjusted EBITDA margin

35.2

%

Reconciliation of Free cash flows

Three Months Ended June 30, 2021

GAAP-based cash flows provided by operating activities

$

296,189

Add:

Capital expenditures (1)

(27,408)

Free cash flows

$

268,781

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

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

for the year ended June 30, 2021

(In thousands, except for per share data)

Year Ended June 30, 2021

GAAP-based

Measures

GAAP-based Measures

% of Total Revenue

Adjustments

Note

Non-GAAP-based

Measures

Non-GAAP-based  Measures

% of Total Revenue

Cost of revenues

Cloud services and subscriptions

$

481,818

$

(3,419)

(1)

$

478,399

Customer support

122,753

(1,910)

(1)

120,843

Professional service and other

197,183

(2,565)

(1)

194,618

Amortization of acquired technology-based intangible assets

218,796

(218,796)

(2)

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

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

2,351,649

69.4%

226,690

(3)

2,578,339

76.1%

Operating expenses

Research and development

421,447

(9,859)

(1)

411,588

Sales and marketing

622,221

(18,312)

(1)

603,909

General and administrative

263,521

(15,904)

(1)

247,617

Amortization of acquired customer-based intangible assets

216,544

(216,544)

(2)

Special charges (recoveries)

1,748

(1,748)

(4)

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

740,903

489,057

(5)

1,229,960

Other income (expense), net

61,434

(61,434)

(6)

Provision for (recovery of) income taxes

339,906

(188,931)

(7)

150,975

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

310,672

616,554

(8)

927,226

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

$

1.14

$

2.25

(8)

$

3.39

(1)

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

(2)

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

(3)

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

(4)

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

(5)

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

(6)

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

(7)

Adjustment relates to differences between the GAAP-based tax provision rate of approximately 52% and a Non-GAAP-based tax rate of approximately 14%; these rate differences are due to the income tax effects of items that are excluded for the purpose of calculating Non-GAAP-based adjusted net income. Such excluded items include amortization, share-based compensation, special charges (recoveries) and other income (expense), net. Also excluded are tax benefits/expense items unrelated to current period income such as changes in reserves for tax uncertainties and valuation allowance reserves, and “book to return” adjustments for tax return filings and tax assessments. Included is the amount of net tax benefits arising from the internal reorganization that occurred in Fiscal 2017 assumed to be allocable to the current period based on the forecasted utilization period. In arriving at our Non-GAAP-based tax rate of approximately 14%, we analyzed the individual adjusted expenses and took into consideration the impact of statutory tax rates from local jurisdictions incurring the expense. The GAAP-based tax provision rate for the year ended June 30, 2021 includes the income tax provision charge from the IRS settlement partially offset by a tax benefit from the release of unrecognized tax benefits due to the conclusion of relevant tax audits that was recognized during the second quarter of Fiscal 2021.

(8)

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

Year Ended June 30, 2021

Per share diluted

GAAP-based net income, attributable to OpenText

$

310,672

$

1.14

Add:

Amortization

435,340

1.59

Share-based compensation

51,969

0.19

Special charges (recoveries)

1,748

0.01

Other (income) expense, net

(61,434)

(0.22)

GAAP-based provision for (recovery of) income taxes

339,906

1.23

Non-GAAP-based provision for income taxes

(150,975)

(0.55)

Non-GAAP-based net income, attributable to OpenText

$

927,226

$

3.39

Reconciliation of Adjusted EBITDA

Year Ended June 30, 2021

GAAP-based net income, attributable to OpenText

$

310,672

Add:

Provision for (recovery of) income taxes

339,906

Interest and other related expense, net

151,567

Amortization of acquired technology-based intangible assets

218,796

Amortization of acquired customer-based intangible assets

216,544

Depreciation

85,265

Share-based compensation

51,969

Special charges (recoveries)

1,748

Other (income) expense, net

(61,434)

Adjusted EBITDA

$

1,315,033

GAAP-based net income margin

9.2

%

Adjusted EBITDA margin

38.8

%

Reconciliation of Free cash flows

Year Ended June 30, 2021

GAAP-based cash flows provided by operating activities

$

876,120

Add:

Capital expenditures (1)

(63,675)

Free cash flows

$

812,445

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

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

for the three months ended March 31, 2021

(In thousands, except for per share data)

Three Months Ended March 31, 2021

GAAP-based

Measures

GAAP-based Measures

% of Total Revenue

Adjustments

Note

Non-GAAP-based

Measures

Non-GAAP-based Measures

% of Total Revenue

Cost of revenues

Cloud services and subscriptions

$

123,729

$

(505)

(1)

$

123,224

Customer support

30,953

(464)

(1)

30,489

Professional service and other

50,321

(684)

(1)

49,637

Amortization of acquired technology-based intangible assets

53,453

(53,453)

(2)

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

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

571,665

68.6%

55,106

(3)

626,771

75.2%

Operating expenses

Research and development

110,071

(2,146)

(1)

107,925

Sales and marketing

158,687

(4,580)

(1)

154,107

General and administrative

71,548

(3,978)

(1)

67,570

Amortization of acquired customer-based intangible assets

54,156

(54,156)

(2)

Special charges (recoveries)

2,846

(2,846)

(4)

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

152,396

122,812

(5)

275,208

Other income (expense), net

8,283

(8,283)

(6)

Provision for (recovery of) income taxes

31,818

1,485

(7)

33,303

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

91,490

113,044

(8)

204,534

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

$

0.33

$

0.42

(8)

$

0.75

(1)

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

(2)

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

(3)

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

(4)

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

(5)

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

(6)

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

(7)

Adjustment relates to differences between the GAAP-based tax provision rate of approximately 26% and a Non-GAAP-based tax rate of approximately 14%; these rate differences are due to the income tax effects of items that are excluded for the purpose of calculating Non-GAAP-based adjusted net income. Such excluded items include amortization, share-based compensation, special charges (recoveries) and other income (expense), net. Also excluded are tax benefits/expense items unrelated to current period income such as changes in reserves for tax uncertainties and valuation allowance reserves, and “book to return” adjustments for tax return filings and tax assessments. Included is the amount of net tax benefits arising from the internal reorganization that occurred in Fiscal 2017 assumed to be allocable to the current period based on the forecasted utilization period. In arriving at our Non-GAAP-based tax rate of approximately 14%, we analyzed the individual adjusted expenses and took into consideration the impact of statutory tax rates from local jurisdictions incurring the expense.

(8)

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

Three Months Ended March 31, 2021

Per share diluted

GAAP-based net income, attributable to OpenText

$

91,490

$

0.33

Add:

Amortization

107,609

0.39

Share-based compensation

12,357

0.05

Special charges (recoveries)

2,846

0.01

Other (income) expense, net

(8,283)

(0.03)

GAAP-based provision for (recovery of) income taxes

31,818

0.12

Non-GAAP-based provision for income taxes

(33,303)

(0.12)

Non-GAAP-based net income, attributable to OpenText

$

204,534

$

0.75

Reconciliation of Adjusted EBITDA

Three Months Ended March 31, 2021

GAAP-based net income, attributable to OpenText

$

91,490

Add:

Provision for (recovery of) income taxes

31,818

Interest and other related expense, net

37,333

Amortization of acquired technology-based intangible assets

53,453

Amortization of acquired customer-based intangible assets

54,156

Depreciation

21,961

Share-based compensation

12,357

Special charges (recoveries)

2,846

Other (income) expense, net

(8,283)

Adjusted EBITDA

$

297,131

GAAP-based net income margin

11.0

%

Adjusted EBITDA margin

35.7

%

Reconciliation of Free cash flows

Three Months Ended March 31, 2021

GAAP-based cash flows provided by operating activities

$

63,572

Add:

Capital expenditures (1)

(13,311)

Free cash flows

$

50,261

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


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

for the three months ended June 30, 2020

(In thousands, except for per share data)

Three Months Ended June 30, 2020

GAAP-based

Measures

GAAP-based Measures

% of Total Revenue

Adjustments

Note

Non-GAAP-based

Measures

Non-GAAP-based Measures

% of Total Revenue

Cost of revenues

Cloud services and subscriptions

$

116,569

$

(490)

(1)

$

116,079

Customer support

32,568

(310)

(1)

32,258

Professional service and other

48,435

(377)

(1)

48,058

Amortization of acquired technology-based intangible assets

59,719

(59,719)

(2)

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

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

565,917

68.5

%

60,896

(3)

626,813

75.8

%

Operating expenses

Research and development

100,766

(1,590)

(1)

99,176

Sales and marketing

152,882

(2,575)

(1)

150,307

General and administrative

62,574

(2,660)

(1)

59,914

Amortization of acquired customer-based intangible assets

58,998

(58,998)

(2)

Special charges (recoveries)

75,849

(75,849)

(4)

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

91,199

202,568

(5)

293,767

Other income (expense), net

7,790

(7,790)

(6)

Provision for (recovery of) income taxes

32,037

3,416

(7)

35,453

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

26,392

191,362

(8)

217,754

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

$

0.10

$

0.70

(8)

$

0.80

(1)

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

(2)

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

(3)

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

(4)

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

(5)

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

(6)

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

(7)

Adjustment relates to differences between the GAAP-based tax provision rate of approximately 55% and a Non-GAAP-based tax rate of approximately 14%; these rate differences are due to the income tax effects of items that are excluded for the purpose of calculating Non-GAAP-based adjusted net income. Such excluded items include amortization, share-based compensation, special charges (recoveries) and other income (expense), net. Also excluded are tax benefits/expense items unrelated to current period income such as changes in reserves for tax uncertainties and valuation allowance reserves, and “book to return” adjustments for tax return filings and tax assessments. Included is the amount of net tax benefits arising from the internal reorganization that occurred in Fiscal 2017 assumed to be allocable to the current period based on the forecasted utilization period. In arriving at our Non-GAAP-based tax rate of approximately 14%, we analyzed the individual adjusted expenses and took into consideration the impact of statutory tax rates from local jurisdictions incurring the expense.

(8)

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

Three Months Ended June 30, 2020

Per share diluted

GAAP-based net income, attributable to OpenText

$

26,392

$

0.10

Add:

Amortization

118,717

0.44

Share-based compensation

8,002

0.03

Special charges (recoveries)

75,849

0.28

Other (income) expense, net

(7,790)

(0.03)

GAAP-based provision for (recovery of) income taxes

32,037

0.12

Non-GAAP-based provision for income taxes

(35,453)

(0.14)

Non-GAAP-based net income, attributable to OpenText

$

217,754

$

0.80

Reconciliation of Adjusted EBITDA

Three Months Ended June 30, 2020

GAAP-based net income, attributable to OpenText

$

26,392

Add:

Provision for (recovery of) income taxes

32,037

Interest and other related expense, net

40,529

Amortization of acquired technology-based intangible assets

59,719

Amortization of acquired customer-based intangible assets

58,998

Depreciation

23,649

Share-based compensation

8,002

Special charges (recoveries)

75,849

Other (income) expense, net

(7,790)

Adjusted EBITDA

$

317,385

GAAP-based net income margin

3.2

%

Adjusted EBITDA margin

38.4

%

Reconciliation of Free cash flows

Three Months Ended June 30, 2020

GAAP-based cash flows provided by operating activities

$

280,250

Add:

Capital expenditures (1)

(17,704)

Free cash flows

$

262,546

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

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

for the year ended June 30, 2020

(In thousands, except for per share data)

Year Ended June 30, 2020

GAAP-based

Measures

GAAP-based Measures

% of Total Revenue

Adjustments

Note

Non-GAAP-based

Measures

Non-GAAP-based Measures

% of Total Revenue

Cost of revenues

Cloud services and subscriptions

$

449,940

$

(1,642)

(1)

$

448,298

Customer support

123,894

(1,207)

(1)

122,687

Professional service and other

212,903

(1,294)

(1)

211,609

Amortization of acquired technology-based intangible assets

205,717

(205,717)

(2)

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

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

2,105,961

67.7

%

209,860

(3)

2,315,821

74.5

%

Operating expenses

Research and development

370,411

(5,309)

(1)

365,102

Sales and marketing

585,044

(9,335)

(1)

575,709

General and administrative

237,532

(10,745)

(1)

226,787

Amortization of acquired customer-based intangible assets

219,559

(219,559)

(2)

Special charges (recoveries)

100,428

(100,428)

(4)

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

503,529

555,236

(5)

1,058,765

Other income (expense), net

(11,946)

11,946

(6)

Provision for (recovery of) income taxes

110,837

16,897

(7)

127,734

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

234,225

550,285

(8)

784,510

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

$

0.86

$

2.03

(8)

$

2.89

(1)

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

(2)

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

(3)

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

(4)

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

(5)

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

(6)

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

(7)

Adjustment relates to differences between the GAAP-based tax provision rate of approximately 32% and a Non-GAAP-based tax rate of approximately 14%; these rate differences are due to the income tax effects of items that are excluded for the purpose of calculating Non-GAAP-based adjusted net income. Such excluded items include amortization, share-based compensation, special charges (recoveries) and other income (expense), net. Also excluded are tax benefits/expense items unrelated to current period income such as changes in reserves for tax uncertainties and valuation allowance reserves, and “book to return” adjustments for tax return filings and tax assessments. Included is the amount of net tax benefits arising from the internal reorganization that occurred in Fiscal 2017 assumed to be allocable to the current period based on the forecasted utilization period. In arriving at our Non-GAAP-based tax rate of approximately 14%, we analyzed the individual adjusted expenses and took into consideration the impact of statutory tax rates from local jurisdictions incurring the expense.

(8)

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

Year Ended June 30, 2020

Per share diluted

GAAP-based net income, attributable to OpenText

$

234,225

$

0.86

Add:

Amortization

425,276

1.56

Share-based compensation

29,532

0.11

Special charges (recoveries)

100,428

0.37

Other (income) expense, net

11,946

0.04

GAAP-based provision for (recovery of) income taxes

110,837

0.41

Non-GAAP-based provision for income taxes

(127,734)

(0.46)

Non-GAAP-based net income, attributable to OpenText

$

784,510

$

2.89

Reconciliation of Adjusted EBITDA

Year Ended June 30, 2020

GAAP-based net income, attributable to OpenText

$

234,225

Add:

Provision for (recovery of) income taxes

110,837

Interest and other related expense, net

146,378

Amortization of acquired technology-based intangible assets

205,717

Amortization of acquired customer-based intangible assets

219,559

Depreciation

89,458

Share-based compensation

29,532

Special charges (recoveries)

100,428

Other (income) expense, net

11,946

Adjusted EBITDA

$

1,148,080

GAAP-based net income margin

7.5

%

Adjusted EBITDA margin

36.9

%

Reconciliation of Free cash flows

Year Ended June 30, 2020

GAAP-based cash flows provided by operating activities

$

954,536

Add:

Capital expenditures (1)

(72,709)

Free cash flows

$

881,827

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


(3)

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

Three Months Ended June 30, 2021

Three Months Ended June 30, 2020

Currencies

% of Revenue

% of Expenses (1)

% of Revenue

% of Expenses (1)

EURO

24

%

14

%

22

%

13

%

GBP

5

%

5

%

4

%

5

%

CAD

3

%

13

%

3

%

8

%

USD

60

%

53

%

63

%

57

%

Other

8

%

15

%

8

%

17

%

Total

100

%

100

%

100

%

100

%

Year Ended June 30, 2021

Year Ended June 30, 2020

Currencies

% of Revenue

% of Expenses (1)

% of Revenue

% of Expenses (1)

EURO

23

%

14

%

22

%

14

%

GBP

5

%

5

%

5

%

6

%

CAD

3

%

11

%

3

%

9

%

USD

61

%

54

%

61

%

55

%

Other

8

%

16

%

9

%

16

%

Total

100

%

100

%

100

%

100

%

(1)

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

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

SOURCE Open Text Corporation

News Provided by PR Newswire via QuoteMedia

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