Aug 3, 2017 SOURCE: PR NewsWire
OpenText Reports Fourth Quarter and Fiscal Year 2017 Financial Results
Q4 Fiscal 2017 - Total revenue of $664 million, up 37% Y/Y; $675 million in CC
Fiscal 2017 - Total revenue of $2.29 billion, up 26% Y/Y; $2.32 billion in CC
WATERLOO, Ontario, Aug. 3, 2017 /PRNewswire/ -- Open Text Corporation (NASDAQ: OTEX, TSX: OTEX) today announced its financial results for the fourth quarter and fiscal year ended June 30, 2017.
"Fiscal 2017 was a transformational year for OpenText as we strengthened our product offerings with OpenText Release 16 and acquisitions. OpenText delivered a record $2.29 billion in revenues and $728 million in Adjusted Operating Income, representing 26% and 18% in year-over-year growth, respectively," said Mark J. Barrenechea, OpenText CEO & CTO. "Our Annual Recurring Revenues (Cloud Services & Subscriptions and Customer Support) grew 25% to $1.69 billion."
"Strategic acquisitions and positive organic growth continue to be our leading growth drivers. Fiscal 2018 will be the first full year of benefit from acquisitions completed over the last 12 months and we expect growth in total revenue, annual recurring revenues, margin, and cash flow. As well, we will remain focused on operational excellence and disciplined capital allocation," said Barrenechea.
Barrenechea concluded, "Our new corporate brand, "OpenText: The Information Company", has been well received by our customers, partners and employees. OpenText Enterprise Information Management (EIM) enables customers to digitize their processes and supply chains, incorporate more information through machines and unlock the value of that information with our new Artificial Intelligence (AI) platform, Magellan. We support our customers operating in a hybrid world, deploying on-premises, in the OpenText Cloud, or in a cloud of their choice."
Financial Highlights for Fiscal 2017 with Year Over Year Comparisons
Summary of Annual Results
-------------------------
(in millions except per
share data) FY17 FY16 $ Change % Change FY17 in CC* % Change in
CC*
(Y/Y)
Revenues:
Cloud services and
subscriptions $705.5 $601.0 $104.5 17.4% $711.8 18.4%
Customer support 981.1 746.4 234.7 31.4% 993.5 33.1%
Total annual recurring
revenues $1,686.6 $1,347.4 $339.2 25.2% $1,705.3 26.6%
License 369.1 283.7 85.4 30.1% 372.8 31.4%
Professional service and
other 235.3 193.1 42.2 21.9% 239.5 24.0%
Total revenues $2,291.1 $1,824.2 $466.8 25.6% $2,317.5 27.0%
GAAP-based operating income $352.9 $368.6 ($15.6 ) (4.2)%
Non-GAAP-based operating
income (1) $728.5 $616.8 $111.6 18.1% $736.0 19.3%
GAAP-based operating margin 15.4% 20.2% n/a (480) bps
Non-GAAP-based operating
margin (1) 31.8% 33.8% n/a (200) bps 31.8% (200) bps
GAAP-based EPS,
diluted(2)(3) $4.01 $1.17 $2.84 242.7%
Non-GAAP-based EPS,
diluted (1)(2)(4) $2.02 $1.77 $0.25 14.1% $2.05 15.8%
Net income, attributable to
OpenText(3) $1,025.7 $284.5 $741.2 260.5%
Adjusted EBITDA(1) $792.5 $671.7 $120.8 18.0%
Operating cash flows $439.3 $525.7 ($86.5) (16.4)%
-------------------- ------ ------ ------ ------
Summary of Quarterly
Results
--------------------
(in millions except per Q4 FY17 Q4 FY16 $ Change % Change
share data)
(Y/Y) Q4 FY17 in % Change in
CC* CC*
Revenues:
Cloud services and
subscriptions $183.6 $156.6 $27.0 17.2% $186.3 18.9%
Customer support 287.8 193.0 94.8 49.1% 293.0 51.8%
Total annual recurring
revenues $471.4 $349.6 $121.8 34.9% $479.3 37.1%
License 123.5 86.1 37.4 43.4% 125.6 45.8%
Professional service and
other 68.6 48.1 20.5 42.7% 70.5 46.6%
Total revenues $663.6 $483.8 $179.8 37.2% $675.4 39.6%
GAAP-based operating income $106.5 $93.5 $13.0 13.9%
Non-GAAP-based operating
income (1) $219.9 $158.1 $61.8 39.1 $222.7 40.9%
GAAP-based operating margin 16.0% 19.3% n/a (330) bps
Non-GAAP-based operating
margin (1) 33.1% 32.7% n/a 40 bps 33.0% 30 bps
GAAP-based EPS, diluted(2) $0.17 $0.35 ($0.18) (51.4)%
Non-GAAP-based EPS,
diluted (1)(2)(4) $0.60 $0.45 $0.15 33.3% $0.61 35.6%
Net income attributable to
OpenText $46.1 $86.4 ($40.3) (46.6)%
Adjusted EBITDA(1) $237.0 $173.1 $63.9 36.9%
Operating cash flows $102.5 $119.1 ($16.6) (14.0)%
-------------------- ------ ------ ------ ------
(1) Please see note 2 "Use of Non-GAAP
Financial Measures" below
As a result of the two-for-one
share split, effected January 24,
2017 by way of a share sub-
division, all current and
historical period per share data
and number of Common Shares
outstanding in this press release
are presented on a post share
(2) split basis.
Recorded a significant tax benefit
in Q1 FY17 of $876.1 million. This
significant tax benefit is
specifically tied to the Company's
internal reorganization and
applied to Q1 FY17 only and as a
result does not continue in future
(3) periods.
Please also see note 14 to the
Company's 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
(4) utilization period.
Note: Individual line items in tables may be
adjusted by non-material amounts to enable
totals to align to published financial
statements.
"We finished a transformative fiscal year with strong fourth quarter results and delivered on our margin targets including margin expansion for each of the acquisitions," said OpenText CFO John Doolittle. "Our focus in Fiscal 2018 will be on continued margin expansion, particularly related to ECD, and operating cash flow growth."
*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.
OpenText Quarterly Business Highlights
-- 37 customer transactions over $1 million, 18 OpenText Cloud and 19
on-premise
-- Financial, Services, Consumer Goods and Technology industries saw the
most demand in cloud and license
-- New customers in the quarter included Deutsche Bundesbank, Hatch, Maxim
Lighting, Menarini Group, Companhia de Electricidade de Macau, The
County of Los Angeles, Department of Human Resources, NASA Langley
Research Center, State of Tennessee Comptroller of the Treasury,
Lincolnshire County Council, Qumu, Panasonic, Modec, Singapore's
Ministry of National Development, UEM, LähiTapiola, the Natori Company,
Volkswagen Financial Services, SecureWorks, Covenant Health, Illovo
Sugar Africa, Constellation Brands, VITAL Shared Services, Ooredoo,
Anthem, Southern California Edison, Tecnimont, Scotiabank Inverlat S.A.,
Alberta Blue Cross Benefits Corp.
-- OpenText Enhances Release 16 to Digitize Business Processes and Manage
Information from Engagement to Insight
-- OpenText buys Covisint Corporation
-- OpenText Launches Magellan, New Analytics and Artificial Intelligence
(AI) Platform
-- OpenText to Acquire Guidance Software Inc.
-- OpenText Announces Accenture Interactive, Deloitte, SAP and Tata
Consultancy Services as Diamond Sponsors at OpenText Enterprise World
2017
-- OpenText Announces OpenText People Center
-- OpenText Announces New Global Cloud Reseller Agreement with SAP to
Provide End-to-End HR Document Management
-- OpenText Named SAP Solution Extension Partner of the Year in 2017 SAP®
Pinnacle Awards
Dividend Program Highlights
Cash Dividend
As part of our quarterly, non-cumulative cash dividend program, the Board declared on August 2, 2017 a cash dividend to $0.132 per common share. The record date for this dividend is September 1, 2017 and the payment date is September 22, 2017. Future declarations of dividends and the establishment of future record and payment dates are subject to the final determination and discretion of the Board of Directors.
Summary of Annual Results
-------------------------
FY17 FY16 % Change
Revenue (million) $2,291.1 $1,824.2 25.6%
GAAP-based gross margin 66.7% 68.5% (180) bps
GAAP-based operating margin 15.4% 20.2% (480) bps
GAAP-based EPS, diluted(1)(2) $4.01 $1.17 242.7%
Non-GAAP-based gross margin
(3) 72.6% 72.8% (20) bps
Non-GAAP-based operating
margin (3) 31.8% 33.8% (200) bps
Non-GAAP-based EPS, diluted
(2)(3)(4) $2.02 $1.77 14.1%
--------------------------- ----- ----- ----
Summary of
Quarterly
Results
----------
Q4 FY17 Q3 FY17 Q4 FY16 % Change % Change
(Q4 FY17 vs (Q4 FY17 vs
Q3 FY17) Q4 FY16)
Revenue
(million) $663.6 $593.1 $483.8 11.9% 37.2%
GAAP-based
gross margin 66.9% 64.5% 68.4% 240 bps (150) bps
GAAP-based
operating
margin 16.0% 11.0% 19.3% 500 bps (330) bps
GAAP-based
EPS,
diluted(2) $0.17 $0.08 $0.35 112.5% (51.4)%
Non-GAAP-
based gross
margin (3) 73.6% 71.2% 72.4% 240 bps 120 bps
Non-GAAP-
based
operating
margin (3) 33.1% 29.1% 32.7% 400 bps 40 bps
Non-GAAP-
based EPS,
diluted
(2)(3)(4) $0.60 $0.45 $0.45 33.3% 33.3%
----------- ----- ----- ----- ---- ----
Recorded a significant tax benefit
in Q1 FY17 of $876.1 million. This
significant tax benefit is
specifically tied to the Company's
internal reorganization and
applied to Q1 FY17 only and as a
result does not continue in future
(1) periods.
As a result of the two-for-one
share split, effected January 24,
2017 by way of a share sub-
division, all current and
historical period per share data
and number of Common Shares
outstanding in this press release
are presented on a post share
(2) split basis.
(3) Please see note 2 "Use of Non-GAAP
Financial Measures" below
Please also see note 14 to the
Company's 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
(4) utilization period.
Shelf Renewal
The Company also announced today that it is filing a renewed preliminary short form base shelf prospectus with the securities regulatory authorities in each of the provinces of Canada. A final shelf prospectus, once a receipt has been issued by the Canadian securities regulatory authorities, will allow OpenText or any selling security holders, as applicable, to offer and issue or sell, as applicable, from time to time, an aggregate of up to US$1 billion of equity and debt securities, or any combination thereof, during the 25-month period that the shelf prospectus remains effective. The Company expects to file a corresponding automatic shelf registration statement on Form S-3 with the U.S. Securities and Exchange Commission (the "SEC") concurrently with the filing of the final shelf prospectus in Canada. The specific terms of any future offering will be established in a prospectus supplement to the shelf prospectus, which supplement will be filed with the applicable Canadian securities regulatory authorities and the SEC.
Conference Call Information
The public is invited to listen to the earnings conference call today at 5:00 p.m. ET (2:00 p.m. PT) by dialing 1-800-319-4610 (toll-free) or +1-604-638-5340 (international). Please dial-in 15 minutes ahead of time to ensure proper connection. Alternatively, a live webcast of the earnings conference call will be available on the Investor Relations section of the Company's website at http://investors.opentext.com/events.cfm.
A replay of the call will be available beginning August 3, 2017 at 7:00 p.m. ET through 11:59 p.m. on August 17, 2017 and can be accessed by dialing 1-855-669-9658 (toll-free) or +1-604-674-8052 (international) and using passcode 1541 followed by the number sign.
Please see below note (2) for a reconciliation of U.S. GAAP-based financial measures used in this press release, to non-U.S. GAAP-based financial measures.
About OpenText
OpenText enables the digital world, creating a better way for organizations to work with information, on premises or in the cloud. For more information about OpenText (NASDAQ: OTEX, TSX: OTEX) visit www.opentext.com.
Cautionary Statement Regarding Forward-Looking Statements
Certain statements in this press release, including statements about the focus of Open Text Corporation ("OpenText" or "the Company") in our fiscal year ending June 30, 2018 (Fiscal 2018) on growth in earnings and cash flows, creating value through investments in broader Enterprise Information Management (EIM) capabilities, distribution, the Company's presence in the cloud and in growth markets, expected growth in our revenue lines, expected ECD Business revenue contributions, adjusted operating income and cash flow, its financial condition, results of operations and earnings, announced acquisitions, ongoing tax matters, the integration of the acquired businesses, expected timing, charges and savings related to restructuring activities, declaration of quarterly dividends, future tax rates, new platform and product offerings and other matters, may contain words such as "anticipates", "expects", "intends", "plans", "believes", "seeks", "estimates", "may", "could", "would", "might", "will" and variations of these words or similar expressions are considered forward-looking statements or information under applicable securities laws. In addition, any information or statements that refer to expectations, beliefs, plans, projections, objectives, performance or other characterizations of future events or circumstances, including any underlying assumptions, are forward-looking, and based on our current expectations, forecasts and projections about the operating environment, economies and markets in which we operate. Forward-looking statements reflect our current estimates, beliefs and assumptions, which are based on management's perception of historic trends, current conditions and expected future developments, as well as other factors it believes are appropriate in the circumstances, such as certain assumptions about the economy, as well as market, financial and operational assumptions. Management's estimates, beliefs and assumptions are inherently subject to significant business, economic, competitive and other uncertainties and contingencies regarding future events and, as such, are subject to change. We can give no assurance that such estimates, beliefs and assumptions will prove to be correct. Such forward-looking statements involve known and unknown risks, uncertainties and other factors and assumptions that may cause the actual results, performance or achievements to differ materially. Such factors include, but are not limited to: (i) the future performance, financial and otherwise, of OpenText; (ii) the ability of OpenText to bring new products and services to market and to increase sales; (iii) the strength of the Company's product development pipeline; (iv) the Company's growth and profitability prospects; (v) the estimated size and growth prospects of the EIM market including expected growth in the Artificial Intelligence market; (vi) the Company's competitive position in the EIM market and its ability to take advantage of future opportunities in this market; (vii) the benefits of the Company's products and services to be realized by customers; (viii) the demand for the Company's products and services and the extent of deployment of the Company's products and services in the EIM marketplace; (ix) downward pressure on our share price and dilutive effect of future sales or issuances of equity securities (including in connection with future acquisitions); (x) the Company's financial condition and capital requirements; and (xi) statements about the impact of product releases. The risks and uncertainties that may affect forward-looking statements include, but are not limited to: (i) integration of acquisitions and related restructuring efforts, including the quantum of restructuring charges and the timing thereof; (ii) the potential for the incurrence of or assumption of debt in connection with acquisitions and the impact on the ratings or outlooks of rating agencies on the Company's outstanding debt securities; (iii) the possibility that the Company may be unable to meet its future reporting requirements under the U.S. Securities Exchange Act of 1934, as amended, and the rules promulgated thereunder, or applicable Canadian securities regulation; (iv) the risks associated with bringing new products and services to market; (v) fluctuations in currency exchange rates; (vi) delays in the purchasing decisions of the Company's customers; (vii) the competition the Company faces in its industry and/or marketplace; (viii) the final determination of litigation, tax audits (including tax examinations in the United States and elsewhere) and other legal proceedings; (ix) potential exposure to greater than anticipated tax liabilities or expenses, including with respect to changes in Canadian, U.S. or international tax regimes; (x) the possibility of technical, logistical or planning issues in connection with the deployment of the Company's products or services; (xi) the continuous commitment of the Company's customers; and (xii) demand for the Company's products and services. For additional information with respect to risks and other factors which could occur, see the Company's Annual Report on Form 10-K, Quarterly Reports on Form 10-Q and other securities filings with the Securities and Exchange Commission (SEC) and other securities regulators. Readers are cautioned not to place undue reliance upon any such forward-looking statements, which speak only as of the date made. Unless otherwise required by applicable securities laws, the Company disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.
This communication does not constitute an offer to sell or the solicitation of an offer to buy any securities, nor shall there be any sale of securities in any state or jurisdiction in which such an offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such state or jurisdiction.
OTEX-F
For more information, please contact:
Greg Secord
Vice President, Investor Relations
Open Text Corporation
415-963-0825
investors@opentext.com
Copyright ©2017 Open Text. OpenText is a trademark or registered trademark of Open Text. The list of trademarks is not exhaustive of other trademarks. Registered trademarks, product names, company names, brands and service names mentioned herein are property of Open Text. All rights reserved. For more information, visit: http://www.opentext.com/who-we-are/copyright-information.
OPEN TEXT CORPORATION
CONSOLIDATED BALANCE SHEETS
(In thousands of U.S. dollars, except share data)
June 30, 2017 June 30, 2016
------------- -------------
ASSETS
Cash and cash equivalents $443,357 $1,283,757
Short-term investments - 11,839
Accounts receivable trade, net of
allowance for doubtful accounts
of $6,319 as of June 30, 2017 and
$6,740 as of June 30, 2016 445,812 285,904
Income taxes recoverable 32,683 31,752
Prepaid expenses and other current
assets 81,625 59,021
Total current assets 1,003,477 1,672,273
Property and equipment 227,418 183,660
Goodwill 3,416,749 2,325,586
Acquired intangible assets 1,472,542 646,240
Deferred tax assets 1,215,712 241,161
Other assets 93,763 53,697
Deferred charges 42,344 22,776
Long-term income taxes recoverable 8,557 8,751
Total assets $7,480,562 $5,154,144
========== ==========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued
liabilities $342,120 $257,450
Current portion of long-term debt 182,760 8,000
Deferred revenues 570,328 373,549
Income taxes payable 31,835 32,030
Total current liabilities 1,127,043 671,029
Long-term liabilities:
Accrued liabilities 50,338 29,848
Deferred credits 5,283 8,357
Pension liability 58,627 61,993
Long-term debt 2,387,057 2,137,987
Deferred revenues 61,678 37,461
Long-term income taxes payable 162,493 149,041
Deferred tax liabilities 94,724 79,231
------ ------
Total long-term liabilities 2,820,200 2,503,918
Shareholders' equity:
Share capital
264,059,567 and 242,809,354 Common
Shares issued and outstanding at
June 30, 2017 and June 30, 2016,
respectively; authorized Common
Shares: unlimited 1,439,850 817,788
Additional paid-in capital 173,604 147,280
Accumulated other comprehensive
income 48,800 46,310
Retained earnings 1,897,624 992,546
Treasury stock, at cost (1,101,612
shares at June 30, 2017 and
1,267,294 at June 30, 2016,
respectively) (27,520) (25,268)
------- -------
Total OpenText shareholders'
equity 3,532,358 1,978,656
Non-controlling interests 961 541
--- ---
Total shareholders' equity 3,533,319 1,979,197
Total liabilities and
shareholders' equity $7,480,562 $5,154,144
========== ==========
OPEN TEXT CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
(In thousands of U.S. dollars, except share and per share data)
Year Ended June 30,
2017 2016 2015
---- ---- ----
Revenues:
License $369,144 $283,710 $294,266
Cloud services and subscriptions 705,495 601,018 605,309
Customer support 981,102 746,409 731,797
Professional service and other 235,316 193,091 220,545
------- ------- -------
Total revenues 2,291,057 1,824,228 1,851,917
--------- --------- ---------
Cost of revenues:
License 13,632 10,296 12,899
Cloud services and subscriptions 300,255 244,021 237,310
Customer support 122,753 89,861 94,456
Professional service and other 195,195 155,584 172,742
Amortization of acquired technology-
based intangible assets 130,556 74,238 81,002
------- ------ ------
Total cost of revenues 762,391 574,000 598,409
------- ------- -------
Gross profit 1,528,666 1,250,228 1,253,508
--------- --------- ---------
Operating expenses:
Research and development 281,680 194,057 196,491
Sales and marketing 444,838 344,235 373,610
General and administrative 170,438 140,397 162,728
Depreciation 64,318 54,929 50,906
Amortization of acquired customer-
based intangible assets 150,842 113,201 108,239
Special charges 63,618 34,846 12,823
------ ------ ------
Total operating expenses 1,175,734 881,665 904,797
--------- ------- -------
Income from operations 352,932 368,563 348,711
------- ------- -------
Other income (expense), net 15,743 (1,423) (28,047)
Interest and other related expense,
net (119,124) (76,363) (54,620)
-------- ------- -------
Income before income taxes 249,551 290,777 266,044
Provision for income taxes (776,364) 6,282 31,638
-------- ----- ------
Net income for the period $1,025,915 $284,495 $234,406
---------- -------- --------
Net (income) loss attributable to
non-controlling interests (256) (18) (79)
Net income attributable to OpenText $1,025,659 $284,477 $234,327
========== ======== ========
Earnings per share-basic
attributable to OpenText $4.04 $1.17 $0.96
===== ===== =====
Earnings per share-diluted
attributable to OpenText $4.01 $1.17 $0.95
===== ===== =====
Weighted average number of Common
Shares outstanding-basic 253,879 242,926 244,184
======= ======= =======
Weighted average number of Common
Shares outstanding-diluted 255,805 244,076 245,914
======= ======= =======
Dividends declared per Common Share $0.4770 $0.4150 $0.3588
======= ======= =======
As a result of the two-for-one share split,
effected January 24, 2017 by way of a share
sub-division, all current and historical
period per share data and number of Common
Shares outstanding in these Consolidated
Financial Statements are presented on a post
share split basis.
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
2017 2016
---- ----
Revenues:
License $123,497 $86,126
Cloud
services
and
subscriptions 183,638 156,624
Customer
support 287,804 192,969
Professional
service
and other 68,615 48,084
------ ------
Total
revenues 663,554 483,803
------- -------
Cost of revenues:
License 3,388 3,106
Cloud
services
and
subscriptions 79,588 64,889
Customer
support 35,224 25,237
Professional
service
and other 58,028 41,546
Amortization
of
acquired
technology-
based
intangible
assets 43,288 17,994
------ ------
Total cost
of
revenues 219,516 152,772
------- -------
Gross
profit 444,038 331,031
------- -------
Operating expenses:
Research
and
development 81,301 53,747
Sales and
marketing 129,541 95,815
General and
administrative 47,499 33,330
Depreciation 17,190 14,931
Amortization
of
acquired
customer-
based
intangible
assets 42,594 29,637
Special
charges 19,461 10,092
------ ------
Total
operating
expenses 337,586 237,552
------- -------
Income from
operations 106,452 93,479
------- ------
Other
income
(expense),
net 11,178 409
Interest
and other
related
expense,
net (32,372) (21,902)
------- -------
Income
before
income
taxes 85,258 71,986
Provision
for
(recovery
of) income
taxes 39,000 (14,347)
------ -------
Net income
for the
period $46,258 $86,333
------- -------
Net
(income)
loss
attributable
to non-
controlling
interests (121) 57
Net income
attributable
to
OpenText $46,137 $86,390
======= =======
Earnings
per share-
basic
attributable
to
OpenText $0.17 $0.36
===== =====
Earnings
per share-
diluted
attributable
to
OpenText $0.17 $0.35
===== =====
Weighted
average
number of
Common
Shares
outstanding-
basic 263,938 242,648
======= =======
Weighted
average
number of
Common
Shares
outstanding-
diluted 265,818 244,040
======= =======
Dividends
declared
per Common
Share $0.1320 $0.1150
======= =======
As a result of the two-for-one
share split, effected January
24, 2017 by way of a share sub-
division, all current and
historical period per share
data and number of Common
Shares outstanding in these
Condensed Consolidated
Financial Statements are
presented on a post share split
basis.
OPEN TEXT CORPORATION
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(In thousands of U.S. dollars)
Year Ended June 30,
2017 2016 2015
---- ---- ----
Net income for the period $1,025,915 $284,495 $234,406
Other comprehensive income-net of tax:
Net foreign currency translation
adjustments (4,756) (3,318) 15,690
Unrealized gain (loss) on cash flow
hedges:
Unrealized gain (loss) -net of tax
expense (recovery) effect of $34,
($928) and ($2,188) for the year ended
June 30, 2017, 2016 and 2015,
respectively 95 (2,574) (6,064)
(Gain) loss reclassified into net income
-net of tax recovery effect of $67,
$1,065 and $2,059 for the year ended
June 30, 2017, 2016 and 2015,
respectively 186 2,956 5,710
Actuarial gain (loss) relating to
defined benefit pension plans:
Actuarial gain (loss) -net of tax
expense (recovery) effect of $840,
($1,612) and ($1,422) for the year
ended June 30, 2017, 2016 and 2015,
respectively 6,216 (3,374) (3,302)
Amortization of actuarial loss into net
income -net of tax recovery effect of
$241, $132 and $89 for the year ended
June 30, 2017, 2016 and 2015,
respectively 565 347 357
Unrealized net gain (loss) on marketable
securities -net of tax effect of nil
for the year ended June 30, 2017, 2016
and 2015, respectively 184 445 (12)
Unrealized gain on marketable securities
-net of tax effect of nil for the year
ended June 30, 2017, 2016 and 2015,
respectively - - 1,906
Release of unrealized gain on marketable
securities -net of tax effect of nil
for the year ended June 30, 2017, 2016
and 2015, respectively - - (1,906)
Total other comprehensive income (loss),
net, for the period 2,490 (5,518) 12,379
----- ------ ------
Total comprehensive income 1,028,405 278,977 246,785
Comprehensive (income) loss attributable
to non-controlling interests (256) (18) (79)
---- --- ---
Total comprehensive income attributable
to OpenText $1,028,149 $278,959 $246,706
========== ======== ========
OPEN TEXT CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands of U.S. dollars)
Year Ended June 30,
2017 2016 2015
---- ---- ----
Cash flows from operating activities:
Net income for the period $1,025,915 $284,495 $234,406
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and
amortization of intangible
assets 345,715 242,368 240,147
Share-based compensation
expense 30,507 25,978 22,047
Excess tax (benefits) on
share-based compensation
expense (1,534) (230) (1,675)
Pension expense 3,893 4,577 4,796
Amortization of debt
issuance costs 5,014 4,678 4,556
Amortization of deferred
charges and credits 6,298 9,903 10,525
Loss on sale and write down
of property and equipment 784 1,108 1,368
Release of unrealized gain
on marketable securities
to income - - (3,098)
Deferred taxes (871,195) (54,461) (14,578)
Share in net (income) of
equity investees (5,952) - -
Write off of unamortized
debt issuance costs 833 - 2,919
Other non-cash charges 1,033 - -
Changes in operating assets and liabilities:
Accounts receivable (126,784) 8,985 43,189
Prepaid expenses and other
current assets (7,766) 316 (3,534)
Income taxes and deferred
charges and credits (1,683) 6,294 2,933
Accounts payable and
accrued liabilities 53,490 (5,671) (22,714)
Deferred revenue 3,484 (4,781) 6,775
Other assets (22,799) 2,163 (5,031)
------- ----- ------
Net cash provided by
operating activities 439,253 525,722 523,031
------- ------- -------
Cash flows from investing activities:
Additions of property and
equipment (79,592) (70,009) (77,046)
Proceeds from maturity of
short-term investments 9,212 11,297 17,017
Purchase of ECD Business (1,622,394) - -
Purchase of HP Inc. CCM
Business (315,000) - -
Purchase of Recommind, Inc. (170,107) - -
Purchase of HP Inc. CEM
Business (7,289) (152,711) -
Purchase of ANXe Business
Corporation 143 (104,570) -
Purchase of Daegis Inc.,
net of cash acquired - (22,146) -
Purchase consideration for
prior period acquisitions - (13,644) (327,792)
Other investing activities (5,937) (9,393) (10,574)
------ ------ -------
Net cash used in investing
activities (2,190,964) (361,176) (398,395)
---------- -------- --------
Cash flows from financing activities:
Excess tax benefits on
share-based compensation
expense 1,534 230 1,675
Proceeds from issuance of
long-term debt 256,875 600,000 800,000
Proceeds from revolver 225,000 - -
Proceeds from issuance of
Common Shares from
exercise of stock options
and ESPP 35,593 20,097 15,240
Proceeds from issuance of
Common Shares under the
public Equity Offering 604,223 - -
Repayment of long-term
debt and revolver (57,880) (8,000) (530,284)
Debt issuance costs (7,240) (6,765) (18,271)
Equity issuance costs (19,574) - -
Common Shares repurchased - (65,509) -
Purchase of treasury stock (8,198) (10,627) (10,126)
Repurchase of non-
controlling interest (208) - -
Payments of dividends to
shareholders (120,581) (99,262) (87,629)
-------- ------- -------
Net cash provided by
financing activities 909,544 430,164 170,605
------- ------- -------
Foreign exchange gain
(loss) on cash held in
foreign currencies 1,767 (10,952) (23,132)
Increase (decrease) in cash
and cash equivalents
during the period (840,400) 583,758 272,109
Cash and cash equivalents
at beginning of the period 1,283,757 699,999 427,890
--------- ------- -------
Cash and cash equivalents
at end of the period $443,357 $1,283,757 $699,999
======== ========== ========
OPEN TEXT CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands of U.S. dollars)
(Unaudited)
Three Months Ended June 30,
2017 2016
---- ----
Cash flows from operating
activities:
Net
income
for the
period $46,258 $86,333
Adjustments to reconcile
net income to net cash
provided by operating
activities:
Depreciation
and
amortization
of
intangible
assets 103,071 62,562
Share-
based
compensation
expense 8,134 6,898
Excess
tax
expense
(benefits)
on
share-
based
compensation
expense 52 27
Pension
expense 940 1,118
Amortization
of debt
issuance
costs 1,233 1,208
Amortization
of
deferred
charges
and
credits (140) 2,653
Loss on
sale
and
write
down of
property
and
equipment 784 -
Deferred
taxes 19,049 (38,769)
Share in
net
(income)
loss of
equity
investees 201 -
Changes in operating
assets and liabilities:
Accounts
receivable (89,689) (13,167)
Prepaid
expenses
and
other
current
assets (1,532) 2,905
Income
taxes
and
deferred
charges
and
credits (3,253) 3,004
Accounts
payable
and
accrued
liabilities 36,969 21,763
Deferred
revenue (3,433) (17,345)
Other
assets (16,164) (70)
------- ---
Net cash
provided
by
operating
activities 102,480 119,120
------- -------
Cash flows from investing
activities:
Additions
of
property
and
equipment (29,521) (21,112)
Proceeds
from
maturity
of
short-
term
investments - 2,058
Purchase
of HP
Inc. CEM
Business - (152,711)
Purchase
of ANXe
Business
Corporation - (104,570)
Other
investing
activities (2,924) (3,269)
Net cash
used in
investing
activities (32,445) (279,604)
------- --------
Cash flows from financing
activities:
Excess
tax
benefits
on
share-
based
compensation
expense (52) (27)
Proceeds
from
issuance
of long-
term
debt - 600,000
Proceeds
from
issuance
of
Common
Shares
from
exercise
of stock
options
and ESPP 8,925 8,269
Repayment
of
long-
term
debt
and
revolver (51,940) (2,000)
Debt
issuance
costs (1,040) (6,765)
Equity
issuance
costs (102) -
Purchase
of
treasury
stock (3,953) -
Repurchase
of non-
controlling
interest (208) -
Payments
of
dividends
to
shareholders (34,628) (27,635)
------- -------
Net cash
provided
by
(used
in)
financing
activities (82,998) 571,842
------- -------
Foreign
exchange
gain
(loss)
on cash
held in
foreign
currencies 7,320 (5,006)
Increase
(decrease)
in cash
and cash
equivalents
during
the
period (5,643) 406,352
Cash and
cash
equivalents
at
beginning
of the
period 449,000 877,405
Cash and
cash
equivalents
at end
of the
period $443,357 $1,283,757
======== ==========
Notes
(1) All dollar amounts in this press release
are in U.S. Dollars unless otherwise
indicated.
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
(2) 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 are 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
calculated as net income or earnings per
share, attributable to OpenText, on a
diluted basis, after giving effect to 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 income from operations,
excluding the amortization of acquired
intangible assets, Special charges
(recoveries), and share-based
compensation expense. Non-GAAP-based
operating margin is calculated as Non-
GAAP-based income from operations
expressed as a percentage of total
revenue.
Adjusted earnings (loss) before interest,
taxes, depreciation and amortization
(Adjusted EBITDA) is calculated as 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).
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 and is
based upon the way the Company's
management evaluates the performance of
the Company's business for use in the
Company's internal reports. In the course
of such evaluation and for the purpose of
making operating decisions, the Company's
management excludes certain items from
its analysis, including amortization of
acquired intangible assets, Special
charges (recoveries), share-based
compensation, other income (expense), and
the taxation impact of these items. These
items are excluded based upon the manner
in which management evaluates the
business of the Company and are not
excluded in the sense that they may be
used under U.S. GAAP.
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-U.S. GAAP-
based financial measures for the
following periods presented:
Reconciliation of selected GAAP-based measures to Non-GAAP-based measures for the three months ended June 30, 2017.
(In thousands except for per share amounts)
------------------------------------------
Three Months Ended June 30, 2017
GAAP-based GAAP-based Adjustments Note Non-GAAP- Non-GAAP-
Measures based based
Measures % of Total Measures
Revenue Measures
% of Total
Revenue
--- -------
Cost of revenues
Cloud services and
subscriptions $79,588 $(390) (1) $79,198
Customer support 35,224 (313) (1) 34,911
Professional
service and other 58,028 (449) (1) 57,579
Amortization of
acquired
technology-based
intangible assets 43,288 (43,288) (2) -
GAAP-based gross
profit and gross
margin (%) /Non-
GAAP-based gross
profit and gross
margin (%) 444,038 66.9% 44,440 (3) 488,478 73.6%
Operating expenses
Research and
development 81,301 (1,777) (1) 79,524
Sales and marketing 129,541 (2,450) (1) 127,091
General and
administrative 47,499 (2,755) (1) 44,744
Amortization of
acquired customer-
based intangible
assets 42,594 (42,594) (2) -
Special charges
(recoveries) 19,461 (19,461) (4) -
GAAP-based income
from operations
and operating
margin (%) /Non-
GAAP-based income
from operations
and operating
margin (%) 106,452 16.0% 113,477 (5) 219,929 33.1%
Other income
(expense), net 11,178 (11,178) (6) -
Provision for
(recovery of)
income taxes 39,000 (10,731) (7) 28,269
GAAP-based net
income /Non-
GAAP-based net
income,
attributable to
OpenText 46,137 113,030 (8) 159,167
GAAP-based
earnings per share
/Non-GAAP-based
earnings per
share-diluted,
attributable to
OpenText $0.17 $0.43 (8) $0.60
Adjustment relates to the exclusion of
share-based compensation expense from
our Non-GAAP-based operating expenses
as this expense is excluded from our
(1) internal analysis of operating results.
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
(2) 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.
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
one-time, non-recurring charges or
recoveries that are not indicative or
related to continuing operations, and
are therefore excluded from our internal
(4) analysis of operating results.
(5) GAAP-based and Non-GAAP-based income
from operations stated in dollars, and
operating margin stated as a percentage
of total revenue.
Adjustment relates to the exclusion of
Other income (expense) from our Non-
GAAP-based operating expenses as Other
income (expense) relates primarily 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
non-marketable securities 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
(6) ongoing business and operating results.
Adjustment relates to differences between
the GAAP-based tax provision rate of
approximately 46% and a Non-GAAP-based
tax rate of approximately 15%; these
rate differences are due to the income
tax effects of expenses that are
excluded for the purpose of calculating
Non-GAAP-based adjusted net income.
Such excluded expenses 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 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 15%, we
analyzed the individual adjusted
expenses and took into consideration the
impact of statutory tax rates from local
(7) jurisdictions incurring the expense.
(8) Reconciliation of GAAP-based net income
to Non-GAAP-based net income:
Three Months Ended June 30, 2017
Per share diluted
-----------------
GAAP-based net income,
attributable to OpenText $46,137 $0.17
Add:
Amortization 85,882 0.32
Share-based compensation 8,134 0.03
Special charges
(recoveries) 19,461 0.07
Other (income) expense,
net (11,178) (0.04)
GAAP-based provision for
(recovery of ) income
taxes 39,000 0.15
Non-GAAP-based provision
for income taxes (28,269) (0.10)
Non-GAAP-based net
income, attributable to
OpenText $159,167 $0.60
======== =====
Reconciliation of Adjusted EBITDA
---------------------------------
Three Months
Ended June 30,
2017
---------------
GAAP-based net income,
attributable to OpenText $46,137
Add:
Provision for (recovery of) income
taxes 39,000
Interest and other related
expense, net 32,372
Amortization of acquired
technology-based intangible
assets 43,288
Amortization of acquired customer-
based intangible assets 42,594
Depreciation 17,190
Share-based compensation 8,134
Special charges (recoveries) 19,461
Other (income) expense, net (11,178)
-------
Adjusted EBITDA $236,998
========
Reconciliation of selected GAAP-based measures to Non-GAAP-based measures for the year ended June 30, 2017.
(In thousands except for per share amounts)
------------------------------------------
Year Ended June 30, 2017
GAAP-based GAAP-based Adjustments Note Non-GAAP- Non-GAAP-
Measures based based
Measures % of Total Measures
Revenue Measures
% of Total
Revenue
--- -------
Cost of revenues
Cloud services and
subscriptions $300,255 $(1,229) (1) $299,026
Customer support 122,753 (1,079) (1) 121,674
Professional
service and other 195,195 (1,451) (1) 193,744
Amortization of
acquired
technology-based
intangible assets 130,556 (130,556) (2) -
GAAP-based gross
profit and gross
margin (%) /Non-
GAAP-based gross
profit and gross
margin (%) 1,528,666 66.7% 134,315 (3) 1,662,981 72.6%
Operating expenses
Research and
development 281,680 (7,149) (1) 274,531
Sales and marketing 444,838 (9,680) (1) 435,158
General and
administrative 170,438 (9,919) (1) 160,519
Amortization of
acquired customer-
based intangible
assets 150,842 (150,842) (2) -
Special charges
(recoveries) 63,618 (63,618) (4) -
GAAP-based income
from operations
and operating
margin (%) /Non-
GAAP-based income
from operations
and operating
margin (%) 352,932 15.4% 375,523 (5) 728,455 31.8%
Other income
(expense), net 15,743 (15,743) (6) -
Provision for
(recovery of)
income taxes (776,364) 867,764 (7) 91,400
GAAP-based net
income /Non-
GAAP-based net
income,
attributable to
OpenText 1,025,659 (507,984) (8) 517,675
GAAP-based
earnings per share
/Non GAAP-based
earnings per
share-diluted,
attributable to
OpenText $4.01 $(1.99) (8) $2.02
Adjustment relates to the exclusion of
share-based compensation expense from
our Non-GAAP-based operating expenses
as this expense is excluded from our
(1) internal analysis of operating results.
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
(2) 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.
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
one-time, non-recurring charges or
recoveries that are not indicative or
related to continuing operations, and
are therefore excluded from our internal
(4) analysis of operating results.
(5) GAAP-based and Non-GAAP-based income
from operations stated in dollars, and
operating margin stated as a percentage
of total revenue.
Adjustment relates to the exclusion of
Other income (expense) from our Non-
GAAP-based operating expenses as Other
income (expense) relates primarily 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
non-marketable securities 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
(6) ongoing business and operating results.
Adjustment relates to differences between
the GAAP-based tax recovery rate of
approximately 311% and a Non-GAAP-
based tax rate of approximately 15%;
these rate differences are due to the
income tax effects of expenses that are
excluded for the purpose of calculating
Non-GAAP-based adjusted net income.
Such excluded expenses 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 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 15%, we
analyzed the individual adjusted
expenses and took into consideration the
impact of statutory tax rates from local
(7) jurisdictions incurring the expense.
(8) Reconciliation of GAAP-based net income
to Non-GAAP-based net income:
Year Ended June 30, 2017
Per share
diluted
----------
GAAP-based net income,
attributable to OpenText $1,025,659 $4.01
Add:
Amortization 281,398 1.10
Share-based compensation 30,507 0.12
Special charges (recoveries) 63,618 0.25
Other (income) expense, net (15,743) (0.06)
GAAP-based provision for
(recovery of) income taxes (776,364) (3.03)
Non-GAAP based provision for
income taxes (91,400) (0.37)
------- -----
Non-GAAP-based net income,
attributable to OpenText $517,675 $2.02
======== =====
Reconciliation of Adjusted EBITDA
---------------------------------
Year Ended June 30,
2017
-------------------
GAAP-based net income,
attributable to OpenText
$1,025,659
Add:
Provision for (recovery of) income
taxes (776,364)
Interest and other related
expense, net 119,124
Amortization of acquired
technology-based intangible
assets 130,556
Amortization of acquired customer-
based intangible assets 150,842
Depreciation 64,318
Share-based compensation 30,507
Special charges (recoveries) 63,618
Other (income) expense, net (15,743)
-------
Adjusted EBITDA $792,517
========
Reconciliation of selected GAAP-based measures to Non-GAAP-based measures for the three months ended March 31, 2017.
(In thousands except for per share amounts)
------------------------------------------
Three Months Ended March 31, 2017
GAAP-based GAAP-based Adjustments Note Non-GAAP- Non-GAAP-
Measures based based
Measures % of Total Measures
Revenue Measures
% of Total
Revenue
--- -------
Cost of revenues
Cloud services and
subscriptions $77,225 $(268) (1) $76,957
Customer support 34,442 (261) (1) 34,181
Professional
service and other 55,529 (89) (1) 55,440
Amortization of
acquired
technology-based
intangible assets 39,285 (39,285) (2) -
GAAP-based gross
profit and gross
margin (%) /Non-
GAAP-based gross
profit and gross
margin (%) 382,641 64.5% 39,903 (3) 422,544 71.2%
Operating expenses
Research and
development 77,086 (1,634) (1) 75,452
Sales and marketing 117,498 (2,081) (1) 115,417
General and
administrative 44,828 (2,328) (1) 42,500
Amortization of
acquired customer-
based intangible
assets 40,825 (40,825) (2) -
Special charges
(recoveries) 20,586 (20,586) (4) -
GAAP-based income
from operations
and operating
margin (%) /Non-
GAAP-based income
from operations
and operating
margin (%) 65,261 11.0% 107,357 (5) 172,618 29.1%
Other income
(expense), net 1,424 (1,424) (6) -
Provision for
(recovery of)
income taxes 13,239 7,798 (7) 21,037
GAAP-based net
income /Non-
GAAP-based net
income,
attributable to
OpenText 21,616 98,135 (8) 119,751
GAAP-based
earnings per share
/Non-GAAP-based
earnings per
share-diluted,
attributable to
OpenText $0.08 $0.37 (8) $0.45
Adjustment relates to the exclusion of
share-based compensation expense from
our Non-GAAP-based operating expenses
as this expense is excluded from our
(1) internal analysis of operating results.
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
(2) 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.
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
one-time, non-recurring charges or
recoveries that are not indicative or
related to continuing operations, and
are therefore excluded from our internal
(4) analysis of operating results.
(5) GAAP-based and Non-GAAP-based income
from operations stated in dollars, and
operating margin stated as a percentage
of total revenue.
Adjustment relates to the exclusion of
Other income (expense) from our Non-
GAAP-based operating expenses as Other
income (expense) relates primarily 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
non-marketable securities 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
(6) ongoing business and operating results.
Adjustment relates to differences between
the GAAP-based tax provision rate of
approximately 38% and a Non-GAAP-based
tax rate of approximately 15%; these
rate differences are due to the income
tax effects of expenses that are
excluded for the purpose of calculating
Non-GAAP-based adjusted net income.
Such excluded expenses 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 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 15%, we
analyzed the individual adjusted
expenses and took into consideration the
impact of statutory tax rates from local
(7) jurisdictions incurring the expense.
(8) Reconciliation of GAAP-based net income
to Non-GAAP-based net income:
Three Months Ended March 31, 2017
Per share diluted
-----------------
GAAP-based net income,
attributable to OpenText $21,616 $0.08
Add:
Amortization 80,110 0.30
Share-based compensation 6,661 0.03
Special charges
(recoveries) 20,586 0.08
Other (income) expense,
net (1,424) (0.01)
GAAP-based provision for
(recovery of ) income
taxes 13,239 0.05
Non-GAAP-based provision
for income taxes (21,037) (0.08)
------- -----
Non-GAAP-based net
income, attributable to
OpenText $119,751 $0.45
======== =====
Reconciliation of Adjusted EBITDA
---------------------------------
Three months
ended March 31,
2017
----------------
GAAP-based net income,
attributable to OpenText
$21,616
Add:
Provision for (recovery of) income
taxes 13,239
Interest and other related
expense, net 31,734
Amortization of acquired
technology-based intangible
assets 39,285
Amortization of acquired customer-
based intangible assets 40,825
Depreciation 16,557
Share-based compensation 6,661
Special charges (recoveries) 20,586
Other (income) expense, net (1,424)
------
Adjusted EBITDA $189,079
========
Reconciliation of selected GAAP-based measures to Non-GAAP-based measures for the three months ended June 30, 2016.
(In thousands except for per share amounts)
------------------------------------------
Three Months Ended June 30, 2016
GAAP-based GAAP-based Adjustments Note Non-GAAP- Non-GAAP-
Measures based based
Measures % of Total Measures
Revenue Measures
% of Total
Revenue
--- -------
Cost of revenues
Cloud services and
subscriptions $64,889 $(312) (1) $64,577
Customer support 25,237 (269) (1) 24,968
Professional
service and other 41,546 (540) (1) 41,006
Amortization of
acquired
technology-based
intangible assets 17,994 (17,994) (2) -
GAAP-based gross
profit and gross
margin (%) /Non-
GAAP-based gross
profit and gross
margin (%) 331,031 68.4% 19,115 (3) 350,146 72.4%
Operating expenses
Research and
development 53,747 (836) (1) 52,911
Sales and marketing 95,815 (3,026) (1) 92,789
General and
administrative 33,330 (1,915) (1) 31,415
Amortization of
acquired customer-
based intangible
assets 29,637 (29,637) (2) -
Special charges
(recoveries) 10,092 (10,092) (4) -
GAAP-based income
from operations
and operating
margin (%) /Non-
GAAP-based income
from operations
and operating
margin (%) 93,479 19.3% 64,621 (5) 158,100 32.7%
Other income
(expense), net 409 (409) (6) -
Provision for
(recovery of)
income taxes (14,347) 41,644 (7) 27,297
GAAP-based net
income /Non-
GAAP-based net
income,
attributable to
OpenText 86,390 22,568 (8) 108,958
GAAP-based
earnings per share
/Non-GAAP-based
earnings per
share-diluted,
attributable to
OpenText $0.35 $0.10 (8) $0.45
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
(1) operating results.
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
(2) operating results.
(3) GAAP-based and Non-GAAP-based gross
profit stated in dollars, and gross
margin stated as a percentage of total
revenue.
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
one-time, non-recurring charges or
recoveries that are not indicative or
related to continuing operations, and
are therefore excluded from our
internal analysis of operating
(4) results.
(5) GAAP-based and Non-GAAP-based income
from operations stated in dollars, and
operating margin stated as a
percentage of total revenue.
Adjustment relates to the exclusion of
Other income (expense) from our Non-
GAAP-based operating expenses as
Other income (expense) relates
primarily 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
(6) operating results.
Adjustment relates to differences
between the GAAP-based tax provision
rate of approximately 20% and a Non-
GAAP-based tax rate of approximately
20%; these rate differences are due to
the income tax effects of expenses
that are excluded for the purpose of
calculating Non-GAAP-based adjusted
net income. Such excluded expenses
include amortization, share-based
compensation, Special charges
(recoveries) and other income
(expense), net. Also excluded are tax
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. In
arriving at our Non-GAAP-based tax
rate of approximately 20%, we analyzed
the individual adjusted expenses and
took into consideration the impact of
statutory tax rates from local
(7) jurisdictions incurring the expense.
(8) Reconciliation of GAAP-based net
income to Non-GAAP-based net income:
Three Months Ended June 30, 2016
Per share diluted
-----------------
GAAP-based net income,
attributable to OpenText $86,390 $0.35
Add:
Amortization 47,631 0.20
Share-based compensation 6,898 0.03
Special charges
(recoveries) 10,092 0.04
Other (income) expense,
net (409) -
GAAP-based provision for
(recovery of ) income
taxes (14,347) (0.06)
Non-GAAP-based provision
for income taxes (27,297) (0.11)
------- -----
Non-GAAP-based net
income, attributable to
OpenText $108,958 $0.45
======== =====
Reconciliation of Adjusted EBITDA
---------------------------------
Three months
ended June 30,
2016
---------------
GAAP-based net income,
attributable to OpenText
$86,390
Add:
Provision for (recovery of) income
taxes (14,347)
Interest and other related
expense, net 21,902
Amortization of acquired
technology-based intangible
assets 17,994
Amortization of acquired customer-
based intangible assets 29,637
Depreciation 14,931
Share-based compensation 6,898
Special charges (recoveries) 10,092
Other (income) expense, net (409)
----
Adjusted EBITDA $173,088
========
Reconciliation of selected GAAP-based measures to Non-GAAP-based measures for the year ended June 30, 2016.
(In thousands except for per share amounts)
------------------------------------------
Year Ended June 30, 2016
GAAP-based GAAP-based Adjustments Note Non-GAAP- Non-GAAP-
Measures based based
Measures % of Total Measures
Revenue Measures
% of Total
Revenue
--- -------
Cost of revenues:
Cloud services and
subscriptions $244,021 $(953) (1) $243,068
Customer support 89,861 (900) (1) 88,961
Professional
service and other 155,584 (1,626) (1) 153,958
Amortization of
acquired
technology-based
intangible assets 74,238 (74,238) (2) -
GAAP-based gross
profit and gross
margin (%) /Non-
GAAP-based gross
profit and gross
margin (%) 1,250,228 68.5% 77,717 (3) 1,327,945 72.8%
Operating expenses
Research and
development 194,057 (2,824) (1) 191,233
Sales and marketing 344,235 (12,069) (1) 332,166
General and
administrative 140,397 (7,606) (1) 132,791
Amortization of
acquired customer-
based intangible
assets 113,201 (113,201) (2) -
Special charges
(recoveries) 34,846 (34,846) (4) -
GAAP-based income
from operations
and operating
margin (%) /Non-
GAAP-based income
from operations
and operating
margin (%) 368,563 20.2% 248,263 (5) 616,826 33.8%
Other income
(expense), net (1,423) 1,423 (6) -
Provision for
(recovery of)
income taxes 6,282 101,793 (7) 108,075
GAAP-based net
income /Non-
GAAP-based net
income,
attributable to
OpenText 284,477 147,893 (8) 432,370
GAAP-based
earnings per share
/Non GAAP-based
earnings per
share-diluted,
attributable to
OpenText $1.17 $0.60 (8) $1.77
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
(1) operating results.
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
(2) operating results.
(3) GAAP-based and Non-GAAP-based gross
profit stated in dollars, and gross
margin stated as a percentage of total
revenue.
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
one-time, non-recurring charges or
recoveries that are not indicative or
related to continuing operations, and
are therefore excluded from our
internal analysis of operating
(4) results.
(5) GAAP-based and Non-GAAP-based income
from operations stated in dollars, and
operating margin stated as a
percentage of total revenue.
Adjustment relates to the exclusion of
Other income (expense) from our Non-
GAAP-based operating expenses as
Other income (expense) relates
primarily 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
(6) operating results.
Adjustment relates to differences
between the GAAP-based tax provision
rate of approximately 2% and a Non-
GAAP-based tax rate of 20%; these
rate differences are due to the income
tax effects of expenses that are
excluded for the purpose of
calculating Non-GAAP-based adjusted
net income. Such excluded expenses
include amortization, share-based
compensation, Special charges
(recoveries) and other income
(expense), net. Also excluded are tax
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. In
arriving at our Non-GAAP-based tax
rate of 20%, we analyzed the
individual adjusted expenses and took
into consideration the impact of
statutory tax rates from local
(7) jurisdictions incurring the expense.
(8) Reconciliation of GAAP-based net
income to Non-GAAP-based net income:
Year Ended June 30, 2016
Per share diluted
-----------------
GAAP-based net income,
attributable to OpenText $284,477 $1.17
Add:
Amortization 187,439 0.77
Share-based compensation 25,978 0.10
Special charges (recoveries) 34,846 0.14
Other (income) expense, net 1,423 0.01
GAAP-based provision for
(recovery of) income taxes 6,282 0.03
Non-GAAP based provision for
income taxes (108,075) (0.45)
-------- -----
Non-GAAP-based net income,
attributable to OpenText $432,370 $1.77
======== =====
Reconciliation of Adjusted EBITDA
---------------------------------
Year Ended June
30, 2016
----------------
GAAP-based net income,
attributable to OpenText $284,477
Add:
Provision for (recovery of) income
taxes 6,282
Interest and other related
expense, net 76,363
Amortization of acquired
technology-based intangible
assets 74,238
Amortization of acquired customer-
based intangible assets 113,201
Depreciation 54,929
Share-based compensation 25,978
Special charges (recoveries) 34,846
Other (income) expense, net 1,423
-----
Adjusted EBITDA $671,737
========
The following tables provide a
composition of our major
currencies for revenue and
expenses, expressed as a
percentage, for the three
months and years ended June
(3) 30, 2017 and 2016:
Three Months Ended Three Months Ended
June 30, 2017 June 30, 2016
Currencies % of Revenue % of Expenses* % of Revenue % of Expenses*
------------ ------------- ------------ -------------
EURO 22% 16% 25% 15%
GBP 6% 6% 7% 7%
CAD 4% 10% 5% 12%
USD 58% 52% 54% 49%
Other 10% 16% 9% 17%
--- --- --- ---
Total 100% 100% 100% 100%
=== === === ===
Year Ended June 30, 2017 Year Ended June 30, 2016
Currencies % of Revenue % of Expenses* % of Revenue % of Expenses*
------------ ------------- ------------ -------------
EURO 22% 15% 24% 15%
GBP 6% 7% 8% 7%
CAD 4% 11% 4% 12%
USD 58% 52% 54% 49%
Other 10% 15% 10% 17%
--- --- --- ---
Total 100% 100% 100% 100%
=== === === ===
*Expenses include all cost of
revenues and operating expenses
included within the Consolidated
Statements of Income, except for
amortization of intangible
assets, share-based compensation
and Special charges (recoveries).
View original content:http://www.prnewswire.com/news-releases/opentext-reports-fourth-quarter-and-fiscal-year-2017-financial-results-300499454.html
SOURCE Open Text Corporation
