OpenText Reports Third Quarter 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   

  $1,245  

  $1,278  

  $1,011  

  $1,036  

  $435  

  $444  

  +41.1 %  

  +44.9 %  

  +37.7 %  

  +41.1 %  

  +8.3 %  

  +10.4 %  

  Annual Recurring Revenues represent 81% of Total Revenues  

   ⁽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 Q4FY'22, plus year-to-date FY'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.  

    Summary of Quarterly Results    

   (In millions, except per share data)   

   Q3 FY'23   

   Q3 FY'22   

   $ Change   

   % Change   

   Q3 FY'23   
in CC*   

   % Change
in CC*   

   Revenues:   

  Cloud services and subscriptions  

  $435.4  

  $401.9  

  $33.5  

  8.3 %  

  $443.7  

  10.4 %  

  Customer support  

  575.9  

  332.5  

  243.4  

  73.2 %  

  592.8  

  78.3 %  

   Total annual recurring revenues**   

   $1,011.3   

   $734.5   

   $276.9   

   37.7 %   

   $1,036.5   

   41.1 %   

  License  

  139.7  

  80.6  

  59.1  

  73.3 %  

  145.0  

  79.9 %  

  Professional service and other  

  93.6  

  67.2  

  26.4  

  39.4 %  

  96.8  

  44.1 %  

   Total revenues   

   $1,244.7   

   $882.3   

   $362.4   

   41.1 %   

   $1,278.3   

   44.9 %   

  GAAP-based operating income  

  $64.0  

  $131.6  

  ($67.6)  

  (51.4) %  

  N/A  

  N/A  

  Non-GAAP-based operating income ⁽¹⁾  

  $334.6  

  $262.2  

  $72.4  

  27.6 %  

  $336.4  

  28.3 %  

  GAAP-based net income attributable to OpenText  

  $57.6  

  $74.7  

  ($17.1)  

  (22.9) %  

  N/A  

  N/A  

  GAAP-based EPS, diluted  

  $0.21  

  $0.28  

  ($0.07)  

  (25.0) %  

  N/A  

  N/A  

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

  $0.73  

  $0.70  

  $0.03  

  4.3 %  

  $0.73  

  4.3 %  

  Adjusted EBITDA ⁽¹⁾  

  $365.1  

  $284.5  

  $80.6  

  28.3 %  

  $367.3  

  29.1 %  

  Operating cash flows  

  $336.8  

  $323.6  

  $13.2  

  4.1 %  

  N/A  

  N/A  

  Free cash flows ⁽¹⁾  

  $305.5  

  $306.0  

  ($0.4)  

  (0.1) %  

  N/A  

  N/A  

    Summary of YTD Results    

   (In millions, except per share data)   

   FY'23   YTD   

   FY'22   YTD   

   $ Change   

   % Change   

   FY'23   YTD
in CC*   

   % Change
in CC*   

   Revenues:   

  Cloud services and subscriptions  

  $1,248.8  

  $1,123.4  

  $125.4  

  11.2 %  

  $1,283.7  

  14.3 %  

  Customer support  

  1,209.7  

  1,002.6  

  207.1  

  20.7 %  

  1,267.4  

  26.4 %  

   Total annual recurring revenues**   

   $2,458.5   

   $2,126.0   

   $332.5   

   15.6 %   

   $2,551.0   

   20.0 %   

  License  

  310.2  

  263.7  

  46.6  

  17.7 %  

  326.2  

  23.7 %  

  Professional service and other  

  225.4  

  201.7  

  23.7  

  11.8 %  

  237.8  

  17.9 %  

   Total revenues   

   $2,994.2   

   $2,591.4   

   $402.8   

   15.5 %   

   $3,115.1   

   20.2 %   

  GAAP-based operating income  

  $395.0  

  $507.2  

  ($112.2)  

  (22.1) %  

  N/A  

  N/A  

  Non-GAAP-based operating income ⁽¹⁾  

  $933.6  

  $886.0  

  $47.6  

  5.4 %  

  $966.0  

  9.0 %  

  GAAP-based net income attributable to OpenText  

  $199.1  

  $294.9  

  ($95.8)  

  (32.5) %  

  N/A  

  N/A  

  GAAP-based EPS, diluted  

  $0.74  

  $1.08  

  ($0.34)  

  (31.5) %  

  N/A  

  N/A  

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

  $2.39  

  $2.43  

  ($0.04)  

  (1.6) %  

  $2.50  

  2.9 %  

  Adjusted EBITDA ⁽¹⁾  

  $1,010.1  

  $951.4  

  $58.7  

  6.2 %  

  $1,043.1  

  9.6 %  

  Operating cash flows  

  $663.9  

  $729.9  

  ($66.0)  

  (9.0) %  

  N/A  

  N/A  

  Free cash flows ⁽¹⁾  

  $564.1  

  $674.9  

  ($110.8)  

  (16.4) %  

  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.  

  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'23   

   Q2 FY'23   

   Q3 FY'22   

   % Change   

   (Q3 FY'23
vs Q2 FY'23)   

   % Change   

   (Q3 FY'23 vs
Q3 FY'22)   

  Revenue (millions)  

  $1,244.7  

  $897.4  

  $882.3  

  38.7 %  

  41.1 %  

  GAAP-based gross margin  

  70.3 %  

  70.8 %  

  68.9 %  

  (50)  

  bps  

  140  

  bps  

  Non-GAAP-based gross margin ⁽¹⁾  

  75.8 %  

  76.0 %  

  74.5 %  

  (20)  

  bps  

  130  

  bps  

  GAAP-based earnings (loss) per share, diluted  

  $0.21  

  $0.96  

  $0.28  

  (78.1) %  

  (25.0) %  

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

  $0.73  

  $0.89  

  $0.70  

  (18.0) %  

  4.3 %  

   ⁽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)   

   March 31, 2023   

   June 30, 2022   

   ASSETS   

   (unaudited)   

  Cash and cash equivalents  

  $             1,396,817  

  $             1,693,741  

  Accounts receivable trade, net of allowance for credit losses of $16,550 as of
March 31, 2023 and $16,473 as of June 30, 2022  

  676,280  

  426,652  

  Contract assets  

  61,374  

  26,167  

  Income taxes recoverable  

  47,803  

  18,255  

  Prepaid expenses and other current assets  

  250,661  

  120,552  

  Total current assets  

  2,432,935  

  2,285,367  

  Property and equipment  

  340,615  

  244,709  

  Operating lease right of use assets  

  297,640  

  198,132  

  Long-term contract assets  

  63,380  

  19,719  

  Goodwill  

  8,748,543  

  5,244,653  

  Acquired intangible assets  

  4,221,885  

  1,075,208  

  Deferred tax assets  

  889,143  

  810,154  

  Other assets  

  343,677  

  256,987  

  Long-term income taxes recoverable  

  89,730  

  44,044  

   Total assets   

  $          17,427,548  

  $          10,178,973  

   LIABILITIES AND SHAREHOLDERS' EQUITY   

  Current liabilities:  

  Accounts payable and accrued liabilities  

  $                910,713  

  $                448,607  

  Current portion of long-term debt  

  495,850  

  10,000  

  Operating lease liabilities  

  94,015  

  56,380  

  Deferred revenues  

  1,785,121  

  902,202  

  Income taxes payable  

  198,371  

  51,069  

  Total current liabilities  

  3,484,070  

  1,468,258  

  Long-term liabilities:  

  Accrued liabilities  

  64,120  

  18,208  

  Pension liability  

  112,168  

  60,951  

  Long-term debt  

  8,565,238  

  4,209,567  

  Long-term operating lease liabilities  

  286,025  

  198,695  

  Long-term deferred revenues  

  240,357  

  91,144  

  Long-term income taxes payable  

  189,351  

  34,003  

  Deferred tax liabilities  

  363,072  

  65,887  

  Total long-term liabilities  

  9,820,331  

  4,678,455  

  Shareholders' equity:  

  Share capital and additional paid-in capital  

  270,479,181   and 269,522,639 Common Shares issued and outstanding at
March 31, 2023 and June 30, 2022, respectively; authorized Common Shares:
unlimited  

  2,130,343  

  2,038,674  

  Accumulated other comprehensive income (loss)  

  (33,114)  

  (7,659)  

  Retained earnings  

  2,163,338  

  2,160,069  

  Treasury stock, at cost (3,216,394 and 3,706,420 shares at March 31, 2023 and
June 30, 2022, respectively)  

  (138,700)  

  (159,966)  

  Total OpenText shareholders' equity  

  4,121,867  

  4,031,118  

  Non-controlling interests  

  1,280  

  1,142  

  Total shareholders' equity  

  4,123,147  

  4,032,260  

   Total liabilities and shareholders' equity   

  $          17,427,548  

  $          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   

   March 31,   

   Nine Months Ended   

   March 31,   

   2023   

   2022   

   2023   

   2022   

  Revenues:  

  Cloud services and subscriptions  

  $       435,449  

  $       401,947  

  $    1,248,774  

  $    1,123,422  

  Customer support  

  575,884  

  332,514  

  1,209,743  

  1,002,626  

  License  

  139,722  

  80,641  

  310,230  

  263,663  

  Professional service and other  

  93,619  

  67,181  

  225,403  

  201,679  

  Total revenues  

  1,244,674  

  882,283  

  2,994,150  

  2,591,390  

  Cost of revenues:  

  Cloud services and subscriptions  

  157,658  

  136,020  

  423,771  

  377,928  

  Customer support  

  67,067  

  31,763  

  123,010  

  90,914  

  License  

  3,840  

  3,196  

  10,461  

  10,906  

  Professional service and other  

  78,526  

  56,693  

  186,390  

  161,459  

  Amortization of acquired technology-based intangible assets  

  62,639  

  46,564  

  146,139  

  152,333  

  Total cost of revenues  

  369,730  

  274,236  

  889,771  

  793,540  

  Gross profit  

  874,944  

  608,047  

  2,104,379  

  1,797,850  

  Operating expenses:  

  Research and development  

  210,731  

  117,730  

  430,629  

  321,517  

  Sales and marketing  

  271,013  

  180,955  

  615,354  

  491,133  

  General and administrative  

  127,047  

  88,137  

  282,724  

  231,127  

  Depreciation  

  30,577  

  22,370  

  76,609  

  65,535  

  Amortization of acquired customer-based intangible assets  

  97,237  

  56,215  

  205,121  

  160,764  

  Special charges (recoveries)  

  74,350  

  11,031  

  98,937  

  20,592  

  Total operating expenses  

  810,955  

  476,438  

  1,709,374  

  1,290,668  

  Income from operations  

  63,989  

  131,609  

  395,005  

  507,182  

  Other income (expense), net  

  85,706  

  24,392  

  59,824  

  29,137  

  Interest and other related expense, net  

  (104,502)  

  (40,238)  

  (183,599)  

  (117,538)  

  Income before income taxes  

  45,193  

  115,763  

  271,230  

  418,781  

  Provision for (recovery of) income taxes  

  (12,420)  

  41,041  

  71,979  

  123,757  

  Net income for the period  

  $         57,613  

  $         74,722  

  $       199,251  

  $       295,024  

  Net (income) loss attributable to non-controlling interests  

  (57)  

  (41)  

  (138)  

  (130)  

  Net income attributable to OpenText  

  $         57,556  

  $         74,681  

  $       199,113  

  $       294,894  

  Earnings per share—basic attributable to OpenText  

  $              0.21  

  $              0.28  

  $              0.74  

  $              1.09  

  Earnings per share—diluted attributable to OpenText  

  $              0.21  

  $              0.28  

  $              0.74  

  $              1.08  

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

  270,441  

  270,693  

  270,143  

  271,623  

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

  270,650  

  271,211  

  270,173  

  272,439  

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

   Three Months Ended   

   March 31,   

   Nine Months Ended  
March 31,   

   2023   

   2022   

   2023   

   2022   

  Net income  

  $         57,613  

  $         74,722  

  $       199,251  

  $       295,024  

  Other comprehensive income (loss)—net of tax:  

  Net foreign currency translation adjustments  

  (28,640)  

  (13,073)  

  (25,587)  

  (44,512)  

  Unrealized gain (loss) on cash flow hedges:  

  Unrealized gain (loss) - net of tax expense (recovery) effect of $15 and $233 for the three months ended March 31, 2023 and 2022, respectively; ($844) and $(158) for the nine months ended March 31, 2023 and 2022, respectively  

  38  

  648  

  (2,343)  

  (334)  

  (Gain) loss reclassified into net income - net of tax (expense) recovery effect of $252 and $79 for the three months ended March 31, 2023 and 2022, respectively; $861 and $(24) for the nine months ended March 31, 2023 and 2022, respectively  

  699  

  219  

  2,388  

  (86)  

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

  Unrealized gain (loss) - net of tax expense (recovery) effect of $238 and $— for the three months ended March 31, 2023 and 2022, respectively; $238 and $— for the nine months ended March 31, 2023 and 2022, respectively  

  (900)  

  —  

  (900)  

  —  

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

  Actuarial gain (loss) - net of tax expense (recovery) effect of ($892) and $(579) for the three months ended March 31, 2023 and 2022, respectively; $318 and $(811) for the nine months ended March 31, 2023 and 2022, respectively  

  (3,318)  

  (2,033)  

  878  

  (4,517)  

  Amortization of actuarial (gain) loss into net income - net of tax (expense) recovery effect of $25 and $66 for the three months ended March 31, 2023 and 2022, respectively; $76 and $134 for the nine months ended March 31, 2023 and 2022, respectively  

  35  

  156  

  109  

  477  

  Total other comprehensive income (loss) net  

  (32,086)  

  (14,083)  

  (25,455)  

  (48,972)  

  Total comprehensive income  

  25,527  

  60,639  

  173,796  

  246,052  

  Comprehensive (income) loss attributable to non-controlling interests  

  (57)  

  (41)  

  (138)  

  (130)  

  Total comprehensive income attributable to OpenText  

  $         25,470  

  $         60,598  

  $       173,658  

  $       245,922  

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

   Three Months Ended March 31, 2023   

   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, 2022   

   270,235   

   $  2,092,079   

   (3,295)   

   $ (142,126)   

   $  2,171,236   

   $          (1,028)   

   $      1,223   

   $  4,121,384   

  Issuance of Common Shares  

  Under employee stock option plans  

  16  

  479  

  —  

  —  

  —  

  —  

  —  

  479  

  Under employee stock purchase plans  

  228  

  5,776  

  —  

  —  

  —  

  —  

  —  

  5,776  

  Share-based compensation  

  —  

  36,505  

  —  

  —  

  —  

  —  

  —  

  36,505  

  Issuance of treasury stock  

  —  

  (4,496)  

  79  

  3,426  

  —  

  —  

  —  

  (1,070)  

  Dividends declared  

  ($0.24299 per Common Share)  

  —  

  —  

  —  

  —  

  (65,454)  

  —  

  —  

  (65,454)  

  Other comprehensive income (loss) - net  

  —  

  —  

  —  

  —  

  —  

  (32,086)  

  —  

  (32,086)  

  Net income for the period  

   —   

   —   

   —   

   —   

  57,556  

   —   

  57  

  57,613  

   Balance as of March 31, 2023   

   270,479   

   $  2,130,343   

   (3,216)   

   $ (138,700)   

   $  2,163,338   

   $        (33,114)   

   $      1,280   

   $  4,123,147   

   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   

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

   Nine Months Ended March 31, 2023   

   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  

  88  

  2,473  

  —  

  —  

  —  

  —  

  —  

  2,473  

  Under employee stock purchase plans  

  868  

  22,997  

  —  

  —  

  —  

  —  

  —  

  22,997  

  Share-based compensation  

  —  

  88,535  

  —  

  —  

  —  

  —  

  —  

  88,535  

  Issuance of treasury stock  

  —  

  (22,336)  

  490  

  21,266  

  —  

  —  

  —  

  (1,070)  

  Dividends declared  

  ($0.72897 per Common Share)  

  —  

  —  

  —  

  —  

  (195,844)  

  —  

  —  

  (195,844)  

  Other comprehensive income (loss) - net  

  —  

  —  

  —  

  —  

  —  

  (25,455)  

  —  

  (25,455)  

  Net income for the period  

   —   

   —   

   —   

   —   

  199,113  

   —   

  138  

  199,251  

   Balance as of March 31, 2023   

   270,479   

   $  2,130,343   

   (3,216)   

   $  (138,700)   

   $  2,163,338   

   $        (33,114)   

   $      1,280   

   $  4,123,147   

   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   

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

   Three Months Ended   

   March 31,   

   Nine Months Ended   

   March 31,   

   2023   

   2022   

   2023   

   2022   

  Cash flows from operating activities:  

  Net income for the period  

  $           57,613  

  $           74,722  

  $         199,251  

  $         295,024  

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

  Depreciation and amortization of intangible assets  

  190,453  

  125,149  

  427,869  

  378,632  

  Share-based compensation expense  

  36,368  

  16,748  

  88,398  

  45,091  

  Pension expense  

  2,362  

  1,868  

  5,806  

  4,883  

  Amortization of debt issuance costs  

  5,330  

  1,482  

  8,496  

  3,936  

  Write off of right of use assets  

  3,344  

  —  

  7,119  

  —  

  Loss on extinguishment of debt  

  21  

  —  

  8,152  

  27,413  

  Loss on sale and write down of property and equipment  

  1,307  

  58  

  1,428  

  96  

  Deferred taxes  

  (131,898)  

  22,440  

  (178,700)  

  43,332  

  Share in net (income) loss of equity investees  

  4,724  

  (27,746)  

  11,547  

  (59,103)  

  Changes in financial instruments  

  102,713  

  —  

  112,567  

  —  

  Changes in operating assets and liabilities:  

  Accounts receivable  

  167,866  

  17,241  

  141,269  

  68,428  

  Contract assets  

  (11,442)  

  (8,463)  

  (29,896)  

  (27,208)  

  Prepaid expenses and other current assets  

  (62,121)  

  (4,501)  

  (65,186)  

  (15,722)  

  Income taxes  

  87,277  

  (14,011)  

  131,517  

  (11,235)  

  Accounts payable and accrued liabilities  

  (146,638)  

  42,891  

  (137,674)  

  (65,738)  

  Deferred revenue  

  (13,498)  

  76,335  

  (42,631)  

  25,642  

  Other assets  

  54,708  

  (386)  

  (5,998)  

  16,527  

  Operating lease assets and liabilities, net  

  (11,714)  

  (270)  

  (19,430)  

  (128)  

  Net cash provided by operating activities  

  336,775  

  323,557  

  663,904  

  729,870  

  Cash flows from investing activities:  

  Additions of property and equipment  

  (31,233)  

  (17,590)  

  (99,772)  

  (54,937)  

  Purchase of Micro Focus International PLC, net of cash acquired  

  (5,655,606)  

  —  

  (5,655,606)  

  —  

  Purchase of Zix Corporation, net of cash acquired  

  —  

  (18,602)  

  —  

  (856,175)  

  Purchase of Bricata Inc.  

  —  

  —  

  —  

  (17,927)  

  Realized gain on financial instruments  

  131,248  

  —  

  131,248  

  —  

  Other investing activities  

  —  

  (651)  

  (873)  

  (3,922)  

  Net cash used in investing activities  

  (5,555,591)  

  (36,843)  

  (5,625,003)  

  (932,961)  

  Cash flows from financing activities:  

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

  9,399  

  10,788  

  25,172  

  56,476  

  Proceeds from long-term debt and Revolver  

  3,927,450  

  —  

  4,927,450  

  1,500,000  

  Repayment of long-term debt and Revolver  

  (11,463)  

  (2,500)  

  (16,463)  

  (857,500)  

  Debt extinguishment costs  

  —  

  —  

  —  

  (24,969)  

  Debt issuance costs  

  (65,559)  

  (1,812)  

  (77,209)  

  (17,159)  

  Repurchase of Common Shares  

  —  

  (45,083)  

  —  

  (136,117)  

  Purchase of treasury stock  

  —  

  (56,067)  

  —  

  (75,660)  

  Distribution to non-controlling interest  

  —  

  —  

  —  

  (396)  

  Payments of dividends to shareholders  

  (64,919)  

  (59,077)  

  (194,481)  

  (178,613)  

  Other financing activities  

  (2,193)  

  —  

  (2,193)  

  —  

  Net cash provided by (used in) financing activities  

  3,792,715  

  (153,751)  

  4,662,276  

  266,062  

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

  2,903  

  (11,207)  

  2,632  

  (36,920)  

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

  (1,423,198)  

  121,756  

  (296,191)  

  26,051  

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

  2,822,918  

  1,514,095  

  1,695,911  

  1,609,800  

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

  $      1,399,720  

  $      1,635,851  

  $      1,399,720  

  $      1,635,851  

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

   Reconciliation of cash, cash equivalents and restricted cash:   

   March 31, 2023   

   March 31, 2022   

  Cash and cash equivalents  

  $               1,396,817  

  $               1,633,702  

  Restricted cash ⁽¹⁾  

  2,903  

  2,149  

  Total cash, cash equivalents and restricted cash  

  $               1,399,720  

  $               1,635,851  

   ⁽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 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, 2023    

    (In thousands, except for per share data)    

   Three Months Ended March 31, 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  

  $  157,658  

  $     (2,943)  

  (1)  

  $   154,715  

  Customer support  

  67,067  

  (1,157)  

  (1)  

  65,910  

  Professional service and other  

  78,526  

  (1,884)  

  (1)  

  76,642  

  Amortization of acquired technology-based intangible assets  

  62,639  

  (62,639)  

  (2)  

  —  

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

  874,944  

  70.3 %  

  68,623  

  (3)  

  943,567  

  75.8 %  

   Operating expenses   

  Research and development  

  210,731  

  (10,801)  

  (1)  

  199,930  

  Sales and marketing  

  271,013  

  (11,947)  

  (1)  

  259,066  

  General and administrative  

  127,047  

  (7,636)  

  (1)  

  119,411  

  Amortization of acquired customer-based intangible assets  

  97,237  

  (97,237)  

  (2)  

  —  

  Special charges (recoveries)  

  74,350  

  (74,350)  

  (4)  

  —  

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

  63,989  

  270,594  

  (5)  

  334,583  

  Other income (expense), net  

  85,706  

  (85,706)  

  (6)  

  —  

  Provision for (recovery of) income taxes  

  (12,420)  

  44,631  

  (7)  

  32,211  

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

  57,556  

  140,257  

  (8)  

  197,813  

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

  $         0.21  

  $          0.52  

  (8)  

  $          0.73  

  (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 on our ongoing business and operating results.  

  (7)  

  Adjustment relates to differences between the GAAP-based tax provision rate of approximately (27%) 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 net income (loss) to Non-GAAP-based net income:  

   Three Months Ended March 31, 2023   

   Per share diluted   

  GAAP-based net income, attributable to OpenText  

  $                     57,556  

  $                          0.21  

  Add:  

  Amortization  

  159,876  

  0.59  

  Share-based compensation  

  36,368  

  0.13  

  Special charges (recoveries)  

  74,350  

  0.28  

  Other (income) expense, net  

  (85,706)  

  (0.32)  

  GAAP-based provision for (recovery of) income taxes  

  (12,420)  

  (0.04)  

  Non-GAAP-based provision for income taxes  

  (32,211)  

  (0.12)  

  Non-GAAP-based net income, attributable to OpenText  

  $                   197,813  

  $                          0.73  

   Reconciliation of Adjusted EBITDA   

   Three Months Ended March 31, 2023   

  GAAP-based net income, attributable to OpenText  

  $                                                          57,556  

  Add:  

  Provision for (recovery of) income taxes  

  (12,420)  

  Interest and other related expense, net  

  104,502  

  Amortization of acquired technology-based intangible assets  

  62,639  

  Amortization of acquired customer-based intangible assets  

  97,237  

  Depreciation  

  30,577  

  Share-based compensation  

  36,368  

  Special charges (recoveries)  

  74,350  

  Other (income) expense, net  

  (85,706)  

  Adjusted EBITDA  

  $                                                       365,103  

  GAAP-based net income margin  

  4.6 %  

  Adjusted EBITDA margin  

  29.3 %  

   Reconciliation of Free cash flows   

   Three Months Ended March 31, 2023   

  GAAP-based cash flows provided by operating activities  

  $                                                         336,775  

  Add:  

  Capital expenditures ⁽¹⁾  

  (31,233)  

  Free cash flows  

  $                                                         305,542  

  (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 nine months ended March 31, 2023    

    (In thousands, except for per share data)    

   Nine Months Ended March 31, 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  

  $   423,771  

  $     (7,788)  

  (1)  

  $   415,983  

  Customer support  

  123,010  

  (2,414)  

  (1)  

  120,596  

  Professional service and other  

  186,390  

  (5,172)  

  (1)  

  181,218  

  Amortization of acquired technology-based intangible assets  

  146,139  

  (146,139)  

  (2)  

  —  

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

  2,104,379  

  70.3 %  

  161,513  

  (3)  

  2,265,892  

  75.7 %  

   Operating expenses   

  Research and development  

  430,629  

  (25,481)  

  (1)  

  405,148  

  Sales and marketing  

  615,354  

  (28,243)  

  (1)  

  587,111  

  General and administrative  

  282,724  

  (19,300)  

  (1)  

  263,424  

  Amortization of acquired customer-based intangible assets  

  205,121  

  (205,121)  

  (2)  

  —  

  Special charges (recoveries)  

  98,937  

  (98,937)  

  (4)  

  —  

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

  395,005  

  538,595  

  (5)  

  933,600  

  Other income (expense), net  

  59,824  

  (59,824)  

  (6)  

  —  

  Provision for income taxes  

  71,979  

  33,021  

  (7)