OpenText Reports Third Quarter Fiscal Year 2022 Financial Results

    Total Revenues    

  (in millions)  

    Annual Recurring Revenues    

  (in millions)  

    Cloud Revenues    

  (in millions)  

    Reported    

    Constant Currency    

    Reported    

    Constant Currency    

    Reported    

    Constant Currency    

  $882.3  

  $899.4  

  $734.5  

  $747.7  

  $401.9  

  $406.6  

  +5.9%  

  +8.0%  

  +6.2%  

  +8.1%  

  +13.0%  

  +14.3%  

  Annual Recurring Revenues represent 83% of Total Revenues  

   ⁽¹⁾ Organic revenue growth is calculated by removing the revenue contribution from newly acquired companies for the first year post acquisition.  

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

     Summary of Quarterly Results     

    (In millions, except per share data)    

    Q3 FY'22    

    Q3 FY'21    

    $ Change    

    % Change    

    Q3 FY'22
in CC*    

    % Change
in CC*    

    Revenues:    

  Cloud services and subscriptions  

  $401.9  

  $355.8  

  $46.1  

  13.0%  

  $406.6  

  14.3%  

  Customer support  

  332.5  

  335.9  

  (3.4)  

  (1.0)%  

  341.1  

  1.5%  

    Total annual recurring revenues**    

   $734.5   

   $691.8   

   $42.7   

   6.2%   

   $747.7   

   8.1%   

  License  

  80.6  

  76.3  

  4.3  

  5.7%  

  82.7  

  8.4%  

  Professional service and other  

  67.2  

  64.9  

  2.3  

  3.6%  

  69.0  

  6.4%  

    Total revenues    

   $882.3   

   $832.9   

   $49.4   

   5.9%   

   $899.4   

   8.0%   

  GAAP-based operating income  

  $131.6  

  $152.4  

  ($20.8)  

  (13.6)%  

  N/A  

  N/A  

  Non-GAAP-based operating income ⁽¹⁾  

  $262.2  

  $275.2  

  ($13.0)  

  (4.7)%  

  $270.1  

  (1.9)%  

  GAAP-based net income attributable to OpenText  

  $74.7  

  $91.5  

  ($16.8)  

  (18.4)%  

  N/A  

  N/A  

  GAAP-based EPS, diluted  

  $0.28  

  $0.33  

  ($0.05)  

  (15.2)%  

  N/A  

  N/A  

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

  $0.70  

  $0.75  

  ($0.05)  

  (6.7)%  

  $0.73  

  (2.7)%  

  Adjusted EBITDA ⁽¹⁾  

  $284.5  

  $297.1  

  ($12.6)  

  (4.3)%  

  $292.5  

  (1.5)%  

  Operating cash flows  

  $323.6  

  $63.6  

  $260.0  

  409.0%  

  N/A  

  N/A  

  Free cash flows ⁽¹⁾  

  $306.0  

  $50.3  

  $255.7  

  508.8%  

  N/A  

  N/A  

     Summary of YTD Results     

    (In millions, except per share data)    

    FY'22 YTD    

    FY'21 YTD    

    $ Change    

    % Change    

    FY'22 YTD
in CC*    

    % Change
in CC*    

    Revenues:    

  Cloud services and subscriptions  

  $1,123.4  

  $1,047.3  

  $76.1  

  7.3%  

  $1,124.8  

  7.4%  

  Customer support  

  1,002.6  

  999.8  

  2.8  

  0.3%  

  1,005.0  

  0.5%  

    Total annual recurring revenues**    

   $2,126.0   

   $2,047.1   

   $79.0   

   3.9%   

   $2,129.8   

   4.0%   

  License  

  263.7  

  252.2  

  11.5  

  4.6%  

  265.8  

  5.4%  

  Professional service and other  

  201.7  

  193.3  

  8.4  

  4.3%  

  202.5  

  4.7%  

    Total revenues    

   $2,591.4   

   $2,492.6   

   $98.8   

   4.0%   

   $2,598.0   

   4.2%   

  GAAP-based operating income  

  $507.2  

  $569.2  

  ($62.0)  

  (10.9)%  

  N/A  

  N/A  

  Non-GAAP-based operating income ⁽¹⁾  

  $886.0  

  $936.1  

  ($50.1)  

  (5.4)%  

  $896.0  

  (4.3)%  

  GAAP-based net income attributable to OpenText  

  $294.9  

  $129.4  

  $165.5  

  127.9%  

  N/A  

  N/A  

  GAAP-based EPS, diluted  

  $1.08  

  $0.47  

  $0.61  

  129.8%  

  N/A  

  N/A  

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

  $2.43  

  $2.59  

  ($0.16)  

  (6.2)%  

  $2.46  

  (5.0)%  

  Adjusted EBITDA ⁽¹⁾  

  $951.4  

  $1,000.2  

  ($48.9)  

  (4.9)%  

  $961.4  

  (3.9)%  

  Operating cash flows  

  $729.9  

  $579.9  

  $149.9  

  25.9%  

  N/A  

  N/A  

  Free cash flows ⁽¹⁾  

  $674.9  

  $543.7  

  $131.3  

  24.1%  

  N/A  

  N/A  

   ⁽¹⁾ Please see note 2 "Use of Non-GAAP Financial Measures" to the condensed 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 Quarterly Results     

    Q3 FY'22    

    Q2 FY'22    

    Q3 FY'21    

    % Change    

    (Q3 FY'22 vs
Q2 FY'22)    

    % Change    

    (Q3 FY'22 vs
Q3 FY'21)    

  Revenue (millions)  

  $882.3  

  $876.8  

  $832.9  

  0.6%  

  5.9%  

  GAAP-based gross margin  

  68.9%  

  70.2%  

  68.6%  

  (130)  

  bps  

  30  

  bps  

  Non-GAAP-based gross margin ⁽¹⁾  

  74.5%  

  76.4%  

  75.2%  

  (190)  

  bps  

  (70)  

  bps  

  GAAP-based EPS, diluted  

  $0.28  

  $0.32  

  $0.33  

  (12.5)%  

  (15.2)%  

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

  $0.70  

  $0.89  

  $0.75  

  (21.3)%  

  (6.7)%  

   ⁽¹⁾ Please see note 2 "Use of Non-GAAP Financial Measures" to the condensed 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   

   CONDENSED CONSOLIDATED BALANCE SHEETS   

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

    March 31, 2022    

    June 30, 2021    

    ASSETS    

    (unaudited)    

  Cash and cash equivalents  

  $             1,633,702  

  $             1,607,306  

  Accounts receivable trade, net of allowance for credit losses of $16,439 as of
March 31, 2022 and $22,151 as of June 30, 2021  

  429,877  

  438,547  

  Contract assets  

  25,481  

  25,344  

  Income taxes recoverable  

  20,781  

  32,312  

  Prepaid expenses and other current assets  

  122,616  

  98,551  

  Total current assets  

  2,232,457  

  2,202,060  

  Property and equipment  

  227,830  

  233,595  

  Operating lease right of use assets  

  217,684  

  234,532  

  Long-term contract assets  

  20,049  

  19,222  

  Goodwill  

  5,265,189  

  4,691,673  

  Acquired intangible assets  

  1,181,266  

  1,187,260  

  Deferred tax assets  

  717,345  

  796,738  

  Other assets  

  257,301  

  208,894  

  Long-term income taxes recoverable  

  43,518  

  35,362  

    Total assets    

  $          10,162,639  

  $             9,609,336  

    LIABILITIES AND SHAREHOLDERS' EQUITY    

  Current liabilities:  

  Accounts payable and accrued liabilities  

  $                404,545  

  $                423,592  

  Current portion of long-term debt  

  10,000  

  10,000  

  Operating lease liabilities  

  59,182  

  58,315  

  Deferred revenues  

  936,750  

  852,629  

  Income taxes payable  

  7,483  

  17,368  

  Total current liabilities  

  1,417,960  

  1,361,904  

  Long-term liabilities:  

  Accrued liabilities  

  16,631  

  28,830  

  Pension liability  

  76,364  

  74,511  

  Long-term debt  

  4,210,582  

  3,578,859  

  Long-term operating lease liabilities  

  203,101  

  224,453  

  Long-term deferred revenues  

  90,736  

  98,989  

  Long-term income taxes payable  

  35,206  

  34,113  

  Deferred tax liabilities  

  56,208  

  108,224  

  Total long-term liabilities  

  4,688,828  

  4,147,979  

  Shareholders' equity:  

  Share capital and additional paid-in capital  

  270,231,166 and 271,540,755 Common Shares issued and outstanding at
March 31, 2022 and June 30, 2021, respectively; authorized Common
Shares: unlimited  

  2,010,146  

  1,947,764  

  Accumulated other comprehensive income  

  17,266  

  66,238  

  Retained earnings  

  2,151,369  

  2,153,326  

  Treasury stock, at cost (2,776,420 and 1,567,664 shares at March 31, 2022 and
June 30, 2021, respectively)  

  (124,033)  

  (69,386)  

  Total OpenText shareholders' equity  

  4,054,748  

  4,097,942  

  Non-controlling interests  

  1,103  

  1,511  

  Total shareholders' equity  

  4,055,851  

  4,099,453  

    Total liabilities and shareholders' equity    

  $          10,162,639  

  $             9,609,336  

   OPEN TEXT CORPORATION   

   CONDENSED CONSOLIDATED STATEMENTS OF INCOME   

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

   (unaudited)   

    Three Months Ended March 31,    

    Nine Months Ended March 31,    

   2022   

   2021   

   2022   

   2021   

  Revenues:  

  Cloud services and subscriptions  

  $           401,947  

  $           355,845  

  $        1,123,422  

  $        1,047,285  

  Customer support  

  332,514  

  335,915  

  1,002,626  

  999,806  

  License  

  80,641  

  76,299  

  263,663  

  252,170  

  Professional service and other  

  67,181  

  64,872  

  201,679  

  193,327  

  Total revenues  

  882,283  

  832,931  

  2,591,390  

  2,492,588  

  Cost of revenues:  

  Cloud services and subscriptions  

  136,020  

  123,729  

  377,928  

  354,235  

  Customer support  

  31,763  

  30,953  

  90,914  

  89,815  

  License  

  3,196  

  2,810  

  10,906  

  9,601  

  Professional service and other  

  56,693  

  50,321  

  161,459  

  143,521  

  Amortization of acquired technology-based
intangible assets  

  46,564  

  53,453  

  152,333  

  165,581  

  Total cost of revenues  

  274,236  

  261,266  

  793,540  

  762,753  

  Gross profit  

  608,047  

  571,665  

  1,797,850  

  1,729,835  

  Operating expenses:  

  Research and development  

  117,730  

  110,071  

  321,517  

  304,212  

  Sales and marketing  

  180,955  

  158,687  

  491,133  

  438,984  

  General and administrative  

  88,137  

  71,548  

  231,127  

  190,502  

  Depreciation  

  22,370  

  21,961  

  65,535  

  64,244  

  Amortization of acquired customer-based
intangible assets  

  56,215  

  54,156  

  160,764  

  164,075  

  Special charges (recoveries)  

  11,031  

  2,846  

  20,592  

  (1,404)  

  Total operating expenses  

  476,438  

  419,269  

  1,290,668  

  1,160,613  

  Income from operations  

  131,609  

  152,396  

  507,182  

  569,222  

  Other income (expense), net  

  24,392  

  8,283  

  29,137  

  16,417  

  Interest and other related expense, net  

  (40,238)  

  (37,333)  

  (117,538)  

  (114,017)  

  Income before income taxes  

  115,763  

  123,346  

  418,781  

  471,622  

  Provision for income taxes  

  41,041  

  31,818  

  123,757  

  342,121  

  Net income for the period  

  $             74,722  

  $             91,528  

  $           295,024  

  $           129,501  

  Net (income) loss attributable to non-controlling
interests  

  (41)  

  (38)  

  (130)  

  (112)  

  Net income attributable to OpenText  

  $             74,681  

  $             91,490  

  $           294,894  

  $           129,389  

  Earnings per share—basic attributable to OpenText  

  $                  0.28  

  $                  0.34  

  $                  1.09  

  $                  0.47  

  Earnings per share—diluted attributable to OpenText  

  $                  0.28  

  $                  0.33  

  $                  1.08  

  $                  0.47  

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

  270,693  

  272,832  

  271,623  

  272,414  

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

  271,211  

  273,924  

  272,439  

  273,312  

   OPEN TEXT CORPORATION   

   CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME   

   (In thousands of U.S. dollars)   

   (unaudited)   

    Three Months Ended March 31,    

    Nine Months Ended March 31,    

   2022   

   2021   

   2022   

   2021   

  Net income for the period  

  $             74,722  

  $             91,528  

  $           295,024  

  $           129,501  

  Other comprehensive income (loss)—net of tax:  

  Net foreign currency translation adjustments  

  (13,073)  

  (12,568)  

  (44,512)  

  36,142  

  Unrealized gain (loss) on cash flow hedges:  

  Unrealized gain (loss) - net of tax expense
(recovery) effect of $233 and $246 for the three
months ended March 31, 2022 and 2021,
respectively; ($158) and $1,302 for the nine
months ended March 31, 2022 and 2021,
respectively  

  648  

  681  

  (334)  

  3,608  

  (Gain) loss reclassified into net income - net of
tax (expense) recovery effect of $79 and ($399)
for the three months ended March 31, 2022 and
2021, respectively; ($24) and ($682) for the
nine months ended March 31, 2022 and 2021,
respectively  

  219  

  (1,108)  

  (86)  

  (1,892)  

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

  Actuarial gain (loss) - net of tax expense
(recovery) effect of ($579) and $944 for the
three months ended March 31, 2022 and 2021,
respectively; ($811) and ($413) for the nine
months ended March 31, 2022 and 2021,
respectively  

  (2,033)  

  344  

  (4,517)  

  (2,342)  

  Amortization of actuarial (gain) loss into net
income - net of tax (expense) recovery effect of
$66 and $95 for the three months ended March
31, 2022 and 2021, respectively; $134 and
$275 for the nine months ended March 31,
2022 and 2021, respectively  

  156  

  249  

  477  

  733  

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

  (14,083)  

  (12,402)  

  (48,972)  

  36,249  

  Total comprehensive income  

  60,639  

  79,126  

  246,052  

  165,750  

  Comprehensive (income) loss attributable to non-
controlling interests  

  (41)  

  (38)  

  (130)  

  (112)  

  Total comprehensive income attributable to OpenText  

  $             60,598  

  $             79,088  

  $           245,922  

  $           165,638  

   OPEN TEXT CORPORATION   

   CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY   

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

   (unaudited)   

    Three Months Ended March 31, 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 December 31, 2021    

   271,006   

   $ 1,990,913   

   (1,476)   

   $ (67,966)   

   $ 2,174,467   

   $          31,349   

   $      1,062   

   $ 4,129,825   

  Issuance of Common Shares  

  Under employee stock option plans  

  53  

  1,863  

  —  

  —  

  —  

  —  

  —  

  1,863  

  Under employee stock purchase plans  

  172  

  7,003  

  —  

  —  

  —  

  —  

  —  

  7,003  

  Share-based compensation  

  —  

  16,748  

  —  

  —  

  —  

  —  

  —  

  16,748  

  Purchase of treasury stock  

  —  

  —  

  (1,300)  

  (56,067)  

  —  

  —  

  —  

  (56,067)  

  Repurchase of Common Shares  

  (1,000)  

  (6,381)  

  —  

  —  

  (38,702)  

  —  

  —  

  (45,083)  

  Dividends declared  

  ($0.2209 per Common Share)  

  —  

  —  

  —  

  —  

  (59,077)  

  —  

  —  

  (59,077)  

  Other comprehensive income (loss) - net  

  —  

  —  

  —  

  —  

  —  

  (14,083)  

  —  

  (14,083)  

  Net income for the period  

  —  

  —  

  —  

  —  

  74,681  

  —  

  41  

  74,722  

    Balance as of March 31, 2022    

   270,231   

   $ 2,010,146   

   (2,776)   

   $ (124,033)   

   $ 2,151,369   

   $          17,266   

   $      1,103   

   $ 4,055,851   

    Three Months Ended March 31, 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 December 31, 2020    

   272,589   

   $ 1,889,857   

   (1,101)   

   $ (47,555)   

   $ 2,093,076   

   $          66,476   

   $      1,393   

   $ 4,003,247   

  Issuance of Common Shares  

  Under employee stock option plans  

  219  

  8,270  

  —  

  —  

  —  

  —  

  —  

  8,270  

  Under employee stock purchase plans  

  165  

  6,421  

  —  

  —  

  —  

  —  

  —  

  6,421  

  Share-based compensation  

  —  

  12,357  

  —  

  —  

  —  

  —  

  —  

  12,357  

  Purchase of treasury stock  

  —  

  —  

  (490)  

  (22,977)  

  —  

  —  

  —  

  (22,977)  

  Issuance of treasury stock  

  —  

  (1,146)  

  23  

  1,146  

  —  

  —  

  —  

  —  

  Dividends declared  

  ($0.2008 per Common Share)  

  —  

  —  

  —  

  —  

  (54,519)  

  —  

  —  

  (54,519)  

  Other comprehensive income (loss) - net  

  —  

  —  

  —  

  —  

  —  

  (12,402)  

  —  

  (12,402)  

  Net income for the period  

  —  

  —  

  —  

  —  

  91,490  

  —  

  38  

  91,528  

    Balance as of March 31, 2021    

   272,973   

   $ 1,915,759   

   (1,568)   

   $ (69,386)   

   $ 2,130,047   

   $          54,074   

   $      1,431   

   $ 4,031,925   

   OPEN TEXT CORPORATION   

   CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY   

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

   (unaudited)   

    Nine Months Ended March 31, 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, 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  

  905  

  31,128  

  —  

  —  

  —  

  —  

  —  

  31,128  

  Under employee stock purchase plans  

  595  

  24,913  

  —  

  —  

  —  

  —  

  —  

  24,913  

  Share-based compensation  

  —  

  45,091  

  —  

  —  

  —  

  —  

  —  

  45,091  

  Purchase of treasury stock  

  —  

  —  

  (1,700)  

  (75,660)  

  —  

  —  

  —  

  (75,660)  

  Issuance of treasury stock  

  —  

  (21,013)  

  492  

  21,013  

  —  

  —  

  —  

  —  

  Repurchase of Common Shares  

  (2,810)  

  (17,879)  

  —  

  —  

  (118,238)  

  —  

  —  

  (136,117)  

  Dividends declared  

  ($0.6627 per Common Share)  

  —  

  —  

  —  

  —  

  (178,613)  

  —  

  —  

  (178,613)  

  Other comprehensive income (loss) - net  

  —  

  —  

  —  

  —  

  —  

  (48,972)  

  —  

  (48,972)  

  Distribution to non-controlling interest  

  —  

  142  

  —  

  —  

  —  

  —  

  (538)  

  (396)  

  Net income for the period  

  —  

  —  

  —  

  —  

  294,894  

  —  

  130  

  295,024  

    Balance as of March 31, 2022    

   270,231   

   $ 2,010,146   

   (2,776)   

   $ (124,033)   

   $ 2,151,369   

   $          17,266   

   $      1,103   

   $ 4,055,851   

    Nine Months Ended March 31, 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, 2020    

   271,863   

   $ 1,851,777   

   (622)   

   $ (23,608)   

   $ 2,159,396   

   $          17,825   

   $      1,319   

   $ 4,006,709   

  Adoption of ASU 2016-13 - cumulative
effect, net  

  —  

  —  

  —  

  —  

  (2,450)  

  —  

  —  

  (2,450)  

  Issuance of Common Shares  

  Under employee stock option plans  

  743  

  23,768  

  —  

  —  

  —  

  —  

  —  

  23,768  

  Under employee stock purchase plans  

  367  

  13,974  

  193  

  6,690  

  —  

  —  

  —  

  20,664  

  Share-based compensation  

  —  

  38,619  

  —  

  —  

  —  

  —  

  —  

  38,619  

  Purchase of treasury stock  

  —  

  —  

  (1,455)  

  (64,847)  

  —  

  —  

  —  

  (64,847)  

  Issuance of treasury stock  

  —  

  (12,379)  

  316  

  12,379  

  —  

  —  

  —  

  —  

  Dividends declared  

  ($0.5762 per Common Share)  

  —  

  —  

  —  

  —  

  (156,288)  

  —  

  —  

  (156,288)  

  Other comprehensive income (loss) - net  

  —  

  —  

  —  

  —  

  —  

  36,249  

  —  

  36,249  

  Net income for the period  

  —  

  —  

  —  

  —  

  129,389  

  —  

  112  

  129,501  

    Balance as of March 31, 2021    

   272,973   

   $ 1,915,759   

   (1,568)   

   $ (69,386)   

   $ 2,130,047   

   $          54,074   

   $      1,431   

   $ 4,031,925   

   OPEN TEXT CORPORATION   

   CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS   

   (In thousands of U.S. dollars)   

   (unaudited)   

    Three Months Ended March 31,    

    Nine Months Ended March 31,    

   2022   

   2021   

   2022   

   2021   

  Cash flows from operating activities:  

  Net income for the period  

  $             74,722  

  $             91,528  

  $           295,024  

  $           129,501  

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

  Depreciation and amortization of intangible assets  

  125,149  

  129,570  

  378,632  

  393,900  

  Share-based compensation expense  

  16,748  

  12,357  

  45,091  

  38,619  

  Pension expense  

  1,868  

  1,550  

  4,883  

  4,670  

  Amortization of debt issuance costs  

  1,482  

  1,141  

  3,936  

  3,395  

  Loss on extinguishment of debt  

  —  

  —  

  27,413  

  —  

  Loss on sale and write down of property and equipment  

  58  

  1,026  

  96  

  1,979  

  Deferred taxes  

  22,440  

  447  

  43,332  

  80,844  

  Share in net (income) loss of equity investees  

  (27,746)  

  (11,765)  

  (59,103)  

  (20,020)  

  Changes in operating assets and liabilities:  

  Accounts receivable  

  17,241  

  54,345  

  68,428  

  87,072  

  Contract assets  

  (8,463)  

  (8,842)  

  (27,208)  

  (29,035)  

  Prepaid expenses and other current assets  

  (4,501)  

  (10,494)  

  (15,722)  

  (2,528)  

  Income taxes  

  (14,011)  

  (286,435)  

  (11,235)  

  (117,594)  

  Accounts payable and accrued liabilities  

  42,891  

  9,211  

  (65,738)  

  (27,327)  

  Deferred revenue  

  76,335  

  81,247  

  25,642  

  62,600  

  Other assets  

  (386)  

  2,232  

  16,527  

  765  

  Operating lease assets and liabilities, net  

  (270)  

  (3,546)  

  (128)  

  (26,910)  

  Net cash provided by operating activities  

  323,557  

  63,572  

  729,870  

  579,931  

  Cash flows from investing activities:  

  Additions of property and equipment  

  (17,590)  

  (13,311)  

  (54,937)  

  (36,267)  

  Purchase of Zix Corporation, net of cash acquired  

  (18,602)  

  —  

  (856,175)  

  —  

  Purchase of Bricata Inc.  

  —  

  —  

  (17,927)  

  —  

  Purchase of XMedius  

  —  

  —  

  —  

  444  

  Purchase of Dynamic Solutions Group Inc.  

  —  

  —  

  —  

  (371)  

  Other investing activities  

  (651)  

  (648)  

  (3,922)  

  (2,018)  

  Net cash used in investing activities  

  (36,843)  

  (13,959)  

  (932,961)  

  (38,212)  

  Cash flows from financing activities:  

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

  10,788  

  16,603  

  56,476  

  45,780  

  Proceeds from long-term debt and Revolver  

  —  

  —  

  1,500,000  

  —  

  Repayment of long-term debt and Revolver  

  (2,500)  

  (2,500)  

  (857,500)  

  (607,500)  

  Debt extinguishment costs  

  —  

  —  

  (24,969)  

  —  

  Debt issuance costs  

  (1,812)  

  —  

  (17,159)  

  —  

  Repurchase of Common Shares  

  (45,083)  

  —  

  (136,117)  

  —  

  Purchase of treasury stock  

  (56,067)  

  (22,977)  

  (75,660)  

  (64,847)  

  Distribution to non-controlling interest  

  —  

  —  

  (396)  

  —  

  Payments of dividends to shareholders  

  (59,077)  

  (54,519)  

  (178,613)  

  (156,288)  

  Net cash provided by (used in) financing activities  

  (153,751)  

  (63,393)  

  266,062  

  (782,855)  

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

  (11,207)  

  (11,218)  

  (36,920)  

  22,553  

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

  121,756  

  (24,998)  

  26,051  

  (218,583)  

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

  1,514,095  

  1,503,678  

  1,609,800  

  1,697,263  

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

  $        1,635,851  

  $        1,478,680  

  $        1,635,851  

  $        1,478,680  

   OPEN TEXT CORPORATION   

   CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS   

   (In thousands of U.S. dollars)   

   (unaudited)   

    Reconciliation of cash, cash equivalents and restricted cash:    

    March 31, 2022    

    March 31, 2021    

  Cash and cash equivalents  

  $             1,633,702  

  $             1,475,626  

  Restricted cash ⁽¹⁾  

  2,149  

  3,054  

  Total cash, cash equivalents and restricted cash  

  $             1,635,851  

  $             1,478,680  

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

    Notes    

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

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

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

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

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

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

  The Company does not acquire businesses on a predictable cycle, and therefore believes that the presentation of Non-GAAP measures, which in certain cases adjust for the impact of amortization of intangible assets and the related tax effects that are primarily related to acquisitions, will provide readers of financial statements with a more consistent basis for comparison across accounting periods and be more useful in helping readers understand the Company's operating results and underlying operational trends. Additionally, the Company has engaged in various restructuring activities over the past several years, primarily due to acquisitions and most recently in response to 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 March 31, 2022     

     (In thousands, except for per share data)     

    Three Months Ended March 31, 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  

  $  136,020  

  $      (1,268)  

  (1)  

  $   134,752  

  Customer support  

  31,763  

  (501)  

  (1)  

  31,262  

  Professional service and other  

  56,693  

  (907)  

  (1)  

  55,786  

  Amortization of acquired technology-based intangible assets  

  46,564  

  (46,564)  

  (2)  

  —  

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

  608,047  

  68.9%  

  49,240  

  (3)  

  657,287  

  74.5%  

    Operating expenses    

  Research and development  

  117,730  

  (4,350)  

  (1)  

  113,380  

  Sales and marketing  

  180,955  

  (5,761)  

  (1)  

  175,194  

  General and administrative  

  88,137  

  (3,961)  

  (1)  

  84,176  

  Amortization of acquired customer-based intangible
assets  

  56,215  

  (56,215)  

  (2)  

  —  

  Special charges (recoveries)  

  11,031  

  (11,031)  

  (4)  

  —  

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

  131,609  

  130,558  

  (5)  

  262,167  

  Other income (expense), net  

  24,392  

  (24,392)  

  (6)  

  —  

  Provision for income taxes  

  41,041  

  (9,971)  

  (7)  

  31,070  

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

  74,681  

  116,137  

  (8)  

  190,818  

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

  $         0.28  

  $          0.42  

  (8)  

  $          0.70  

  (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 35% and a Non-GAAP-based tax rate of approximately 14%; these rate differences are due to the income tax effects of items that are excluded for the purpose of calculating Non-GAAP-based adjusted net income. Such excluded items include amortization, share-based compensation, special charges (recoveries) and other income (expense), net. Also excluded are tax benefits/expense items unrelated to current period income such as changes in reserves for tax uncertainties and valuation allowance reserves, and "book to return" adjustments for tax return filings and tax assessments. Included is the amount of net tax benefits arising from the internal reorganization that occurred in Fiscal 2017 assumed to be allocable to the current period based on the forecasted utilization period. In arriving at our Non-GAAP-based tax rate of approximately 14%, we analyzed the individual adjusted expenses and took into consideration the impact of statutory tax rates from local jurisdictions incurring the expense.  

  (8)  

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

    Three Months Ended March 31, 2022    

    Per share diluted    

  GAAP-based net income, attributable to OpenText  

  $                     74,681  

  $                          0.28  

  Add:  

  Amortization  

  102,779  

  0.38  

  Share-based compensation  

  16,748  

  0.06  

  Special charges (recoveries)  

  11,031  

  0.04  

  Other (income) expense, net  

  (24,392)  

  (0.09)  

  GAAP-based provision for income taxes  

  41,041  

  0.15  

  Non-GAAP-based provision for income taxes  

  (31,070)  

  (0.12)  

  Non-GAAP-based net income, attributable to OpenText  

  $                   190,818  

  $                          0.70  

   Reconciliation of Adjusted   EBITDA   

    Three Months Ended March 31, 2022    

  GAAP-based net income, attributable to OpenText  

  $                                                       74,681  

  Add:  

  Provision for income taxes  

  41,041  

  Interest and other related expense, net  

  40,238  

  Amortization of acquired technology-based intangible assets  

  46,564  

  Amortization of acquired customer-based intangible assets  

  56,215  

  Depreciation  

  22,370  

  Share-based compensation  

  16,748  

  Special charges (recoveries)  

  11,031  

  Other (income) expense, net  

  (24,392)  

  Adjusted EBITDA  

  $                                                     284,496  

  GAAP-based net income margin  

  8.5%  

  Adjusted EBITDA margin  

  32.2%  

   Reconciliation of Free cash flows   

    Three Months Ended March 31, 2022    

  GAAP-based cash flows provided by operating activities  

  $                                                         323,557  

  Add:  

  Capital expenditures ⁽¹⁾  

  (17,590)  

  Free cash flows  

  $                                                         305,967  

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

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

     for the nine months ended March 31, 2022     

     (In thousands, except for per share data)     

    Nine Months Ended March 31, 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  

  $   377,928  

  $      (3,072)  

  (1)  

  $   374,856  

  Customer support  

  90,914  

  (1,631)