Feb 4, 2021 SOURCE: PR NewsWire
OpenText Reports Second Quarter Fiscal Year 2021 Financial Results
Record Annual Recurring Revenues (ARR), Record Cloud Revenues
WATERLOO, ON, Feb. 4, 2021 /PRNewswire/ --
Second Quarter Highlights
Total Revenues Annual Recurring Revenues Cloud Revenues
(in millions)
(in millions) (in millions)
Reported Constant Reported
Constant Currency Reported Constant
Currency Currency
$855.6 $839.4 $684.9 $673.6 $350.5 $346.7
+10.9% +8.8% +21.5% +19.5% +41.1% +39.6%
Annual Recurring Revenues represents 80% of Total Revenues
---
-- Operating Cash Flows of $282.5 million in the quarter, up 36.3% Y/Y
-- Free Cash Flows of $274.8 million in the quarter, up 46.5% Y/Y
-- GAAP-based net income (loss) of ($65.5) million, down 160.9% Y/Y, margin
of (7.7)% down 2,160 basis points Y/Y, primarily due to one-time IRS
settlement charge of $299 million
-- Adjusted EBITDA of $360.8 million, up 13.8%, margin of 42.2%, up 110
basis points Y/Y
-- GAAP-based diluted earnings (loss) per share of ($0.24), down 160.0% Y/Y
-- Non-GAAP diluted earnings per share of $0.95, up 13.1%, and $0.92 in
constant currency, up 9.5% Y/Y
Open Text Corporation (NASDAQ: OTEX), (TSX: OTEX), "The Information Company," today announced its financial results for the second quarter ended December 31, 2020.
"OpenText delivered another quarter of strong growth, reflecting the power of our business model and exceptional performance in all of our key metrics," said Mark J. Barrenechea, OpenText CEO & CTO. "Total revenues grew to $855.6 million, up 10.9% year-over-year, and Cloud Services and Subscriptions revenues grew to $350.5 million, up 41.1% year-over-year. Annual Recurring Revenues (ARR) grew to a record $684.9 million, up 21.5% year-over-year, now representing 80% of total revenues."
"Increasing demand for OpenText's Information Management cloud offerings strongly positions us to achieve market share gains through continued alignment with our customers' digital transformation and business needs," said Mr. Barrenechea.
"OpenText demonstrated strong operational excellence in our second quarter, generating free cash flows of $274.8 million, with a record Adjusted EBITDA of $360.8 million", said OpenText EVP, CFO, Madhu Ranganathan. "Our balance sheet and liquidity position of approximately $1.5 billion of cash at the end of the quarter and a 1.6x net leverage ratio, supports our goals to grow, generate cash and pursue our Total Growth strategy."
Financial Highlights for Q2 Fiscal 2021 with Year Over Year Comparisons
Summary of Quarterly Results
---
(In millions, except per share data) Q2 FY'21 Q2 FY'20
$ Change % Change Q2 FY'21 % Change
in CC* in CC*
(Y/Y)
Revenues:
Cloud services and subscriptions $350.5 $248.3 $102.1 41.1 $346.7 39.6
% %
Customer support 334.5 315.5 19.0 6.0 326.9 3.6
% %
Total annual recurring revenues** $684.9 $563.8 $121.1 21.5 $673.6 19.5
% %
License 107.3 138.1 (30.7) (22.3) 104.1 (24.6)
% %
Professional service and other 63.4 69.6 (6.3) (9.0) 61.6 (11.4)
% %
Total revenues $855.6 $771.6 $84.1 10.9 $839.4 8.8
% %
GAAP-based operating income $234.5 $184.7 $49.7 26.9
% N/A N/A
Non-GAAP-based operating income (1) $340.5 $296.4 $44.2 14.9 $330.9 11.6
% %
GAAP-based earnings (loss) per share, diluted ($0.24) $0.40 ($0.64) (160.0)
% N/A N/A
Non-GAAP-based EPS, diluted (1)(2) $0.95 $0.84 $0.11 13.1 $0.92 9.5
% %
GAAP-based net income (loss) attributable to OpenText ($65.5) $107.5 ($172.9) (160.9)
% N/A N/A
Adjusted EBITDA (1) $360.8 $317.0 $43.7 13.8 $351.0 10.7
% %
Operating cash flows $282.5 $207.2 $75.2 36.3
% N/A N/A
Free cash flows (1) $274.8 $187.6 $87.2 46.5
% N/A N/A
---
Summary of YTD Results
---
(In millions, except per share data) FY'21 YTD FY'20 YTD
$ Change % Change FY'21 YTD % Change
in CC* in CC*
(Y/Y)
Revenues:
Cloud services and subscriptions $691.4 $485.6 $205.8 42.4 $686.9 41.5
% %
Customer support 663.9 627.8 36.1 5.7 654.0 4.2
% %
Total annual recurring revenues** $1,355.3 $1,113.4 $241.9 21.7 $1,341.0 20.4
% %
License 175.9 216.0 (40.1) (18.6) 171.3 (20.7)
% %
Professional service and other 128.5 139.0 (10.6) (7.6)
%
% 125.2 (10.0)
Total revenues $1,659.7 $1,468.4 $191.2 13.0 $1,637.4 11.5
% %
GAAP-based operating income $416.8 $317.3 $99.6 31.4
% N/A N/A
Non-GAAP-based operating income (1) $660.9 $530.3 $130.6 24.6 $644.8 21.6
% %
GAAP-based EPS, diluted $0.14 $0.67 ($0.53) (79.1)
% N/A N/A
Non-GAAP-based EPS, diluted (1)(2) $1.84 $1.48 $0.36 24.3 $1.79 20.9
% %
GAAP-based net income attributable to OpenText $37.9 $181.9 ($144.0) (79.2)
% N/A N/A
Adjusted EBITDA (1) $703.1 $571.2 $131.9 23.1 $686.7 20.2
% %
Operating cash flows $516.4 $344.7 $171.7 49.8
% N/A N/A
Free cash flows (1) $493.4 $306.5 $186.9 61.0
% 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 February 3, 2021 a cash dividend of $0.2008 per common share. The record date for this dividend is March 5, 2021 and the payment date is March 26, 2021. 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 Auto Club Group, Autoriteit
Persoonsgegevens, City of San Diego, UK Department for Work and
Pensions, Evonik Industries AG, Froneri, Heraeus, McCain Foods, MedPro
Group, Nestlé, Norwegian Labour and Welfare Administration, Region
Skane, Revo Health, SaskPower
-- OpenText Launches BrightCloud® Cloud Service Intelligence
-- OpenText named a leader in 2020 Gartner Magic Quadrant for Content
Services Platforms
-- Launched OpenText(TM) Cloud Editions 20.4, designed to help customers
get to the cloud, accelerate digital transformation, and rethink the
future of work
-- OpenText brings Digital Investigation to the Cloud with Microsoft Azure
-- OpenText announced $1M USD donation to support food security
Summary of Quarterly Results
---
Q2 FY'21 Q1 FY'21 Q2 FY'20 % Change % Change
(Q2 FY'21 vs (Q2 FY'21 vs
Q1 FY'21) Q2 FY'20)
Revenue (millions) $855.6 $804.0 $771.6 6.4 10.9
% %
GAAP-based gross margin 70.5 69.0 69.9
% % % 150
bps 60
bps
GAAP-based earnings (loss) per share, diluted ($0.24) $0.38 $0.40 (163.2) (160.0)
% %
Non-GAAP-based gross margin (1) 77.1 76.5 75.5
% % % 60
bps 160
bps
Non-GAAP-based EPS, diluted (1)(2) $0.95 $0.89 $0.84 6.7 13.1
% %
---
( Please see note 2 "Use of Non-GAAP
1) 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 February 4, 2021 at 7:00 p.m. ET through 11:59 p.m. on February 18, 2021 and can be accessed by dialing 1-855-669-9658 (toll-free) or +1-604-674-8052 (international) and using passcode 5838 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-GAAP-based financial measures. Additionally, "off-cloud" is a term we use to describe license transactions.
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, future cloud growth and market share gains, generating substantial long-term value for shareholders, the financial and operational impact of the COVID-19 pandemic, 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, potential share repurchases pursuant to its Repurchase Plan, 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 which include, but are not limited to, actual and potential risks and uncertainties relating to the ultimate spread of COVID-19, the severity of the disease and the duration of the COVID-19 pandemic. 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 ©2021 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
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands of U.S. dollars, except share data)
December 31, 2020 June 30, 2020
---
ASSETS (unaudited)
Cash and cash equivalents $
1,500,561 $
1,692,850
Accounts receivable trade, net of allowance for credit losses of $22,845 as of December
31, 2020 and $20,906 as of June 30, 2020 445,841 466,357
Contract assets 27,460 29,570
Income taxes recoverable 24,517 61,186
Prepaid expenses and other current assets 130,177 136,436
Total current assets 2,128,556 2,386,399
Property and equipment 227,434 244,555
Operating lease right of use assets 235,142 207,869
Long-term contract assets 18,175 15,427
Goodwill 4,696,349 4,672,356
Acquired intangible assets 1,402,928 1,612,564
Deferred tax assets 866,788 911,565
Other assets 164,238 154,467
Long-term income taxes recoverable 29,488 29,620
Total assets $
9,769,098 $
10,234,822
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued liabilities $
348,080 $
373,314
Current portion of long-term debt 10,000 610,000
Operating lease liabilities 59,874 64,071
Deferred revenues 798,340 812,218
Income taxes payable 320,084 44,630
Total current liabilities 1,536,378 1,904,233
Long-term liabilities:
Accrued liabilities 28,334 34,955
Pension liability 83,271 73,129
Long-term debt 3,581,565 3,584,311
Long-term operating lease liabilities 227,265 217,165
Long-term deferred revenues 97,083 94,382
Long-term income taxes payable 32,794 171,200
Deferred tax liabilities 179,161 148,738
Total long-term liabilities 4,229,473 4,323,880
Shareholders' equity:
Share capital and additional paid-in capital
272,588,542 and 271,863,354 Common Shares issued and outstanding at December 31, 2020
and June 30, 2020, respectively; authorized Common Shares: unlimited 1,889,857 1,851,777
Accumulated other comprehensive income 66,476 17,825
Retained earnings 2,093,076 2,159,396
Treasury stock, at cost (1,101,370 and 622,297 shares at December 31, 2020 and June 30,
2020, respectively) (47,555) (23,608)
Total OpenText shareholders' equity 4,001,854 4,005,390
Non-controlling interests 1,393 1,319
Total shareholders' equity 4,003,247 4,006,709
Total liabilities and shareholders' equity $
9,769,098 $
10,234,822
OPEN TEXT CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (LOSS)
(In thousands of U.S. dollars, except share and per share data)
(unaudited)
Three Months Ended December 31, Six Months Ended December 31,
---
2020 2019 2020 2019
---
Revenues:
Cloud services and
subscriptions $
350,454 $
248,340 $
691,440 $
485,605
Customer support 334,492 315,508 663,891 627,806
License 107,348 138,095 175,871 215,993
Professional service and other 63,350 69,614 128,455 139,041
Total revenues 855,644 771,557 1,659,657 1,468,445
Cost of revenues:
Cloud services and
subscriptions 117,882 103,644 230,506 205,806
Customer support 29,668 29,788 58,862 59,175
License 4,302 3,050 6,791 5,373
Professional service and other 46,619 53,604 93,200 107,942
Amortization of acquired
technology-based intangible
assets 54,091 42,299 112,128 82,597
Total cost of revenues 252,562 232,385 501,487 460,893
Gross profit 603,082 539,172 1,158,170 1,007,552
Operating expenses:
Research and development 100,238 80,283 194,141 161,461
Sales and marketing 147,897 137,310 280,297 265,928
General and administrative 62,765 54,595 118,954 106,130
Depreciation 20,280 20,712 42,283 40,989
Amortization of acquired
customer-based intangible
assets 54,926 51,460 109,919 100,618
Special charges (recoveries) (17,494) 10,072 (4,250) 15,173
Total operating expenses 368,612 354,432 741,344 690,299
Income from operations 234,470 184,740 416,826 317,253
Other income (expense), net 5,251 1,972 8,134 (813)
Interest and other related
expense, net (37,595) (32,376) (76,684) (64,586)
Income before income taxes 202,126 154,336 348,276 251,854
Provision for (recovery of)
income taxes 267,559 46,818 310,303 69,909
Net income (loss) for the
period $
(65,433) $
107,518 $
37,973 $
181,945
Net (income) loss attributable
to non-controlling interests (44) (51) (74) (77)
Net income (loss) attributable
to OpenText $
(65,477) $
107,467 $
37,899 $
181,868
Earnings (loss) per share-
basic attributable to OpenText $
(0.24) $
0.40 $
0.14 $
0.67
Earnings (loss) per share-
diluted attributable to
OpenText $
(0.24) $
0.40 $
0.14 $
0.67
Weighted average number of
Common Shares outstanding-
basic (in '000's) 272,433 270,450 272,210 270,232
Weighted average number of
Common Shares outstanding-
diluted (in '000's) 272,433 271,590 273,019 271,328
OPEN TEXT CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(In thousands of U.S. dollars)
(unaudited)
Three Months Ended December 31, Six Months Ended December 31,
---
2020 2019 2020 2019
---
Net income (loss) for the period $
(65,433) $
107,518 $
37,973 $
181,945
Other comprehensive income (loss)-net of tax:
Net foreign currency translation
adjustments 26,065 4,875 48,710 (736)
Unrealized gain (loss) on cash flow hedges:
Unrealized gain (loss) -net of
tax expense (recovery) effect of
$751 and $301 for the three
months ended December 31, 2020
and 2019, respectively; $1,056
and $95 for the six months ended
December 31, 2020 and 2019,
respectively 2,082 833 2,927 261
(Gain) loss reclassified into net
income (loss) -net of tax
(expense) recovery effect of
($227) and ($26) for the three
months ended December 31, 2020
and 2019, respectively; ($283)
and ($23) for the six months
ended December 31, 2020 and 2019,
respectively (628) (72) (784) (64)
Actuarial gain (loss) relating to defined benefit
pension plans:
Actuarial gain (loss) -net of tax
expense (recovery) effect of
($441) and $1,308 for the three
months ended December 31, 2020
and 2019, respectively; ($1,357)
and $59 for the six months ended
December 31, 2020 and 2019,
respectively (981) 3,698 (2,686) 614
Amortization of actuarial (gain)
loss into net income (loss) -net
of tax (expense) recovery effect
of $93 and $97 for the three
months ended December 31, 2020
and 2019, respectively; $180 and
$243 for the six months ended
December 31, 2020 and 2019,
respectively 243 260 484 491
Total other comprehensive income
(loss) net, for the period 26,781 9,594 48,651 566
Total comprehensive income (loss) (38,652) 117,112 86,624 182,511
Comprehensive (income) loss
attributable to non-controlling
interests (44) (51) (74) (77)
Total comprehensive income (loss)
attributable to OpenText $
(38,696) $
117,061 $
86,550 $
182,434
OPEN TEXT CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
(In thousands of U.S. dollars and shares)
(unaudited)
Three Months Ended December 31, 2020
Common Shares and Treasury Stock Retained Accumulated Other Non- Total
Additional Paid in Capital Controlling
Earnings Comprehensive Interests
Income
---
Shares Amount Shares Amount
Balance as of
September 30, 2020 272,174 $
1,872,411 (1,394) $
(58,788) $
2,213,053 $
39,695 $
1,349 $
4,067,720
Issuance of Common Shares
Under employee stock
option plans 213 6,893 6,893
Under employee stock
purchase plans 202 7,260 7,260
Share-based
compensation - 14,526 14,526
Issuance of treasury
stock - (11,233) 293 11,233
Dividends declared - (54,500) (54,500)
($0.2008 per Common Share)
Other comprehensive
income -net - 26,781 26,781
Net income (loss) for
the quarter - (65,477) 44 (65,433)
Balance as of December
31, 2020 272,589 $
1,889,857 (1,101) $
(47,555) $
2,093,076 $
66,476 $
1,393 $
4,003,247
Three Months Ended December 31, 2019
Common Shares and Treasury Stock Retained Accumulated Other Non- Total
Additional Paid in Capital Controlling
Earnings Comprehensive Interests
Income
Shares Amount Shares Amount
Balance as of
September 30, 2019 270,190 $
1,791,689 (1,103) $
(41,190) $
2,141,278 $
15,096 $
1,241 $
3,908,114
Issuance of Common
Shares
Under employee stock
option plans 231 6,783 6,783
Under employee stock
purchase plans 188 6,532 6,532
Share-based
compensation 7,783 7,783
Issuance of treasury
stock (9,124) 256 9,124
Dividends declared (47,092) (47,092)
($0.1746 per Common
Share)
Other comprehensive
income -net 9,594 9,594
Net income for the
quarter 107,467 51 107,518
Balance as of December
31, 2019 270,609 $
1,803,663 (847) $
(32,066) $
2,201,653 $
24,690 $
1,292 $
3,999,232
Six Months Ended December 31, 2020
---
Common Shares and Treasury Stock Retained Accumulated Other Non- Total
Additional Paid in Capital Controlling
Earnings Comprehensive Interests
Income
Shares Amount Shares Amount
Balance as of June 30,
2020 271,863 $
1,851,777 (622) $
(23,608) $
2,159,396 $
17,825 $
1,319 $
4,006,709
Adoption of ASU
2016-13 -cumulative
effect, net (2,450) (2,450)
Issuance of Common
Shares
Under employee stock
option plans 524 15,498 15,498
Under employee stock
purchase plans 202 7,553 193 6,690 14,243
Share-based
compensation 26,262 26,262
Purchase of treasury
stock (965) (41,870) (41,870)
Issuance of treasury
stock (11,233) 293 11,233
Dividends declared (101,769) (101,769)
($0.3754 per Common
Share)
Other comprehensive
income -net 48,651 48,651
Net income for the
period 37,899 74 37,973
Balance as of December
31, 2020 272,589 $
1,889,857 (1,101) $
(47,555) $
2,093,076 $
66,476 $
1,393 $
4,003,247
Six Months Ended December 31, 2019
---
Common Shares and Treasury Stock Retained Accumulated Other Non- Total
Additional Paid in Capital Comprehensive Controlling
Earnings Income Interests
Shares Amount Shares Amount
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 415 11,359 11,359
Under employee stock
purchase plans 360 12,540 12,540
Share-based
compensation 14,674 14,674
Purchase of treasury
stock (300) (12,424) (12,424)
Issuance of treasury
stock (9,124) 256 9,124
Dividends declared (94,098) (94,098)
($0.3492 per Common
Share)
Other comprehensive
income -net 566 566
Net income for the
period 181,868 77 181,945
Balance as of December
31, 2019 270,609 $
1,803,663 (847) $
(32,066) $
2,201,653 $
24,690 $
1,292 $
3,999,232
OPEN TEXT CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands of U.S. dollars)
(unaudited)
Three Months Ended December 31, Six Months Ended December 31,
---
2020 2019 2020 2019
---
Cash flows from operating activities:
Net income (loss) for
the period $
(65,433) $
107,518 $
37,973 $
181,945
Adjustments to reconcile net income (loss)
to net cash provided by operating
activities:
Depreciation and
amortization of
intangible assets 129,297 114,471 264,330 224,204
Share-based
compensation expense 14,526 7,783 26,262 14,674
Pension expense 1,615 1,459 3,120 2,895
Amortization of debt
issuance costs 1,142 1,149 2,254 2,276
Loss on sale and write
down of property and
equipment 380 953
Deferred taxes 81,577 27,924 80,397 34,168
Share in net (income)
loss of equity
investees (2,034) (1,266) (8,255) (1,948)
Changes in operating assets and
liabilities:
Accounts receivable (42,115) (55,833) 32,727 2,598
Contract assets (10,355) (10,458) (20,193) (17,659)
Prepaid expenses and
other current assets 11,457 1,111 7,966 (501)
Income taxes 147,809 (7,944) 168,841 (891)
Accounts payable and
accrued liabilities 14,891 29,744 (36,538) (33,235)
Deferred revenue 22,621 (2,924) (18,647) (64,093)
Other assets (2,016) (3,327) (1,467) 2,357
Operating lease assets
and liabilities, net (20,907) (2,169) (23,364) (2,105)
Net cash provided by
operating activities 282,455 207,238 516,359 344,685
Cash flows from investing activities:
Additions of property
and equipment (7,651) (19,598) (22,956) (38,212)
Purchase of XMedius 444 444
Purchase of Carbonite,
Inc., net of cash and
restricted cash
acquired - (1,216,639) (1,216,639)
Purchase of Dynamic
Solutions Group Inc. (371) (4,149) (371) (4,149)
Other investing
activities 867 (3,505) (1,370) (5,541)
Net cash used in
investing activities (6,711) (1,243,891) (24,253) (1,264,541)
Cash flows from financing activities:
Proceeds from issuance
of Common Shares from
exercise of stock
options and ESPP 13,338 12,000 29,177 23,117
Proceeds from long-
term debt and Revolver - 750,000 750,000
Repayment of long-term
debt and Revolver (602,500) (2,500) (605,000) (5,000)
Debt issuance costs - (979) (979)
Purchase of treasury
stock - (41,870) (12,424)
Payments of dividends
to shareholders (54,500) (47,092) (101,769) (94,098)
Net cash provided by
(used in) financing
activities (643,662) 711,429 (719,462) 660,616
Foreign exchange gain
(loss) on cash held in
foreign currencies 22,979 3,640 33,771 (4,071)
Increase (decrease) in
cash, cash equivalents
and restricted cash
during the period (344,939) (321,584) (193,585) (263,311)
Cash, cash equivalents
and restricted cash at
beginning of the
period 1,848,617 1,001,816 1,697,263 943,543
Cash, cash equivalents
and restricted cash at
end of the period $
1,503,678 $
680,232 $
1,503,678 $
680,232
Reconciliation of cash, cash equivalents and restricted cash: December 31, 2020 December 31, 2019
Cash and cash equivalents $
1,500,561 $
675,403
Restricted cash (1) 3,117 4,829
Total cash, cash equivalents and restricted cash $
1,503,678 $
680,232
(1) Restricted cash is classified
under the Prepaid expenses and
other current assets and Other
assets line items on the
Condensed Consolidated Balance
Sheets.
Notes
---
(1) All dollar amounts in this press release
are in U.S. Dollars unless otherwise
indicated.
(2) Use of Non-GAAP Financial Measures: In
addition to reporting financial results
in accordance with U.S. GAAP, the
Company provides certain financial
measures that are not in accordance with
U.S. GAAP (Non-GAAP). These Non-GAAP
financial measures have certain
limitations in that they do not have a
standardized meaning and thus the
Company's definition may be different
from similar Non-GAAP financial
measures used by other companies and/or
analysts and may differ from period to
period. Thus it may be more difficult to
compare the Company's financial
performance to that of other companies.
However, the Company's management
compensates for these limitations by
providing the relevant disclosure of the
items excluded in the calculation of
these Non-GAAP financial measures both
in its reconciliation to the U.S. GAAP
financial measures and its consolidated
financial statements, all of which
should be considered when evaluating the
Company's results.
The Company uses these Non-GAAP
financial measures to supplement the
information provided in its consolidated
financial statements, which are
presented in accordance with U.S. GAAP.
The presentation of Non-GAAP financial
measures 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 (loss) or
earnings (loss) per share, attributable
to OpenText, on a diluted basis,
excluding the effects of the
amortization of acquired intangible
assets, other income (expense), share-
based compensation, and special charges
(recoveries), all net of tax and any tax
benefits/expense items unrelated to
current period income, as further
described in the tables below. Non-
GAAP-based gross profit is the
arithmetical sum of GAAP-based gross
profit and the amortization of acquired
technology-based intangible assets and
share-based compensation within cost of
sales. Non-GAAP-based gross margin is
calculated as Non-GAAP-based gross
profit expressed as a percentage of
total revenue. Non-GAAP-based income
from operations is calculated as GAAP-
based income from operations, excluding
the amortization of acquired intangible
assets, special charges (recoveries),
and share-based compensation expense.
Adjusted earnings (loss) before interest,
taxes, depreciation and amortization
(Adjusted EBITDA) is consistently
calculated as GAAP-based net income
(loss), attributable to OpenText,
excluding interest income (expense),
provision for income taxes, depreciation
and amortization of acquired intangible
assets, other income (expense), share-
based compensation and special charges
(recoveries). Adjusted EBITDA margin is
calculated as adjusted EBITDA expressed
as a percentage of total revenue.
The Company's management believes that
the presentation of the above defined
Non-GAAP financial measures provides
useful information to investors because
they portray the financial results of
the Company before the impact of certain
non-operational charges. The use of the
term "non-operational charge" is
defined for this purpose as an expense
that does not impact the ongoing
operating decisions taken by the
Company's management. These items are
excluded based upon the way the
Company's management evaluates the
performance of the Company's business
for use in the Company's internal
reports and are not excluded in the
sense that they may be used under U.S.
GAAP.
The Company does not acquire businesses
on a predictable cycle, and therefore
believes that the presentation of Non-
GAAP measures, which in certain cases
adjust for the impact of amortization of
intangible assets and the related tax
effects that are primarily related to
acquisitions, will provide readers of
financial statements with a more
consistent basis for comparison across
accounting periods and be more useful in
helping readers understand the Company's
operating results and underlying
operational trends. Additionally, the
Company has engaged in various
restructuring activities over the past
several years, primarily due to
acquisitions, 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
(Loss). Each restructuring activity is a
discrete event based on a unique set of
business objectives or circumstances,
and each differs in terms of its
operational implementation, business
impact and scope, and the size of each
restructuring plan can vary
significantly from period to period.
Therefore, the Company believes that the
exclusion of these special charges
(recoveries) will also better aid
readers of financial statements in the
understanding and comparability of the
Company's operating results and
underlying operational trends.
In summary, the Company believes the
provision of supplemental Non-GAAP
measures allow investors to evaluate the
operational and financial performance of
the Company's core business using the
same evaluation measures that management
uses, and is therefore a useful
indication of OpenText's performance or
expected performance of future
operations and facilitates period-to-
period comparison of operating
performance (although prior performance
is not necessarily indicative of future
performance). As a result, the Company
considers it appropriate and reasonable
to provide, in addition to U.S. GAAP
measures, supplementary Non-GAAP
financial measures that exclude certain
items from the presentation of its
financial results.
The following charts provide unaudited
reconciliations of U.S. GAAP-based
financial measures to Non-GAAP-based
financial measures for the following
periods presented.
Reconciliation of selected GAAP-based measures to Non-GAAP-based measures
for the three months ended December 31, 2020.
(In thousands, except for per share data)
---
Three Months Ended December 31, 2020
GAAP-based
GAAP-based Adjustments Note Non-GAAP- Non-GAAP-
Measures Measures based based
% of Total Measures Measures
Revenue % of Total
Revenue
---
Cost of revenues
Cloud services and
subscriptions $
117,882 $
(1,143) (1) $
116,739
Customer support 29,668 (499) (1) 29,169
Professional
service and other 46,619 (666) (1) 45,953
Amortization of
acquired
technology-based
intangible assets 54,091 (54,091) (2)
GAAP-based gross
profit and gross
margin (%) /Non-
GAAP-based gross
profit and gross
margin (%) 603,082 70.5% 56,399 (3) 659,481 77.1%
Operating expenses
Research and
development 100,238 (2,707) (1) 97,531
Sales and marketing 147,897 (4,957) (1) 142,940
General and
administrative 62,765 (4,554) (1) 58,211
Amortization of
acquired customer-
based intangible
assets 54,926 (54,926) (2)
Special charges
(recoveries) (17,494) 17,494 (4)
GAAP-based income
from operations /
Non-GAAP-based
income from
operations 234,470 106,049 (5) 340,519
Other income
(expense), net 5,251 (5,251) (6)
Provision for
(recovery of)
income taxes 267,559 (225,150) (7) 42,409
GAAP-based net
income (loss) /
Non-GAAP-based
net income,
attributable to
OpenText (65,477) 325,948 (8) 260,471
GAAP-based
earnings (loss)
per share /Non-
GAAP-based
earnings per
share-diluted,
attributable to
OpenText $
(0.24) $
1.19 (8) $
0.95
(1) Adjustment relates to the exclusion of
share-based compensation expense from
our Non-GAAP-based operating expenses
as this expense is excluded from our
internal analysis of operating results.
(2) Adjustment relates to the exclusion of
amortization expense from our Non-GAAP-
based operating expenses as the timing
and frequency of amortization expense is
dependent on our acquisitions and is
hence excluded from our internal
analysis of operating results.
(3) GAAP-based and Non-GAAP-based gross
profit stated in dollars and gross
margin stated as a percentage of total
revenue.
(4) Adjustment relates to the exclusion of
special charges (recoveries) from our
Non-GAAP-based operating expenses as
special charges (recoveries) are
generally incurred in the periods
relevant to an acquisition and include
certain charges or recoveries that are
not indicative or related to continuing
operations, and are therefore excluded
from our internal analysis of operating
results.
(5) GAAP-based and Non-GAAP-based income
from operations stated in dollars.
(6) Adjustment relates to the exclusion of
other income (expense) from our Non-
GAAP-based operating expenses as other
income (expense) generally relates to
the transactional impact of foreign
exchange and is generally not indicative
or related to continuing operations and
is therefore excluded from our internal
analysis of operating results. Other
income (expense) also includes our share
of income (losses) from our holdings in
investments as a limited partner. We do
not actively trade equity securities in
these privately held companies nor do we
plan our ongoing operations based around
any anticipated fundings or
distributions from these investments. We
exclude gains and losses on these
investments as we do not believe they
are reflective of our ongoing business
and operating results.
(7) Adjustment relates to differences between
the GAAP-based tax provision rate of
approximately 132% 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. The
GAAP-based tax provision rate for the
three months ended December 31, 2020
includes an income tax provision charge
from the IRS Settlement partially offset
by a tax benefit from the release of
unrecognized tax benefits due to the
conclusion of relevant tax audits.
(8) Reconciliation of GAAP-based net loss to
Non-GAAP-based net income:
Three Months Ended December 31, 2020
Per share diluted*
GAAP-
based
net
loss,
attributable
to
OpenText $
(65,477) $
(0.24)
Add:
Amortization 109,017 0.40
Share-
based
compensation 14,526 0.05
Special
charges
(recoveries) (17,494) (0.06)
Other
(income)
expense,
net (5,251) (0.02)
GAAP-
based
provision
for
(recovery
of)
income
taxes 267,559 0.98
Non-
GAAP-
based
provision
for
income
taxes (42,409) (0.16)
Non-
GAAP-
based
net
income,
attributable
to
OpenText $
260,471 $
0.95
*Weighted average number of
Common Shares - diluted (in
thousands) used in the
calculation of Non-GAAP-
based earnings per share for
the three months ended
December 31, 2020 were
273,183.
Reconciliation of Adjusted EBITDA
Three Months Ended December 31, 2020
GAAP-
based
net
loss,
attributable
to
OpenText $
(65,477)
Add:
Provision
for
(recovery
of)
income
taxes 267,559
Interest
and
other
related
expense,
net 37,595
Amortization
of
acquired
technology-
based
intangible
assets 54,091
Amortization
of
acquired
customer-
based
intangible
assets 54,926
Depreciation 20,280
Share-
based
compensation 14,526
Special
charges
(recoveries) (17,494)
Other
(income)
expense,
net (5,251)
Adjusted
EBITDA $
360,755
GAAP-
based
net
loss
margin (7.7)
%
Adjusted
EBITDA
margin 42.2
%
Reconciliation of Free cash flows
Three Months Ended December 31, 2020
GAAP-based cash
flows provided
by operating
activities $
282,455
Add:
Capital expenditures
(1) (7,651)
Free cash flows $
274,804
(1) Defined as "Additions of property and equipment" in the Condensed Consolidated Statements of Cash Flows.
Reconciliation of selected GAAP-based measures to Non-GAAP-based measures
for the six months ended December 31, 2020.
(In thousands, except for per share data)
---
Six Months Ended December 31, 2020
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 $
230,506 $
(1,979) (1) $
228,527
Customer support 58,862 (941) (1) 57,921
Professional
service and other 93,200 (1,183) (1) 92,017
Amortization of
acquired
technology-based
intangible assets 112,128 (112,128) (2)
GAAP-based gross
profit and gross
margin (%) /Non-
GAAP-based gross
profit and gross
margin (%) 1,158,170 69.8% 116,231 (3) 1,274,401 76.8%
Operating expenses
Research and
development 194,141 (5,049) (1) 189,092
Sales and marketing 280,297 (9,014) (1) 271,283
General and
administrative 118,954 (8,096) (1) 110,858
Amortization of
acquired customer-
based intangible
assets 109,919 (109,919) (2)
Special charges
(recoveries) (4,250) 4,250 (4)
GAAP-based income
from operations /
Non-GAAP-based
income from
operations 416,826 244,059 (5) 660,885
Other income
(expense), net 8,134 (8,134) (6)
Provision for
(recovery of)
income taxes 310,303 (228,515) (7) 81,788
GAAP-based net
income /Non-
GAAP-based net
income,
attributable to
OpenText 37,899 464,440 (8) 502,339
GAAP-based
earnings per share
/Non-GAAP-based
earnings per
share-diluted,
attributable to
OpenText $
0.14 $
1.70 (8) $
1.84
(1) Adjustment relates to the exclusion of
share-based compensation expense from
our Non-GAAP-based operating expenses
as this expense is excluded from our
internal analysis of operating results.
(2) Adjustment relates to the exclusion of
amortization expense from our Non-GAAP-
based operating expenses as the timing
and frequency of amortization expense is
dependent on our acquisitions and is
hence excluded from our internal
analysis of operating results.
(3) GAAP-based and Non-GAAP-based gross
profit stated in dollars and gross
margin stated as a percentage of total
revenue.
(4) Adjustment relates to the exclusion of
special charges (recoveries) from our
Non-GAAP-based operating expenses as
special charges (recoveries) are
generally incurred in the periods
relevant to an acquisition and include
certain charges or recoveries that are
not indicative or related to continuing
operations, and are therefore excluded
from our internal analysis of operating
results.
(5) GAAP-based and Non-GAAP-based income
from operations stated in dollars.
(6) Adjustment relates to the exclusion of
other income (expense) from our Non-
GAAP-based operating expenses as other
income (expense) generally relates to
the transactional impact of foreign
exchange and is generally not indicative
or related to continuing operations and
is therefore excluded from our internal
analysis of operating results. Other
income (expense) also includes our share
of income (losses) from our holdings in
investments as a limited partner. We do
not actively trade equity securities in
these privately held companies nor do we
plan our ongoing operations based around
any anticipated fundings or
distributions from these investments. We
exclude gains and losses on these
investments as we do not believe they
are reflective of our ongoing business
and operating results.
(7) Adjustment relates to differences between
the GAAP-based tax provision rate of
approximately 89% 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. The
GAAP-based tax provision rate for the
six months ended December 31, 2020
includes an income tax provision charge
from the IRS Settlement partially offset
by a tax benefit from the release of
unrecognized tax benefits due to the
conclusion of relevant tax audits.
(8) Reconciliation of GAAP-based net income
to Non-GAAP-based net income:
Six Months Ended December 31, 2020
Per share diluted
GAAP-
based
net
income,
attributable
to
OpenText $
37,899 $
0.14
Add:
Amortization 222,047 0.81
Share-
based
compensation 26,262 0.10
Special
charges
(recoveries) (4,250) (0.02)
Other
(income)
expense,
net (8,134) (0.03)
GAAP-
based
provision
for
(recovery
of)
income
taxes 310,303 1.14
Non-
GAAP-
based
provision
for
income
taxes (81,788) (0.30)
Non-
GAAP-
based
net
income,
attributable
to
OpenText $
502,339 $
1.84
Reconciliation of Adjusted EBITDA
Six Months Ended December 31, 2020
GAAP-based
net
income,
attributable
to
OpenText $
37,899
Add:
Provision
for
(recovery
of) income
taxes 310,303
Interest
and other
related
expense,
net 76,684
Amortization
of
acquired
technology-
based
intangible
assets 112,128
Amortization
of
acquired
customer-
based
intangible
assets 109,919
Depreciation 42,283
Share-
based
compensation 26,262
Special
charges
(recoveries) (4,250)
Other
(income)
expense,
net (8,134)
Adjusted
EBITDA $
703,094
GAAP-based
net income
margin 2.3
%
Adjusted
EBITDA
margin 42.4
%
Reconciliation of Free cash flows
Six Months Ended December 31, 2020
GAAP-based
cash flows
provided
by
operating
activities $
516,359
Add:
Capital
expenditures
(1) (22,956)
Free cash
flows $
493,403
(1) Defined as "Additions of
property and equipment" in the
Condensed Consolidated
Statements of Cash Flows.
Reconciliation of selected GAAP-based measures to Non-GAAP-based measures
for the three months ended September 30, 2020.
(In thousands, except for per share data)
---
Three Months Ended September 30, 2020
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 $
112,624 $
(836) (1) $
111,788
Customer support 29,194 (442) (1) 28,752
Professional
service and other 46,581 (517) (1) 46,064
Amortization of
acquired
technology-based
intangible assets 58,037 (58,037) (2)
GAAP-based gross
profit and gross
margin (%) /Non-
GAAP-based gross
profit and gross
margin (%) 555,088 69.0% 59,832 (3) 614,920 76.5%
Operating expenses
Research and
development 93,903 (2,342) (1) 91,561
Sales and marketing 132,400 (4,057) (1) 128,343
General and
administrative 56,189 (3,542) (1) 52,647
Amortization of
acquired customer-
based intangible
assets 54,993 (54,993) (2)
Special charges
(recoveries) 13,244 (13,244) (4)
GAAP-based income
from operations /
Non-GAAP-based
income from
operations 182,356 138,010 (5) 320,366
Other income
(expense), net 2,883 (2,883) (6)
Provision for
(recovery of)
income taxes 42,744 (3,365) (7) 39,379
GAAP-based net
income /Non-
GAAP-based net
income,
attributable to
OpenText 103,376 138,492 (8) 241,868
GAAP-based
earnings per share
/Non-GAAP-based
earnings per
share-diluted,
attributable to
OpenText $
0.38 $
0.51 (8) $
0.89
(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
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 29% 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 September 30, 2020
Per share diluted
GAAP-
based
net
income,
attributable
to
OpenText $
103,376 $
0.38
Add:
Amortization 113,030 0.41
Share-
based
compensation 11,736 0.04
Special
charges
(recoveries) 13,244 0.05
Other
(income)
expense,
net (2,883) (0.01)
GAAP-
based
provision
for
(recovery
of)
income
taxes 42,744 0.16
Non-
GAAP-
based
provision
for
income
taxes (39,379) (0.14)
Non-
GAAP-
based
net
income,
attributable
to
OpenText $
241,868 $
0.89
Reconciliation of Adjusted EBITDA
Three Months Ended September 30, 2020
GAAP-
based
net
income,
attributable
to
OpenText $
103,376
Add:
Provision
for
(recovery
of)
income
taxes 42,744
Interest
and
other
related
expense,
net 39,089
Amortization
of
acquired
technology-
based
intangible
assets 58,037
Amortization
of
acquired
customer-
based
intangible
assets 54,993
Depreciation 22,003
Share-
based
compensation 11,736
Special
charges
(recoveries) 13,244
Other
(income)
expense,
net (2,883)
Adjusted
EBITDA $
342,339
GAAP-
based
net
income
margin 12.9
%
Adjusted
EBITDA
margin 42.6
%
Reconciliation of Free cash flows
Three Months Ended September 30, 2020
GAAP-
based
cash
flows
provided
by
operating
activities $
233,904
Add:
Capital
expenditures
(1) (15,305)
Free
cash
flows $
218,599
(1) Defined as "Additions of
property and equipment" in the
Condensed Consolidated
Statements of Cash Flows.
Reconciliation of selected GAAP-based measures to Non-GAAP-based measures
for the three months ended December 31, 2019.
(In thousands, except for per share data)
---
Three Months Ended December 31, 2019
GAAP-based GAAP-based Adjustments Note Non-GAAP- Non-GAAP-
Measures based based Measures
Measures % of Total % of Total
Revenue Measures Revenue
---
Cost of revenues
Cloud services and
subscriptions $
103,644 $
(371) (1) $
103,273
Customer support 29,788 (297) (1) 29,491
Professional
service and other 53,604 (346) (1) 53,258
Amortization of
acquired
technology-based
intangible assets 42,299 (42,299) (2)
GAAP-based gross
profit and gross % %
margin (%) /Non-
GAAP-based gross
profit and gross
margin (%) 539,172 69.9 43,313 (3) 582,485 75.5
Operating expenses
Research and
development 80,283 (1,255) (1) 79,028
Sales and marketing 137,310 (2,383) (1) 134,927
General and
administrative 54,595 (3,131) (1) 51,464
Amortization of
acquired customer-
based intangible
assets 51,460 (51,460) (2)
Special charges
(recoveries) 10,072 (10,072) (4)
GAAP-based income
from operations /
Non-GAAP-based
income from
operations 184,740 111,614 (5) 296,354
Other income
(expense), net 1,972 (1,972) (6)
Provision for
(recovery of)
income taxes 46,818 (9,861) (7) 36,957
GAAP-based net
income /Non-
GAAP-based net
income,
attributable to
OpenText 107,467 119,503 (8) 226,970
GAAP-based
earnings per share
/Non-GAAP-based
earnings per
share-diluted,
attributable to
OpenText $
0.40 $
0.44 (8) $
0.84
(1) Adjustment relates to the exclusion of
share-based compensation expense from
our Non-GAAP-based operating expenses
as this expense is excluded from our
internal analysis of operating results.
(2) Adjustment relates to the exclusion of
amortization expense from our Non-GAAP-
based operating expenses as the timing
and frequency of amortization expense is
dependent on our acquisitions and is
hence excluded from our internal
analysis of operating results.
(3) GAAP-based and Non-GAAP-based gross
profit stated in dollars and gross
margin stated as a percentage of total
revenue.
(4) Adjustment relates to the exclusion of
special charges (recoveries) from our
Non-GAAP-based operating expenses as
special charges (recoveries) are
generally incurred in the periods
relevant to an acquisition and include
certain charges or recoveries that are
not indicative or related to continuing
operations, and are therefore excluded
from our internal analysis of operating
results.
(5) GAAP-based and Non-GAAP-based income
from operations stated in dollars.
(6) Adjustment relates to the exclusion of
other income (expense) from our Non-
GAAP-based operating expenses as other
income (expense) generally relates to
the transactional impact of foreign
exchange and is generally not indicative
or related to continuing operations and
is therefore excluded from our internal
analysis of operating results. Other
income (expense) also includes our share
of income (losses) from our holdings in
investments as a limited partner. We do
not actively trade equity securities in
these privately held companies nor do we
plan our ongoing operations based around
any anticipated fundings or
distributions from these investments. We
exclude gains and losses on these
investments as we do not believe they
are reflective of our ongoing business
and operating results.
(7) Adjustment relates to differences between
the GAAP-based tax provision rate of
approximately 30% 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 December 31, 2019
Per share diluted
GAAP-
based
net
income,
attributable
to
OpenText $
107,467 $
0.40
Add:
Amortization 93,759 0.35
Share-
based
compensation 7,783 0.03
Special
charges
(recoveries) 10,072 0.04
Other
(income)
expense,
net (1,972) (0.01)
GAAP-
based
provision
for
(recovery
of)
income
taxes 46,818 0.17
Non-
GAAP-
based
provision
for
income
taxes (36,957) (0.14)
Non-
GAAP-
based
net
income,
attributable
to
OpenText $
226,970 $
0.84
Reconciliation of Adjusted EBITDA
Three Months Ended December 31, 2019
GAAP-
based net
income,
attributable
to
OpenText $
107,467
Add:
Provision
for
(recovery
of)
income
taxes 46,818
Interest
and other
related
expense,
net 32,376
Amortization
of
acquired
technology-
based
intangible
assets 42,299
Amortization
of
acquired
customer-
based
intangible
assets 51,460
Depreciation 20,712
Share-
based
compensation 7,783
Special
charges
(recoveries) 10,072
Other
(income)
expense,
net (1,972)
Adjusted
EBITDA $
317,015
GAAP-
based net
income
margin 13.9
%
Adjusted
EBITDA
margin 41.1
%
Reconciliation of Free cash flows
Three Months Ended December 31, 2019
GAAP-based
cash flows
provided by
operating
activities $
207,238
Add:
Capital
expenditures (1) (19,598)
Free cash
flows $
187,640
(1) Defined as "Additions of
property and equipment" in the
Condensed Consolidated
Statements of Cash Flows.
Reconciliation of selected GAAP-based measures to Non-GAAP-based measures
for the six months ended December 31, 2019.
(In thousands, except for per share data)
---
Six Months Ended December 31, 2019
GAAP-based Adjustments Note Non-GAAP- Non-GAAP-
based based Measures
Measures % of Total
Measures Revenue
GAAP-based
Measures
% of Total
Revenue
---
Cost of revenues
Cloud services and
subscriptions $
205,806 $
(754) (1) $
205,052
Customer support 59,175 (613) (1) 58,562
Professional
service and other 107,942 (589) (1) 107,353
Amortization of
acquired
technology-based
intangible assets 82,597 (82,597) (2)
GAAP-based gross
profit and gross % %
margin (%) /Non-
GAAP-based gross
profit and gross
margin (%) 1,007,552 68.6 84,553 (3) 1,092,105 74.4
Operating expenses
Research and
development 161,461 (2,476) (1) 158,985
Sales and marketing 265,928 (4,499) (1) 261,429
General and
administrative 106,130 (5,743) (1) 100,387
Amortization of
acquired customer-
based intangible
assets 100,618 (100,618) (2)
Special charges
(recoveries) 15,173 (15,173) (4)
GAAP-based income
from operations /
Non-GAAP-based
income from
operations 317,253 213,062 (5) 530,315
Other income
(expense), net (813) 813 (6)
Provision for
(recovery of)
income taxes 69,909 (4,707) (7) 65,202
GAAP-based net
income /Non-
GAAP-based net
income,
attributable to
OpenText 181,868 218,582 (8) 400,450
GAAP-based
earnings per share
/Non-GAAP-based
earnings per
share-diluted,
attributable to
OpenText $
0.67 $
0.81 (8) $
1.48
(1) Adjustment relates to the exclusion of
share-based compensation expense from
our Non-GAAP-based operating expenses
as this expense is excluded from our
internal analysis of operating results.
(2) Adjustment relates to the exclusion of
amortization expense from our Non-GAAP-
based operating expenses as the timing
and frequency of amortization expense is
dependent on our acquisitions and is
hence excluded from our internal
analysis of operating results.
(3) GAAP-based and Non-GAAP-based gross
profit stated in dollars and gross
margin stated as a percentage of total
revenue.
(4) Adjustment relates to the exclusion of
special charges (recoveries) from our
Non-GAAP-based operating expenses as
special charges (recoveries) are
generally incurred in the periods
relevant to an acquisition and include
certain charges or recoveries that are
not indicative or related to continuing
operations, and are therefore excluded
from our internal analysis of operating
results.
(5) GAAP-based and Non-GAAP-based income
from operations stated in dollars.
(6) Adjustment relates to the exclusion of
other income (expense) from our Non-
GAAP-based operating expenses as other
income (expense) generally relates to
the transactional impact of foreign
exchange and is generally not indicative
or related to continuing operations and
is therefore excluded from our internal
analysis of operating results. Other
income (expense) also includes our share
of income (losses) from our holdings in
investments as a limited partner. We do
not actively trade equity securities in
these privately held companies nor do we
plan our ongoing operations based around
any anticipated fundings or
distributions from these investments. We
exclude gains and losses on these
investments as we do not believe they
are reflective of our ongoing business
and operating results.
(7) Adjustment relates to differences between
the GAAP-based tax provision rate of
approximately 28% 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:
Six Months Ended December 31, 2019
Per share diluted
GAAP-
based
net
income,
attributable
to
OpenText $
181,868 $
0.67
Add:
Amortization 183,215 0.68
Share-
based
compensation 14,674 0.05
Special
charges
(recoveries) 15,173 0.06
Other
(income)
expense,
net 813
GAAP-
based
provision
for
(recovery
of)
income
taxes 69,909 0.26
Non-
GAAP-
based
provision
for
income
taxes (65,202) (0.24)
Non-
GAAP-
based
net
income,
attributable
to
OpenText $
400,450 $
1.48
Reconciliation of Adjusted EBITDA
Six Months Ended December 31, 2019
GAAP-based
net income,
attributable
to OpenText $
181,868
Add:
Provision for
(recovery of)
income taxes 69,909
Interest and
other related
expense, net 64,586
Amortization
of acquired
technology-
based
intangible
assets 82,597
Amortization
of acquired
customer-
based
intangible
assets 100,618
Depreciation 40,989
Share-based
compensation 14,674
Special
charges
(recoveries) 15,173
Other (income)
expense, net 813
Adjusted
EBITDA $
571,227
GAAP-based
net income
margin 12.4
%
Adjusted
EBITDA margin 38.9
%
Reconciliation of Free cash flows
Six Months Ended December 31, 2019
GAAP-based
cash flows
provided
by
operating
activities $
344,685
Add:
Capital
expenditures
(1) (38,212)
Free cash
flows $
306,473
(1) Defined as "Additions of
property and equipment" in the
Condensed Consolidated
Statements of Cash Flows.
(3) The following tables provide a
composition of our major
currencies for revenue and
expenses, expressed as a
percentage, for the three and six
months ended December 31, 2020 and
2019:
Three Months Ended December 31, 2020 Three Months Ended December 31, 2019
Currencies % of Revenue % of Expenses* % of Revenue % of Expenses*
EURO 24 14 25 15
% % % %
GBP 5 5 5 6
% % % %
CAD 3 10 3 10
% % % %
USD 60 54 58 51
% % % %
Other 8 17 9 18
% % % %
Total 100 100 100 100
% % % %
Six Months Ended December 31, 2020 Six Months Ended December 31, 2019
Currencies % of Revenue % of Expenses* % of Revenue % of Expenses*
EURO 23 14 23 14
% % % %
GBP 5 5 5 6
% % % %
CAD 3 10 3 10
% % % %
USD 61 55 59 52
% % % %
Other 8 16 10 18
% % % %
Total 100 100 100 100
% % % %
*Expenses include all cost of
revenues and operating expenses
included within the Condensed
Consolidated Statements of Income
(Loss), except for amortization of
intangible assets, share-based
compensation and special charges
(recoveries).
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SOURCE Open Text Corporation
