OpenText Reports Fourth Quarter and Fiscal Year 2020 Financial Results

·8 min read

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

(in millions)


Annual Recurring Revenues

(in millions)


Cloud Revenues

(in millions)

Reported

Constant
Currency


Reported

Constant
Currency


Reported

Constant
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
(in millions)


Annual Recurring Revenues
(in millions)


Cloud Revenues
(in millions)

Reported

Constant
Currency


Reported

Constant
Currency


Reported

Constant

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

(Y/Y)


Q4 FY20
in CC*

% Change
in CC*


Revenues:









Cloud services and subscriptions

$332.6

$241.9

$90.7

37.5

%


$335.7


38.8

%


Customer support

324.9

315.2

9.7

3.1

%


330.2


4.7

%


Total annual recurring revenues**

$657.5

$557.1

$100.4

18.0

%


$665.9


19.5

%


License

105.8

119.7

(13.9)

(11.6)

%


107.4


(10.3)

%


Professional service and other

63.3

70.4

(7.1)

(10.1)

%


64.9


(7.7)

%


Total revenues

$826.6

$747.2

$79.4

10.6

%


$838.2


12.2

%


GAAP-based operating income

$91.2

$158.0

($66.8)

(42.3)

%


N/A


N/A



Non-GAAP-based operating income (1)

$293.8

$259.0

$34.8

13.4

%


$294.8


13.9

%


GAAP-based EPS, diluted

$0.10

$0.27

($0.17)

(63.0)

%


N/A


N/A



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

$0.80

$0.72

$0.08

11.1

%


$0.80


11.1

%


GAAP-based net income attributable to OpenText

$26.4

$72.0

($45.6)

(63.3)

%


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
(Y/Y)


FY20 in
CC*

% Change
in CC*


Revenues:









Cloud services and subscriptions

$1,157.7

$907.8

$249.9

27.5

%


$1,165.8


28.4

%


Customer support

1,275.6

1,247.9

27.7

2.2

%


1,293.7


3.7

%


Total annual recurring revenues**

$2,433.3

$2,155.7

$277.5

12.9

%


$2,459.5


14.1

%


License

402.9

428.1

(25.2)

(5.9)

%


408.7


(4.5)

%


Professional service and other

273.6

284.9

(11.3)

(4.0)

%


278.6


(2.2)

%


Total revenues

$3,109.7

$2,868.8

$241.0

8.4

%


$3,146.8


9.7

%


GAAP-based operating income

$503.5

$567.0

($63.5)

(11.2)

%


N/A


N/A



Non-GAAP-based operating income (1)

$1,058.8

$1,002.7

$56.1

5.6

%


$1,074.8


7.2

%


GAAP-based EPS, diluted

$0.86

$1.06

($0.20)

(18.9)

%


N/A


N/A



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

$2.89

$2.76

$0.13

4.7

%


$2.94


6.5

%


GAAP-based net income attributable to OpenText

$234.2

$285.5

($51.3)

(18.0)

%


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
(Q4 FY20 vs
Q3 FY20)


% Change
(Q4 FY20 vs
Q4 FY19)


Revenue (millions)

$826.6


$814.7


$747.2


1.5

%


10.6

%


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 (millions)

$3,109.7


$2,868.8


8.4

%


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™, 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
Additional Paid in Capital


Treasury Stock


Retained

Earnings


Accumulated Other

Comprehensive

Income


Non-Controlling Interests


Total


Shares


Amount


Shares


Amount


Balance as of June 30, 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
($0.5478 per Common Share)









(145,613)







(145,613)


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
($0.6300 per Common Share)









(168,859)







(168,859)


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
($0.6984 per Common Share)









(188,712)







(188,712)


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.


(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 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

Measures

GAAP-based Measures
% of Total Revenue

Adjustments

Note

Non-GAAP-based

Measures

Non-GAAP-
based Measures

% of Total Revenue

Cost of revenues







Cloud services and subscriptions

$

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

565,917


68.5

%

60,896


(3)

626,813


75.8

%

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
Measures

GAAP-based Measures
% of Total Revenue

Adjustments

Note

Non-GAAP-based
Measures

Non-GAAP-
based Measures
% of Total Revenue

Cost of revenues







Cloud services and subscriptions

$

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

2,105,961


67.7

%

209,860


(3)

2,315,821


74.5

%

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

Measures

GAAP-based Measures
% of Total Revenue

Adjustments

Note

Non-GAAP-based

Measures

Non-GAAP-
based Measures

% of Total Revenue

Cost of revenues







Cloud services and subscriptions

$

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

532,492


65.4

%

64,411


(3)

596,903


73.3

%

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