OpenText Reports Fourth Quarter and Fiscal Year 2023 Financial Results

   Total Revenues   

  (in millions)  

   Annual Recurring Revenues   

  (in millions)  

   Cloud Revenues   

  (in millions)  

   Reported   

   Constant
Currency   

   Reported   

   Constant
Currency   

   Reported   

   Constant
Currency   

  $4,485  

  $4,617  

  $3,615  

  $3,718  

  $1,700  

  $1,739  

  +28.4 %  

  +32.2 %  

  +26.2 %  

  +29.7 %  

  +10.8 %  

  +13.3 %  

  Annual Recurring Revenues represent 81% of Total Revenues  

   Total Revenues   

  (in millions)  

   Annual Recurring Revenues   

  (in millions)  

   Cloud Revenues   

  (in millions)  

   Reported   

   Constant
Currency   

   Reported   

   Constant
Currency   

   Reported   

   Constant
Currency   

  $1,491  

  $1,502  

  $1,157  

  $1,167  

  $452  

  $455  

  +65.2 %  

  +66.5 %  

  +56.4 %  

  +57.7 %  

  +9.7 %  

  +10.6 %  

  Annual Recurring Revenues represent 78% of Total Revenues  

   ⁽¹⁾  

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

   ⁽²⁾  

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

    Summary of Annual Results    

   (In millions, except per share data)   

   FY'23   

   FY'22   

   $ Change   

   % Change   

   FY'23   
in CC*   

   % Change
in CC*   

   Revenues:   

  Cloud services and subscriptions  

  $1,700.4  

  $1,535.0  

  $165.4  

  10.8 %  

  $1,739.1  

  13.3 %  

  Customer support  

  1,915.0  

  1,331.0  

  $584.1  

  43.9 %  

  1,978.8  

  48.7 %  

   Total annual recurring revenues**   

   $3,615.5   

   $2,866.0   

   $749.5   

   26.2 %   

   $3,717.9   

   29.7 %   

  License  

  539.0  

  358.4  

  $180.7  

  50.4 %  

  555.4  

  55.0 %  

  Professional service and other  

  330.5  

  269.5  

  $61.0  

  22.6 %  

  344.1  

  27.7 %  

   Total revenues   

   $4,485.0   

   $3,493.8   

   $991.1   

   28.4 %   

   $4,617.4   

   32.2 %   

  GAAP-based operating income  

  $     516.3  

  $644.8  

  ($128.5)  

  (19.9) %  

  N/A  

  N/A  

  Non-GAAP-based operating income ⁽¹⁾  

  $1,365.3  

  $1,176.9  

  $188.4  

  16.0 %  

  $1,387.5  

  17.9 %  

  GAAP-based net income attributable to OpenText  

  $150.4  

  $397.1  

  ($246.7)  

  (62.1) %  

  N/A  

  N/A  

  GAAP-based EPS, diluted  

  $0.56  

  $1.46  

  ($0.90)  

  (61.6) %  

  N/A  

  N/A  

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

  $3.29  

  $3.22  

  $0.07  

  2.2 %  

  $3.37  

  4.7 %  

  Adjusted EBITDA ⁽¹⁾  

  $1,472.9  

  $1,265.0  

  $207.9  

  16.4 %  

  $1,495.8  

  18.2 %  

  Operating cash flows  

  $779.2  

  $981.8  

  ($202.6)  

  (20.6) %  

  N/A  

  N/A  

  Free cash flows ⁽¹⁾  

  $655.4  

  $888.7  

  ($233.3)  

  (26.3) %  

  N/A  

  N/A  

    Summary of Quarterly Results    

   (In millions, except per share data)   

   Q4 FY'23   

   Q4 FY'22   

   $ Change   

   % Change   

   Q4 FY'23   
in CC*   

   % Change
in CC*   

   Revenues:   

  Cloud services and subscriptions  

  $451.7  

  $411.6  

  $40.1  

  9.7 %  

  $455.4  

  10.6 %  

  Customer support  

  705.3  

  328.3  

  $376.9  

  114.8 %  

  711.4  

  116.7 %  

   Total annual recurring revenues**   

   $1,156.9   

   $739.9   

   $417.0   

   56.4 %   

   $1,166.8   

   57.7 %   

  License  

  228.8  

  94.7  

  $134.1  

  141.6 %  

  229.2  

  142.0 %  

  Professional service and other  

  105.1  

  67.8  

  $37.3  

  54.9 %  

  106.3  

  56.7 %  

   Total revenues   

   $1,490.8   

   $902.5   

   $588.4   

   65.2 %   

   $1,502.3   

   66.5 %   

  GAAP-based operating income  

  $121.3  

  $137.6  

  ($16.3)  

  (11.8) %  

  N/A  

  N/A  

  Non-GAAP-based operating income ⁽¹⁾  

  $431.7  

  $291.0  

  $140.8  

  48.4 %  

  $421.5  

  44.9 %  

  GAAP-based net income attributable to OpenText  

  ($48.7)  

  $102.2  

  ($150.9)  

  (147.7) %  

  N/A  

  N/A  

  GAAP-based EPS, diluted  

  ($0.18)  

  $0.38  

  ($0.56)  

  (147.4) %  

  N/A  

  N/A  

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

  $0.91  

  $0.80  

  $0.11  

  13.8 %  

  $0.88  

  10.0 %  

  Adjusted EBITDA ⁽¹⁾  

  $462.8  

  $313.6  

  $149.2  

  47.6 %  

  $452.7  

  44.3 %  

  Operating cash flows  

  $115.3  

  $251.9  

  ($136.6)  

  (54.2) %  

  N/A  

  N/A  

  Free cash flows ⁽¹⁾  

  $91.2  

  $213.8  

  ($122.5)  

  (57.3) %  

  N/A  

  N/A  

   ⁽¹⁾  

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

   ⁽²⁾  

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

  Note:  

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

  *CC:  

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

  **  

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

    Summary of Annual Results    

   FY'23   

   FY'22   

   % Change   

  Revenue (millions)  

  $4,485.0  

  $3,493.8  

  28.4 %  

  GAAP-based gross margin  

  70.6 %  

  69.6 %  

  105  

  bps  

  Non-GAAP-based gross margin ⁽¹⁾  

  76.1 %  

  75.6 %  

  49  

  bps  

  GAAP-based EPS, diluted  

  $0.56  

  $1.46  

  (61.6) %  

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

  $3.29  

  $3.22  

  2.2 %  

    Summary of Quarterly Results    

   Q4 FY'23   

   Q3 FY'23   

   Q4 FY'22   

   % Change   

   (Q4 FY'23 vs
Q3 FY'23)   

   % Change   

   (Q4 FY'23 vs
Q4 FY'22)   

  Revenue (millions)  

  $1,490.8  

  $1,244.7  

  $902.5  

  19.8 %  

  65.2 %  

  GAAP-based gross margin  

  71.4 %  

  70.3 %  

  70.2 %  

  110  

  bps  

  120  

  bps  

  Non-GAAP-based gross margin ⁽¹⁾  

  76.9 %  

  75.8 %  

  75.9 %  

  110  

  bps  

  100  

  bps  

  GAAP-based EPS, diluted  

  ($0.18)  

  $0.21  

  $0.38  

  (185.7) %  

  (147.4) %  

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

  $0.91  

  $0.73  

  $0.80  

  24.7 %  

  13.8 %  

   ⁽¹⁾  

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

   ⁽²⁾  

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

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

   June 30, 2023   

   June 30, 2022   

   ASSETS   

  Cash and cash equivalents  

  $             1,231,625  

  $             1,693,741  

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

  682,517  

  426,652  

  Contract assets  

  71,196  

  26,167  

  Income taxes recoverable  

  68,161  

  18,255  

  Prepaid expenses and other current assets  

  221,732  

  120,552  

  Total current assets  

  2,275,231  

  2,285,367  

  Property and equipment  

  356,904  

  244,709  

  Operating lease right of use assets  

  285,723  

  198,132  

  Long-term contract assets  

  64,553  

  19,719  

  Goodwill  

  8,662,603  

  5,244,653  

  Acquired intangible assets  

  4,080,879  

  1,075,208  

  Deferred tax assets  

  926,719  

  810,154  

  Other assets  

  342,318  

  256,987  

  Long-term income taxes recoverable  

  94,270  

  44,044  

   Total assets   

  $          17,089,200  

  $          10,178,973  

   LIABILITIES AND SHAREHOLDERS' EQUITY   

  Current liabilities:  

  Accounts payable and accrued liabilities  

  $                996,261  

  $                448,607  

  Current portion of long-term debt  

  320,850  

  10,000  

  Operating lease liabilities  

  91,425  

  56,380  

  Deferred revenues  

  1,721,781  

  902,202  

  Income taxes payable  

  89,297  

  51,069  

  Total current liabilities  

  3,219,614  

  1,468,258  

  Long-term liabilities:  

  Accrued liabilities  

  51,961  

  18,208  

  Pension liability  

  126,312  

  60,951  

  Long-term debt  

  8,562,096  

  4,209,567  

  Long-term operating lease liabilities  

  271,579  

  198,695  

  Long-term deferred revenues  

  217,771  

  91,144  

  Long-term income taxes payable  

  193,808  

  34,003  

  Deferred tax liabilities  

  423,955  

  65,887  

  Total long-term liabilities  

  9,847,482  

  4,678,455  

  Shareholders' equity:  

  Share capital and additional paid-in capital  

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

  2,176,947  

  2,038,674  

  Accumulated other comprehensive income (loss)  

  (53,559)  

  (7,659)  

  Retained earnings  

  2,048,984  

  2,160,069  

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

  (151,597)  

  (159,966)  

  Total OpenText shareholders' equity  

  4,020,775  

  4,031,118  

  Non-controlling interests  

  1,329  

  1,142  

  Total shareholders' equity  

  4,022,104  

  4,032,260  

   Total liabilities and shareholders' equity   

  $          17,089,200  

  $          10,178,973  

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

   Three Months Ended June 30,   

   2023   

   2022   

  Revenues:  

  Cloud services and subscriptions  

  $                451,659  

  $                411,595  

  Customer support  

  705,277  

  328,339  

  License  

  228,796  

  94,688  

  Professional service and other  

  105,098  

  67,832  

  Total revenues  

  1,490,830  

  902,454  

  Cost of revenues:  

  Cloud services and subscriptions  

  166,394  

  133,785  

  Customer support  

  86,695  

  30,571  

  License  

  6,184  

  2,595  

  Professional service and other  

  90,498  

  55,436  

  Amortization of acquired technology-based intangible assets  

  77,045  

  46,274  

  Total cost of revenues  

  426,816  

  268,661  

  Gross profit  

  1,064,014  

  633,793  

  Operating expenses:  

  Research and development  

  249,958  

  118,931  

  Sales and marketing  

  333,244  

  185,985  

  General and administrative  

  136,866  

  85,958  

  Depreciation  

  31,152  

  22,706  

  Amortization of acquired customer-based intangible assets  

  121,285  

  56,341  

  Special charges (recoveries)  

  70,222  

  26,281  

  Total operating expenses  

  942,727  

  496,202  

  Income   from operations  

  121,287  

  137,591  

  Other income (expense), net  

  (25,355)  

  (19)  

  Interest and other related expense, net  

  (145,829)  

  (40,342)  

  Income (loss)   before income taxes  

  (49,897)  

  97,230  

  Provision for (recovery of) income taxes  

  (1,212)  

  (5,005)  

  Net income (loss) for the period  

  $                (48,685)  

  $                102,235  

  Net (income) attributable to non-controlling interests  

  (49)  

  (39)  

  Net income (loss) attributable to OpenText  

  $                (48,734)  

  $                102,196  

  Earnings per share—basic attributable to OpenText  

  $                     (0.18)  

  $                       0.38  

  Earnings per share—diluted attributable to OpenText  

  $                     (0.18)  

  $                       0.38  

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

  270,772  

  270,152  

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

  270,772  

  270,394  

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

   Year Ended June 30,   

   2023   

   2022   

   2021   

  Revenues:  

  Cloud services and subscriptions  

  $        1,700,433  

  $        1,535,017  

  $        1,407,445  

  Customer support  

  1,915,020  

  1,330,965  

  1,334,062  

  License  

  539,026  

  358,351  

  384,711  

  Professional service and other  

  330,501  

  269,511  

  259,897  

  Total revenues  

  4,484,980  

  3,493,844  

  3,386,115  

  Cost of revenues:  

  Cloud services and subscriptions  

  590,165  

  511,713  

  481,818  

  Customer support  

  209,705  

  121,485  

  122,753  

  License  

  16,645  

  13,501  

  13,916  

  Professional service and other  

  276,888  

  216,895  

  197,183  

  Amortization of acquired technology-based intangible assets  

  223,184  

  198,607  

  218,796  

  Total cost of revenues  

  1,316,587  

  1,062,201  

  1,034,466  

  Gross profit  

  3,168,393  

  2,431,643  

  2,351,649  

  Operating expenses:  

  Research and development  

  680,587  

  440,448  

  421,447  

  Sales and marketing  

  948,598  

  677,118  

  622,221  

  General and administrative  

  419,590  

  317,085  

  263,521  

  Depreciation  

  107,761  

  88,241  

  85,265  

  Amortization of acquired customer-based intangible assets  

  326,406  

  217,105  

  216,544  

  Special charges (recoveries)  

  169,159  

  46,873  

  1,748  

  Total operating expenses  

  2,652,101  

  1,786,870  

  1,610,746  

  Income   from operations  

  516,292  

  644,773  

  740,903  

  Other income (expense), net  

  34,469  

  29,118  

  61,434  

  Interest and other related expense, net  

  (329,428)  

  (157,880)  

  (151,567)  

  Income   before income taxes  

  221,333  

  516,011  

  650,770  

  Provision for (recovery of) income taxes  

  70,767  

  118,752  

  339,906  

  Net income  

  $           150,566  

  $           397,259  

  $           310,864  

  Net (income) attributable to non-controlling interests  

  (187)  

  (169)  

  (192)  

  Net income attributable to OpenText  

  $           150,379  

  $           397,090  

  $           310,672  

  Earnings per share—basic attributable to OpenText  

  $                  0.56  

  $                  1.46  

  $                  1.14  

  Earnings per share—diluted attributable to OpenText  

  $                  0.56  

  $                  1.46  

  $                  1.14  

  Weighted average number of Common Shares outstanding—basic  

  (in ' 000's)  

  270,299  

  271,271  

  272,533  

  Weighted average number of Common Shares outstanding—diluted  

  (in ' 000's)  

  270,451  

  271,909  

  273,479  

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

   Year Ended June 30,   

   2023   

   2022   

   2021   

  Net income  

  $           150,566  

  $           397,259  

  $           310,864  

  Other comprehensive income (loss)—net of tax:  

  Net foreign currency translation adjustments  

  (40,798)  

  (78,724)  

  42,440  

  Unrealized gain (loss) on cash flow hedges:  

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

  (941)  

  (1,859)  

  4,246  

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

  2,721  

  373  

  (3,280)  

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

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

  (602)  

  —  

  —  

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

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

  (6,605)  

  5,595  

  3,987  

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

  325  

  718  

  1,020  

  Total other comprehensive income (loss) net  

  (45,900)  

  (73,897)  

  48,413  

  Total comprehensive income  

  104,666  

  323,362  

  359,277  

  Comprehensive income attributable to non - controlling interests  

  (187)  

  (169)  

  (192)  

  Total comprehensive income attributable to OpenText  

  $           104,479  

  $           323,193  

  $           359,085  

  (1)  

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

  (2)  

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

  (3)  

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

  (4)  

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

  (5)  

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

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

   Common Shares and
Additional Paid in Capital   

   Treasury Stock   

   Retained   

   Earnings   

   Accumulated  Other   

   Comprehensive   

   Income   

   Non-Controlling Interests   

   Total   

   Shares   

   Amount   

   Shares   

   Amount   

   Balance as of June 30, 2020   

   271,863   

   $  1,851,777   

   (622)   

   $ (23,608)   

   $  2,159,396   

   $          17,825   

   $      1,319   

   $  4,006,709   

  Adoption of ASU 2016-13 - cumulative effect  

  —  

  —  

  —  

  —  

  (2,450)  

  —  

  —  

  (2,450)  

  Issuance of Common Shares  

  Under employee stock option plans  

  1,605  

  49,565  

  —  

  —  

  —  

  —  

  —  

  49,565  

  Under employee stock purchase plans  

  573  

  22,307  

  193  

  6,690  

  —  

  —  

  —  

  28,997  

  Share-based compensation  

  —  

  51,969  

  —  

  —  

  —  

  —  

  —  

  51,969  

  Purchase of treasury stock  

  —  

  —  

  (1,455)  

  (64,847)  

  —  

  —  

  —  

  (64,847)  

  Issuance of treasury stock  

  —  

  (12,379)  

  316  

  12,379  

  —  

  —  

  —  

  —  

  Common Shares repurchased  

  (2,500)  

  (15,475)  

  —  

  —  

  (103,630)  

  —  

  —  

  (119,105)  

  Dividends declared  

  ($0.777 per Common Share)  

  —  

  —  

  —  

  —  

  (210,662)  

  —  

  —  

  (210,662)  

  Non-controlling interest  

  —  

  —  

  —  

  —  

  —  

  —  

  —  

  —  

  Other comprehensive income - net  

  —  

  —  

  —  

  —  

  —  

  48,413  

  —  

  48,413  

  Net income  

  —  

  —  

  —  

  —  

  310,672  

  —  

  192  

  310,864  

   Balance as of June 30, 2021   

   271,541   

   $  1,947,764   

   (1,568)   

   $ (69,386)   

   $  2,153,326   

   $          66,238   

   $      1,511   

   $  4,099,453   

  Issuance of Common Shares  

  Under employee stock option plans  

  950  

  32,714  

  —  

  —  

  —  

  —  

  —  

  32,714  

  Under employee stock purchase plans  

  842  

  33,806  

  —  

  —  

  —  

  —  

  —  

  33,806  

  Share-based compensation  

  —  

  69,556  

  —  

  —  

  —  

  —  

  —  

  69,556  

  Purchase of treasury stock  

  —  

  —  

  (2,630)  

  (111,593)  

  —  

  —  

  —  

  (111,593)  

  Issuance of treasury stock  

  —  

  (21,013)  

  492  

  21,013  

  —  

  —  

  —  

  —  

  Common Shares repurchased  

  (3,810)  

  (24,295)  

  —  

  —  

  (152,692)  

  —  

  —  

  (176,987)  

  Dividends declared  

  ($0.8836 per Common Share)  

  —  

  —  

  —  

  —  

  (237,655)  

  —  

  —  

  (237,655)  

  Non-controlling interest  

  —  

  —  

  —  

  —  

  —  

  —  

  —  

  —  

  Other comprehensive loss - net  

  —  

  —  

  —  

  —  

  —  

  (73,897)  

  —  

  (73,897)  

  Distribution to non-controlling interest  

  —  

  142  

  —  

  —  

  —  

  —  

  (538)  

  (396)  

  Net income  

  —  

  —  

  —  

  —  

  397,090  

  —  

  169  

  397,259  

   Balance as of June 30, 2022   

   269,523   

   $  2,038,674   

   (3,706)   

   $ (159,966)   

   $  2,160,069   

   $          (7,659)   

   $      1,142   

   $  4,032,260   

  Issuance of Common Shares  

  Under employee stock option plans  

  245  

  7,830  

  —  

  —  

  —  

  —  

  —  

  7,830  

  Under employee stock purchase plans  

  1,135  

  31,679  

  —  

  —  

  —  

  —  

  —  

  31,679  

  Share-based compensation  

  —  

  130,119  

  —  

  —  

  —  

  —  

  —  

  130,119  

  Purchase of treasury stock  

  —  

  —  

  (521)  

  (21,919)  

  —  

  —  

  —  

  (21,919)  

  Issuance of treasury stock  

  —  

  (31,355)  

  691  

  30,288  

  —  

  —  

  —  

  (1,067)  

  Common Shares repurchased  

  —  

  —  

  —  

  —  

  —  

  —  

  —  

  —  

  Dividends declared ($0.9720 per Common Share)  

  —  

  —  

  —  

  —  

  (261,464)  

  —  

  —  

  (261,464)  

  Non-controlling interest  

  —  

  —  

  —  

  —  

  —  

  —  

  —  

  —  

  Other comprehensive loss - net  

  —  

  —  

  —  

  —  

  —  

  (45,900)  

  —  

  (45,900)  

  Net income  

  —  

  —  

  —  

  —  

  150,379  

  —  

  187  

  150,566  

   Balance as of June 30, 2023   

   270,903   

   $  2,176,947   

   (3,536)   

   $ (151,597)   

   $  2,048,984   

   $        (53,559)   

   $      1,329   

   $  4,022,104   

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

   Three Months Ended June 30,   

   2023   

   2022   

  Cash flows from operating activities:  

  Net income (loss) for the period  

  $                  (48,685)  

  $                  102,235  

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

  Depreciation and amortization of intangible assets  

  229,482  

  125,321  

  Share-based compensation expense  

  41,904  

  24,464  

  Pension expense  

  3,401  

  1,723  

  Amortization of debt discount and issuance costs  

  8,257  

  1,486  

  Write-off of right of use assets  

  2,507  

  17,707  

  Loss on extinguishment of debt  

  —  

  —  

  Loss on sale and write down of property and equipment  

  903  

  198  

  Deferred taxes  

  29,140  

  (79,420)  

  Share in net (income) loss of equity investees  

  11,530  

  401  

  Changes in financial instruments  

  16,274  

  —  

  Changes in operating assets and liabilities:  

  Accounts receivable  

  27,335  

  13,413  

  Contract assets  

  (43,643)  

  (10,758)  

  Prepaid expenses and other current assets  

  42,151  

  1,768  

  Income taxes  

  (116,569)  

  45,824  

  Accounts payable and accrued liabilities  

  10,582  

  41,561  

  Deferred revenue  

  (85,764)  

  (30,878)  

  Other assets  

  (5,299)  

  771  

  Operating lease assets and liabilities, net  

  (8,205)  

  (3,876)  

  Net cash provided by operating activities  

  115,301  

  251,940  

  Cash flows from investing activities:  

  Additions of property and equipment  

  (24,060)  

  (38,172)  

  Purchase of Micro Focus International PLC, net of cash acquired  

  (2,357)  

  —  

  Purchase of Bricata Inc.  

  —  

  174  

  Net cash used in investing activities  

  (26,417)  

  (37,998)  

  Cash flows from financing activities:  

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

  14,159  

  10,738  

  Repayment of long-term debt and Revolver  

  (186,463)  

  (2,500)  

  Debt issuance costs  

  (690)  

  —  

  Repurchase of Common Shares  

  —  

  (40,869)  

  Purchase of treasury stock  

  (21,919)  

  (35,933)  

  Payments of dividends to shareholders  

  (65,068)  

  (59,042)  

  Other financing activities  

  758  

  —  

  Net cash used in financing activities  

  (259,223)  

  (127,606)  

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

  4,571  

  (26,276)  

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

  (165,768)  

  60,060  

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

  1,399,720  

  1,635,851  

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

  $               1,233,952  

  $               1,695,911  

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

   Reconciliation of cash, cash equivalents and restricted cash:   

   June 30, 2023   

   June 30, 2022   

  Cash and cash equivalents  

  $               1,231,625  

  $               1,693,741  

  Restricted cash ⁽¹⁾  

  2,327  

  2,170  

  Total cash, cash equivalents and restricted cash  

  $               1,233,952  

  $               1,695,911  

  (1)  

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

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

   Year Ended June 30,   

   2023   

   2022   

   2021   

  Cash flows from operating activities:  

  Net income for the period  

  $             150,566  

  $             397,259  

  $             310,864  

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

  Depreciation and amortization of intangible assets  

  657,351  

  503,953  

  520,605  

  Share-based compensation expense  

  130,302  

  69,556  

  51,969  

  Pension expense  

  9,207  

  6,606  

  6,616  

  Amortization of debt discount and issuance costs  

  16,753  

  5,422  

  4,548  

  Write-off of right of use assets  

  9,626  

  17,707  

  —  

  Loss on extinguishment of debt  

  8,152  

  27,413  

  —  

  Loss on sale and write down of property and equipment  

  2,331  

  294  

  2,771  

  Deferred taxes  

  (149,560)  

  (36,088)  

  73,039  

  Share in net (income) loss of equity investees  

  23,077  

  (58,702)  

  (62,897)  

  Changes in financial instruments  

  128,841  

  —  

  —  

  Changes in operating assets and liabilities:  

  Accounts receivable  

  168,604  

  81,841  

  60,954  

  Contract assets  

  (73,539)  

  (37,966)  

  (39,333)  

  Prepaid expenses and other current assets  

  (23,035)  

  (13,954)  

  37,733  

  Income taxes  

  14,948  

  34,589  

  (140,763)  

  Accounts payable and accrued liabilities  

  (127,092)  

  (24,177)  

  26,088  

  Deferred revenue  

  (128,395)  

  (5,236)  

  39,295  

  Other assets  

  (11,297)  

  17,297  

  11,914  

  Operating lease assets and liabilities, net  

  (27,635)  

  (4,004)  

  (27,283)  

  Net cash provided by operating activities  

  779,205  

  981,810  

  876,120  

  Cash flows from investing activities:  

  Additions of property and equipment  

  (123,832)  

  (93,109)  

  (63,675)  

  Purchase of Micro Focus International PLC, net of cash acquired  

  (5,657,963)  

  —  

  —  

  Purchase of Zix Corporation, net of cash acquired  

  —  

  (856,175)  

  —  

  Purchase of Bricata Inc.  

  —  

  (17,753)  

  —  

  Purchase of XMedius  

  —  

  —  

  444  

  Purchase of Dynamic Solutions Group Inc.  

  —  

  —  

  (971)  

  Realized gain (loss) on financial instruments  

  131,248  

  —  

  —  

  Other investing activities  

  (873)  

  (3,922)  

  (4,568)  

  Net cash used in investing activities  

  (5,651,420)  

  (970,959)  

  (68,770)  

  Cash flows from financing activities:  

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

  39,331  

  67,215  

  80,067  

  Proceeds from long-term debt and Revolver  

  4,927,450  

  1,500,000  

  —  

  Repayment of long-term debt and Revolver  

  (202,926)  

  (860,000)  

  (610,000)  

  Debt extinguishment costs  

  —  

  (24,969)  

  —  

  Debt issuance costs  

  (77,899)  

  (17,159)  

  —  

  Repurchase of Common Shares  

  —  

  (176,987)  

  (119,105)  

  Purchase of treasury stock  

  (21,919)  

  (111,593)  

  (64,847)  

  Distribution to non-controlling interest  

  —  

  (396)  

  —  

  Payments of dividends to shareholders  

  (259,549)  

  (237,655)  

  (210,662)  

  Other financing activities  

  (1,435)  

  —  

  —  

  Net cash provided by (used in) financing activities  

  4,403,053  

  138,456  

  (924,547)  

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

  7,203  

  (63,196)  

  29,734  

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

  (461,959)  

  86,111  

  (87,463)  

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

  1,695,911  

  1,609,800  

  1,697,263  

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

  $          1,233,952  

  $          1,695,911  

  $          1,609,800  

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

   Reconciliation of cash, cash equivalents and restricted cash:   

   June 30, 2023   

   June 30, 2022   

   June 30, 2021   

  Cash and cash equivalents  

  $        1,231,625  

  $        1,693,741  

  $        1,607,306  

  Restricted cash ⁽¹⁾  

  2,327  

  2,170  

  2,494  

  Total cash, cash equivalents and restricted cash  

  $        1,233,952  

  $        1,695,911  

  $        1,609,800  

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

    Notes    

  (1)  

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

  (2)  

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

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

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

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

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

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

  In summary, the Company believes the provision of supplemental Non-GAAP measures allow investors to evaluate the operational and financial performance of the Company's core business using the same evaluation measures that management uses, and is therefore a useful indication of OpenText's performance or expected performance of future operations and facilitates period-to-period comparison of operating performance (although prior performance is not necessarily indicative of future performance). As a result, the Company considers it appropriate and reasonable to provide, in addition to U.S. GAAP measures, supplementary Non-GAAP financial measures that exclude certain items from the presentation of its financial results. Information reconciling certain forward-looking GAAP measures to non-GAAP measures related to F'24 targets and F'26 aspirations, including A-EBITDA is not available without unreasonable effort due to high variability, complexity and uncertainty with respect to forecasting and quantifying certain amounts that are necessary for such reconciliations.  

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

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

    for the three months ended June 30, 2023    

    (In thousands, except for per share data)    

   Three Months Ended June 30, 2023   

   GAAP-based Measures   

   GAAP-based Measures   

   % of Total Revenue   

   Adjustments   

   Note   

   Non-GAAP-based Measures   

   Non-GAAP-based  Measures   

   % of Total Revenue   

   Cost of revenues   

  Cloud services and subscriptions  

  $  166,394  

  $     (2,876)  

  (1)  

  $   163,518  

  Customer support  

  86,695  

  (1,213)  

  (1)  

  85,482  

  Professional service and other  

  90,498  

  (1,826)  

  (1)  

  88,672  

  Amortization of acquired technology-based intangible assets  

  77,045  

  (77,045)  

  (2)  

  —  

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

  1,064,014  

  71.4 %  

  82,960  

  (3)  

  1,146,974  

  76.9 %  

   Operating expenses   

  Research and development  

  249,958  

  (13,584)  

  (1)  

  236,374  

  Sales and marketing  

  333,244  

  (13,467)  

  (1)  

  319,777  

  General and administrative  

  136,866  

  (8,938)  

  (1)  

  127,928  

  Amortization of acquired customer-based intangible assets  

  121,285  

  (121,285)  

  (2)  

  —  

  Special charges (recoveries)  

  70,222  

  (70,222)  

  (4)  

  —  

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

  121,287  

  310,456  

  (5)  

  431,743  

  Other income (expense), net  

  (25,355)  

  25,355  

  (6)  

  —  

  Provision for (recovery of)   income taxes  

  (1,212)  

  41,240  

  (7)  

  40,028  

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

  (48,734)  

  294,571  

  (8)  

  245,837  

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

  $       (0.18)  

  $          1.09  

  (8)  

  $          0.91  

  (1)  

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

  (2)  

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

  (3)  

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

  (4)  

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

  (5)  

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

  (6)  

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

  (7)  

  Adjustment relates to differences between the GAAP-based tax provision rate of approximately 2% and a Non-GAAP-based tax rate of approximately 14%; these rate differences are due to the income tax effects of items that are excluded for the purpose of calculating Non-GAAP-based net income. Such excluded items include amortization, share-based compensation, special charges (recoveries) and other income (expense), net. Also excluded are tax benefits/expense items unrelated to current period income such as changes in reserves for tax uncertainties and valuation allowance reserves and "book to return" adjustments for tax return filings and tax assessments. Included is the amount of net tax benefits arising from the internal reorganization that occurred in Fiscal 2017 assumed to be allocable to the current period based on the forecasted utilization period. In arriving at our Non-GAAP-based tax rate of approximately  14%, we analyzed the individual adjusted expenses and took into consideration the impact of statutory tax rates from local jurisdictions incurring the expense.  

  (8)  

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

   Three Months Ended June 30, 2023   

   Per share diluted   

  GAAP-based net loss, attributable to OpenText  

  $                   (48,734)  

  $                        (0.18)  

  Add:  

  Amortization  

  198,330  

  0.73  

  Share-based compensation  

  41,904  

  0.15  

  Special charges (recoveries)  

  70,222  

  0.26  

  Other (income) expense, net  

  25,355  

  0.10  

  GAAP-based recovery of income taxes  

  (1,212)  

  —  

  Non-GAAP-based recovery of income taxes  

  (40,028)  

  (0.15)  

  Non-GAAP-based net income, attributable to OpenText  

  $                   245,837  

  $                          0.91  

   Reconciliation of Adjusted EBITDA   

   Three Months Ended June 30, 2023   

  GAAP-based net loss, attributable to OpenText  

  $                                                      (48,734)  

  Add:  

  Recovery of   income taxes  

  (1,212)  

  Interest and other related expense, net  

  145,829  

  Amortization of acquired technology-based intangible assets  

  77,045  

  Amortization of acquired customer-based intangible assets  

  121,285  

  Depreciation  

  31,152  

  Share-based compensation  

  41,904  

  Special charges (recoveries)  

  70,222  

  Other (income) expense, net  

  25,355  

  Adjusted EBITDA  

  $                                                       462,846  

  GAAP-based net loss margin