8-K
Open Text Corp (OTEX)
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
______________________
FORM 8-K
______________________
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): April 30, 2025
______________________
Open Text Corporation
(Exact name of Registrant as specified in its charter)
______________________
| Canada | 0-27544 | 98-0154400 |
|---|---|---|
| (State or Other Jurisdiction<br>of Incorporation) | (Commission<br>File Number) | (IRS Employer<br>Identification No.) |
275 Frank Tompa Drive, Waterloo, Ontario, Canada N2L 0A1
(Address of principal executive offices)
(519) 888-7111
(Registrant's telephone number, including area code)
______________________
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
☐ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
☐ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
☐ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
☐ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered |
|---|---|---|
| Common stock without par value | OTEX | NASDAQ Global Select Market |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Item 2.02 Results of Operations and Financial Condition
The following information is furnished pursuant to Item 2.02, “Results of Operations and Financial Condition.”
On April 30, 2025, Open Text Corporation (the “Company”) issued a press release announcing its financial results for the quarter ended March 31, 2025. A copy of the press release is furnished as Exhibit 99.1 to this Form 8-K.
The information in this Item 2.02 and the exhibits attached hereto are furnished to, but not “filed” with, the Securities and Exchange Commission (“SEC”) and shall not be deemed to be incorporated by reference into any of the Company’s filings with the SEC under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, whether made before or after the date hereof, regardless of any general incorporation language in such filing.
Item 2.05 Costs Associated with Exit or Disposal Activities
On April 29, 2025, the Board of Directors of the Company approved an expansion of its previously announced Business Optimization Plan to complete strategic initiatives, integration and simplification following the Micro Focus acquisition, AMC divestiture and other growth and innovation plans including the deployment of AI and automation. The Company expects up to approximately $200 million of additional costs to be incurred to complete this final phase of the Business Optimization Plan, bringing the combined plan up to approximately $260 million. This expansion includes costs associated with workforce reduction due to automation, centralization and simplification, and corresponding facility costs related to a reduction of the Company’s real estate footprint globally. On an overall basis, the expansion is expected to result in a total net reduction of approximately 2,000 positions, an increase of approximately 1,600 positions from the previously announced plan. The expanded Business Optimization Plan along with other savings initiatives, when fully implemented, is expected to generate total annualized savings of approximately $490 million to $550 million, an increase of $340 million to $400 million on an annualized basis. Of this, approximately 50% will be realized in Fiscal 2026, with the remaining annualized benefit to be realized in Fiscal 2027.
Cautionary Note Regarding Forward-Looking Statements
Certain statements in this Current Report on Form 8-K contain forward-looking statements or information (forward-looking statements) within the meaning of the Private Securities Litigation Reform Act of 1995, Section 21E of the Securities and Exchange Act of 1934, as amended, Section 27A of the Securities Act of 1933, as amended, and other applicable securities laws of the United States and Canada, and is subject to the safe harbors created by those provisions. All statements other than statements of historical facts are statements that could be deemed forward-looking statements. Words such as “anticipates,” “expects,” “intends,” “plans,” “believes,” “seeks,” “estimates,” “may,” “could,” “would,” “might,” “will” and variations of these words or similar expressions are intended to identify forward-looking statements. In addition, any statements or information that refer to expectations, beliefs, plans, projections, objectives, performance or other characterizations of future events or circumstances, including any underlying assumptions, are forward-looking statements, and are based on our current expectations, forecasts and projections about the operating environment, economies and markets in which we operate. Projected financial information with respect to the Company, as well as statements about annualized cost savings and restructuring charges, benefits and other aspects of the business optimization plan, and other matters, constitutes forward-looking statements and should not be relied upon as being necessarily indicative of future results. 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. Forward-looking statements involve known and unknown risks and uncertainties. The actual results that OpenText achieves may differ materially from any forward-looking statements.
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. Further, readers should note that we may announce information using our website, press releases, securities law filings, public conference calls, webcasts and the social media channels identified on the Investors section of our website (https://investors.opentext.com). Such social media channels may include the Company's or our CEO's blog, X, formerly known as Twitter, account or LinkedIn account. The information posted through such channels may be material. Accordingly, readers should monitor such channels in addition to our other forms of communication. Information included on or accessible through any such channels is not incorporated by reference in or otherwise included as a part of this filing.
Item 8.01 Other Events
The following information is filed pursuant to Item 8.01 “Other Events”.
Cash Dividends
Pursuant to the Company's dividend policy, the Board of Directors of the Company has declared a dividend of $0.2625 per Common Share, payable on June 20, 2025, to the shareholders of the Company of record on June 6, 2025.
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.
The declaration, payment and amount of any future dividends will be made pursuant to the Company's dividend policy and is subject to final determination each quarter by the Board of Directors in its discretion based on a number of factors that it deems relevant, including the Company's financial position, results of operations, available cash resources, cash requirements and alternative uses of cash that the Board of Directors may conclude would be in the best interest of the shareholders of the Company. Payment of dividends is also subject to relevant contractual limitations, including those in the Company's existing credit agreements. Accordingly, there can be no assurance that any future dividends will be equal or similar in amount to any dividends previously paid or that the Board of Directors will not decide to reduce, suspend or discontinue the payment of dividends in the future.
Item 9.01 Financial Statements and Exhibits
(d) Exhibits
| Exhibit No. | Description |
|---|---|
| 99.1 | Press release of financial results issued by Open Text Corporation on April 30, 2025. |
| 101.INS | XBRL instance document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document. |
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| 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document). |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| OPEN TEXT CORPORATION | ||
|---|---|---|
| April 30, 2025 | By: | /s/ CHADWICK WESTLAKE |
| Chadwick Westlake<br>Executive Vice President, Chief Financial Officer |
Exhibit Index
| Exhibit No. | Description |
|---|---|
| 99.1 | Press release of financial results issued by Open Text Corporation on April 30, 2025. |
| 101.INS | XBRL instance document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document. |
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| 101.DEF | Inline XBRL taxonomy extension definition linkbase. |
| 101.LAB | Inline XBRL taxonomy extension label linkbase. |
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| 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document). |
Document
Exhibit 99.1
OpenText Reports Third Quarter Fiscal Year 2025 Financial Results Announces Expansion and Final Phase of Business Optimization Plan
Fiscal 2025 Third Quarter Highlights (in millions(1))
| Cloud Revenues | Profitability | EPS | Cash Flows | |||
|---|---|---|---|---|---|---|
| 463 | 93 | 395 | 0.35 | 0.82 | 402 | $374 |
| +1.8% Y/Y | 7.4% margin | 31.5% margin | -2.8% Y/Y | -12.8% Y/Y | +4.6% Y/Y | +7.4% Y/Y |
All values are in US Dollars.
| “On the strength of our operating model, OpenText delivered solid Q3 Cloud revenues, A-EBITDA margin and free cash flows, however, total revenues fell short of our expectations given demand volatility,” said Mark J. Barrenechea, OpenText CEO & CTO. “While every organization is managing significant uncertainty, we continue to prove the criticality of OpenText products and the resiliency of our business model, as we support customers in all industries across this dynamic environment.” |
|---|
| “We are incredibly proud to have expanded many customer relationships during the quarter, and we launched with great anticipation our new Titanium X platform (CE 25.2) that will allow customers to work in SaaS and hybrid environments, while making smarter decisions with OpenText Aviator AI,” said Barrenechea. “In addition, we announced the significant final phase of our Business Optimization Plan that commenced last summer. This work is important in continuously improve our A-EBITDA margin, and allow us to reinvest for the long-term in our Aviator AI platform, Content, Security and Cloud growth products.” |
| Mark J. Barrenechea, OpenText CEO & CTO |
| “I am excited to have joined such an extraordinary Canadian company. There is no other Canadian software company with the breadth, depth and clear winning position particularly in AI, Content, Security and Cloud, as OpenText. We have the operational focus to generate strong long-term margin and earnings growth, while leveraging our significant cash flow generation capability to reinvest in top priority products and investor returns. The bottom line results this quarter are a great example of our resilience and consistency. It’s an exceptional time for investors to participate in the earnings growth engine we’re building at OpenText.” |
| Chadwick Westlake, OpenText EVP, CFO |
Waterloo, ON, April 30, 2025 - Open Text Corporation (NASDAQ: OTEX), (TSX: OTEX), today announced its financial results for the third quarter ended March 31, 2025.
Third Quarter Financial Highlights Y/Y
•Total revenues: $1.254 billion, -13.3% Y/Y or -4.5% when adjusted for the AMC divestiture
•Annual recurring revenues (ARR): $1.030 billion, -10.1% Y/Y or -2.8% when adjusted for the AMC divestiture
•Cloud revenues: $463 million, +1.8% Y/Y, 17 consecutive quarters of cloud organic growth
•Quarterly enterprise cloud bookings(2):$151 million, -8.4% Y/Y
•Cash flows: Operating $402 million and free cash flows(3) $374 million
•Net income: GAAP $93 million, -5.6% Y/Y, Non-GAAP(3) $216 million, -16.0% Y/Y
•Adjusted EBITDA(3) of $395 million, margin of 31.5%
•Diluted earnings per share (EPS): GAAP $0.35, Non-GAAP(3) $0.82
•Returned $183 million of capital to shareholders
•Paid $68 million to shareholders through dividends
•Repurchased $115 million of common shares for cancellation
(1) Numbers represented are in millions of US dollars, except for per share or percentage metrics.
(2) Enterprise cloud bookings is defined as the total value from cloud services and subscription contracts, entered into in the period that are new, committed and incremental to our existing contracts, entered into with our enterprise based customers.
(3) Please see Note 2 “Use of Non-GAAP Financial Measures” to the condensed consolidated financial statements below.
Financial Highlights for Q3 Fiscal 2025 with Year Over Year Comparisons
| Summary of Quarterly Results | ||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| (In millions, except per share data) | Q3 FY'25 | Q3 FY'24 | $ Change | % Change | Q3 FY'25 in CC* | % Change in CC* | ||||||||||||
| Revenues: | ||||||||||||||||||
| Cloud services and subscriptions | $463 | $455 | $8 | 1.8 | % | $468 | 3.0 | % | ||||||||||
| Customer support | $567 | $691 | ($124) | (17.9) | % | $578 | (16.4) | % | ||||||||||
| Total annual recurring revenues** | $1,030 | $1,146 | ($116) | (10.1) | % | $1,046 | (8.7) | % | ||||||||||
| License | $138 | $200 | ($62) | (30.9) | % | $141 | (29.6) | % | ||||||||||
| Professional service and other | $86 | $101 | ($15) | (14.7) | % | $88 | (12.6) | % | ||||||||||
| Total revenues | $1,254 | $1,447 | ($193) | (13.3) | % | $1,275 | (11.9) | % | ||||||||||
| GAAP-based operating income | $209 | $227 | ($18) | (7.9) | % | N/A | N/A | |||||||||||
| Non-GAAP-based operating income (1) | $363 | $432 | ($69) | (15.9) | % | $366 | (15.3) | % | ||||||||||
| GAAP-based net income attributable to OpenText | $93 | $98 | ($5) | (5.6) | % | N/A | N/A | |||||||||||
| Non-GAAP-based net income attributable to OpenText (1) | $216 | $257 | ($41) | (16.0) | % | $218 | (15.1) | % | ||||||||||
| GAAP-based EPS, diluted | $0.35 | $0.36 | ($0.01) | (2.8) | % | N/A | N/A | |||||||||||
| Non-GAAP-based EPS, diluted (1)(2) | $0.82 | $0.94 | ($0.12) | (12.8) | % | $0.83 | (11.7) | % | ||||||||||
| Adjusted EBITDA (1) | $395 | $464 | ($68) | (14.8) | % | $398 | (14.2) | % | ||||||||||
| Operating cash flows | $402 | $385 | $18 | 4.6 | % | N/A | N/A | |||||||||||
| Free cash flows (1) | $374 | $348 | $26 | 7.4 | % | N/A | N/A | Summary of YTD Results | ||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | ||||||||||
| (In millions, except per share data) | FY'25 YTD | FY'24 YTD | $ Change | % Change | FY'25 YTD in CC* | % Change in CC* | ||||||||||||
| Revenues: | ||||||||||||||||||
| Cloud services and subscriptions | $1,382 | $1,356 | $26 | 1.9 | % | $1,387 | 2.3 | % | ||||||||||
| Customer support | $1,753 | $2,085 | ($331) | (15.9) | % | $1,761 | (15.5) | % | ||||||||||
| Total annual recurring revenues** | $3,135 | $3,441 | ($305) | (8.9) | % | $3,148 | (8.5) | % | ||||||||||
| License | $453 | $663 | ($210) | (31.6) | % | $455 | (31.3) | % | ||||||||||
| Professional service and other | $269 | $304 | ($35) | (11.5) | % | $270 | (11.3) | % | ||||||||||
| Total revenues | $3,858 | $4,407 | ($550) | (12.5) | % | $3,873 | (12.1) | % | ||||||||||
| GAAP-based operating income | $711 | $694 | $17 | 2.5 | % | N/A | N/A | |||||||||||
| Non-GAAP-based operating income (1) | $1,244 | $1,425 | ($181) | (12.7) | % | $1,241 | (13.0) | % | ||||||||||
| GAAP-based net income attributable to OpenText | $407 | $217 | $190 | 87.7 | % | N/A | N/A | |||||||||||
| Non-GAAP-based net income attributable to OpenText (1) | $758 | $870 | ($112) | (12.9) | % | $756 | (13.1) | % | ||||||||||
| GAAP-based EPS, diluted | $1.53 | $0.80 | $0.73 | 91.3 | % | N/A | N/A | |||||||||||
| Non-GAAP-based EPS, diluted (1)(2) | $2.85 | $3.19 | ($0.34) | (10.7) | % | $2.85 | (10.8) | % | ||||||||||
| Adjusted EBITDA (1) | $1,341 | $1,525 | ($184) | (12.1) | % | $1,337 | (12.3) | % | ||||||||||
| Operating cash flows | $672 | $782 | ($110) | (14.1) | % | N/A | N/A | |||||||||||
| Free cash flows (1) | $563 | $663 | ($100) | (15.0) | % | N/A | N/A |
(1) Please see Note 2 “Use of Non-GAAP Financial Measures” to the condensed consolidated financial statements below.
(2) For periods prior to Fiscal 2025, this is reflective of the amount of net tax benefit arising from the internal reorganization assumed to be allocable to the period based on the forecasted utilization period. Please also see Note 14 to the Company's Fiscal 2018 Consolidated Financial Statements on Form 10-K.
Note: Items in tables may not add due to rounding. Percentages presented are calculated based on the underlying amounts.
*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.
Expansion of the Business Optimization Plan
On April 29, 2025, the Board approved an expansion of our previously announced Business Optimization Plan to complete strategic initiatives, integration and simplification following the Micro Focus acquisition, AMC divestiture and other growth and innovation plans including the deployment of AI and automation. We expect up to approximately $200 million of additional costs to be incurred to complete this final phase of the Business Optimization Plan, bringing the combined plan up to approximately $260 million. This expansion includes costs associated with workforce reduction due to automation, centralization and simplification, and corresponding facility costs related to a reduction of our real estate footprint globally. On an overall basis, the expansion is expected to result in a total net reduction of approximately 2,000 positions, an increase of approximately 1,600 positions from the previously announced plan. The expanded Business Optimization Plan along with other savings initiatives, when fully implemented, is expected to generate total annualized savings of approximately $490 million to $550 million, an increase of $340 million to $400 million on an annualized basis. Of this, approximately 50% will be realized in Fiscal 2026, with the remaining annualized benefit to be realized in Fiscal 2027.
Dividend
As part of our quarterly, non-cumulative cash dividend program, the Board declared on April 29, 2025, a cash dividend of $0.2625 per common share. The record date for this dividend is June 6, 2025 and the payment date is June 20, 2025. 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.
Share Repurchase
OpenText announced that in the third quarter of Fiscal 2025, it repurchased $115 million of common shares for cancellation under its share repurchase plan (the Fiscal 2025 Repurchase Plan). As of the end of the third quarter of Fiscal 2025, $266 million of common shares have been repurchased for cancellation under the Fiscal 2025 Repurchase Plan. During the fiscal quarter, OpenText also announced that it increased the authorized limit of the Fiscal 2025 Repurchase Plan by $150 million to $450 million and established an automatic share purchase plan (ASPP) with its broker to facilitate repurchases of common shares. Under the Fiscal 2025 Repurchase Plan, for the period commencing August 7, 2024 until August 6, 2025, OpenText intends to purchase for cancellation in open market transactions, from time to time, up to $450 million of its issued and outstanding common shares, subject to a maximum of 21,179,064 common shares.
Quarterly Business Highlights
•Key customer wins in the quarter include: ABN AMRO Bank, Alps Alpine North America, Avatel Telecom, Converge ICT Solutions, Criteo Technology, Fidelity National Financial, Froneri International, Japan Tobacco International (Spain), Kubus IT GbR, Leonardo UK, Pikeville Medical Center, Quantum Health, Sky Italia, SMA Solar Technology, United States Air Force.
•OpenText announced availability of Cloud Editions 25.2, formerly known as Titanium X, which brings together a comprehensive set of enterprise capabilities for process automation, data, security and AI.
•OpenText held customer summits in London and Munich, empowering businesses with the latest breakthroughs in information management and AI that are driving massive growth and productivity enhancements for the world’s largest organizations.
•OpenText launched next generation OpenText Cybersecurity Cloud with AI-powered threat detection and response capabilities.
•OpenText strengthened consumer Cybersecurity portfolio delivering multiple layers of security in a single, unified platform.
| Summary of Quarterly Results | |||||||||
|---|---|---|---|---|---|---|---|---|---|
| Q3 FY'25 | Q2 FY'25 | Q3 FY'24 | % Change<br><br>(Q3 FY'25 vs Q2 FY'25) | % Change<br><br>(Q3 FY'25 vs Q3 FY'24) | |||||
| Revenue (millions) | 1,254 | 1,335 | 1,447 | (6.0) | % | (13.3) | % | ||
| GAAP-based gross margin | 71.6 | 73.3 | 73.0 | (170) | bps | (140) | bps | ||
| Non-GAAP-based gross margin (1) | 75.7 | 77.2 | 76.7 | (150) | bps | (100) | bps | ||
| GAAP-based EPS, diluted | 0.35 | 0.87 | 0.36 | (59.8) | % | (2.8) | % | ||
| Non-GAAP-based EPS, diluted (1)(2) | 0.82 | 1.11 | 0.94 | (26.1) | % | (12.8) | % |
All values are in US Dollars.
(1) Please see Note 2 “Use of Non-GAAP Financial Measures” to the condensed consolidated financial statements below.
(2) Please also see Note 14 to the Company's Fiscal 2018 Consolidated Financial Statements on Form 10-K. Reflective of the amount of net tax benefit arising from the internal reorganization assumed to be allocable to the current period based on the forecasted utilization period.
Conference Call Information
OpenText posted an investor presentation on its Investor Relations website and invites the public to listen to the earnings conference call webcast tomorrow on Thursday, May 1, 2025 at 8:30 a.m. ET (5:30 a.m. PT) from the Investor Relations section of the Company’s website at https://investors.opentext.com. To join the webcast instantly, use this webcast link. A webcast replay will be available shortly following completion of the live call.
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.
For more information, please contact:
Greg Secord
Vice President, Global Head of Investor Relations
Open Text Corporation
415-963-0825
investors@opentext.com
Copyright ©2025 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: https://www.opentext.com/about/copyright-information.
About OpenText
OpenText is the leading Information Management software and services company in the world. We help organizations solve complex global problems with a comprehensive suite of Business Clouds, Business AI, and Business Technology. For more information about OpenText (NASDAQ/TSX: OTEX), please visit us at https://www.opentext.com.
Cautionary Statement Regarding Forward-Looking Statements
Certain statements in this press release, including statements about Open Text Corporation (“OpenText” or “the Company”) on growth, profitability and future of Information Management, including delivering long term margin and earnings growth, reinvestment in growth products, margin improvement and efficiency; achieving total revenue growth, competitive advantage through innovation, and operational excellence through delivering upper quartile margins, free cash flow, earnings and capital return; customer benefits from products; A-EBITDA expansion; executing the Company’s capital allocation strategy, including expected return to shareholders; level of performance through the fiscal year; new bookings, demand, scale and revenue growth; expansion and execution of Business Optimization Plan and other savings initiatives, including timing, costs, savings, associated benefits thereof and potential adjustments of amounts thereto; innovation fueled by cloud, AI and security technologies; executing on targets and aspirations; future acquisitions or divestitures and associated strategy; future revenues, operating expenses, margins, free cash flows, interest expense and capital expenditures; net leverage and savings targets and timing thereof; market share of our products; innovation road map; intention to maintain a dividend program, including any targeted annualized dividend; expected size and timing of the Fiscal 2025 Repurchase Plan, including execution thereof; future tax rates; renewal rates; new platform and product offerings, including reinvestment therein and associated benefits to customers; internal automation and AI leverage, including our AI strategy, vision and growth; strategy to build shareholder value; and other matters, which 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 intended to identify forward-looking statements or information under applicable securities laws (forward-looking statements). In addition, any statements or information that refer to expectations, beliefs, plans, projections, objectives, performance or other characterizations of future events or circumstances, including any underlying assumptions, are forward-looking statements, and are 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, including statements regarding future targets and aspirations, are inherently subject to significant business, economic, competitive and other uncertainties and contingencies regarding future events and, as such, are subject to change and are not considered guidance. We can give no assurance that such estimates, beliefs and assumptions will prove to be correct. Future declarations of dividends are also subject to the final determination and discretion of the Board of Directors, and an annualized dividend has not been approved or declared by the Board. Forward-looking statements involve known and unknown risks and uncertainties such as those relating to: all statements regarding the expected future financial position, results of operations, revenues, expenses, margins, cash flows, dividends, share buybacks, financing plans, business strategy, budgets, capital expenditures, competitive positions, growth opportunities, plans and objectives of management, including any anticipated synergy benefits; incurring unanticipated costs, delays or difficulties; and our ability to develop, protect and maintain our intellectual property and proprietary technology and to operate without infringing on the proprietary rights of others. We rely on a combination of copyright, patent, trademark and trade secret laws, non-disclosure agreements and other contractual provisions to establish and maintain our proprietary rights, which are important to our success. From time to time, we may also enforce our intellectual property rights through litigation in line with our strategic and business objectives. The actual results that OpenText achieves may differ materially from any forward-looking statements. 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. Further, readers should note that we may announce information using our website, press releases, securities law filings, public conference calls, webcasts and the social media channels identified on the Investors section of our website (https://investors.opentext.com). Such social media channels may include the Company's or our CEO's blog, X, formerly known as Twitter, account or LinkedIn account. The information posted through such channels may be material. Accordingly, readers should monitor such channels in addition to our other forms of communication.
OPEN TEXT CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands of U.S. dollars, except share data)
| March 31, 2025 | June 30, 2024 | |||
|---|---|---|---|---|
| ASSETS | (unaudited) | |||
| Cash and cash equivalents | $ | 1,277,950 | $ | 1,280,662 |
| Accounts receivable trade, net of allowance for credit losses of $13,379 as of March 31, 2025 and $12,108 as of June 30, 2024 | 593,069 | 626,189 | ||
| Contract assets | 70,878 | 66,450 | ||
| Income taxes recoverable | 18,767 | 61,113 | ||
| Prepaid expenses and other current assets | 200,969 | 242,911 | ||
| Total current assets | 2,161,633 | 2,277,325 | ||
| Property and equipment, net of accumulated depreciation of $806,609 as of March 31, 2025 and $751,174 as of June 30, 2024 | 367,741 | 367,740 | ||
| Operating lease right of use assets | 209,121 | 219,774 | ||
| Long-term contract assets | 47,961 | 38,684 | ||
| Goodwill | 7,493,952 | 7,488,367 | ||
| Acquired intangible assets | 2,102,476 | 2,486,264 | ||
| Deferred tax assets | 1,004,429 | 932,657 | ||
| Other assets | 303,124 | 298,281 | ||
| Long-term income taxes recoverable | 64,389 | 96,615 | ||
| Total assets | $ | 13,754,826 | $ | 14,205,707 |
| LIABILITIES AND SHAREHOLDERS' EQUITY | ||||
| Current liabilities: | ||||
| Accounts payable and accrued liabilities | $ | 847,735 | $ | 931,116 |
| Current portion of long-term debt | 35,850 | 35,850 | ||
| Operating lease liabilities | 75,538 | 76,446 | ||
| Deferred revenues | 1,526,829 | 1,521,416 | ||
| Income taxes payable | 37,231 | 235,666 | ||
| Total current liabilities | 2,523,183 | 2,800,494 | ||
| Long-term liabilities: | ||||
| Accrued liabilities | 42,555 | 46,483 | ||
| Pension liability, net | 132,066 | 127,255 | ||
| Long-term debt | 6,345,390 | 6,356,943 | ||
| Long-term operating lease liabilities | 195,394 | 218,174 | ||
| Long-term deferred revenues | 171,890 | 162,401 | ||
| Long-term income taxes payable | 84,294 | 145,644 | ||
| Deferred tax liabilities | 129,646 | 148,632 | ||
| Total long-term liabilities | 7,101,235 | 7,205,532 | ||
| Shareholders' equity: | ||||
| Share capital and additional paid-in capital | ||||
| 259,649,857 and 267,800,517 Common Shares issued and outstanding at March 31, 2025 and June 30, 2024, respectively; authorized Common Shares: unlimited | 2,200,012 | 2,271,886 | ||
| Accumulated other comprehensive income (loss) | (75,847) | (69,619) | ||
| Retained earnings | 2,082,247 | 2,119,159 | ||
| Treasury stock, at cost (2,512,726 and 3,135,980 shares at March 31, 2025 and June 30, 2024, respectively) | (77,674) | (123,268) | ||
| Total OpenText shareholders' equity | 4,128,738 | 4,198,158 | ||
| Non-controlling interests | 1,670 | 1,523 | ||
| Total shareholders' equity | 4,130,408 | 4,199,681 | ||
| Total liabilities and shareholders' equity | $ | 13,754,826 | $ | 14,205,707 |
OPEN TEXT CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(In thousands of U.S. dollars, except share and per share data)
(unaudited)
| Three Months Ended<br>March 31, | Nine Months Ended<br>March 31, | |||||||
|---|---|---|---|---|---|---|---|---|
| 2025 | 2024 | 2025 | 2024 | |||||
| Revenues: | ||||||||
| Cloud services and subscriptions | $ | 462,614 | $ | 454,528 | $ | 1,381,944 | $ | 1,355,633 |
| Customer support | 567,379 | 691,441 | 1,753,464 | 2,084,916 | ||||
| License | 138,363 | 200,363 | 453,099 | 662,627 | ||||
| Professional service and other | 86,007 | 100,799 | 269,361 | 304,252 | ||||
| Total revenues | 1,254,363 | 1,447,131 | 3,857,868 | 4,407,428 | ||||
| Cost of revenues: | ||||||||
| Cloud services and subscriptions | 174,186 | 186,400 | 521,731 | 537,960 | ||||
| Customer support | 61,733 | 74,639 | 186,963 | 223,027 | ||||
| License | 7,504 | 6,769 | 20,497 | 16,591 | ||||
| Professional service and other | 65,487 | 75,455 | 200,443 | 230,836 | ||||
| Amortization of acquired technology-based intangible assets | 47,199 | 48,094 | 141,646 | 195,702 | ||||
| Total cost of revenues | 356,109 | 391,357 | 1,071,280 | 1,204,116 | ||||
| Gross profit | 898,254 | 1,055,774 | 2,786,588 | 3,203,312 | ||||
| Operating expenses: | ||||||||
| Research and development | 197,333 | 226,521 | 568,753 | 665,608 | ||||
| Sales and marketing | 260,102 | 303,750 | 779,913 | 871,384 | ||||
| General and administrative | 115,718 | 145,924 | 321,804 | 450,399 | ||||
| Depreciation | 32,474 | 32,109 | 96,524 | 99,615 | ||||
| Amortization of acquired customer-based intangible assets | 79,683 | 100,841 | 242,235 | 334,958 | ||||
| Special charges (recoveries) | 3,854 | 19,561 | 66,228 | 87,521 | ||||
| Total operating expenses | 689,164 | 828,706 | 2,075,457 | 2,509,485 | ||||
| Income from operations | 209,090 | 227,068 | 711,131 | 693,827 | ||||
| Other income (expense), net | (26,578) | 9,950 | 6,382 | (38,664) | ||||
| Interest and other related expense, net | (78,816) | (132,663) | (246,713) | (413,719) | ||||
| Income before income taxes | 103,696 | 104,355 | 470,800 | 241,444 | ||||
| Provision for income taxes | 10,842 | 6,028 | 63,618 | 24,434 | ||||
| Net income for the period | $ | 92,854 | $ | 98,327 | $ | 407,182 | $ | 217,010 |
| Net (income) attributable to non-controlling interests | (49) | (42) | (147) | (149) | ||||
| Net income attributable to OpenText | $ | 92,805 | $ | 98,285 | $ | 407,035 | $ | 216,861 |
| Earnings per share—basic attributable to OpenText | $ | 0.35 | $ | 0.36 | $ | 1.54 | $ | 0.80 |
| Earnings per share—diluted attributable to OpenText | $ | 0.35 | $ | 0.36 | $ | 1.53 | $ | 0.80 |
| Weighted average number of Common Shares outstanding—basic (in '000's) | 262,841 | 272,272 | 265,132 | 271,671 | ||||
| Weighted average number of Common Shares outstanding—diluted (in '000's) | 263,834 | 273,033 | 265,610 | 272,349 |
OPEN TEXT CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(In thousands of U.S. dollars)
(unaudited)
| Three Months Ended<br>March 31, | Nine Months Ended<br>March 31, | |||||||
|---|---|---|---|---|---|---|---|---|
| 2025 | 2024 | 2025 | 2024 | |||||
| Net income for the period | $ | 92,854 | $ | 98,327 | $ | 407,182 | $ | 217,010 |
| Other comprehensive income (loss)—net of tax: | ||||||||
| Net foreign currency translation adjustments | (1,511) | 11,765 | (5,534) | (18,614) | ||||
| Unrealized gain (loss) on cash flow hedges: | ||||||||
| Unrealized gain (loss)—net of tax (1) | (46) | (1,634) | (3,580) | (1,953) | ||||
| (Gain) loss reclassified into net income—net of tax (2) | 1,371 | 118 | 2,643 | 455 | ||||
| Unrealized gain (loss) on available-for-sale financial assets: | ||||||||
| Unrealized gain (loss)—net of tax (3) | (395) | 90 | 289 | 319 | ||||
| Actuarial gain (loss) relating to defined benefit pension plans: | ||||||||
| Actuarial gain (loss)—net of tax (4) | — | — | (1,045) | (110) | ||||
| Amortization of actuarial (gain) loss into net income—net of tax (5) | 513 | 115 | 999 | 417 | ||||
| Total other comprehensive income (loss), net for the period | (68) | 10,454 | (6,228) | (19,486) | ||||
| Total comprehensive income | 92,786 | 108,781 | 400,954 | 197,524 | ||||
| Comprehensive income attributable to non-controlling interests | (49) | (42) | (147) | (149) | ||||
| Total comprehensive income attributable to OpenText | $ | 92,737 | $ | 108,739 | $ | 400,807 | $ | 197,375 |
______________________________
(1)Net of tax expense (recovery) of $(17) and $(589) for the three months ended March 31, 2025 and 2024, respectively; $(1,291) and $(704) for the nine months ended March 31, 2025 and 2024, respectively.
(2)Net of tax expense (recovery) of $494 and $42 for the three months ended March 31, 2025 and 2024, respectively; $952 and $163 for the nine months ended March 31, 2025 and 2024, respectively.
(3)Net of tax expense (recovery) of $91 and $24 for the three months ended March 31, 2025 and 2024, respectively; $316 and $84 for the nine months ended March 31, 2025 and 2024, respectively.
(4)Net of tax expense (recovery) of $— and $— for the three months ended March 31, 2025 and 2024, respectively; $(43) and $110 for the nine months ended March 31, 2025 and 2024, respectively.
(5)Net of tax expense (recovery) of $83 and $50 for the three months ended March 31, 2025 and 2024, respectively; $267 and $175 for the nine months ended March 31, 2025 and 2024, respectively.
OPEN TEXT CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
(In thousands of U.S. dollars and shares)
(unaudited)
| Three Months Ended March 31, 2025 | ||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Common Shares and Additional Paid in Capital | Treasury Stock | Retained<br>Earnings | Accumulated Other<br>Comprehensive<br>Income | Non-Controlling Interests | Total | |||||||||
| Shares | Amount | Shares | Amount | |||||||||||
| Balance as of December 31, 2024 | 263,728 | $ | 2,275,583 | (4,226) | $ | (144,432) | $ | 2,174,514 | $ | (75,779) | $ | 1,621 | $ | 4,231,507 |
| Issuance of Common Shares | ||||||||||||||
| Under employee stock option plans | — | 3 | — | — | — | — | — | 3 | ||||||
| Under employee stock purchase plans | 273 | 6,551 | — | — | — | — | — | 6,551 | ||||||
| Share-based compensation | — | 23,000 | — | — | — | — | — | 23,000 | ||||||
| Purchase of treasury stock | — | — | (297) | (7,564) | — | — | — | (7,564) | ||||||
| Issuance of treasury stock | — | (73,720) | 2,010 | 74,322 | (425) | — | — | 177 | ||||||
| Repurchase of Common Shares | (4,351) | (31,405) | — | — | (115,412) | — | — | (146,817) | ||||||
| Dividends declared<br><br>($0.2625 per Common Share) | — | — | — | — | (69,235) | — | — | (69,235) | ||||||
| Other comprehensive income (loss) - net | — | — | — | — | — | (68) | — | (68) | ||||||
| Net income for the period | — | — | — | — | 92,805 | — | 49 | 92,854 | ||||||
| Balance as of March 31, 2025 | 259,650 | $ | 2,200,012 | (2,513) | $ | (77,674) | $ | 2,082,247 | $ | (75,847) | $ | 1,670 | $ | 4,130,408 |
| Three Months Ended March 31, 2024 | ||||||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| Common Shares and Additional Paid in Capital | Treasury Stock | Retained<br>Earnings | Accumulated Other<br>Comprehensive<br>Income | Non-Controlling Interests | Total | |||||||||
| Shares | Amount | Shares | Amount | |||||||||||
| Balance as of December 31, 2023 | 271,855 | $ | 2,261,856 | (4,400) | $ | (179,089) | $ | 2,029,643 | $ | (83,499) | $ | 1,436 | $ | 4,030,347 |
| Issuance of Common Shares | ||||||||||||||
| Under employee stock option plans | 517 | 17,315 | — | — | — | — | — | 17,315 | ||||||
| Under employee stock purchase plans | 190 | 6,698 | — | — | — | — | — | 6,698 | ||||||
| Share-based compensation | — | 35,947 | — | — | — | — | — | 35,947 | ||||||
| Issuance of treasury stock | — | (45,058) | 1,023 | 45,483 | (425) | — | — | — | ||||||
| Dividends declared<br><br>($0.25 per Common Share) | — | — | — | — | (68,443) | — | — | (68,443) | ||||||
| Other comprehensive income (loss) - net | — | — | — | — | — | 10,454 | — | 10,454 | ||||||
| Net income for the period | — | — | — | — | 98,285 | — | 42 | 98,327 | ||||||
| Balance as of March 31, 2024 | 272,562 | $ | 2,276,758 | (3,377) | $ | (133,606) | $ | 2,059,060 | $ | (73,045) | $ | 1,478 | $ | 4,130,645 |
OPEN TEXT CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
(In thousands of U.S. dollars and shares)
(unaudited)
| Nine Months Ended March 31, 2025 | ||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Common Shares and Additional Paid in Capital | Treasury Stock | Retained<br>Earnings | Accumulated Other<br>Comprehensive<br>Income | Non-Controlling Interests | Total | |||||||||
| Shares | Amount | Shares | Amount | |||||||||||
| Balance as of June 30, 2024 | 267,801 | $ | 2,271,886 | (3,136) | $ | (123,268) | $ | 2,119,159 | $ | (69,619) | $ | 1,523 | $ | 4,199,681 |
| Issuance of Common Shares | ||||||||||||||
| Under employee stock option plans | 70 | 1,883 | — | — | — | — | — | 1,883 | ||||||
| Under employee stock purchase plans | 992 | 25,722 | — | — | — | — | — | 25,722 | ||||||
| Share-based compensation | — | 82,801 | — | — | — | — | — | 82,801 | ||||||
| Purchase of treasury stock | — | — | (2,484) | (72,587) | — | — | — | (72,587) | ||||||
| Issuance of treasury stock | — | (115,556) | 3,107 | 118,181 | (1,127) | — | — | 1,498 | ||||||
| Repurchase of Common Shares | (9,213) | (66,724) | — | — | (233,668) | — | — | (300,392) | ||||||
| Dividends declared<br><br>($0.7875 per Common Share) | — | — | — | — | (209,152) | — | — | (209,152) | ||||||
| Other comprehensive income (loss) - net | — | — | — | — | — | (6,228) | — | (6,228) | ||||||
| Net income for the period | — | — | — | — | 407,035 | — | 147 | 407,182 | ||||||
| Balance as of March 31, 2025 | 259,650 | $ | 2,200,012 | (2,513) | $ | (77,674) | $ | 2,082,247 | $ | (75,847) | $ | 1,670 | $ | 4,130,408 |
| Nine Months Ended March 31, 2024 | ||||||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| Common Shares and Additional Paid in Capital | Treasury Stock | Retained<br>Earnings | Accumulated Other<br>Comprehensive<br>Income | Non-Controlling Interests | Total | |||||||||
| Shares | Amount | Shares | Amount | |||||||||||
| Balance as of June 30, 2023 | 270,903 | $ | 2,176,947 | (3,536) | $ | (151,597) | $ | 2,048,984 | $ | (53,559) | $ | 1,329 | $ | 4,022,104 |
| Issuance of Common Shares | ||||||||||||||
| Under employee stock option plans | 942 | 31,318 | — | — | — | — | — | 31,318 | ||||||
| Under employee stock purchase plans | 717 | 23,709 | — | — | — | — | — | 23,709 | ||||||
| Share-based compensation | — | 112,944 | — | — | — | — | — | 112,944 | ||||||
| Purchase of treasury stock | — | — | (1,400) | (53,085) | — | — | — | (53,085) | ||||||
| Issuance of treasury stock | — | (68,160) | 1,559 | 71,076 | (2,916) | — | — | — | ||||||
| Dividends declared<br><br>($0.75 per Common Share) | — | — | — | — | (203,869) | — | — | (203,869) | ||||||
| Other comprehensive income (loss) - net | — | — | — | — | — | (19,486) | — | (19,486) | ||||||
| Net income for the period | — | — | — | — | 216,861 | — | 149 | 217,010 | ||||||
| Balance as of March 31, 2024 | 272,562 | $ | 2,276,758 | (3,377) | $ | (133,606) | $ | 2,059,060 | $ | (73,045) | $ | 1,478 | $ | 4,130,645 |
OPEN TEXT CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands of U.S. dollars)
(unaudited)
| Three Months Ended<br>March 31, | Nine Months Ended<br>March 31, | |||||||
|---|---|---|---|---|---|---|---|---|
| 2025 | 2024 | 2025 | 2024 | |||||
| Cash flows from operating activities: | ||||||||
| Net income for the period | $ | 92,854 | $ | 98,327 | $ | 407,182 | $ | 217,010 |
| Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||
| Depreciation and amortization of intangible assets | 159,356 | 181,044 | 480,405 | 630,275 | ||||
| Share-based compensation expense | 23,000 | 36,042 | 82,919 | 113,312 | ||||
| Pension expense | 3,381 | 3,196 | 10,194 | 9,579 | ||||
| Amortization of debt discount and issuance costs | 5,539 | 6,766 | 16,334 | 19,587 | ||||
| Write-off of right of use assets | 46 | 4,278 | 1,431 | 15,241 | ||||
| Adjustment to gain on AMC Divestiture | — | — | 4,175 | — | ||||
| Loss on extinguishment of debt | — | 10,803 | — | 10,803 | ||||
| Loss on sale and write down of property and equipment, net | 289 | (162) | 728 | 1,715 | ||||
| Deferred taxes | (38,794) | (72,144) | (91,771) | (249,174) | ||||
| Share in net (income) loss of equity investees | (1,644) | 835 | (3,637) | 19,013 | ||||
| Changes in derivative instruments | 9,836 | (16,671) | (10,778) | 3,551 | ||||
| Changes in operating assets and liabilities: | ||||||||
| Accounts receivable | 70,030 | 111,772 | 111,909 | 51,487 | ||||
| Contract assets | (36,155) | (24,859) | (96,101) | (71,486) | ||||
| Prepaid expenses and other current assets | (17,401) | 728 | 37,177 | 4,717 | ||||
| Income taxes | 12,578 | 16,943 | (184,149) | 75,676 | ||||
| Accounts payable and accrued liabilities | 46,802 | (24,731) | (81,308) | (72,887) | ||||
| Deferred revenue | 82,367 | 56,840 | 10,960 | 14,338 | ||||
| Other assets | (6,146) | 650 | (7,582) | 5,868 | ||||
| Operating lease assets and liabilities, net | (3,697) | (4,960) | (15,661) | (16,154) | ||||
| Net cash provided by operating activities | 402,241 | 384,697 | 672,427 | 782,471 | ||||
| Cash flows from investing activities: | ||||||||
| Additions of property and equipment | (28,412) | (36,537) | (108,997) | (119,316) | ||||
| Purchase of Micro Focus, net of cash acquired | — | — | — | (9,272) | ||||
| Settlement of derivative instruments | (10,380) | — | (10,380) | — | ||||
| Adjustment to proceeds from AMC Divestiture | — | — | (11,686) | — | ||||
| Proceeds from interest on derivative instruments | 2,647 | 2,490 | 5,166 | 4,456 | ||||
| Other investing activities | 582 | 6,315 | 6,474 | (468) | ||||
| Net cash used in investing activities | (35,563) | (27,732) | (119,423) | (124,600) | ||||
| Cash flows from financing activities: | ||||||||
| Proceeds from issuance of Common Shares from exercise of stock options and ESPP | 8,185 | 27,770 | 25,925 | 57,027 | ||||
| Repayment of long-term debt and Revolver | (8,962) | (186,463) | (26,888) | (559,389) | ||||
| Net change in transition services agreement obligation | (37,215) | — | (15,277) | — | ||||
| Debt issuance costs | — | — | (1,066) | (2,792) | ||||
| Repurchase of Common Shares | (114,563) | — | (267,969) | — | ||||
| Purchase of treasury stock | (5,136) | — | (70,159) | (53,085) | ||||
| Payments of dividends to shareholders | (67,961) | (67,293) | (205,335) | (200,672) | ||||
| Other financing activities | — | (1,447) | — | (1,447) | ||||
| Net cash used in financing activities | (225,652) | (227,433) | (560,769) | (760,358) | ||||
| Foreign exchange gain (loss) on cash held in foreign currencies | 14,660 | (7,521) | 4,866 | (3,982) | ||||
| Increase (decrease) in cash, cash equivalents and restricted cash during the period | 155,686 | 122,011 | (2,899) | (106,469) | ||||
| Cash, cash equivalents and restricted cash at beginning of the period | 1,124,208 | 1,005,472 | 1,282,793 | 1,233,952 | ||||
| Cash, cash equivalents and restricted cash at end of the period | $ | 1,279,894 | $ | 1,127,483 | $ | 1,279,894 | $ | 1,127,483 |
OPEN TEXT CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands of U.S. dollars)
(unaudited)
| Reconciliation of cash, cash equivalents and restricted cash: | March 31, 2025 | March 31, 2024 | ||
|---|---|---|---|---|
| Cash and cash equivalents | $ | 1,277,950 | $ | 1,125,323 |
| Restricted cash (1) | 1,944 | 2,160 | ||
| Total cash, cash equivalents and restricted cash | $ | 1,279,894 | $ | 1,127,483 |
| (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 condensed 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 condensed consolidated financial statements, which are presented in accordance with U.S. GAAP. The presentation of Non-GAAP financial measures is not meant to be a substitute for financial measures presented in accordance with U.S. GAAP, but rather should be evaluated in conjunction with and as a supplement to such U.S. GAAP measures. OpenText strongly encourages investors to review its financial information in its entirety and not to rely on a single financial measure. The Company therefore believes that despite these limitations, it is appropriate to supplement the disclosure of the U.S. GAAP measures with certain Non-GAAP measures defined below.
Non-GAAP-based net income and Non-GAAP-based EPS, attributable to OpenText, are consistently calculated as GAAP-based net income (loss) or earnings (loss) per share, attributable to OpenText, on a diluted basis, excluding the effects of the amortization of acquired intangible assets, other income (expense), share-based compensation, and special charges (recoveries), all net of tax and any tax benefits/expense items unrelated to current period income, as further described in the tables below. Non-GAAP-based gross profit is the arithmetical sum of GAAP-based gross profit and the amortization of acquired technology-based intangible assets and share-based compensation within cost of sales. Non-GAAP-based gross margin is calculated as Non-GAAP-based gross profit expressed as a percentage of total revenue. Non-GAAP-based income from operations is calculated as GAAP-based income from operations, excluding the amortization of acquired intangible assets, special charges (recoveries), and share-based compensation expense.
Adjusted earnings before interest, taxes, depreciation and amortization (Adjusted EBITDA) is consistently calculated as GAAP-based net income (loss), attributable to OpenText, excluding interest income (expense), provision for (recovery of) income taxes, depreciation and amortization of acquired intangible assets, other income (expense), share-based compensation and special charges (recoveries). Adjusted EBITDA margin is calculated as adjusted EBITDA expressed as a percentage of total revenue.
The Company's management believes that the presentation of the above defined Non-GAAP financial measures provides useful information to investors because they portray the financial results of the Company before the impact of certain non-operational charges. The use of the term “non-operational charge” is defined for this purpose as an expense that does not impact the ongoing operating decisions taken by the Company's management. These items are excluded based upon the way the Company's management evaluates the performance of the Company's business for use in the Company's internal reports and are not excluded in the sense that they may be used under U.S. GAAP.
The Company does not acquire businesses on a predictable cycle, and therefore believes that the presentation of Non-GAAP measures, which in certain cases adjust for the impact of amortization of intangible assets and the related tax effects that are primarily related to acquisitions, will provide readers of financial statements with a more consistent basis for comparison across accounting periods and be more useful in helping readers understand the Company’s operating results and underlying operational trends. Additionally, the Company has engaged in various restructuring activities over the past several years, primarily due to acquisitions and in response to our return to office planning, that have resulted in costs associated with reductions in headcount, consolidation of leased facilities and related costs, all which are recorded under the Company’s “Special charges (recoveries)” caption on the Condensed 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. Information reconciling certain forward-looking GAAP measures to non-GAAP measures related to F'25 targets and F’27 aspirations, including A-EBITDA is not available without unreasonable effort due to high variability, complexity and uncertainty with respect to forecasting and quantifying certain amounts that are necessary for such reconciliations.
The following charts provide unaudited reconciliations of U.S. GAAP-based financial measures to Non-GAAP-based financial measures for the following periods presented. The Micro Focus Acquisition significantly impacts period-over-period comparability.
| Reconciliation of selected GAAP-based measures to Non-GAAP-based measures<br><br>for the three months ended March 31, 2025<br><br>(In thousands, except for per share data) | |||||||||
|---|---|---|---|---|---|---|---|---|---|
| Three Months Ended March 31, 2025 | |||||||||
| GAAP-based Measures | GAAP-based Measures <br>% of Total Revenue | Adjustments | Note | Non-GAAP-based Measures | Non-GAAP-based Measures<br>% of Total Revenue | ||||
| Cost of revenues | |||||||||
| Cloud services and subscriptions | $ | 174,186 | $ | (1,846) | (1) | $ | 172,340 | ||
| Customer support | 61,733 | (812) | (1) | 60,921 | |||||
| Professional service and other | 65,487 | (922) | (1) | 64,565 | |||||
| Amortization of acquired technology-based intangible assets | 47,199 | (47,199) | (2) | — | |||||
| GAAP-based gross profit and gross margin (%) / Non-GAAP-based gross profit and gross margin (%) | 898,254 | 71.6% | 50,779 | (3) | 949,033 | 75.7% | |||
| Operating expenses | |||||||||
| Research and development | 197,333 | (4,737) | (1) | 192,596 | |||||
| Sales and marketing | 260,102 | (6,842) | (1) | 253,260 | |||||
| General and administrative | 115,718 | (7,841) | (1) | 107,877 | |||||
| Amortization of acquired customer-based intangible assets | 79,683 | (79,683) | (2) | — | |||||
| Special charges (recoveries) | 3,854 | (3,854) | (4) | — | |||||
| GAAP-based income from operations / Non-GAAP-based income from operations | 209,090 | 153,736 | (5) | 362,826 | |||||
| Other income (expense), net | (26,578) | 26,578 | (6) | — | |||||
| Provision for income taxes | 10,842 | 57,320 | (7) | 68,162 | |||||
| GAAP-based net income / Non-GAAP-based net income, attributable to OpenText | 92,805 | 122,994 | (8) | 215,799 | |||||
| GAAP-based earnings per share / Non-GAAP-based earnings per share-diluted, attributable to OpenText | $ | 0.35 | $ | 0.47 | (8) | $ | 0.82 |
(1) Adjustment relates to the exclusion of share-based compensation expense from our Non-GAAP-based operating expenses as this expense is excluded from our internal analysis of operating results.
(2) Adjustment relates to the exclusion of amortization expense from our Non-GAAP-based operating expenses as the timing and frequency of amortization expense is dependent on our acquisitions and is hence excluded from our internal analysis of operating results.
(3) GAAP-based and Non-GAAP-based gross profit stated in dollars and gross margin stated as a percentage of total revenue.
(4) Adjustment relates to the exclusion of special charges (recoveries) from our Non-GAAP-based operating expenses as special charges (recoveries) are generally incurred in the periods relevant to an acquisition and include certain charges or recoveries that are not indicative or related to continuing operations and are therefore excluded from our internal analysis of operating results.
(5) GAAP-based and Non-GAAP-based income from operations stated in dollars.
(6)Adjustment relates to the exclusion of other income (expense) from our Non-GAAP-based operating expenses as other income (expense) generally relates to the transactional impact of foreign exchange and is generally not indicative or related to continuing operations and is therefore excluded from our internal analysis of operating results. Other income (expense) also includes our share of income (losses) from our holdings in investments as a limited partner. We do not actively trade equity securities in these privately held companies nor do we plan our ongoing operations based around any anticipated fundings or distributions from these investments. We exclude gains and losses on these investments as we do not believe they are reflective of our ongoing business and operating results. Other income (expense) also includes unrealized and realized gains (losses) on our derivatives which are not designated as hedges. We exclude gains and losses on these derivatives as we do not believe they are reflective of our ongoing business and operating results.
(7)Adjustment relates to differences between the GAAP-based tax provision rate of approximately 10% and a Non-GAAP-based tax rate of approximately 24% ; these rate differences are due to the income tax effects of items that are excluded for the purpose of calculating Non-GAAP-based net income. Such excluded items include amortization, share-based compensation, special charges (recoveries) and other income (expense), net. Also excluded are tax benefits/expense items unrelated to current period income such as changes in reserves for tax uncertainties and valuation allowance reserves and “book to return” adjustments for tax return filings and tax assessments. Beginning in Fiscal 2025, net tax benefits arising from the internal reorganization that occurred in Fiscal 2017 have been fully utilized and are no longer included. In arriving at our Non-GAAP-based tax rate of approximately 24%, 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 income to Non-GAAP-based net income:
| Three Months Ended March 31, 2025 | ||||
|---|---|---|---|---|
| Per share diluted | ||||
| GAAP-based net income, attributable to OpenText | $ | 92,805 | $ | 0.35 |
| Add (deduct): | ||||
| Amortization | 126,882 | 0.49 | ||
| Share-based compensation | 23,000 | 0.09 | ||
| Special charges (recoveries) | 3,854 | 0.01 | ||
| Other (income) expense, net | 26,578 | 0.10 | ||
| GAAP-based provision for income taxes | 10,842 | 0.04 | ||
| Non-GAAP-based provision for income taxes | (68,162) | (0.26) | ||
| Non-GAAP-based net income, attributable to OpenText | $ | 215,799 | $ | 0.82 |
Reconciliation of Adjusted EBITDA
| Three Months Ended March 31, 2025 | |||
|---|---|---|---|
| GAAP-based net income, attributable to OpenText | $ | 92,805 | |
| Add: | |||
| Provision for income taxes | 10,842 | ||
| Interest and other related expense, net | 78,816 | ||
| Amortization of acquired technology-based intangible assets | 47,199 | ||
| Amortization of acquired customer-based intangible assets | 79,683 | ||
| Depreciation | 32,474 | ||
| Share-based compensation | 23,000 | ||
| Special charges (recoveries) | 3,854 | ||
| Other (income) expense, net | 26,578 | ||
| Adjusted EBITDA | $ | 395,251 | |
| GAAP-based net income margin | 7.4 | % | |
| Adjusted EBITDA margin | 31.5 | % |
Reconciliation of Free cash flows
| Three Months Ended March 31, 2025 | |||||||||
|---|---|---|---|---|---|---|---|---|---|
| GAAP-based cash flows provided by operating activities | $ | 402,241 | |||||||
| Add: | |||||||||
| Capital expenditures (1) | $ | (28,412) | |||||||
| Free cash flows | $ | 373,829 | |||||||
| (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<br><br>for the nine months ended March 31, 2025<br><br>(In thousands, except for per share data) | |||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| Nine Months Ended March 31, 2025 | |||||||||
| GAAP-based<br><br>Measures | GAAP-based Measures <br>% of Total Revenue | Adjustments | Note | Non-GAAP-based<br><br>Measures | Non-GAAP-based Measures<br>% of Total Revenue | ||||
| Cost of revenues | |||||||||
| Cloud services and subscriptions | $ | 521,731 | $ | (6,828) | (1) | $ | 514,903 | ||
| Customer support | 186,963 | (3,293) | (1) | 183,670 | |||||
| Professional service and other | 200,443 | (3,509) | (1) | 196,934 | |||||
| Amortization of acquired technology-based intangible assets | 141,646 | (141,646) | (2) | — | |||||
| GAAP-based gross profit and gross margin (%) / Non-GAAP-based gross profit and gross margin (%) | 2,786,588 | 72.2% | 155,276 | (3) | 2,941,864 | 76.3% | |||
| Operating expenses | |||||||||
| Research and development | 568,753 | (20,560) | (1) | 548,193 | |||||
| Sales and marketing | 779,913 | (27,380) | (1) | 752,533 | |||||
| General and administrative | 321,804 | (21,349) | (1) | 300,455 | |||||
| Amortization of acquired customer-based intangible assets | 242,235 | (242,235) | (2) | — | |||||
| Special charges (recoveries) | 66,228 | (66,228) | (4) | — | |||||
| GAAP-based income from operations / Non-GAAP-based income from operations | 711,131 | 533,028 | (5) | 1,244,159 | |||||
| Other income (expense), net | 6,382 | (6,382) | (6) | — | |||||
| Provision for income taxes | 63,618 | 175,768 | (7) | 239,386 | |||||
| GAAP-based net income / Non-GAAP-based net income, attributable to OpenText | 407,035 | 350,878 | (8) | 757,913 | |||||
| GAAP-based earnings per share / Non-GAAP-based earnings per share-diluted, attributable to OpenText | $ | 1.53 | $ | 1.32 | (8) | $ | 2.85 |
(1)Adjustment relates to the exclusion of share-based compensation expense from our Non-GAAP-based operating expenses as this expense is excluded from our internal analysis of operating results.
(2)Adjustment relates to the exclusion of amortization expense from our Non-GAAP-based operating expenses as the timing and frequency of amortization expense is dependent on our acquisitions and is hence excluded from our internal analysis of operating results.
(3)GAAP-based and Non-GAAP-based gross profit stated in dollars and gross margin stated as a percentage of total revenue.
(4)Adjustment relates to the exclusion of special charges (recoveries) from our Non-GAAP-based operating expenses as special charges (recoveries) are generally incurred in the periods relevant to an acquisition and include certain charges or recoveries that are not indicative or related to continuing operations and are therefore excluded from our internal analysis of operating results.
(5)GAAP-based and Non-GAAP-based income from operations stated in dollars.
(6)Adjustment relates to the exclusion of other income (expense) from our Non-GAAP-based operating expenses as other income (expense) generally relates to the transactional impact of foreign exchange and is generally not indicative or related to continuing operations and is therefore excluded from our internal analysis of operating results. Other income (expense) also includes our share of income (losses) from our holdings in investments as a limited partner. We do not actively trade equity securities in these privately held companies nor do we plan our ongoing operations based around any anticipated fundings or distributions from these investments. We exclude gains and losses on these investments as we do not believe they are reflective of our ongoing business and operating results. Other income (expense) also includes unrealized and realized gains (losses) on our derivatives which are not designated as hedges. We exclude gains and losses on these derivatives as we do not believe they are reflective of our ongoing business and operating results.
(7)Adjustment relates to differences between the GAAP-based tax provision rate of approximately 14% and a Non-GAAP-based tax rate of approximately 24%; these rate differences are due to the income tax effects of items that are excluded for the purpose of calculating Non-GAAP-based net income. Such excluded items include amortization, share-based compensation, special charges (recoveries) and other income (expense), net. Also excluded are tax benefits/expense items unrelated to current period income such as changes in reserves for tax uncertainties and valuation allowance reserves and “book to return” adjustments for tax return filings and tax assessments. Beginning in Fiscal 2025, net tax benefits arising from the internal reorganization that occurred in Fiscal 2017 have been fully utilized and are no longer included. In arriving at our Non-GAAP-based tax rate of approximately 24%, 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:
| Nine Months Ended March 31, 2025 | ||||
|---|---|---|---|---|
| Per share diluted | ||||
| GAAP-based net income, attributable to OpenText | $ | 407,035 | $ | 1.53 |
| Add (deduct): | ||||
| Amortization | 383,881 | 1.44 | ||
| Share-based compensation | 82,919 | 0.31 | ||
| Special charges (recoveries) | 66,228 | 0.25 | ||
| Other (income) expense, net | (6,382) | (0.02) | ||
| GAAP-based provision for income taxes | 63,618 | 0.24 | ||
| Non-GAAP-based provision for income taxes | (239,386) | (0.90) | ||
| Non-GAAP-based net income, attributable to OpenText | $ | 757,913 | $ | 2.85 |
Reconciliation of Adjusted EBITDA
| Nine Months Ended March 31, 2025 | |||
|---|---|---|---|
| GAAP-based net income, attributable to OpenText | $ | 407,035 | |
| Add: | |||
| Provision for income taxes | 63,618 | ||
| Interest and other related expense, net | 246,713 | ||
| Amortization of acquired technology-based intangible assets | 141,646 | ||
| Amortization of acquired customer-based intangible assets | 242,235 | ||
| Depreciation | 96,524 | ||
| Share-based compensation | 82,919 | ||
| Special charges (recoveries) | 66,228 | ||
| Other (income) expense, net | (6,382) | ||
| Adjusted EBITDA | $ | 1,340,536 | |
| GAAP-based net income margin | 10.6 | % | |
| Adjusted EBITDA margin | 34.7 | % |
Reconciliation of Free cash flows
| Nine Months Ended March 31, 2025 | |||||||||
|---|---|---|---|---|---|---|---|---|---|
| GAAP-based cash flows provided by operating activities | $ | 672,427 | |||||||
| Add: | |||||||||
| Capital expenditures (1) | (108,997) | ||||||||
| Free cash flows | $ | 563,430 | |||||||
| (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<br><br>for the three months ended December 31, 2024<br><br>(In thousands, except for per share data) | |||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| Three Months Ended December 31, 2024 | |||||||||
| GAAP-based<br><br>Measures | GAAP-based Measures <br>% of Total Revenue | Adjustments | Note | Non-GAAP-based<br><br>Measures | Non-GAAP-based Measures <br>% of Total Revenue | ||||
| Cost of revenues | |||||||||
| Cloud services and subscriptions | $ | 172,288 | $ | (2,796) | (1) | $ | 169,492 | ||
| Customer support | 62,656 | (1,139) | (1) | 61,517 | |||||
| Professional service and other | 68,041 | (1,273) | (1) | 66,768 | |||||
| Amortization of acquired technology-based intangible assets | 47,203 | (47,203) | (2) | — | |||||
| GAAP-based gross profit and gross margin (%) /Non-GAAP-based gross profit and gross margin (%) | 977,976 | 73.3% | 52,411 | (3) | 1,030,387 | 77.2% | |||
| Operating expenses | |||||||||
| Research and development | 180,727 | (7,656) | (1) | 173,071 | |||||
| Sales and marketing | 273,929 | (11,223) | (1) | 262,706 | |||||
| General and administrative | 99,356 | (6,274) | (1) | 93,082 | |||||
| Amortization of acquired customer-based intangible assets | 81,048 | (81,048) | (2) | — | |||||
| Special charges (recoveries) | 15,238 | (15,238) | (4) | — | |||||
| GAAP-based income from operations / Non-GAAP-based income from operations | 295,799 | 173,850 | (5) | 469,649 | |||||
| Other income (expense), net | 68,615 | (68,615) | (6) | — | |||||
| Provision for income taxes | 50,893 | 41,755 | (7) | 92,648 | |||||
| GAAP-based net income / Non-GAAP-based net income, attributable to OpenText | 229,862 | 63,480 | (8) | 293,342 | |||||
| GAAP-based earnings per share / Non-GAAP-based earnings per share-diluted, attributable to OpenText | $ | 0.87 | $ | 0.24 | (8) | $ | 1.11 |
(1) Adjustment relates to the exclusion of share-based compensation expense from our Non-GAAP-based operating expenses as this expense is excluded from our internal analysis of operating results.
(2) Adjustment relates to the exclusion of amortization expense from our Non-GAAP-based operating expenses as the timing and frequency of amortization expense is dependent on our acquisitions and is hence excluded from our internal analysis of operating results.
(3) GAAP-based and Non-GAAP-based gross profit stated in dollars and gross margin stated as a percentage of total revenue.
(4) Adjustment relates to the exclusion of special charges (recoveries) from our Non-GAAP-based operating expenses as special charges (recoveries) are generally incurred in the periods relevant to an acquisition and include certain charges or recoveries that are not indicative or related to continuing operations and are therefore excluded from our internal analysis of operating results.
(5) GAAP-based and Non-GAAP-based income from operations stated in dollars.
(6) Adjustment relates to the exclusion of other income (expense) from our Non-GAAP-based operating expenses as other income (expense) generally relates to the transactional impact of foreign exchange and is generally not indicative or related to continuing operations and is therefore excluded from our internal analysis of operating results. Other income (expense) also includes our share of income (losses) from our holdings in investments as a limited partner. We do not actively trade equity securities in these privately held companies nor do we plan our ongoing operations based around any anticipated fundings or distributions from these investments. We exclude gains and losses on these investments as we do not believe they are reflective of our ongoing business and operating results. Other income (expense) also includes unrealized and realized gains (losses) on our derivatives which are not designated as hedges. We exclude gains and losses on these derivatives as we do not believe they are reflective of our ongoing business and operating results.
(7) Adjustment relates to differences between the GAAP-based tax provision rate of approximately 18% and a Non-GAAP-based tax rate of approximately 24%; these rate differences are due to the income tax effects of items that are excluded for the purpose of calculating Non-GAAP-based net income. Such excluded items include amortization, share-based compensation, special charges (recoveries) and other income (expense), net. Also excluded are tax benefits/expense items unrelated to current period income such as changes in reserves for tax uncertainties and valuation allowance reserves and “book to return” adjustments for tax return filings and tax assessments. Beginning in Fiscal 2025, net tax benefits arising from the internal reorganization that occurred in Fiscal 2017 have been fully utilized and are no longer included. In arriving at our Non-GAAP-based tax rate of approximately 24%, 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, 2024 | ||||
|---|---|---|---|---|
| Per share diluted | ||||
| GAAP-based net income, attributable to OpenText | $ | 229,862 | $ | 0.87 |
| Add (deduct): | ||||
| Amortization | 128,251 | 0.49 | ||
| Share-based compensation | 30,361 | 0.11 | ||
| Special charges (recoveries) | 15,238 | 0.06 | ||
| Other (income) expense, net | (68,615) | (0.26) | ||
| GAAP-based provision for income taxes | 50,893 | 0.19 | ||
| Non-GAAP-based provision for income taxes | (92,648) | (0.35) | ||
| Non-GAAP-based net income, attributable to OpenText | $ | 293,342 | $ | 1.11 |
Reconciliation of Adjusted EBITDA
| Three Months Ended December 31, 2024 | |||
|---|---|---|---|
| GAAP-based net income, attributable to OpenText | $ | 229,862 | |
| Add (deduct): | |||
| Provision for income taxes | 50,893 | ||
| Interest and other related expense, net | 83,615 | ||
| Amortization of acquired technology-based intangible assets | 47,203 | ||
| Amortization of acquired customer-based intangible assets | 81,048 | ||
| Depreciation | 31,879 | ||
| Share-based compensation | 30,361 | ||
| Special charges (recoveries) | 15,238 | ||
| Other (income) expense, net | (68,615) | ||
| Adjusted EBITDA | $ | 501,484 | |
| GAAP-based net income margin | 17.2 | % | |
| Adjusted EBITDA margin | 37.6 | % |
Reconciliation of Free cash flows
| Three Months Ended December 31, 2024 | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|
| GAAP-based cash flows provided by operating activities | $ | 347,992 | |||||||||
| Add: | |||||||||||
| Capital expenditures (1) | (41,269) | ||||||||||
| Free cash flows | $ | 306,723 | |||||||||
| (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<br><br>for the three months ended March 31, 2024<br><br>(In thousands, except for per share data) | |||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| Three Months Ended March 31, 2024 | |||||||||||
| GAAP-based<br><br>Measures | GAAP-based Measures <br>% of Total Revenue | Adjustments | Note | Non-GAAP-based<br><br>Measures | Non-GAAP-based Measures <br>% of Total Revenue | ||||||
| Cost of revenues | |||||||||||
| Cloud services and subscriptions | $ | 186,400 | $ | (3,292) | (1) | $ | 183,108 | ||||
| Customer support | 74,639 | (1,149) | (1) | 73,490 | |||||||
| Professional service and other | 75,455 | (1,458) | (1) | 73,997 | |||||||
| Amortization of acquired technology-based intangible assets | 48,094 | (48,094) | (2) | — | |||||||
| GAAP-based gross profit and gross margin (%) /Non-GAAP-based gross profit and gross margin (%) | 1,055,774 | 73.0 | % | 53,993 | (3) | 1,109,767 | 76.7 | % | |||
| Operating expenses | |||||||||||
| Research and development | 226,521 | (10,799) | (1) | 215,722 | |||||||
| Sales and marketing | 303,750 | (12,260) | (1) | 291,490 | |||||||
| General and administrative | 145,924 | (7,084) | (1) | 138,840 | |||||||
| Amortization of acquired customer-based intangible assets | 100,841 | (100,841) | (2) | — | |||||||
| Special charges (recoveries) | 19,561 | (19,561) | (4) | — | |||||||
| GAAP-based income from operations / Non-GAAP-based income from operations | 227,068 | 204,538 | (5) | 431,606 | |||||||
| Other income (expense), net | 9,950 | (9,950) | (6) | — | |||||||
| Provision for income taxes | 6,028 | 35,824 | (7) | 41,852 | |||||||
| GAAP-based net income / Non-GAAP-based net income, attributable to OpenText | 98,285 | 158,764 | (8) | 257,049 | |||||||
| GAAP-based earnings per share / Non-GAAP-based earnings per share-diluted, attributable to OpenText | $ | 0.36 | $ | 0.58 | (8) | $ | 0.94 |
(1) Adjustment relates to the exclusion of share-based compensation expense from our Non-GAAP-based operating expenses as this expense is excluded from our internal analysis of operating results.
(2) Adjustment relates to the exclusion of amortization expense from our Non-GAAP-based operating expenses as the timing and frequency of amortization expense is dependent on our acquisitions and is hence excluded from our internal analysis of operating results.
(3) GAAP-based and Non-GAAP-based gross profit stated in dollars and gross margin stated as a percentage of total revenue.
(4) Adjustment relates to the exclusion of special charges (recoveries) from our Non-GAAP-based operating expenses as special charges (recoveries) are generally incurred in the periods relevant to an acquisition and include certain charges or recoveries that are not indicative or related to continuing operations and are therefore excluded from our internal analysis of operating results.
(5) GAAP-based and Non-GAAP-based income from operations stated in dollars.
(6) Adjustment relates to the exclusion of other income (expense) from our Non-GAAP-based operating expenses as other income (expense) generally relates to the transactional impact of foreign exchange and is generally not indicative or related to continuing operations and is therefore excluded from our internal analysis of operating results. Other income (expense) also includes our share of income (losses) from our holdings in investments as a limited partner. We do not actively trade equity securities in these privately held companies nor do we plan our ongoing operations based around any anticipated fundings or distributions from these investments. We exclude gains and losses on these investments as we do not believe they are reflective of our ongoing business and operating results. Other income (expense) also includes unrealized and realized gains (losses) on our derivatives which are not designated as hedges. We exclude gains and losses on these derivatives as we do not believe they are reflective of our ongoing business and operating results.
(7) Adjustment relates to differences between the GAAP-based tax provision rate of approximately 6% and a Non-GAAP-based tax rate of approximately 14%; these rate differences are due to the income tax effects of items that are excluded for the purpose of calculating Non-GAAP-based net income. Such excluded items include amortization, share-based compensation, special charges (recoveries) and other income (expense), net. Also excluded are tax benefits/expense items unrelated to current period income such as changes in reserves for tax uncertainties and valuation allowance reserves and “book to return” adjustments for tax return filings and tax assessments. Included is the amount of net tax benefits arising from the internal reorganization that occurred in Fiscal 2017 assumed to be allocable to the current period based on the forecasted utilization period. In arriving at our Non-GAAP-based tax rate of approximately 14%, we analyzed the individual adjusted expenses and took into consideration the impact of statutory tax rates from local jurisdictions incurring the expense.
(8) Reconciliation of GAAP-based net income to Non-GAAP-based net income:
| Three Months Ended March 31, 2024 | ||||
|---|---|---|---|---|
| Per share diluted | ||||
| GAAP-based net income, attributable to OpenText | $ | 98,285 | $ | 0.36 |
| Add (deduct): | ||||
| Amortization | 148,935 | 0.55 | ||
| Share-based compensation | 36,042 | 0.13 | ||
| Special charges (recoveries) | 19,561 | 0.07 | ||
| Other (income) expense, net | (9,950) | (0.04) | ||
| GAAP-based provision for income taxes | 6,028 | 0.02 | ||
| Non-GAAP-based provision for income taxes | (41,852) | (0.15) | ||
| Non-GAAP-based net income, attributable to OpenText | $ | 257,049 | $ | 0.94 |
Reconciliation of Adjusted EBITDA
| Three Months Ended March 31, 2024 | |||
|---|---|---|---|
| GAAP-based net income, attributable to OpenText | $ | 98,285 | |
| Add (deduct): | |||
| Provision for income taxes | 6,028 | ||
| Interest and other related expense, net | 132,663 | ||
| Amortization of acquired technology-based intangible assets | 48,094 | ||
| Amortization of acquired customer-based intangible assets | 100,841 | ||
| Depreciation | 32,109 | ||
| Share-based compensation | 36,042 | ||
| Special charges (recoveries) | 19,561 | ||
| Other (income) expense, net | (9,950) | ||
| Adjusted EBITDA | $ | 463,673 | |
| GAAP-based net income margin | 6.8 | % | |
| Adjusted EBITDA margin | 32.0 | % |
Reconciliation of Free cash flows
| Three Months Ended March 31, 2024 | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|
| GAAP-based cash flows provided by operating activities | $ | 384,697 | |||||||||
| Add: | |||||||||||
| Capital expenditures (1) | (36,537) | ||||||||||
| Free cash flows | $ | 348,160 | |||||||||
| (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<br><br>for the nine months ended March 31, 2024<br><br>(In thousands, except for per share data) | |||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| Nine Months Ended March 31, 2024 | |||||||||||
| GAAP-based<br><br>Measures | GAAP-based Measures <br>% of Total Revenue | Adjustments | Note | Non-GAAP-based<br><br>Measures | Non-GAAP-based Measures <br>% of Total Revenue | ||||||
| Cost of revenues | |||||||||||
| Cloud services and subscriptions | $ | 537,960 | $ | (9,892) | (1) | $ | 528,068 | ||||
| Customer support | 223,027 | (3,335) | (1) | 219,692 | |||||||
| Professional service and other | 230,836 | (5,096) | (1) | 225,740 | |||||||
| Amortization of acquired technology-based intangible assets | 195,702 | (195,702) | (2) | — | |||||||
| GAAP-based gross profit and gross margin (%) / Non-GAAP-based gross profit and gross margin (%) | 3,203,312 | 72.7 | % | 214,025 | (3) | 3,417,337 | 77.5 | % | |||
| Operating expenses | |||||||||||
| Research and development | 665,608 | (35,300) | (1) | 630,307 | |||||||
| Sales and marketing | 871,384 | (37,294) | (1) | 834,091 | |||||||
| General and administrative | 450,399 | (22,395) | (1) | 428,004 | |||||||
| Amortization of acquired customer-based intangible assets | 334,958 | (334,958) | (2) | — | |||||||
| Special charges (recoveries) | 87,521 | (87,521) | (4) | — | |||||||
| GAAP-based income from operations / Non-GAAP-based income from operations | 693,827 | 731,493 | (5) | 1,425,320 | |||||||
| Other income (expense), net | (38,664) | 38,664 | (6) | — | |||||||
| Provision for income taxes | 24,434 | 117,191 | (7) | 141,625 | |||||||
| GAAP-based net income / Non-GAAP-based net income, attributable to OpenText | 216,861 | 652,966 | (8) | 869,827 | |||||||
| GAAP-based earnings per share / Non-GAAP-based earnings per share-diluted, attributable to OpenText | $ | 0.80 | $ | 2.39 | (8) | $ | 3.19 |
(1) Adjustment relates to the exclusion of share-based compensation expense from our Non-GAAP-based operating expenses as this expense is excluded from our internal analysis of operating results.
(2) Adjustment relates to the exclusion of amortization expense from our Non-GAAP-based operating expenses as the timing and frequency of amortization expense is dependent on our acquisitions and is hence excluded from our internal analysis of operating results.
(3) GAAP-based and Non-GAAP-based gross profit stated in dollars and gross margin stated as a percentage of total revenue.
(4) Adjustment relates to the exclusion of special charges (recoveries) from our Non-GAAP-based operating expenses as special charges (recoveries) are generally incurred in the periods relevant to an acquisition and include certain charges or recoveries that are not indicative or related to continuing operations and are therefore excluded from our internal analysis of operating results.
(5) GAAP-based and Non-GAAP-based income from operations stated in dollars.
(6) Adjustment relates to the exclusion of other income (expense) from our Non-GAAP-based operating expenses as other income (expense) generally relates to the transactional impact of foreign exchange and is generally not indicative or
related to continuing operations and is therefore excluded from our internal analysis of operating results. Other income (expense) also includes our share of income (losses) from our holdings in investments as a limited partner. We do not actively trade equity securities in these privately held companies nor do we plan our ongoing operations based around any anticipated fundings or distributions from these investments. We exclude gains and losses on these investments as we do not believe they are reflective of our ongoing business and operating results. Other income (expense) also includes unrealized and realized gains (losses) on our derivatives which are not designated as hedges. We exclude gains and losses on these derivatives as we do not believe they are reflective of our ongoing business and operating results.
(7) Adjustment relates to differences between the GAAP-based tax provision rate of approximately 10% and a Non-GAAP-based tax rate of approximately 14%; these rate differences are due to the income tax effects of items that are excluded for the purpose of calculating Non-GAAP-based net income. Such excluded items include amortization, share-based compensation, special charges (recoveries) and other income (expense), net. Also excluded are tax benefits/expense items unrelated to current period income such as changes in reserves for tax uncertainties and valuation allowance reserves and “book to return” adjustments for tax return filings and tax assessments. Included is the amount of net tax benefits arising from the internal reorganization that occurred in Fiscal 2017 assumed to be allocable to the current period based on the forecasted utilization period. In arriving at our Non-GAAP-based tax rate of approximately 14%, we analyzed the individual adjusted expenses and took into consideration the impact of statutory tax rates from local jurisdictions incurring the expense.
(8) Reconciliation of GAAP-based net income to Non-GAAP-based net income:
| Nine Months Ended March 31, 2024 | ||||
|---|---|---|---|---|
| Per share diluted | ||||
| GAAP-based net income, attributable to OpenText | $ | 216,861 | $ | 0.80 |
| Add (deduct): | ||||
| Amortization | 530,660 | 1.95 | ||
| Share-based compensation | 113,312 | 0.42 | ||
| Special charges (recoveries) | 87,521 | 0.32 | ||
| Other (income) expense, net | 38,664 | 0.13 | ||
| GAAP-based provision for income taxes | 24,434 | 0.09 | ||
| Non-GAAP-based provision for income taxes | (141,625) | (0.52) | ||
| Non-GAAP-based net income, attributable to OpenText | $ | 869,827 | $ | 3.19 |
Reconciliation of Adjusted EBITDA
| Nine Months Ended March 31, 2024 | |||
|---|---|---|---|
| GAAP-based net income, attributable to OpenText | $ | 216,861 | |
| Add: | |||
| Provision for income taxes | 24,434 | ||
| Interest and other related expense, net | 413,719 | ||
| Amortization of acquired technology-based intangible assets | 195,702 | ||
| Amortization of acquired customer-based intangible assets | 334,958 | ||
| Depreciation | 99,615 | ||
| Share-based compensation | 113,312 | ||
| Special charges (recoveries) | 87,521 | ||
| Other (income) expense, net | 38,664 | ||
| Adjusted EBITDA | $ | 1,524,786 | |
| GAAP-based net income margin | 4.9 | % | |
| Adjusted EBITDA margin | 34.6 | % |
Reconciliation of Free cash flows
| Nine Months Ended March 31, 2024 | ||
|---|---|---|
| GAAP-based cash flows provided by operating activities | $ | 782,471 |
| Add: | ||
| Capital expenditures (1) | (119,316) | |
| Free cash flows | $ | 663,155 |
| (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 nine months ended March 31, 2025 and 2024:
| Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | |||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Currencies | % of Revenue | % of Expenses(1) | % of Revenue | % of Expenses(1) | ||||||||||||||
| EURO | 23 | % | 12 | % | 22 | % | 12 | % | ||||||||||
| GBP | 5 | % | 6 | % | 5 | % | 7 | % | ||||||||||
| CAD | 3 | % | 11 | % | 3 | % | 10 | % | ||||||||||
| USD | 58 | % | 48 | % | 59 | % | 50 | % | ||||||||||
| Other | 11 | % | 23 | % | 11 | % | 21 | % | ||||||||||
| Total | 100 | % | 100 | % | 100 | % | 100 | % | Nine Months Ended March 31, 2025 | Nine Months Ended March 31, 2024 | ||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | ||||||||||
| Currencies | % of Revenue | % of Expenses(1) | % of Revenue | % of Expenses(1) | ||||||||||||||
| EURO | 23 | % | 12 | % | 22 | % | 12 | % | ||||||||||
| GBP | 5 | % | 6 | % | 5 | % | 7 | % | ||||||||||
| CAD | 3 | % | 11 | % | 3 | % | 10 | % | ||||||||||
| USD | 58 | % | 48 | % | 59 | % | 51 | % | ||||||||||
| Other | 11 | % | 23 | % | 11 | % | 20 | % | ||||||||||
| Total | 100 | % | 100 | % | 100 | % | 100 | % |
(1) Expenses include all cost of revenues and operating expenses included within the Condensed Consolidated Statements of Income, except for amortization of intangible assets, share-based compensation and special charges (recoveries).
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