Aug 6, 2020 SOURCE: PR NewsWire
OpenText Reports Fourth Quarter and Fiscal Year 2020 Financial Results
Record Cloud, Record Annual Recurring Revenues (ARR) and Record Operating Cash Flows
Declares Cash Dividend of $0.1746 Per Common Share
WATERLOO, Ontario, Aug. 6, 2020 /PRNewswire/ --
Fiscal 2020 Fourth Quarter Highlights Y/Y
Total Revenues Annual Recurring
Revenues Cloud Revenues
(in millions) (in millions) (in millions)
Reported Constant Reported Constant Reported Constant
Currency Currency Currency
$826.6 $838.2 $657.5 $665.9 $332.6 $335.7
+10.6% +12.2% +18.0% +19.5% +37.5% +38.8%
Annual Recurring Revenues represents 80% of Total Revenues
---
-- Operating Cash Flows of $280.3 million in the quarter, up 22.0% Y/Y
-- GAAP net income of $26.4 million, down 63.3% Y/Y
-- Adjusted EBITDA of $317.4 million, up 11.8%, margin of 38.4%, up 40
basis points Y/Y
-- GAAP diluted EPS of $0.10, down 63.0% Y/Y
-- Non-GAAP diluted EPS of $0.80, up 11.1%, and $0.80 in constant currency,
up 11.1% Y/Y
Fiscal 2020 Annual Highlights Y/Y
Total Revenues Annual Recurring
Revenues Cloud Revenues
(in millions) (in millions) (in millions)
Reported Constant Reported Constant Reported Constant
Currency Currency
Currency
$3,109.7 $3,146.8 $2,433.3 $2,459.5 $1,157.7 $1,165.8
+8.4% +9.7% +12.9% +14.1% +27.5% +28.4%
Annual Recurring Revenues represents 78% of Total Revenues
---
-- Record Operating Cash Flows of $954.5 million for the year, up 8.9% Y/Y
-- GAAP net income of $234.2 million, down 18.0% Y/Y
-- Adjusted EBITDA of $1,148.1 million, up 4.3%, margin of 36.9%, down 150
basis points Y/Y
-- GAAP diluted EPS of $0.86, down 18.9% Y/Y
-- Non-GAAP diluted EPS of $2.89, up 4.7%, and $2.94 in constant currency,
up 6.5% Y/Y
Open Text Corporation (NASDAQ: OTEX), (TSX: OTEX), "The Information Company," today announced its financial results for the fourth quarter and year ended June 30, 2020.
"Fiscal 2020 was a pivotal year for OpenText, highlighting that digital technologies are the key to business resilience. Businesses that build digital capabilities will recover faster and emerge stronger from this pandemic," said Mark J. Barrenechea, OpenText CEO & CTO. "OpenText delivered a record $3.15 billion in total revenues, up 9.7% year-over-year, a record $1.17 billion in cloud revenues, up 28.4% year-over-year and a record $2.46 billion in Annual Recurring Revenues, up 14.1% year-over-year, representing 78% of total revenues - all in constant currency. These record annual results were delivered against the backdrop of a major global pandemic, demonstrating the durability and resilience of our customers and our business."
Barrenechea added, "I am very proud of the OpenText team and our many accomplishments in Fiscal 2020, including the launch of OpenText Cloud Editions, the acquisitions of Carbonite, Inc. and XMedius, expansion of our Information Management platform into the small and medium business market and valuable expanded partnerships with Google, Amazon and Microsoft. Our commitment to our customers has been unwavering throughout this global crisis as we accelerate their digital transformation, ensuring their systems and processes can handle the changing reality of today, while continuing to develop solutions for the problems of tomorrow."
"On behalf of OpenText, we commend the brave women and men serving on the front lines of the pandemic, keeping us healthy, safe and productive," said Barrenechea. "Looking ahead to Fiscal 2021, we are well positioned to weather the short-term challenges ahead, build a stronger and better company, and gain market share."
"OpenText demonstrated strong Q4 and Fiscal 2020 results that reflect the excellence of our people and operating framework. The durability of our business model and the discipline of OpenText was especially effective as we achieved these results amid the challenge of a global pandemic," said OpenText EVP and CFO, Madhu Ranganathan. "In Fiscal 2020, we generated in constant currency $1.16 billion of adjusted EBITDA, $954.5 million in Operating Cash Flows and deployed $1,379.0 million of capital to acquire Carbonite, Inc. and XMedius. The integration of Carbonite remains on track to be on our operating model by the end of Fiscal 2021. With $1.7 Billion in cash as of June 30, 2020 and a net leverage ratio of 2.0x, we are well positioned to drive Total Growth, including both organically and through M&A."
Financial Highlights for Q4 Fiscal 2020 with Year Over Year Comparisons
Summary of Quarterly
Results
---
(in millions except per
share data) Q4 FY20 Q4 FY19
$ Change % Change Q4 FY20 % Change
in CC* in CC*
(Y/Y)
Revenues:
Cloud services and $332.6 $241.9 $90.7 37.5 $335.7 38.8
subscriptions % %
Customer support 324.9 315.2 9.7 3.1 330.2 4.7
% %
Total annual recurring $657.5 $557.1 $100.4 18.0 $665.9 19.5
revenues**
% %
License 105.8 119.7 (13.9) (11.6) 107.4 (10.3)
% %
Professional service and 63.3 70.4 (7.1) (10.1) 64.9 (7.7)
other %
%
Total revenues $826.6 $747.2 $79.4 10.6 $838.2 12.2
% %
GAAP-based operating $91.2 $158.0 ($66.8) (42.3)
income % N/A N/A
Non-GAAP-based operating $293.8 $259.0 $34.8 13.4 $294.8 13.9
income (1) % %
GAAP-based EPS, diluted $0.10 $0.27 ($0.17) (63.0)
% N/A N/A
Non-GAAP-based EPS, $0.80 $0.72 $0.08 11.1 $0.80 11.1
diluted (1)(2) % %
GAAP-based net income $26.4 $72.0 ($45.6) (63.3)
attributable to OpenText % N/A N/A
Adjusted EBITDA (1) $317.4 $283.9 $33.4 11.8 $318.3 12.1
% %
Operating cash flows $280.3 $229.8 $50.5 22.0
% N/A N/A
---
Summary of Annual Results
---
(in millions except per
share data) FY20 FY19
$ Change % Change FY20 in % Change
(Y/Y) CC* in CC*
Revenues:
Cloud services and $1,157.7 $907.8 $249.9 27.5 $1,165.8 28.4
subscriptions %
%
Customer support 1,275.6 1,247.9 27.7 2.2 1,293.7 3.7
%
%
Total annual recurring 12.9 14.1
revenues**
%
$2,433.3 $2,155.7 $277.5 $2,459.5 %
License 402.9 428.1 (25.2) (5.9) 408.7 (4.5)
% %
Professional service and 273.6 284.9 (11.3) (4.0) 278.6 (2.2)
other
% %
Total revenues $3,109.7 $2,868.8 $241.0 8.4 $3,146.8 9.7
% %
GAAP-based operating $503.5 $567.0 ($63.5) (11.2)
income % N/A N/A
Non-GAAP-based operating $1,058.8 $1,002.7 $56.1 5.6 $1,074.8 7.2
income (1) %
%
GAAP-based EPS, diluted $0.86 $1.06 ($0.20) (18.9)
% N/A N/A
Non-GAAP-based EPS, $2.89 $2.76 $0.13 4.7 $2.94 6.5
diluted (1)(2) %
%
GAAP-based net income $234.2 $285.5 ($51.3) (18.0)
attributable to OpenText % N/A N/A
Adjusted EBITDA (1) $1,148.1 $1,100.3 $47.8 4.3 $1,163.4 5.7
%
%
Operating cash flows $954.5 $876.3 $78.3 8.9
% N/A N/A
---
(1) Please see note 2 "Use of Non-GAAP Financial Measures" below
(2) Please also see note 14 to the Company's Fiscal 2018 Consolidated
Financial Statements on Form 10-K. Reflective of the amount of
net tax benefit arising from the internal reorganization assumed
to be allocable to the current period based on the forecasted
utilization period.
Note: Individual line items in tables may be adjusted by non-
material amounts to enable totals to align to published
financial statements.
*CC: Constant currency for this purpose is defined as the current
period reported revenues/expenses/earnings represented at the
prior comparative period's foreign exchange rate.
** Annual recurring revenue is defined as the sum of Cloud services
and subscriptions revenue and Customer support revenue.
Dividend Program
As part of our quarterly, non-cumulative cash dividend program, the Board declared on August 5, 2020 a cash dividend of $0.1746 per common share. The record date for this dividend is September 4, 2020 and the payment date is September 25, 2020. OpenText believes strongly in returning value to its shareholders and intends to maintain its dividend program. Any future declarations of dividends and the establishment of future record and payment dates are all subject to the final determination and discretion of the Board of Directors.
Quarterly Business Highlights
-- Key customer wins in the quarter included AIA Thailand, Amway, Arch
Resources, Asahi Intecc, Becton Dickinson and Company, Doosan Babcock,
iCare Insurance and Care NSW, Leonardo Group, Merck KGaA, Michelin,
National Institute of Allergy and Infectious Diseases & the National
Institutes of Health Office of Management, Panasonic Corporation, Rapid
Radiology, Rivian Automotive, Southwest Gas, US Defense Health Agency
and Williams Companies
-- OpenText extends Content Services technology for Microsoft Teams
-- New Webroot® DNS Protection delivers privacy and security
-- OpenText receives 2020 SAP® Pinnacle Award SAP Solution Extensions
Partner of the Year
-- OpenText recognized as overall leader in 2020 Aspire Customer
Communications Management leaderboard
-- OpenText Named a leader in IDC MarketScape for Customer Communications
Management
Summary of
Quarterly
Results
---
Q4 FY20 Q3 FY20 Q4 FY19 % Change % Change
(Q4 FY20 vs (Q4 FY20 vs
Q3 FY20) Q4 FY19)
Revenue $826.6 $814.7 $747.2 1.5 10.6
(millions) % %
GAAP-based
gross % % %
margin 68.5 65.4 68.3 310 bps 20
bps
GAAP-based
EPS, %
diluted $0.10 $0.10 $0.27 % (63.0)
Non-GAAP-
based gross % % %
margin (1) 75.8 73.3 74.2 250 bps 160
bps
Non-GAAP-
based EPS, % %
diluted
(1)(2) $0.80 $0.61 $0.72 31.1 11.1
---
Summary
of
Annual
Results
---
FY20 FY19 % Change
Revenue $3,109.7 $2,868.8 8.4
(millions) %
GAAP-
based % %
gross
margin 67.7 67.6 10
bps
GAAP-
based %
EPS,
diluted $0.86 $1.06 (18.9)
Non-
GAAP- % %
based
gross
margin
(1) 74.5 74.1 40
bps
Non-
GAAP- %
based
EPS,
diluted
(1)(2) $2.89 $2.76 4.7
---
(1) Please see note 2 "Use of Non-GAAP
Financial Measures" below
(2) Please also see note 14 to the
Company's Fiscal 2018 Consolidated
Financial Statements on Form 10-K.
Reflective of the amount of net
tax benefit arising from the
internal reorganization assumed to
be allocable to the current period
based on the forecasted
utilization period.
Conference Call Information
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 10 minutes ahead of time to ensure proper connection. Alternatively, a live webcast of the earnings conference call will be available on the Investor Relations section of the Company's website at http://investors.opentext.com/investor-events-and-presentations.
A replay of the call will be available beginning August 6, 2020 at 7:00 p.m. ET through 11:59 p.m. on August 20, 2020 and can be accessed by dialing 1-855-669-9658 (toll-free) or +1-604-674-8052 (international) and using passcode 4814 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. Additionally, "off-cloud" is a term we use to describe license transactions.
OpenText Investor Day 2020
OpenText will host a virtual Investor Day on Thursday, November 12, 2020. The virtual conference will include an annual strategic update with formal presentations by the OpenText executive team. Further details will be provided closer to the event date. Investors and Analysts are invited to pre-register by contacting investors@opentext.com.
About OpenText
OpenText, The Information Company(TM), enables organizations to gain insight through market leading information management solutions, on-premises or in the cloud. For more information about OpenText (NASDAQ: OTEX, TSX: OTEX) visit opentext.com.
Cautionary Statement Regarding Forward-Looking Statements
Certain statements in this press release, including statements about the focus of Open Text Corporation ("OpenText" or "the Company") in our fiscal year ending June 30, 2021 (Fiscal 2021) on growth, the financial and operational impact of COVID-19 and associated preemptive measures and restructuring plans, anticipated benefits of our partnerships and next generation product lines, the strength of our operating framework and balance sheet flexibility, continued investments in product innovation, go-to-market and strategic acquisitions, M&A continuing to be our leading growth contributor, our capital allocation strategy, creating value through investments in broader Information Management capabilities, the Company's presence in the cloud and in growth markets, expected growth in our revenue lines, total growth from acquisitions, innovation and organic initiatives, the focus on recurring revenues, improving operational efficiency, expanding cash flow and strengthening the business, adjusted operating income and cash flow, its financial condition, the adjusted operating margin target range, results of operations and earnings, announced acquisitions, ongoing tax matters, the integration of the acquired businesses, declaration of quarterly dividends, future tax rates, new platform and product offerings, scaling OpenText to new levels in Fiscal 2021 and beyond, 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 Information Management market including expected growth in the Artificial Intelligence market; (vi) the Company's competitive position in the Information Management 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 Information Management 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) failure to comply with privacy laws and regulations that are extensive, open to various interpretations and complex to implement including General Data Protection Regulation (GDPR) and Country by Country Reporting (CBCR); (vi) fluctuations in currency exchange rates; (vii) delays in the purchasing decisions of the Company's customers; (viii) the competition the Company faces in its industry and/or marketplace; (ix) the final determination of litigation, tax audits (including tax examinations in the United States and elsewhere) and other legal proceedings; (x) potential exposure to greater than anticipated tax liabilities or expenses, including with respect to changes in Canadian, U.S. or international tax regimes including tax reform legislation enacted through the Tax Cuts and Jobs Act in the United States; (xi) the possibility of technical, logistical or planning issues in connection with the deployment of the Company's products or services; (xii) the continuous commitment of the Company's customers; and (xiii) 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.
OTEX-F
For more information, please contact:
Harry E. Blount
Senior Vice President, Global Head of Investor Relations
Open Text Corporation
415-963-0825
investors@opentext.com
Copyright ©2020 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, 2020 June 30, 2019
---
ASSETS
Cash and cash equivalents $
1,692,850 $
941,009
Accounts receivable trade, net of
allowance for doubtful accounts
of $20,906 as of June 30, 2020
and $17,011 as of June 30, 2019 466,357 463,785
Contract assets 29,570 20,956
Income taxes recoverable 61,186 38,340
Prepaid expenses and other current
assets 136,436 97,238
Total current assets 2,386,399 1,561,328
Property and equipment 244,555 249,453
Operating lease right of use
assets 207,869
Long-term contract assets 15,427 15,386
Goodwill 4,672,356 3,769,908
Acquired intangible assets 1,612,564 1,146,504
Deferred tax assets 911,565 1,004,450
Other assets 154,467 148,977
Long-term income taxes
recoverable 29,620 37,969
Total assets $
10,234,822 $
7,933,975
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued
liabilities $
373,314 $
329,903
Current portion of long-term debt 610,000 10,000
Operating lease liabilities 64,071
Deferred revenues 812,218 641,656
Income taxes payable 44,630 33,158
Total current liabilities 1,904,233 1,014,717
Long-term liabilities:
Accrued liabilities 34,955 49,441
Pension liability 73,129 75,239
Long-term debt 3,584,311 2,604,878
Long-term operating lease
liabilities 217,165
Deferred revenues 94,382 46,974
Long-term income taxes payable 171,200 202,184
Deferred tax liabilities 148,738 55,872
Total long-term liabilities 4,323,880 3,034,588
Shareholders' equity:
Share capital and additional paid-in capital
271,863,354 and 269,834,442 Common
Shares issued and outstanding at
June 30, 2020 and June 30, 2019,
respectively; authorized Common
Shares: unlimited 1,851,777 1,774,214
Accumulated other comprehensive
income 17,825 24,124
Retained earnings 2,159,396 2,113,883
Treasury stock, at cost (622,297
shares at June 30, 2020 and
802,871 shares at June 30, 2019,
respectively) (23,608) (28,766)
Total OpenText shareholders'
equity 4,005,390 3,883,455
Non-controlling interests 1,319 1,215
Total shareholders' equity 4,006,709 3,884,670
Total liabilities and
shareholders' equity $
10,234,822 $
7,933,975
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,
2020 2019
---
Revenues:
License $
105,803 $
119,728
Cloud services and
subscriptions 332,618 241,889
Customer support 324,915 315,248
Professional service and
other 63,276 70,356
Total revenues 826,612 747,221
Cost of revenues:
License 3,404 4,128
Cloud services and
subscriptions 116,569 103,719
Customer support 32,568 30,761
Professional service and
other 48,435 55,183
Amortization of acquired
technology-based intangible
assets 59,719 42,946
Total cost of revenues 260,695 236,737
Gross profit 565,917 510,484
Operating expenses:
Research and development 100,766 83,708
Sales and marketing 152,882 139,416
General and administrative 62,574 52,954
Depreciation 23,649 25,000
Amortization of acquired
customer-based intangible
assets 58,998 49,200
Special charges (recoveries) 75,849 2,232
Total operating expenses 474,718 352,510
Income from operations 91,199 157,974
Other income (expense), net 7,790 3,191
Interest and other related
expense, net (40,529) (32,841)
Income before income taxes 58,460 128,324
Provision for (recovery of)
income taxes 32,037 56,309
Net income $
26,423 $
72,015
Net (income) loss
attributable to non-
controlling interests (31) (32)
Net income attributable to
OpenText $
26,392 $
71,983
Earnings per share-basic
attributable to OpenText $
0.10 $
0.27
Earnings per share-diluted
attributable to OpenText $
0.10 $
0.27
Weighted average number of
Common Shares outstanding-
basic 271,717 269,446
Weighted average number of
Common Shares outstanding-
diluted 272,367 270,652
OPEN TEXT CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
(In thousands of U.S. dollars, except share and per share data)
Year Ended June 30,
2020 2019 2018
---
Revenues:
License $
402,851 $
428,092 $
437,512
Cloud services and
subscriptions 1,157,686 907,812 828,968
Customer support 1,275,586 1,247,915 1,232,504
Professional service and
other 273,613 284,936 316,257
Total revenues 3,109,736 2,868,755 2,815,241
Cost of revenues:
License 11,321 14,347 13,693
Cloud services and
subscriptions 449,940 383,993 364,160
Customer support 123,894 124,343 133,889
Professional service and
other 212,903 224,635 253,389
Amortization of acquired
technology-based intangible
assets 205,717 183,385 185,868
Total cost of revenues 1,003,775 930,703 950,999
Gross profit 2,105,961 1,938,052 1,864,242
Operating expenses:
Research and development 370,411 321,836 322,909
Sales and marketing 585,044 518,035 529,141
General and administrative 237,532 207,909 205,227
Depreciation 89,458 97,716 86,943
Amortization of acquired
customer-based intangible
assets 219,559 189,827 184,118
Special charges (recoveries) 100,428 35,719 29,211
Total operating expenses 1,602,432 1,371,042 1,357,549
Income from operations 503,529 567,010 506,693
Other income (expense), net (11,946) 10,156 17,973
Interest and other related
expense, net (146,378) (136,592) (138,540)
Income before income taxes 345,205 440,574 386,126
Provision for (recovery of)
income taxes 110,837 154,937 143,826
Net income $
234,368 $
285,637 $
242,300
Net (income) loss
attributable to non-
controlling interests (143) (136) (76)
Net income attributable to
OpenText $
234,225 $
285,501 $
242,224
Earnings per share-basic
attributable to OpenText $
0.86 $
1.06 $
0.91
Earnings per share-diluted
attributable to OpenText $
0.86 $
1.06 $
0.91
Weighted average number of
Common Shares outstanding-
basic 270,847 268,784 266,085
Weighted average number of
Common Shares outstanding-
diluted 271,817 269,908 267,492
OPEN TEXT CORPORATION
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(In thousands of U.S. dollars)
Year Ended June 30,
2020 2019 2018
---
Net income for the period $
234,368 $
285,637 $
242,300
Other comprehensive income (loss)-net of tax:
Net foreign currency translation
adjustments (7,784) (3,882) (9,582)
Unrealized gain (loss) on cash flow hedges:
Unrealized gain (loss) -net of
tax expense (recovery) effect
of ($599), $6 and ($171) for
the year ended June 30, 2020,
2019 and 2018, respectively (1,662) 16 (476)
(Gain) loss reclassified into
net income -net of tax
(expense) recovery effect of
$355, $539 and ($489) for the
year ended June 30, 2020, 2019
and 2018, respectively 985 1,494 (1,357)
Actuarial gain (loss) relating to defined benefit
pension plans:
Actuarial gain (loss) -net of
tax expense (recovery) effect
of $1,219, ($2,004) and
($1,846) for the year ended
June 30, 2020, 2019 and 2018,
respectively 1,245 (7,421) (3,383)
Amortization of actuarial (gain)
loss into net income -net of
tax (expense) recovery effect
of $520, $292 and $183 for the
year ended June 30, 2020, 2019
and 2018, respectively 917 272 260
Release of unrealized gain on
marketable securities -net of
tax effect of nil for the year
ended June 30, 2020, 2019, and
2018 respectively - (617)
Total other comprehensive income
(loss) net, for the period (6,299) (9,521) (15,155)
Total comprehensive income 228,069 276,116 227,145
Comprehensive (income) loss
attributable to non-
controlling interests (143) (136) (76)
Total comprehensive income
attributable to OpenText $
227,926 $
275,980 $
227,069
OPEN TEXT CORPORATION
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
(In thousands of U.S. dollars and shares)
Common Shares and Treasury Stock Retained Accumulated Non-
Other Controlling
Interests Total
Additional Paid in Capital
Earnings Comprehensive
Income
Shares Amount Shares Amount
Balance as of June 30,
2017 264,060 $
1,613,454 (1,102) $
(27,520) $
1,897,624 $
48,800 $
961 $
3,533,319
Issuance of Common Shares
Under employee stock
option plans 2,870 54,355 54,355
Under employee stock
purchase plans 721 20,458 20,458
Share-based
compensation - 27,594 27,594
Issuance of treasury
stock - (8,788) 411 8,788
Dividends declared - (145,613) (145,613)
($0.5478 per Common Share)
Other comprehensive
income -net - (15,155) (15,155)
Net income for the
year - 242,224 76 242,300
Balance as of June 30,
2018 267,651 $
1,707,073 (691) $
(18,732) $
1,994,235 $
33,645 $
1,037 $
3,717,258
Issuance of Common Shares
Under employee stock
option plans 1,472 35,626 35,626
Under employee stock
purchase plans 711 21,835 21,835
Share-based
compensation - 26,770 26,770
Purchase of treasury
stock - (726) (26,499) (26,499)
Issuance of treasury
stock - (16,465) 614 16,465
Dividends declared - (168,859) (168,859)
($0.6300 per Common Share)
Cumulative effect of
ASU 2016-16 - (26,780) (26,780)
Cumulative effect of
Topic 606 - 29,786 29,786
Other comprehensive
income -net - (9,521) (9,521)
Non-controlling
interest - (625) 42 (583)
Net income for the
year - 285,501 136 285,637
Balance as of June 30,
2019 269,834 $
1,774,214 (803) $
(28,766) $
2,113,883 $
24,124 $
1,215 $
3,884,670
Issuance of Common Shares
Under employee stock
option plans 1,530 41,282 41,282
Under employee stock
purchase plans 499 17,757 17,757
Share-based
compensation - 29,532 29,532
Purchase of treasury
stock - (300) (12,424) (12,424)
Issuance of treasury
stock - (11,008) 481 17,582 6,574
Dividends declared - (188,712) (188,712)
($0.6984 per Common Share)
Other comprehensive
income -net - (6,299) (6,299)
Non-controlling
interest - (39) (39)
Net income for the
year - 234,225 143 234,368
Balance as of June 30,
2020 271,863 $
1,851,777 (622) $
(23,608) $
2,159,396 $
17,825 $
1,319 $
4,006,709
OPEN TEXT CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands of U.S. dollars)
(Unaudited)
Three Months Ended June 30,
2020 2019
---
Cash flows from operating activities:
Net income for the period $
26,423 $
72,015
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and
amortization of
intangible assets 142,366 117,146
Share-based compensation
expense 8,002 6,618
Pension expense 1,479 1,212
Amortization of debt
issuance costs 1,130 1,096
Accelerated amortization
of right of use assets 36,864
Loss on sale and write
down of property and
equipment 9,714
Deferred taxes 14,677 36,118
Share in net (income)
loss of equity investees (2,225) (3,016)
Changes in operating assets and liabilities:
Accounts receivable (1,689) 22,731
Contract assets (13,636) (8,751)
Prepaid expenses and
other current assets 458 (324)
Income taxes (478) 6,285
Accounts payable and
accrued liabilities 72,876 8,912
Deferred revenue (12,974) (25,961)
Other assets (6,309) (4,304)
Operating lease assets
and liabilities, net 3,572
Net cash provided by
operating activities 280,250 229,777
Cash flows from investing activities:
Additions of property and
equipment (17,704) (13,405)
Other investing
activities (2,783) (8,762)
Net cash used in
investing activities (20,487) (22,167)
Cash flows from financing activities:
Proceeds from issuance of
Common Shares from
exercise of stock
options and ESPP 13,493 15,792
Repayment of long-term
debt and revolver (2,500) (2,500)
Debt issuance costs (3,636)
Payments of dividends to
shareholders (47,335) (46,958)
Net cash provided by
(used in) financing
activities (39,978) (33,666)
Foreign exchange gain
(loss) on cash held in
foreign currencies 19,882 83
Increase (decrease) in
cash, cash equivalents
and restricted cash
during the period 239,667 174,027
Cash, cash equivalents
and restricted cash at
beginning of the period 1,457,596 769,516
Cash, cash equivalents
and restricted cash at
end of the period $1,697,263 $
943,543
Reconciliation of cash,
cash equivalents and
restricted cash: June 30, 2020 June 30, 2019
---
Cash and cash equivalents 1,692,850 941,009
Restricted cash included
in Other assets 4,413 2,534
Total Cash, cash
equivalents and
restricted cash $
1,697,263 $
943,543
OPEN TEXT CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands of U.S. dollars)
Year Ended June 30,
2020 2019 2018
---
Cash flows from operating activities:
Net income for the period $
234,368 $
285,637 $
242,300
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and
amortization of intangible
assets 514,734 470,928 456,929
Share-based compensation
expense 29,532 26,770 27,594
Pension expense 5,802 4,624 3,738
Amortization of debt
issuance costs 4,633 4,330 4,646
Amortization of deferred
charges and credits - 4,242
Accelerated amortization of
right of use assets 36,864
Loss on extinguishment of
debt 17,854
Loss on sale and write down
of property and equipment 9,714 9,438 2,234
Release of unrealized gain
on marketable securities
to income - (841)
Deferred taxes 51,388 47,425 89,736
Share in net (income) loss
of equity investees (8,700) (13,668) (5,965)
Write off of unamortized
debt issuance costs - 155
Changes in operating assets and liabilities:
Accounts receivable 84,499 75,508 (22,566)
Contract assets (40,301) (37,623)
Prepaid expenses and other
current assets (6,897) (819) (7,274)
Income taxes and deferred
charges and credits (35,086) 27,291 (31,323)
Accounts payable and
accrued liabilities 30,613 (21,732) (91,650)
Deferred revenue 25,306 (1,827) 35,629
Other assets 1,127 (4) 497
Operating lease assets and
liabilities, net (914)
Net cash provided by
operating activities 954,536 876,278 708,081
Cash flows from investing activities:
Additions of property and
equipment (72,709) (63,837) (105,318)
Purchase of XMedius (73,335)
Purchase of Carbonite,
Inc., net of cash and
restricted cash acquired (1,305,097)
Purchase of Dynamic
Solutions Group Inc. (4,149)
Purchase of Catalyst
Repository Systems Inc. - (70,800)
Purchase of Liaison
Technologies, Inc. - (310,644)
Purchase of Hightail, Inc.,
net of cash acquired - (20,535)
Purchase of Guidance
Software, Inc., net of
cash acquired - (2,279) (229,275)
Purchase of Covisint
Corporation, net of cash
acquired - (71,279)
Other investing activities (14,127) (16,966) (18,034)
Net cash used in investing
activities (1,469,417) (464,526) (444,441)
Cash flows from financing activities:
Proceeds from issuance of
Common Shares from
exercise of stock options
and ESPP 66,600 57,889 75,935
Proceeds from long-term
debt and revolver 3,150,000 1,200,000
Repayment of long-term
debt and revolver (1,713,631) (10,000) (1,149,620)
Debt extinguishment costs (11,248)
Debt issuance costs (21,806) (322) (4,375)
Purchase of Treasury Stock (12,424) (26,499)
Purchase of non-
controlling interest - (583)
Payments of dividends to
shareholders (188,712) (168,859) (145,613)
Net cash provided by (used
in) financing activities 1,268,779 (148,374) (23,673)
Foreign exchange gain
(loss) on cash held in
foreign currencies (178) (3,826) (2,186)
Increase (decrease) in
cash, cash equivalents and
restricted cash during the
period 753,720 259,552 237,781
Cash, cash equivalents and
restricted cash at
beginning of the period 943,543 683,991 446,210
Cash, cash equivalents and
restricted cash at end of
the period $
1,697,263 $
943,543 $
683,991
Reconciliation of cash,
cash equivalents and
restricted cash: June 30, 2020 June 30, 2019 June 30, 2018
---
Cash and cash equivalents 1,692,850 941,009 682,942
Restricted cash included in
Other assets and Prepaid 4,413 2,534 1,049
Total Cash, cash
equivalents and restricted
cash $
1,697,263 $
943,543 $
683,991
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 evaluating the
(2) 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 consistently calculated as
GAAP-based net income or earnings per
share, attributable to OpenText, on a
diluted basis, excluding the effects of
the amortization of acquired intangible
assets, other income (expense), share-
based compensation, and Special charges
(recoveries), all net of tax and any tax
benefits/expense items unrelated to
current period income, as further
described in the tables below. Non-
GAAP-based gross profit is the
arithmetical sum of GAAP-based gross
profit and the amortization of acquired
technology-based intangible assets and
share-based compensation within cost of
sales. Non-GAAP-based gross margin is
calculated as Non-GAAP-based gross
profit expressed as a percentage of
total revenue. Non-GAAP-based income
from operations is calculated as income
from operations, excluding the
amortization of acquired intangible
assets, Special charges (recoveries),
and share-based compensation expense.
Adjusted earnings (loss) before interest,
taxes, depreciation and amortization
(Adjusted EBITDA) is consistently
calculated as GAAP-based net income,
attributable to OpenText, excluding
interest income (expense), provision for
income taxes, depreciation and
amortization of acquired intangible
assets, other income (expense), share-
based compensation and Special charges
(recoveries).
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, 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-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, 2020.
(In thousands except for per share amounts)
---
Three Months Ended June 30, 2020
GAAP-based GAAP-based
Measures Adjustments Note Non-GAAP-based Non-GAAP-
% of Total based
Revenue Measures
Measures Measures
% of Total
Revenue
Cost of revenues
Cloud services and
subscriptions $
116,569 $
(490) (1) $
116,079
Customer support 32,568 (310) (1) 32,258
Professional service
and other 48,435 (377) (1) 48,058
Amortization of
acquired
technology-based
intangible assets 59,719 (59,719) (2)
GAAP-based gross 565,917 68.5 60,896 (3) 626,813 75.8
profit and gross
margin (%) / % %
Non-GAAP-based gross profit and
gross margin (%)
Operating expenses
Research and
development 100,766 (1,590) (1) 99,176
Sales and marketing 152,882 (2,575) (1) 150,307
General and
administrative 62,574 (2,660) (1) 59,914
Amortization of
acquired customer-
based intangible
assets 58,998 (58,998) (2)
Special charges
(recoveries) 75,849 (75,849) (4)
GAAP-based income
from operations /
Non-GAAP-based
income from
operations 91,199 202,568 (5) 293,767
Other income
(expense), net 7,790 (7,790) (6)
Provision for
(recovery of)
income taxes 32,037 3,416 (7) 35,453
GAAP-based net
income /Non-GAAP-
based net income,
attributable to
OpenText 26,392 191,362 (8) 217,754
GAAP-based earnings
per share /Non-
GAAP-based
earnings per share-
diluted,
attributable to
OpenText $
0.10 $
0.70 (8) $
0.80
(1) Adjustment relates to the exclusion of
share-based compensation expense from
our Non-GAAP-based operating expenses
as this expense is excluded from our
internal analysis of operating results.
(2) Adjustment relates to the exclusion of
amortization expense from our Non-GAAP-
based operating expenses as the timing
and frequency of amortization expense is
dependent on our acquisitions and is
hence excluded from our internal
analysis of operating results.
(3) GAAP-based and Non-GAAP-based gross
profit stated in dollars, and gross
margin stated as a percentage of total
revenue.
(4) Adjustment relates to the exclusion of
Special charges (recoveries) from our
Non-GAAP-based operating expenses as
Special charges (recoveries) are
generally incurred in the periods
relevant to an acquisition and include
certain charges or recoveries that are
not indicative or related to continuing
operations, and are therefore excluded
from our internal analysis of operating
results.
(5) GAAP-based and Non-GAAP-based income
from operations stated in dollars.
(6) Adjustment relates to the exclusion of
Other income (expense) from our Non-
GAAP-based operating expenses as Other
income (expense) generally relates to
the transactional impact of foreign
exchange and is generally not indicative
or related to continuing operations and
is therefore excluded from our internal
analysis of operating results. Other
income (expense) also includes our share
of income (losses) from our holdings in
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
ongoing business and operating results.
(7) Adjustment relates to differences between
the GAAP-based tax provision rate of
approximately 55% and a Non-GAAP-based
tax rate of approximately 14%; these
rate differences are due to the income
tax effects of items that are excluded
for the purpose of calculating Non-
GAAP-based adjusted net income. Such
excluded items include amortization,
share-based compensation, Special
charges (recoveries) and other income
(expense), net. Also excluded are tax
benefits/expense items unrelated to
current period income such as changes in
reserves for tax uncertainties and
valuation allowance reserves, and "book
to return" adjustments for tax return
filings and tax assessments. Included is
the amount of net tax benefits arising
from the internal reorganization that
occurred in Fiscal 2017 assumed to be
allocable to the current period based on
the forecasted utilization period. In
arriving at our Non-GAAP-based tax
rate of approximately 14%, we analyzed
the individual adjusted expenses and
took into consideration the impact of
statutory tax rates from local
jurisdictions incurring the expense.
(8) Reconciliation of GAAP-based net income
to Non-GAAP-based net income:
Three Months Ended June 30, 2020
Per share
diluted
GAAP-based net
income,
attributable
to OpenText $
26,392 $
0.10
Add:
Amortization 118,717 0.44
Share-based
compensation 8,002 0.03
Special charges
(recoveries) 75,849 0.28
Other (income)
expense, net (7,790) (0.03)
GAAP-based
provision for
(recovery of)
income taxes 32,037 0.12
Non-GAAP-
based
provision for
income taxes (35,453) (0.14)
Non-GAAP-
based net
income,
attributable
to OpenText $
217,754 $
0.80
Reconciliation of Adjusted EBITDA
Three Months
Ended June 30,
2020
GAAP-based net income,
attributable to OpenText $
26,392
Add:
Provision for (recovery of)
income taxes 32,037
Interest and other related
expense, net 40,529
Amortization of acquired
technology-based intangible
assets 59,719
Amortization of acquired
customer-based intangible
assets 58,998
Depreciation 23,649
Share-based compensation 8,002
Special charges (recoveries) 75,849
Other (income) expense, net (7,790)
Adjusted EBITDA $
317,385
Reconciliation of selected GAAP-based measures to Non-GAAP-based measures
for the year ended June 30, 2020.
(In thousands except for per share amounts)
---
Year Ended June 30, 2020
GAAP-based GAAP-based
Measures Adjustments Note Non-GAAP-based Non-GAAP-
Measures % of Total Measures based
Revenue Measures
% of Total
Revenue
Cost of revenues
Cloud services and
subscriptions $
449,940 $
(1,642) (1) $
448,298
Customer support 123,894 (1,207) (1) 122,687
Professional service
and other 212,903 (1,294) (1) 211,609
Amortization of
acquired
technology-based
intangible assets 205,717 (205,717) (2)
GAAP-based gross 2,105,961 67.7 209,860 (3) 2,315,821 74.5
profit and gross
margin (%) / % %
Non-GAAP-based gross profit and
gross margin (%)
Operating expenses
Research and
development 370,411 (5,309) (1) 365,102
Sales and marketing 585,044 (9,335) (1) 575,709
General and
administrative 237,532 (10,745) (1) 226,787
Amortization of
acquired customer-
based intangible
assets 219,559 (219,559) (2)
Special charges
(recoveries) 100,428 (100,428) (4)
GAAP-based income
from operations /
Non-GAAP-based
income from
operations 503,529 555,236 (5) 1,058,765
Other income
(expense), net (11,946) 11,946 (6)
Provision for
(recovery of)
income taxes 110,837 16,897 (7) 127,734
GAAP-based net
income /Non-GAAP-
based net income,
attributable to
OpenText 234,225 550,285 (8) 784,510
GAAP-based earnings
per share /Non-
GAAP-based
earnings per share-
diluted,
attributable to
OpenText $
0.86 $
2.03 (8) $
2.89
(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
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
ongoing business and operating results.
(7) Adjustment relates to differences between
the GAAP-based tax provision rate of
approximately 32% and a Non-GAAP-based
tax rate of approximately 14%; these
rate differences are due to the income
tax effects of items that are excluded
for the purpose of calculating Non-
GAAP-based adjusted net income. Such
excluded items include amortization,
share-based compensation, Special
charges (recoveries) and other income
(expense), net. Also excluded are tax
benefits/expense items unrelated to
current period income such as changes in
reserves for tax uncertainties and
valuation allowance reserves, and "book
to return" adjustments for tax return
filings and tax assessments. Included is
the amount of net tax benefits arising
from the internal reorganization that
occurred in Fiscal 2017 assumed to be
allocable to the current period based on
the forecasted utilization period. In
arriving at our Non-GAAP-based tax
rate of approximately 14%, we analyzed
the individual adjusted expenses and
took into consideration the impact of
statutory tax rates from local
jurisdictions incurring the expense.
(8) Reconciliation of GAAP-based net income
to Non-GAAP-based net income:
Year Ended June 30, 2020
Per share
diluted
GAAP-based net
income,
attributable to
OpenText $
234,225 $
0.86
Add:
Amortization 425,276 1.56
Share-based
compensation 29,532 0.11
Special charges
(recoveries) 100,428 0.37
Other (income)
expense, net 11,946 0.04
GAAP-based
provision for
(recovery of)
income taxes 110,837 0.41
Non-GAAP-based
provision for
income taxes (127,734) (0.46)
Non-GAAP-based
net income,
attributable to
OpenText $
784,510 $
2.89
Reconciliation of Adjusted EBITDA
Year Ended June
30, 2020
GAAP-based net income,
attributable to OpenText $
234,225
Add:
Provision for (recovery
of) income taxes 110,837
Interest and other
related expense, net 146,378
Amortization of acquired
technology-based
intangible assets 205,717
Amortization of acquired
customer-based
intangible assets 219,559
Depreciation 89,458
Share-based compensation 29,532
Special charges
(recoveries) 100,428
Other (income) expense,
net 11,946
Adjusted EBITDA $
1,148,080
Reconciliation of selected GAAP-based measures to Non-GAAP-based measures
for the three months ended March 31, 2020.
(In thousands except for per share amounts)
---
Three Months Ended March 31, 2020
GAAP-based GAAP-based
Measures Adjustments Note Non-GAAP-based Non-GAAP-
% of Total based
Revenue Measures
Measures Measures
% of Total
Revenue
Cost of revenues
Cloud services and
subscriptions $
127,565 $
(398) (1) $
127,167
Customer support 32,151 (284) (1) 31,867
Professional service
and other 56,526 (328) (1) 56,198
Amortization of
acquired
technology-based
intangible assets 63,401 (63,401) (2)
GAAP-based gross 532,492 65.4 64,411 (3) 596,903 73.3
profit and gross
margin (%) / % %
Non-GAAP-based gross profit and
gross margin (%)
Operating expenses
Research and
development 108,184 (1,243) (1) 106,941
Sales and marketing 166,234 (2,261) (1) 163,973
General and
administrative 68,828 (2,342) (1) 66,486
Amortization of
acquired customer-
based intangible
assets 59,943 (59,943) (2)
Special charges
(recoveries) 9,406 (9,406) (4)
GAAP-based income
from operations /
Non-GAAP-based
income from
operations 95,077 139,606 (5) 234,683
Other income
(expense), net (18,923) 18,923 (6)
Provision for
(recovery of)
income taxes 8,891 18,188 (7) 27,079
GAAP-based net
income /Non-GAAP-
based net income,
attributable to
OpenText 25,965 140,341 (8) 166,306
GAAP-based earnings
per share /Non-
GAAP-based
earnings per share-
diluted,
attributable to
OpenText $
0.10 $
0.51 (8) $
0.61
(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
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
ongoing business and operating results.
(7) Adjustment relates to differences between
the GAAP-based tax provision rate of
approximately 25% and a Non-GAAP-based
tax rate of approximately 14%; these
rate differences are due to the income
tax effects of items that are excluded
for the purpose of calculating Non-
GAAP-based adjusted net income. Such
excluded items include amortization,
share-based compensation, Special
charges (recoveries) and other income
(expense), net. Also excluded are tax
benefits/expense items unrelated to
current period income such as changes in
reserves for tax uncertainties and
valuation allowance reserves, and "book
to return" adjustments for tax return
filings and tax assessments. Included is
the amount of net tax benefits arising
from the internal reorganization that
occurred in Fiscal 2017 assumed to be
allocable to the current period based on
the forecasted utilization period. In
arriving at our Non-GAAP-based tax
rate of approximately 14%, we analyzed
the individual adjusted expenses and
took into consideration the impact of
statutory tax rates from local
jurisdictions incurring the expense.
(8) Reconciliation of GAAP-based net income
to Non-GAAP-based net income:
Three Months Ended March 31,
2020
Per share
diluted
GAAP-based net
income,
attributable
to OpenText $
25,965 $
0.10
Add:
Amortization 123,344 0.45
Share-based
compensation 6,856 0.03
Special charges
(recoveries) 9,406 0.03
Other (income)
expense, net 18,923 0.07
GAAP-based
provision for
(recovery of)
income taxes 8,891 0.03
Non-GAAP-
based
provision for
income taxes (27,079) (0.10)
Non-GAAP-
based net
income,
attributable
to OpenText $
166,306 $
0.61
Reconciliation of Adjusted EBITDA
Three Months
Ended March 31,
2020
GAAP-based net income,
attributable to OpenText $
25,965
Add:
Provision for (recovery of)
income taxes 8,891
Interest and other related
expense, net 41,263
Amortization of acquired
technology-based
intangible assets 63,401
Amortization of acquired
customer-based intangible
assets 59,943
Depreciation 24,820
Share-based compensation 6,856
Special charges
(recoveries) 9,406
Other (income) expense, net 18,923
Adjusted EBITDA $
259,468
Reconciliation of selected GAAP-based measures to Non-GAAP-based measures
for the three months ended June 30, 2019.
(In thousands except for per share amounts)
---
Three Months Ended June 30, 2019
GAAP-based GAAP-based
Measures Adjustments Note Non-GAAP-based Non-GAAP-
% of Total based
Revenue Measures
Measures Measures
% of Total
Revenue
Cost of revenues
Cloud services and
subscriptions $
103,719 $
(75) (1) $
103,644
Customer support 30,761 (361) (1) 30,400
Professional service
and other 55,183 (434) (1) 54,749
Amortization of
acquired
technology-based
intangible assets 42,946 (42,946) (2)
GAAP-based gross 510,484 68.3 43,816 (3) 554,300 74.2
profit and gross
margin (%) / % %
Non-GAAP-based gross profit and
gross margin (%)
Operating expenses
Research and
development 83,708 (1,323) (1) 82,385
Sales and marketing 139,416 (2,006) (1) 137,410
General and
administrative 52,954 (2,419) (1) 50,535
Amortization of
acquired customer-
based intangible
assets 49,200 (49,200) (2)
Special charges
(recoveries) 2,232 (2,232) (4)
GAAP-based income
from operations /
Non-GAAP-based
income from
operations 157,974 100,996 (5) 258,970
Other income
(expense), net 3,191 (3,191) (6)
Provision for
(recovery of)
income taxes 56,309 (24,651) (7) 31,658
GAAP-based net
income /Non-GAAP-
based net income,
attributable to
OpenText 71,983 122,456 (8) 194,439
GAAP-based earnings
per share /Non-
GAAP-based
earnings per share-
diluted,
attributable to
OpenText $
0.27 $
0.45 (8) $
0.72
(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
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
ongoing business and operating results.
(7) Adjustment relates to differences between
the GAAP-based tax provision rate of
approximately 44% and a Non-GAAP-based
tax rate of approximately 14%; these
rate differences are due to the income
tax effects of items that are excluded
for the purpose of calculating Non-
GAAP-based adjusted net income. Such
excluded items include amortization,
share-based compensation, Special
charges (recoveries) and other income
(expense), net. Also excluded are tax
benefits/expense items unrelated to
current period income such as changes in
reserves for tax uncertainties and
valuation allowance reserves, and "book
to return" adjustments for tax return
filings and tax assessments. Included is
the amount of net tax benefits arising
from the internal reorganization that
occurred in Fiscal 2017 assumed to be
allocable to the current period based on
the forecasted utilization period. In
arriving at our Non-GAAP-based tax
rate of approximately 14%, we analyzed
the individual adjusted expenses and
took into consideration the impact of
statutory tax rates from local
jurisdictions incurring the expense.
(8) Reconciliation of GAAP-based net income
to Non-GAAP-based net income:
Three Months Ended June 30, 2019
Per share
diluted
GAAP-based net
income,
attributable
to OpenText $
71,983 $
0.27
Add:
Amortization 92,146 0.34
Share-based
compensation 6,618 0.02
Special charges
(recoveries) 2,232 0.01
Other (income)
expense, net (3,191) (0.01)
GAAP-based
provision for
(recovery of)
income taxes 56,309 0.21
Non-GAAP-
based
provision for
income taxes (31,658) (0.12)
Non-GAAP-
based net
income,
attributable
to OpenText $
194,439 $
0.72
Reconciliation of Adjusted EBITDA
Three Months
Ended June 30,
2019
GAAP-based net income,
attributable to OpenText $
71,983
Add:
Provision for (recovery of)
income taxes 56,309
Interest and other related
expense, net 32,841
Amortization of acquired
technology-based
intangible assets 42,946
Amortization of acquired
customer-based intangible
assets 49,200
Depreciation 25,000
Share-based compensation 6,618
Special charges (recoveries) 2,232
Other (income) expense, net (3,191)
Adjusted EBITDA $
283,938
Reconciliation of selected GAAP-based measures to Non-GAAP-based measures
for the year ended June 30, 2019.
(In thousands except for per share amounts)
---
Year Ended June 30, 2019
GAAP-based GAAP-based
Measures Adjustments Note Non-GAAP-based Non-GAAP-
Measures % of Total Measures based
Revenue Measures
% of Total
Revenue
Cost of revenues
Cloud services and
subscriptions $
383,993 $
(948) (1) $
383,045
Customer support 124,343 (1,242) (1) 123,101
Professional service
and other 224,635 (1,764) (1) 222,871
Amortization of
acquired
technology-based
intangible assets 183,385 (183,385) (2)
GAAP-based gross 1,938,052 67.6 187,339 (3) 2,125,391 74.1
profit and gross
margin (%) / % %
Non-GAAP-based gross profit and
gross margin (%)
Operating expenses
Research and
development 321,836 (4,991) (1) 316,845
Sales and marketing 518,035 (7,880) (1) 510,155
General and
administrative 207,909 (9,945) (1) 197,964
Amortization of
acquired customer-
based intangible
assets 189,827 (189,827) (2)
Special charges
(recoveries) 35,719 (35,719) (4)
GAAP-based income
from operations /
Non-GAAP-based
income from
operations 567,010 435,701 (5) 1,002,711
Other income
(expense), net 10,156 (10,156) (6)
Provision for
(recovery of)
income taxes 154,937 (33,680) (7) 121,257
GAAP-based net
income /Non-GAAP-
based net income,
attributable to
OpenText 285,501 459,225 (8) 744,726
GAAP-based earnings
per share /Non-
GAAP-based
earnings per share-
diluted,
attributable to
OpenText $
1.06 $
1.70 (8) $
2.76
(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
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
ongoing business and operating results.
(7) Adjustment relates to differences between
the GAAP-based tax provision rate of
approximately 35% and a Non-GAAP-based
tax rate of approximately 14%; these
rate differences are due to the income
tax effects of items that are excluded
for the purpose of calculating Non-
GAAP-based adjusted net income. Such
excluded items include amortization,
share-based compensation, Special
charges (recoveries) and other income
(expense), net. Also excluded are tax
benefits/expense items unrelated to
current period income such as changes in
reserves for tax uncertainties and
valuation allowance reserves, and "book
to return" adjustments for tax return
filings and tax assessments. Included is
the amount of net tax benefits arising
from the internal reorganization that
occurred in Fiscal 2017 assumed to be
allocable to the current period based on
the forecasted utilization period. In
arriving at our Non-GAAP-based tax
rate of approximately 14%, we analyzed
the individual adjusted expenses and
took into consideration the impact of
statutory tax rates from local
jurisdictions incurring the expense.
(8) Reconciliation of GAAP-based net income
to Non-GAAP-based net income:
Year Ended June 30, 2019
Per share
diluted
GAAP-based net
income,
attributable to
OpenText $
285,501 $
1.06
Add:
Amortization 373,212 1.38
Share-based
compensation 26,770 0.10
Special charges
(recoveries) 35,719 0.13
Other (income)
expense, net (10,156) (0.04)
GAAP-based
provision for
(recovery of)
income taxes 154,937 0.57
Non-GAAP-based
provision for
income taxes (121,257) (0.44)
Non-GAAP-based
net income,
attributable to
OpenText $
744,726 $
2.76
Reconciliation of Adjusted EBITDA
Year Ended June 30,
2019
GAAP-based net
income, attributable
to OpenText $
285,501
Add:
Provision for
(recovery of) income
taxes 154,937
Interest and other
related expense, net 136,592
Amortization of
acquired technology-
based intangible
assets 183,385
Amortization of
acquired customer-
based intangible
assets 189,827
Depreciation 97,716
Share-based
compensation 26,770
Special charges
(recoveries) 35,719
Other (income)
expense, net (10,156)
Adjusted EBITDA $
1,100,291
(3) The following tables provide a
composition of our major
currencies for revenue and
expenses, expressed as a
percentage, for the three
months and year ended June 30,
2020 and 2019:
Three Months Ended June 30, 2020 Three Months Ended June 30, 2019
Currencies % of Revenue % of Expenses* % of Revenue % of Expenses*
EURO 22 13 24 15
% % % %
GBP 4 5 6 6
% % % %
CAD 3 8 3 9
% % % %
USD 63 57 58 53
% % % %
Other 8 17 9 17
% % % %
Total 100 100 100 100
% % % %
Year Ended June 30, 2020 Year Ended June 30, 2019
Currencies % of Revenue % of Expenses* % of Revenue % of Expenses*
EURO 22 14 24 15
% % % %
GBP 5 6 6 6
% % % %
CAD 3 9 4 10
% % % %
USD 61 55 58 51
% % % %
Other 9 16 8 18
% % % %
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-2020-financial-results-301107994.html
SOURCE Open Text Corporation
