Artificial Intelligence

Record Q1 Revenues Powered by Cloud Revenue Growth and Continued Strong Cloud Bookings

Fiscal 2023 First Quarter Highlights

Total Revenues

(in millions)


Annual Recurring Revenues

(in millions)


Cloud Revenues

(in millions)


Reported

Constant
Currency


Reported

Constant
Currency


Reported

Constant
Currency









$852

$892


$722

$754


$405

$417









+2.4 %

+7.1 %


+4.4 %

+8.9 %


+13.5 %

+16.9 %


Annual Recurring Revenues represent 85% of Total Revenues

  • Total revenues of $852 million , up 2.4% Y/Y or up 7.1% in constant currency
  • Annual recurring revenues of $722 million , up 4.4% Y/Y or up 8.9% in constant currency, a record 85% of total revenues
  • Cloud revenues of $405 million , up 13.5% Y/Y or up 16.9% in constant currency
  • Strong quarterly enterprise cloud bookings (1) of $112 million , up 37% Y/Y
  • Operating cash flows were $132 million and free cash flows (3) were $96 million
  • TTM operating cash flows (2) were $924 million and TTM free cash flows (2)(3) were $821 million
  • GAAP-based net income (loss) of ($117) million including $181 million of pretax unrealized losses on mark-to-market valuations related to derivative transactions in connection with the Micro Focus acquisition
  • Adjusted EBITDA (3) of $304 million , margin of 35.7% and TTM Adjusted EBITDA (2)(3) of $1,246 million , margin of 35.5%
  • GAAP-based diluted earnings (loss) per share (EPS) of ($0.43) , Non-GAAP diluted EPS (3) of $0.77

WATERLOO, ON , Nov. 3, 2022 /PRNewswire/ -- Open Text Corporation (NASDAQ: OTEX), (TSX: OTEX), today announced its financial results for the fourth quarter ended September 30, 2022.

"OpenText demonstrated outstanding execution and delivered record Q1 revenues and enterprise cloud bookings, up 37% Y/Y, amidst a dynamic macro environment," said Mark J. Barrenechea , OpenText CEO & CTO. "Total revenues of $852 million grew 2.4% year-over-year or 7.1% in constant currency. Cloud revenues of $405 million grew 13.5% year-over-year or 16.9% in constant currency, driven by increased cloud consumption. Annual recurring revenues of $722 million grew 4.4% year-over-year or 8.9% in constant currency, representing 85% of total revenues and achieving seven consecutive quarters of cloud and ARR organic growth in constant currency."

"OpenText empowers organizations to drive cloud-based digital transformations, helping customers excel in a world of rapid change," added Mr. Barrenechea. "On August 25, 2022 , we announced our intention to acquire Micro Focus International plc, and on October 18 , Micro Focus shareholders approved the offer - an important milestone in our path towards completing the acquisition. With the planned acquisition of Micro Focus, OpenText will be one of the world's largest software and cloud businesses with a $170 billion market opportunity. We remain on track to close the Micro Focus acquisition in the first calendar quarter of 2023."

"We are pleased with our first fiscal quarter performance where we continued to lead with operational excellence in a dynamic environment," said Madhu Ranganathan , OpenText EVP, CFO. "With approximately $1.7 billion in cash as of September 30, 2022 , our balance sheet and liquidity position remain solid. OpenText's strong momentum reflects continued execution of OpenText strategic priorities and positions us well for the upcoming integration of Micro Focus."

(1) Enterprise cloud bookings is defined as the total value from cloud services and subscription contracts, entered into in the period that are new, committed and incremental to our existing contracts, excluding the impact of Carbonite and Zix.

(2) TTM is calculated as the full year FY'22 amount, less Q1FY'22, plus Q1FY'23 included within our current and historical filings on Forms 10-Q and 10-K.

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


Financial Highlights for Q1 Fiscal 2023 with Year Over Year Comparisons

Summary of Quarterly Results









(In millions, except per share data)

Q1 FY'23

Q1 FY'22

$ Change

% Change


Q1 FY'23
in CC*

% Change
in CC*


Revenues:









Cloud services and subscriptions

$404.7

$356.6

$48.1

13.5 %


$416.8

16.9 %


Customer support

317.4

335.2

($17.9)

(5.3) %


336.9

0.5 %


Total annual recurring revenues**

$722.0

$691.8

$30.2

4.4 %


$753.6

8.9 %


License

62.5

73.5

($11.0)

(14.9) %


66.4

(9.7) %


Professional service and other

67.5

67.0

$0.5

0.8 %


71.8

7.2 %


Total revenues

$852.0

$832.3

$19.7

2.4 %


$891.8

7.1 %


GAAP-based operating income

$146.4

$182.7

($36.3)

(19.9) %


N/A

N/A


Non-GAAP-based operating income (1)

$280.9

$302.0

($21.1)

(7.0) %


$296.4

(1.9) %


GAAP-based net income (loss) attributable to OpenText

($116.9)

$131.9

($248.8)

(188.6) %


N/A

N/A


GAAP-based EPS, diluted

($0.43)

$0.48

($0.91)

(189.6) %


N/A

N/A


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

$0.77

$0.83

($0.06)

(7.2) %


$0.83

— %


Adjusted EBITDA (1)

$304.0

$323.4

($19.3)

(6.0) %


$319.7

(1.1) %


Operating cash flows

$132.0

$189.7

($57.7)

(30.4) %


N/A

N/A


Free cash flows (1)

$95.6

$163.0

($67.3)

(41.3) %


N/A

N/A



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


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


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


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


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

Dividend

As part of our quarterly, non-cumulative cash dividend program, the Board declared on November 2, 2022, a cash dividend of $0.24299 per common share. The record date for this dividend is December 2, 2022 and the payment date is December 22, 2022. 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.

Quarterly Business Highlights

  • OpenText announced its intention to acquire Micro Focus International plc and fund the all-cash offer with existing cash, new debt and a draw on our existing revolving credit facility
  • Micro Focus shareholders approved all cash offer by OpenText
  • Key customer wins in the quarter include: Al Ahli Bank of Kuwait , Alcatel Lucent, Auto Club Group of Michigan , The City of Calgary , Close Brothers Group,  DataExpert, Engie, Fifth Third Bank, Industry Data Exchange Association, KMD Nexus,  Penn Mutual, People's Education Press, Sutter Health, Serious Fraud Office, University of Winchester and Water Board Hoogheemraadschap
  • OpenText kicked off OpenText World introducing Cloud Editions 22.4 and Project Titanium
  • OpenText unveiled new integrations and innovations with Google Cloud at OpenText World 2022
  • OpenText announced 2030 Pledge Zero-in with ambitious ESG targets and programs

Summary of Quarterly Results









Q1 FY'23

Q4 FY'22

Q1 FY'22

% Change
(Q1 FY'23 vs
Q4 FY'22)


% Change
(Q1 FY'23 vs
Q1 FY'22)


Revenue (millions)

$852.0

$902.5

$832.3

(5.6) %


2.4 %


GAAP-based gross margin

69.7 %

70.2 %

69.0 %

(50)

bps

70

bps

Non-GAAP-based gross margin (1)

75.2 %

75.9 %

75.7 %

(70)

bps

(50)

bps

GAAP-based EPS, diluted

($0.43)

$0.38

$0.48

(213.2) %


(189.6) %


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

$0.77

$0.80

$0.83

(3.8) %


(7.2) %



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


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

Conference Call Information

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

A replay of the call will be available beginning November 3, 2022 at 7:00 p.m. ET through 11:59 p.m. on November 17, 2022 and can be accessed by dialing 1-855-669-9658 (toll-free) or +1-604-674-8052 (international) and using passcode 9454 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.

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, 2023 (Fiscal 2023) on growth, future cloud growth and market share gains, future organic growth initiatives and deployment of capital, intention to maintain a dividend program, the proposed acquisition of Micro Focus International plc (the Acquisition) and associated benefits, future tax rates, new platform and product offerings and associated benefits to customers, scaling OpenText, and other matters, which may contain words such as "anticipates", "expects", "intends", "plans", "believes", "seeks", "estimates", "may", "could", "would", "might", "will" and variations of these words or similar expressions are 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 and uncertainties such as those relating to: inability to obtain required regulatory approvals for the Acquisition, the timing of obtaining such approvals and the risk that such approvals may result in the imposition of conditions that could adversely affect; the expected benefits of the Acquisition; the risk that a condition to closing of the Acquisition may not be satisfied on a timely basis or at all; uncertainties as to access to available financing (including refinancing of debt) on a timely basis and on reasonable terms; all statements regarding the expected future financial position, results of operations, cash flows, dividends, financing plans, business strategy, budgets, capital expenditures, competitive positions, growth opportunities, plans and objectives of management following the Acquisition, including any anticipated synergy benefits; our ability to integrate successfully Micro Focus' operations and programs, including incurring unanticipated costs, delays or difficulties;  duration and severity of the COVID-19 pandemic, including any new strains or resurgence; and our ability to develop, protect and maintain our intellectual property and proprietary technology and to operate without infringing on the proprietary rights of others. For additional information with respect to risks and other factors which could occur, see the Company's Annual Report on Form 10-K, Quarterly Report on Form 10-Q and other securities filings with the Securities and Exchange Commission (SEC) and other securities regulators. Readers are cautioned not to place undue reliance upon any such forward-looking statements, which speak only as of the date made. Unless otherwise required by applicable securities laws, the Company disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

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 ©2022 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)



September 30, 2022


June 30, 2022

ASSETS

(unaudited)



Cash and cash equivalents

$             1,704,385


$             1,693,741

Accounts receivable trade, net of allowance for credit losses of $15,410 as of September 30, 2022 and $16,473 as of June 30, 2022

378,143


426,652

Contract assets

27,802


26,167

Income taxes recoverable

8,856


18,255

Prepaid expenses and other current assets

124,868


120,552

Total current assets

2,244,054


2,285,367

Property and equipment

251,151


244,709

Operating lease right of use assets

201,374


198,132

Long-term contract assets

18,544


19,719

Goodwill

5,226,814


5,244,653

Acquired intangible assets

974,589


1,075,208

Deferred tax assets

814,471


810,154

Other assets

299,608


256,987

Long-term income taxes recoverable

46,483


44,044

Total assets

$          10,077,088


$          10,178,973

LIABILITIES AND SHAREHOLDERS' EQUITY




Current liabilities:




Accounts payable and accrued liabilities

$                601,074


$                448,607

Current portion of long-term debt

10,000


10,000

Operating lease liabilities

58,969


56,380

Deferred revenues

848,789


902,202

Income taxes payable

58,692


51,069

Total current liabilities

1,577,524


1,468,258

Long-term liabilities:




Accrued liabilities

20,119


18,208

Pension liability

53,202


60,951

Long-term debt

4,208,547


4,209,567

Long-term operating lease liabilities

197,328


198,695

Long-term deferred revenues

85,514


91,144

Long-term income taxes payable

42,087


34,003

Deferred tax liabilities

42,626


65,887

Total long-term liabilities

4,649,423


4,678,455

Shareholders' equity:




Share capital and additional paid-in capital




269,880,769 and 269,522,639 Common Shares issued and outstanding at September 30, 2022 and June 30, 2022, respectively; authorized Common Shares: unlimited

2,067,881


2,038,674

Accumulated other comprehensive income (loss)

(42,576)


(7,659)

Retained earnings

1,978,442


2,160,069

Treasury stock, at cost (3,586,014 and 3,706,420 shares at September 30, 2022 and June 30, 2022, respectively)

(154,792)


(159,966)

Total OpenText shareholders' equity

3,848,955


4,031,118

Non-controlling interests

1,186


1,142

Total shareholders' equity

3,850,141


4,032,260

Total liabilities and shareholders' equity

$          10,077,088


$          10,178,973




OPEN TEXT CORPORATION

CONSOLIDATED STATEMENTS OF INCOME

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

(unaudited)



Three Months Ended September 30,


2022


2021

Revenues:




Cloud services and subscriptions

$                404,651


$                356,589

Customer support

317,351


335,237

License

62,548


73,529

Professional service and other

67,486


66,953

Total revenues

852,036


832,308

Cost of revenues:




Cloud services and subscriptions

131,799


119,779

Customer support

27,354


29,483

License

2,758


3,969

Professional service and other

53,800


51,725

Amortization of acquired technology-based intangible assets

42,637


53,167

Total cost of revenues

258,348


258,123

Gross profit

593,688


574,185

Operating expenses:




Research and development

110,198


100,165

Sales and marketing

167,170


146,240

General and administrative

78,074


71,477

Depreciation

23,174


21,386

Amortization of acquired customer-based intangible assets

54,438


51,884

Special charges (recoveries)

14,281


344

Total operating expenses

447,335


391,496

Income from operations

146,353


182,689

Other income (expense), net

(189,231)


29,782

Interest and other related expense, net

(40,382)


(37,055)

Income (loss) before income taxes

(83,260)


175,416

Provision for income taxes

33,625


43,450

Net income (loss) for the period

$              (116,885)


$                131,966

Net (income) loss attributable to non-controlling interests

(44)


(51)

Net income (loss) attributable to OpenText

$              (116,929)


$                131,915

Earnings (loss) per share—basic attributable to OpenText

$                     (0.43)


$                       0.48

Earnings (loss) per share—diluted attributable to OpenText

$                     (0.43)


$                       0.48

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

269,804


272,044

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

269,804


273,232




OPEN TEXT CORPORATION

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(In thousands of U.S. dollars)

(unaudited)



Three Months Ended September 30,


2022


2021

Net income (loss)

$              (116,885)


$                131,966

Other comprehensive income (loss)—net of tax:




Net foreign currency translation adjustments

(36,366)


(10,092)

Unrealized gain (loss) on cash flow hedges:




Unrealized gain (loss) - net of tax expense (recovery) effect of  ($1,206) and ($391) for the three months ended September 30, 2022 and 2021, respectively

(3,340)


(1,086)

(Gain) loss reclassified into net income - net of tax (expense) recovery effect of $212 and ($103) for the three months ended September 30, 2022 and 2021, respectively

588


(287)

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




Actuarial gain (loss) - net of tax expense (recovery) effect of $1,104 and ($232) for the three months ended September 30, 2022 and 2021, respectively

4,164


(1,049)

Amortization of actuarial (gain) loss into net income - net of tax (expense) recovery effect of $26 and $68 for the three months ended September 30, 2022 and 2021, respectively

37


162

Total other comprehensive income (loss) net

(34,917)


(12,352)

Total comprehensive income (loss)

(151,802)


119,614

Comprehensive (income) loss attributable to non - controlling interests

(44)


(51)

Total comprehensive income (loss) attributable to OpenText

$              (151,846)


$                119,563




OPEN TEXT CORPORATION

CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY

(In thousands of U.S. dollars and shares)

(unaudited)



Three Months Ended September 30, 2022


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, 2022

269,523


$  2,038,674


(3,706)


$  (159,966)


$  2,160,069


$          (7,659)


$      1,142


$  4,032,260

Issuance of Common Shares
















Under employee stock option plans

72


1,994







1,994

Under employee stock purchase plans

286


9,179







9,179

Share-based compensation


23,208







23,208

Issuance of treasury stock


(5,174)


120


5,174





Dividends declared (0.24299 per Common Share)





(64,698)




(64,698)

Other comprehensive income (loss) - net






(34,917)



(34,917)

Net income (loss)  for the period





(116,929)



44


(116,885)

Balance as of September 30, 2022

269,881


2,067,881


(3,586)


(154,792)


1,978,442


(42,576)


1,186


3,850,141






Three Months Ended September 30, 2021


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, 2021

271,541


$  1,947,764


(1,568)


$ (69,386)


$  2,153,326


$          66,238


$      1,511


$  4,099,453

Issuance of Common Shares
















Under employee stock option plans

796


27,299







27,299

Under employee stock purchase plans

197


8,489







8,489

Share-based compensation


13,934







13,934

Issuance of treasury stock


(5,909)


142


5,909





Dividends declared

($0.2209 per Common Share)





(59,878)




(59,878)

Other comprehensive income (loss) - net






(12,352)



(12,352)

Distribution to non-controlling interest


142






(538)


(396)

Net income (loss) for the period





131,915



51


131,966

Balance as of September 30, 2021

272,534


1,991,719


(1,426)


(63,477)


2,225,363


53,886


1,024


4,208,515




OPEN TEXT CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands of U.S. dollars)

(unaudited)



Three Months Ended September 30,


2022


2021

Cash flows from operating activities:




Net income (loss) for the period

$                (116,885)


$                  131,966

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




Depreciation and amortization of intangible assets

120,249


126,437

Share-based compensation expense

23,208


13,934

Pension expense

1,387


1,486

Amortization of debt issuance costs

1,480


1,161

Write-off of right of use assets

2,827


Loss on sale and write down of property and equipment


27

Deferred taxes

(20,667)


14,682

Share in net (income) loss of equity investees

6,534


(29,315)

Unrealized (gain) loss on financial instruments

181,461


Changes in operating assets and liabilities:




Accounts receivable

59,494


76,526

Contract assets

(9,054)


(7,248)

Prepaid expenses and other current assets

(2,934)


(9,811)

Income taxes

15,834


16,761

Accounts payable and accrued liabilities

(27,179)


(114,334)

Deferred revenue

(53,779)


(38,516)

Other assets

(47,749)


7,542

Operating lease assets and liabilities, net

(2,268)


(1,629)

Net cash provided by operating activities

131,959


189,669

Cash flows from investing activities:




Additions of property and equipment

(36,324)


(26,712)

Other investing activities


296

Net cash used in investing activities

(36,324)


(26,416)

Cash flows from financing activities:




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

10,037


36,720

Repayment of long-term debt and Revolver

(2,500)


(2,500)

Distribution to non-controlling interest


(396)

Payments of dividends to shareholders

(64,698)


(59,878)

Net cash provided by (used in) financing activities

(57,161)


(26,054)

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

(28,102)


(9,277)

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

10,372


127,922

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

1,695,911


1,609,800

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

$               1,706,283


$               1,737,722




OPEN TEXT CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands of U.S. dollars)

(unaudited)


Reconciliation of cash, cash equivalents and restricted cash:

September 30, 2022


September 30, 2021

Cash and cash equivalents

$               1,704,385


$               1,735,265

Restricted cash (1)

1,898


2,457

Total cash, cash equivalents and restricted cash

$               1,706,283


$               1,737,722





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

Notes

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

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

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

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

Adjusted earnings before interest, taxes, depreciation and amortization (Adjusted EBITDA) is consistently calculated as GAAP-based net income (loss), attributable to OpenText, excluding interest income (expense), provision for 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 our return to office planning, that have resulted in costs associated with reductions in headcount, consolidation of leased facilities and related costs, all which are recorded under the Company's "Special charges (recoveries)" caption on the Consolidated Statements of Income. Each restructuring activity is a discrete event based on a unique set of business objectives or circumstances, and each differs in terms of its operational implementation, business impact and scope, and the size of each restructuring plan can vary significantly from period to period. Therefore, the Company believes that the exclusion of these special charges (recoveries) will also better aid readers of financial statements in the understanding and comparability of the Company's operating results and underlying operational trends.

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

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 September 30, 2022

(In thousands, except for per share data)


Three Months Ended September 30, 2022


GAAP-based
Measures

GAAP-based
Measures

% of Total
Revenue

Adjustments

Note

Non-GAAP-
based
Measures

Non-GAAP-
based
Measures

% of Total
Revenue

Cost of revenues







Cloud services and subscriptions

$  131,799


$     (2,033)

(1)

$   129,766


Customer support

27,354


(567)

(1)

26,787


Professional service and other

53,800


(1,525)

(1)

52,275


Amortization of acquired technology-based intangible assets

42,637


(42,637)

(2)


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

593,688

69.7 %

46,762

(3)

640,450

75.2 %

Operating expenses







Research and development

110,198


(6,854)

(1)

103,344


Sales and marketing

167,170


(6,859)

(1)

160,311


General and administrative

78,074


(5,370)

(1)

72,704


Amortization of acquired customer-based intangible assets

54,438


(54,438)

(2)


Special charges (recoveries)

14,281


(14,281)

(4)


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

146,353


134,564

(5)

280,917


Other income (expense), net

(189,231)


189,231

(6)


Provision for income taxes

33,625


50

(7)

33,675


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

(116,929)


323,745

(8)

206,816


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

$       (0.43)


$          1.20

(8)

$          0.77




(1)

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

(2)

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

(3)

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

(4)

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

(5)

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

(6)

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

(7)

Adjustment relates to differences between the GAAP-based tax provision rate of approximately 40% 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 (loss) to Non-GAAP-based net income:




Three Months Ended September 30, 2022



Per share diluted

GAAP-based net income (loss), attributable to OpenText

$                 (116,929)

$                        (0.43)

Add:



Amortization

97,075

0.36

Share-based compensation

23,208

0.09

Special charges (recoveries)

14,281

0.05

Other (income) expense, net

189,231

0.70

GAAP-based provision for income taxes

33,625

0.12

Non-GAAP-based provision for income taxes

(33,675)

(0.12)

Non-GAAP-based net income, attributable to OpenText

$                   206,816

$                          0.77

Reconciliation of Adjusted EBITDA


Three Months Ended September 30, 2022

GAAP-based net income (loss), attributable to OpenText

$                                                   (116,929)

Add:


Provision for income taxes

33,625

Interest and other related expense, net

40,382

Amortization of acquired technology-based intangible assets

42,637

Amortization of acquired customer-based intangible assets

54,438

Depreciation

23,174

Share-based compensation

23,208

Special charges (recoveries)

14,281

Other (income) expense, net

189,231

Adjusted EBITDA

$                                                     304,047



GAAP-based net income (loss) margin

(13.7) %

Adjusted EBITDA margin

35.7 %

Reconciliation of Free cash flows


Three Months Ended September 30, 2022

GAAP-based cash flows provided by operating activities

$                                                         131,959

Add:


Capital expenditures (1)

(36,324)

Free cash flows

$                                                           95,635



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




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

for the three months ended June 30, 2022

(In thousands, except for per share data)


Three Months Ended June 30, 2022


GAAP-based

Measures

GAAP-based
Measures

% of Total
Revenue

Adjustments

Note

Non-GAAP-
based

Measures

Non-GAAP-
based
Measures

% of Total
Revenue

Cost of revenues







Cloud services and subscriptions

$   133,785


$     (2,213)

(1)

$   131,572


Customer support

30,571


(768)

(1)

29,803


Professional service and other

55,436


(1,465)

(1)

53,971


Amortization of acquired technology-based intangible assets

46,274


(46,274)

(2)


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

633,793

70.2 %

50,720

(3)

684,513

75.9 %

Operating expenses







Research and development

118,931


(7,186)

(1)

111,745


Sales and marketing

185,985


(7,251)

(1)

178,734


General and administrative

85,958


(5,582)

(1)

80,376


Amortization of acquired customer-based intangible assets

56,341


(56,341)

(2)


Special charges (recoveries)

26,281


(26,281)

(4)


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

137,591


153,361

(5)

290,952


Other income (expense), net

(19)


19

(6)


Provision for income taxes

(5,005)


40,090

(7)

35,085


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

102,196


113,290

(8)

215,486


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

$          0.38


$          0.42

(8)

$          0.80




(1)

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

(2)

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

(3)

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

(4)

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

(5)

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

(6)

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

(7)

Adjustment relates to differences between the GAAP-based tax provision rate of approximately 5% and a Non-GAAP-based tax rate of approximately 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, 2022



Per share diluted

GAAP-based net income, attributable to OpenText

$                   102,196

$                          0.38

Add:



Amortization

102,615

0.38

Share-based compensation

24,465

0.09

Special charges (recoveries)

26,281

0.10

Other (income) expense, net

19

GAAP-based provision for income taxes

(5,005)

(0.02)

Non-GAAP-based provision for income taxes

(35,085)

(0.13)

Non-GAAP-based net income, attributable to OpenText

$                   215,486

$                          0.80

Reconciliation of Adjusted EBITDA


Three Months Ended June 30, 2022

GAAP-based net income, attributable to OpenText

$                                                      102,196

Add:


Provision for income taxes

(5,005)

Interest and other related expense, net

40,342

Amortization of acquired technology-based intangible assets

46,274

Amortization of acquired customer-based intangible assets

56,341

Depreciation

22,706

Share-based compensation

24,465

Special charges (recoveries)

26,281

Other (income) expense, net

19

Adjusted EBITDA

$                                                      313,619



GAAP-based net income margin

11.3 %

Adjusted EBITDA margin

34.8 %

Reconciliation of Free cash flows


Three Months Ended June 30, 2022

GAAP-based cash flows provided by operating activities

$                                                         251,940

Add:


Capital expenditures (1)

(38,172)

Free cash flows

$                                                         213,768



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




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

for the three months ended September 30, 2021

(In thousands, except for per share data)


Three Months Ended September 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

$   119,779


$         (907)

(1)

$   118,872


Customer support

29,483


(721)

(1)

28,762


Professional service and other

51,725


(721)

(1)

51,004


Amortization of acquired technology-based intangible assets

53,167


(53,167)

(2)


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

574,185

69.0 %

55,516

(3)

629,701

75.7 %

Operating expenses







Research and development

100,165


(2,934)

(1)

97,231


Sales and marketing

146,240


(4,610)

(1)

141,630


General and administrative

71,477


(4,041)

(1)

67,436


Amortization of acquired customer-based intangible assets

51,884


(51,884)

(2)


Special charges (recoveries)

344


(344)

(4)


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

182,689


119,329

(5)

302,018


Other income (expense), net

29,782


(29,782)

(6)


Provision for income taxes

43,450


(6,355)

(7)

37,095


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

131,915


95,902

(8)

227,817


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

$          0.48


$          0.35

(8)

$          0.83




(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 25% 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, 2021



Per share diluted

GAAP-based net income, attributable to OpenText

$                   131,915

$                          0.48

Add:



Amortization

105,051

0.38

Share-based compensation

13,934

0.05

Special charges (recoveries)

344

Other (income) expense, net

(29,782)

(0.11)

GAAP-based provision for income taxes

43,450

0.17

Non-GAAP-based provision for income taxes

(37,095)

(0.14)

Non-GAAP-based net income, attributable to OpenText

$                   227,817

$                          0.83


Reconciliation of Adjusted EBITDA


Three Months Ended September 30, 2021

GAAP-based net income, attributable to OpenText

$                                                      131,915

Add:


Provision for income taxes

43,450

Interest and other related expense, net

37,055

Amortization of acquired technology-based intangible assets

53,167

Amortization of acquired customer-based intangible assets

51,884

Depreciation

21,386

Share-based compensation

13,934

Special charges (recoveries)

344

Other (income) expense, net

(29,782)

Adjusted EBITDA

$                                                      323,353



GAAP-based net income margin

15.8 %

Adjusted EBITDA margin

38.9 %

Reconciliation of Free cash flows


Three Months Ended September 30, 2021

GAAP-based cash flows provided by operating activities

$                                                         189,669

Add:


Capital expenditures (1)

(26,712)

Free cash flows

$                                                         162,957



(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 ended September 30, 2022 and 2021:


Three Months Ended September 30, 2022


Three Months Ended September 30, 2021

Currencies

% of Revenue

% of Expenses (1)


% of Revenue

% of Expenses (1)

EURO

20 %

11 %


23 %

13 %

GBP

4 %

5 %


5 %

6 %

CAD

3 %

14 %


3 %

14 %

USD

65 %

55 %


61 %

52 %

Other

8 %

15 %


8 %

15 %

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).

Open_Text_Logo

Cision View original content: https://www.prnewswire.com/news-releases/opentext-reports-first-quarter-fiscal-year-2023-financial-results-301668301.html

SOURCE Open Text Corporation

News Provided by PR Newswire via QuoteMedia

OTEX:CA

OpenText Completes Notes Offering and Term Loan Amendment as part of Micro Focus Acquisition Financing

OpenText™ (NASDAQ: OTEX), (TSX: OTEX) announced today that, in connection with its proposed acquisition (the "Acquisition") of Micro Focus International plc ("Micro Focus"), Open Text Corporation (the "Company" or "OpenText") has closed its offering (the "Notes Offering") of US$1 billion principal amount of 6.90% senior secured fixed rate notes due 2027 (the "Notes") and executed an amendment to its first lien term loan facility due 2029 (the "Term Loan"). As a result, the entire previously announced US$4.585 billion aggregate debt financing package for the Acquisition is now finalized, and, as such, all commitments under the bridge loan agreement related to the Acquisition have been correspondingly terminated undrawn.

News Provided by PR Newswire via QuoteMedia

Keep reading...Show less
virtual human 3dillustration

5 Artificial Intelligence ETFs

It might be surprising, but the phrase "artificial intelligence" has been around for over half a century — since 1955, in fact. It was intended to describe a new computer science subdiscipline.

But what exactly is artificial intelligence? In simple terms, artificial intelligence, or AI, means "simulated intelligence in machines." In other words, machines with AI are capable of thinking like people and mimicking their actions. The ideal characteristic of AI is the ability to rationalize.

Of course, that is a very broad definition of AI technology. There are actually at least 14 different applications of AI, which seems to prove that this market isn't going away anytime soon.

Keep reading...Show less

OpenText Achieves FedRAMP 'In Process' Designation

OpenText Invests in US Government Transformation for Information Management

OpenText™ (NASDAQ: OTEX), (TSX: OTEX), a global leader in information management, today announced it has achieved the "In Process" designation for its OpenText Cloud for Government offering as one of the initial steps in the Federal Risk and Authorization Management Program (FedRAMP) authorization process.

News Provided by PR Newswire via QuoteMedia

Keep reading...Show less
SensOre

New Gold Mineralisation From First Aircore Drilling At Boodanoo, Identified Using Sensore’s Dpt® Technology

SensOre (SensOre or the Company) (ASX: S3N) is pleased to announce results from an early stage, first pass targeted air core drilling programme at its wholly owned Boodanoo Project, south-west of Mount Magnet in Western Australia. Assays have identified new gold mineralisation and are the cumulation of systematic exploration of one of the first mineral systems targets identified by SensOre’s Discriminant Predictive Targeting® (DPT) over the past two years. Exploration involved a systematic target test including ground gravity survey and surface sampling, geological mapping and finally an air core drilling program. The conventional program was augmented by data fusion and interrogation by machine learning applied to multielement geochemistry prior to drilling. Newly discovered mineralisation is associated with quartz sulphide (pyrite, pyrrhotite) veining in fresh medium grained amphibolite below a shallow weathering profile.

Keep reading...Show less

OpenText Announces Pricing of Notes Offering and Successful Term Loan Syndication as part of Micro Focus Acquisition Financing

OpenText™ (NASDAQ: OTEX), (TSX: OTEX) announced today that Open Text Corporation (the "Company" or "OpenText") has priced an offering (the "Notes Offering") of US$1 billion principal amount of 6.90% senior secured fixed rate notes due 2027 (the "Notes") in connection with its proposed acquisition (the "Acquisition") of Micro Focus International plc ("Micro Focus").

OpenText logo (PRNewsfoto/Open Text Corporation) (PRNewsfoto/Open Text Corporation)

OpenText further announced that it successfully fully syndicated its first lien term loan facility due 2029 (the "Term Loan") in the amount of US$3.585 billion , which will bear interest at a rate per annum equal to adjusted term SOFR plus 3.50%.

Upon closing of the Notes Offering and an amendment to the Term Loan credit agreement, the bridge loan agreement entered into in connection with the Acquisition will be terminated undrawn, and the entire previously announced US$4.585 billion aggregate debt financing package for the Acquisition will be finalized.

The Notes Offering is expected to close, and the Term Loan credit agreement is expected to be amended, on December 1, 2022 , subject in each case to customary conditions. The net proceeds from the Notes Offering, borrowings under the Term Loan and the Company's existing revolving credit facility, and cash on hand will be used to fund the Acquisition.

As previously announced, shareholders of Micro Focus have approved the terms of the Acquisition. The Acquisition is expected to close in the first calendar quarter of 2023, subject to regulatory approvals and customary closing conditions.

After giving effect to the Notes Offering and the above noted borrowings, following closing of the Acquisition, the Company's long-term debt would be approximately US$9.3 billion (consisting of approximately 46% fixed and 54% floating rate debt), with a weighted average interest rate of approximately 5.88% and a weighted average maturity of approximately 6 years. As previously announced, OpenText is targeting a net leverage ratio of less than three times within eight quarters following the closing of the Acquisition.

Additional Information

The Notes and the Term Loan will be guaranteed on a senior secured basis by OpenText's existing wholly-owned subsidiaries organized in the United States or Canada that borrow or guarantee OpenText's obligations under its senior credit facilities and, concurrent with or within one business day of the closing of the Acquisition, additionally by Open Text UK Holding Limited. The Notes and related guarantees will be secured on the same basis as the Company's senior credit facilities.

The Notes and related guarantees will not be registered under the Securities Act of 1933, as amended (the "Securities Act"). The Notes and the related guarantees are being issued pursuant to Rule 144A and Regulation S under the Securities Act. The Notes and related guarantees may not be offered or sold within the United States or to, or for the account or benefit of, U.S. persons (as defined in Regulation S under the Securities Act), except to persons reasonably believed to be qualified institutional buyers in reliance on the exemption from registration provided by Rule 144A under the Securities Act and to certain persons in offshore transactions in reliance on Regulation S under the Securities Act. The Notes have not been and will not be qualified for sale to the public by prospectus under applicable Canadian securities laws and, accordingly, any offer and sale of the Notes in Canada will be made on a basis which is exempt from the prospectus requirements of such securities laws. This press release shall not constitute an offer to sell, or the solicitation of an offer to buy, nor shall there be any sale of, any securities in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration, qualification or exemption under the securities laws of any such jurisdiction.

About OpenText

OpenText, The Information Company™, enables organizations to gain insight through market leading information management solutions, powered by OpenText Cloud Editions.

Publication on a website

This announcement and certain associated documents will be available, subject to certain restrictions, on OpenText's website at https://investors.opentext.com/ by no later than 12 noon ( London time) on the business day following the publication of this announcement. This announcement and certain associated documents available on OpenText's website are only being provided to comply with the requirements under the UK City Code on Takeovers and Mergers. Neither the content any of the websites referred to in this announcement nor the content of any website accessible from hyperlinks in this announcement is incorporated into, or forms part of, this announcement.

Cautionary Statement Regarding Forward-Looking Statements

Certain statements in this announcement, including statements regarding completion of and timing for closing of the Notes Offering, completion of and timing for execution of the amendment to the Term Loan credit agreement, including completing certain conditions prior to borrowing under the Term Loan, statements regarding OpenText's targeted net leverage ratio and timing thereof, OpenText's plans, objectives, expectations and intentions relating to the Acquisition, the Acquisition's expected contribution to OpenText's results, financing and closing of the Acquisition, as well as the expected timing and benefits of the Acquisition, impact on future financial performance including in respect of annual recurring revenues, cloud growth, adjusted EBITDA, cash flows and earnings, may contain words considered forward-looking statements or information under applicable securities laws. These statements are based on OpenText's current expectations, estimates, forecasts and projections about the operating environment, economies and markets in which OpenText operates, as well as the impact of the ongoing COVID-19 pandemic. These statements are subject to important assumptions, risks and uncertainties that are difficult to predict, and the actual outcome may be materially different. OpenText's assumptions, although considered reasonable by OpenText at the date of this announcement, may prove to be inaccurate and consequently its actual results could differ materially from the expectations set out herein. For additional information with respect to risks and other factors, which could occur, see OpenText's Annual Report on Form 10-K, Quarterly Reports on Form 10-Q and other securities filings with the Securities and Exchange Commission and other securities regulators. Unless otherwise required by applicable securities laws, OpenText disclaims any intention or obligations to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

Copyright © 2022 OpenText. All Rights Reserved. Trademarks owned by OpenText. One or more patents may cover this product(s). For more information, please visit https://www.opentext.com/patents .

OTEX-MNA

Further information, please contact:

Harry E. Blount
Senior Vice President, Investor Relations
OpenText Corporation
415-963-0825
investors@opentext.com

Cision View original content to download multimedia: https://www.prnewswire.com/news-releases/opentext-announces-pricing-of-notes-offering-and-successful-term-loan-syndication-as-part-of-micro-focus-acquisition-financing-301680741.html

SOURCE Open Text Corporation

News Provided by PR Newswire via QuoteMedia

Keep reading...Show less

OpenText Announces Senior Secured Notes Offering as part of Micro Focus Acquisition Financing

OpenText™ (NASDAQ: OTEX), (TSX: OTEX) today announced Open Text Corporation (the "Company" or "OpenText") intends to commence, subject to market and customary conditions, a proposed offering of senior secured notes (the "Notes") pursuant to Rule 144A and Regulation S under the Securities Act of 1933, as amended (the "Securities Act").

The Notes will be guaranteed on a senior secured basis by OpenText's existing wholly-owned subsidiaries organized in the United States or Canada that borrow or guarantee OpenText's obligations under its senior credit facilities. The Notes and related guarantees will be secured on the same basis as the Company's senior credit facilities.

News Provided by PR Newswire via QuoteMedia

Keep reading...Show less

Latest Press Releases

Related News

×