0001002638-21-000027.txt : 20210805 0001002638-21-000027.hdr.sgml : 20210805 20210805160843 ACCESSION NUMBER: 0001002638-21-000027 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 13 CONFORMED PERIOD OF REPORT: 20210805 ITEM INFORMATION: Results of Operations and Financial Condition ITEM INFORMATION: Other Events ITEM INFORMATION: Financial Statements and Exhibits FILED AS OF DATE: 20210805 DATE AS OF CHANGE: 20210805 FILER: COMPANY DATA: COMPANY CONFORMED NAME: OPEN TEXT CORP CENTRAL INDEX KEY: 0001002638 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-COMPUTER INTEGRATED SYSTEMS DESIGN [7373] IRS NUMBER: 980154400 STATE OF INCORPORATION: A6 FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 000-27544 FILM NUMBER: 211148209 BUSINESS ADDRESS: STREET 1: 275 FRANK TOMPA DRIVE STREET 2: WATERLOO CITY: ONTARIO CANADA STATE: A6 ZIP: N2L 0A1 BUSINESS PHONE: 519-888-7111 MAIL ADDRESS: STREET 1: 275 FRANK TOMPA DRIVE STREET 2: WATERLOO CITY: ONTARIO CANADA STATE: A6 ZIP: N2L 0A1 8-K 1 otex-20210805.htm 8-K otex-20210805
0001002638false00010026382021-08-052021-08-05


 
 
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): August 5, 2021
______________________
Open Text Corporation
(Exact name of Registrant as specified in its charter)
______________________
Canada0-2754498-0154400
(State or Other Jurisdiction
of Incorporation)
(Commission
File Number)
(IRS Employer
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 valueOTEXNASDAQ 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 August 5, 2021, Open Text Corporation (the “Company”) issued a press release announcing its financial results for the quarter and year ended June 30, 2021. A copy of the press release is furnished as Exhibit 99.1 to this Form 8-K.

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 $0.2209 per Common Share, payable on September 24, 2021, to the shareholders of the Company of record on September 3, 2021.
OpenText believes strongly in returning value to its shareholders and intends to maintain its dividend program. Any future declarations of dividends and the establishment of future record and payment dates are all subject to the final determination and discretion of the Board of Directors.
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
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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
August 5, 2021 By:/s/ MADHU RANGANATHAN
   Madhu Ranganathan
Executive Vice President and Chief Financial Officer

 



Exhibit Index
 
Exhibit No. 
Description
 
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EX-99.1 2 exhibit991q4-21pressrelease.htm EX-99.1 Document

Exhibit 99.1
OpenText Reports Fourth Quarter and Fiscal Year 2021 Financial Results
Record Annual Total Revenues with Cloud Revenue Growth of 21.6%
Repurchases 2.5 Million Common Shares and Increases Dividend by 10%

Fiscal 2021 Fourth Quarter Highlights Y/Y
Total Revenues
(in millions)
Annual Recurring Revenues
(in millions)
Cloud Revenues
(in millions)
ReportedConstant CurrencyReportedConstant CurrencyReportedConstant Currency
$893.5$859.4$694.4$671.8$360.2$352.7
+8.1%+4.0%+5.6%+2.2%+8.3%+6.0%
Annual Recurring Revenues represent 78% of Total Revenues

Operating cash flows were $296.2 million and free cash flows were $268.8 million
GAAP-based net income of $181.3 million, up 586.9% Y/Y, margin of 20.3%, up 1,710 basis points Y/Y
Adjusted EBITDA of $314.8 million, down 0.8%, margin of 35.2%, down 320 basis points Y/Y
GAAP-based diluted EPS of $0.66, up 560.0% Y/Y
Non-GAAP diluted EPS of $0.80, constant Y/Y
During the quarter, the company repurchased and cancelled 2.5 million common shares for $119.1 million under our Share Repurchase Plan
Quarterly cash dividend increased by 10%

Fiscal 2021 Annual Highlights Y/Y
Total Revenues
(in millions)
Annual Recurring Revenues
(in millions)
Cloud Revenues
(in millions)
ReportedConstant CurrencyReportedConstant CurrencyReportedConstant Currency
$3,386.1$3,304.8$2,741.5$2,686.6$1,407.4$1,389.7
+8.9%+6.3%+12.7%+10.4%+21.6%+20.0%
Annual Recurring Revenues represent 81% of Total Revenues

Operating cash flows were $876.1 million and free cash flows were $812.4 million, which include the IRS settlement payment of $299.6 million
GAAP-based net income of $310.7 million, up 32.6% Y/Y, margin of 9.2%, up 170 basis points Y/Y
Adjusted EBITDA of $1,315.0 million, up 14.5%, margin of 38.8%, up 190 basis points Y/Y
GAAP-based diluted EPS of $1.14, up 32.6% Y/Y
Non-GAAP diluted EPS of $3.39, up 17.3% Y/Y

Waterloo, ON, August 5, 2021 - Open Text Corporation (NASDAQ: OTEX), (TSX: OTEX), today announced its financial results for the fourth quarter and year ended June 30, 2021.
“Our robust fourth quarter results contributed to a record fiscal year, as we successfully helped our customers navigate the challenges of an evolving market and workforce,” said Mark J. Barrenechea, OpenText CEO & CTO. “In Fiscal 2021,
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OpenText delivered a record $3.39 billion in total revenues, up 8.9% year-over-year, supported by record Cloud revenues of $1.4 billion, up 21.6% from a year ago. Annual Recurring Revenues (ARR) reached a record $2.7 billion, up 12.7% year-over-year, representing 81% of total revenues.”
“Information Management’s time has come, and OpenText is perfectly positioned to lead the market as we digitally empower many of the most innovative global organizations, in nearly every vertical and line of business. OpenText Cloud Editions enables customers to accelerate growth and stay ahead of the competition by maximizing the value of their information through our cloud-based Information Management platform.”
“I am very pleased with our fourth quarter and Fiscal 2021 results,” said Madhu Ranganathan, OpenText EVP, CFO. “In Fiscal 2021, we excelled in our operational performance, generating a record $1.3 billion of adjusted EBITDA, up 14.5% year-over-year, and free cash flows of $812.4 million which includes the IRS settlement payment of $299.6 million. With approximately $1.6 billion of cash as of June 30, 2021, and a net leverage ratio of 1.5x, our balance sheet and liquidity position remain strong. We are well positioned to drive our organic growth initiatives and to deploy capital that meet OpenText’s growth and returns based metrics.”
Financial Highlights for Q4 and Fiscal 2021 with Year Over Year Comparisons
Summary of Quarterly Results
(In millions, except per share data)Q4 FY'21Q4 FY'20$ Change % Change Q4 FY'21 in CC*% Change in CC*
Revenues:
Cloud services and subscriptions$360.2 $332.6 $27.5 8.3 %$352.7 6.0 %
Customer support334.3 324.9 9.3 2.9 %319.1 (1.8)%
Total annual recurring revenues**$694.4 $657.5 $36.9 5.6 %$671.8 2.2 %
License132.5 105.8 26.7 25.3 %124.6 17.8 %
Professional service and other66.6 63.3 3.3 5.2 %63.0 (0.4)%
Total revenues
$893.5 $826.6 $66.9 8.1 %$859.4 4.0 %
GAAP-based operating income$171.7 $91.2 $80.5 88.2 %N/AN/A
Non-GAAP-based operating income (1)
$293.9 $293.8 $0.1 — %$285.7 (2.7)%
GAAP-based net income attributable to OpenText$181.3 $26.4 $154.9 586.9 %N/AN/A
GAAP-based EPS, diluted$0.66 $0.10 $0.56 560.0 %N/AN/A
Non-GAAP-based EPS, diluted (1)(2)
$0.80 $0.80 $— — %$0.78 (2.5)%
Adjusted EBITDA (1)
$314.8 $317.4 ($2.6)(0.8)%$306.3 (3.5)%
Operating cash flows$296.2 $280.3 $15.9 5.7 %N/AN/A
Free cash flows (1)
$268.8 $262.5 $6.2 2.4 %N/AN/A

2


Summary of Annual Results
(In millions, except per share data)FY'21FY'20$ Change % Change FY'21 in CC*% Change in CC*
Revenues:
Cloud services and subscriptions$1,407.4 $1,157.7 $249.8 21.6 %$1,389.7 20.0 %
Customer support1,334.1 1,275.6 58.5 4.6 %1,297.0 1.7 %
Total annual recurring revenues**$2,741.5 $2,433.3 $308.2 12.7 %$2,686.6 10.4 %
License384.7 402.9 (18.1)(4.5)%368.1 (8.6)%
Professional service and other259.9 273.6 (13.7)(5.0)%250.0 (8.6)%
Total revenues
$3,386.1 $3,109.7 $276.4 8.9 %$3,304.8 6.3 %
GAAP-based operating income$740.9 $503.5 $237.4 47.1 %N/AN/A
Non-GAAP-based operating income (1)
$1,230.0 $1,058.8 $171.2 16.2 %$1,193.9 12.8 %
GAAP-based net income attributable to OpenText$310.7 $234.2 $76.4 32.6 %N/AN/A
GAAP-based EPS, diluted$1.14 $0.86 $0.28 32.6 %N/AN/A
Non-GAAP-based EPS, diluted (1)(2)
$3.39 $2.89 $0.50 17.3 %$3.28 13.5 %
Adjusted EBITDA (1)
$1,315.0 $1,148.1 $167.0 14.5 %$1,278.2 11.3 %
Operating cash flows$876.1 $954.5 ($78.4)(8.2)%N/AN/A
Free cash flows (1)
$812.4 $881.8 ($69.4)(7.9)%N/AN/A

(1) Please see note 2 "Use of Non-GAAP Financial Measures" below.
(2) Please also see note 14 to the Company's Fiscal 2018 Consolidated Financial Statements on Form 10-K. Reflective of the amount of net tax benefit arising from the internal reorganization assumed to be allocable to the current period based on the forecasted utilization period.
Note: Individual line items in tables may be adjusted by non-material amounts to enable totals to align to published financial statements.

*CC: Constant currency for this purpose is defined as the current period reported revenues/expenses/earnings represented at the prior comparative period's foreign exchange rate.
**Annual recurring revenue is defined as the sum of Cloud services and subscriptions revenue and Customer support revenue.

Dividend and Share Repurchases
As part of our quarterly, non-cumulative cash dividend program, the Board declared on August 4, 2021, a cash dividend increase of 10% to $0.2209 per common share. The record date for this dividend is September 3, 2021 and the payment date is September 24, 2021. OpenText believes strongly in returning value to its shareholders and intends to maintain its dividend program. Any future declarations of dividends and the establishment of future record and payment dates are all subject to the final determination and discretion of the Board of Directors.
“Since Fiscal 2013, OpenText has delivered approximately $1.3 billion to shareholders through our dividend and share repurchase programs. In Fiscal 2021 we repurchased and cancelled 2.5 million common shares through our share repurchase plan, and in the next fiscal year, we expect to increase shareholder returns by allocating approximately 33% of free cash flows towards both our dividend and share repurchase programs,” said Mark J. Barrenechea.
Quarterly Business Highlights
Key customer wins in the quarter included VMware, Wells Fargo, EDF, Cerner, Raytheon, Revlon, Froneri, DHL, Transport for London, Big Cart Holdings, California Department of State Hospitals, Enercon, Multibank Panama, Netherlands Police, Rapid Radiology and Services Australia
Cloud Editions 21.3 strengthens Information Management in the cloud at scale
OpenText partners with Google Cloud to extend availability of solution extensions for SAP® applications to the Asia Pacific Japan region
Industry-leading solutions from OpenText Complement RISE with SAP
OpenText launches Managed Detection and Response (MDR) Service
OpenText named a leader in Content Platforms by Forrester
OpenText recognized as an overall leader for fourth consecutive year in the 2021 Customer Communications Management Aspire Leaderboard
OpenText World Asia Pacific showcases OpenText Cloud Editions
Published our second Corporate Citizenship Report confirming our commitment to ESG
3




Summary of Quarterly Results
 Q4 FY'21Q3 FY'21Q4 FY'20% Change 
(Q4 FY'21 vs Q3 FY'21)
% Change
(Q4 FY'21 vs Q4 FY'20)
Revenue (millions)$893.5 $832.9 $826.6 7.3 %8.1 %
GAAP-based gross margin69.6 %68.6 %68.5 %100 bps110 bps
Non-GAAP-based gross margin (1)
75.8 %75.2 %75.8 %60 bps— bps
GAAP-based EPS, diluted$0.66 $0.33 $0.10 100.0 %560.0 %
Non-GAAP-based EPS, diluted (1)(2)
$0.80 $0.75 $0.80 6.7 %— %


Summary of Annual Results
 FY'21FY'20% Change
Revenue (millions)$3,386.1 $3,109.7 8.9 %
GAAP-based gross margin69.4 %67.7 %170 bps
Non-GAAP-based gross margin (1)
76.1 %74.5 %160 bps
GAAP-based EPS, diluted$1.14 $0.86 32.6 %
Non-GAAP-based EPS, diluted (1)(2)
$3.39 $2.89 17.3 %

(1) Please see note 2 "Use of Non-GAAP Financial Measures" below.
(2) Please also see note 14 to the Company's Fiscal 2018 Consolidated Financial Statements on Form 10-K. Reflective of the amount of net tax benefit arising from the internal reorganization assumed to be allocable to the current period based on the forecasted utilization period.
Conference Call Information

The public is invited to listen to the earnings conference call today at 5:00 p.m. ET (2:00 p.m. PT) by dialing 1-800-319-4610 (toll-free) or +1-604-638-5340 (international). Please dial-in 10 minutes ahead of time to ensure proper connection. Alternatively, a live webcast of the earnings conference call will be available on the Investor Relations section of the Company's website at http://investors.opentext.com/investor-events-and-presentations.

A replay of the call will be available beginning August 5, 2021 at 7:00 p.m. ET through 11:59 p.m. on August 19, 2021 and can be accessed by dialing 1-855-669-9658 (toll-free) or +1-604-674-8052 (international) and using passcode 7298 followed by the number sign.

Please see below note (2) for a reconciliation of U.S. GAAP-based financial measures used in this press release, to Non-GAAP-based financial measures. Additionally, “off-cloud” is a term we use to describe license transactions.

About OpenText

OpenText, The Information Company™, enables organizations to gain insight through market leading information management solutions, powered by OpenText Cloud Editions. For more information about OpenText (NASDAQ: OTEX, TSX: OTEX) visit opentext.com.
Cautionary Statement Regarding Forward-Looking Statements

Certain statements in this press release, including statements about the focus of Open Text Corporation (“OpenText” or “the Company”) in our fiscal year ending June 30, 2022 (Fiscal 2022) on growth, future cloud growth and market share gains, future organic growth initiatives and deployment of capital, declaration of quarterly dividends, potential share repurchases pursuant to its Repurchase Plan, future tax rates, new platform and product offerings, scaling OpenText to new levels in Fiscal 2022 and beyond, and other matters, may contain words such as "anticipates", "expects", "intends", "plans", "believes", "seeks", "estimates", "may", "could", "would", "might", "will" and variations of these words or similar expressions are considered forward-looking statements or information under applicable securities laws. In addition, any information or statements that refer to expectations, beliefs, plans, projections, objectives, performance or other characterizations of future events or circumstances, including any underlying assumptions, are forward-looking, and based on our current expectations, forecasts and projections about the operating environment, economies and markets in which we operate. Forward-looking statements reflect our current
4


estimates, beliefs and assumptions, which are based on management's perception of historic trends, current conditions and expected future developments, as well as other factors it believes are appropriate in the circumstances, such as certain assumptions about the economy, as well as market, financial and operational assumptions. Management's estimates, beliefs and assumptions are inherently subject to significant business, economic, competitive and other uncertainties and contingencies regarding future events and, as such, are subject to change. We can give no assurance that such estimates, beliefs and assumptions will prove to be correct. Such forward-looking statements involve known and unknown risks, uncertainties and other factors and assumptions that may cause the actual results, performance or achievements to differ materially which include, but are not limited to, actual and potential risks and uncertainties relating to the ultimate spread of COVID-19, the severity of the disease and the duration of the COVID-19 pandemic. For additional information with respect to risks and other factors which could occur, see the Company's Annual Report on Form 10-K, Quarterly Reports on Form 10-Q and other securities filings with the Securities and Exchange Commission (SEC) and other securities regulators. Readers are cautioned not to place undue reliance upon any such forward-looking statements, which speak only as of the date made. Unless otherwise required by applicable securities laws, the Company disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.



For more information, please contact:

Harry E. Blount
Senior Vice President, Global Head of Investor Relations
Open Text Corporation
415-963-0825
investors@opentext.com

Copyright ©2021 Open Text. OpenText is a trademark or registered trademark of Open Text. The list of trademarks is not exhaustive of other trademarks. Registered trademarks, product names, company names, brands and service names mentioned herein are property of Open Text. All rights reserved. For more information, visit: http://www.opentext.com/who-we-are/copyright-information.
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OPEN TEXT CORPORATION
CONSOLIDATED BALANCE SHEETS
(In thousands of U.S. dollars, except share data)
 June 30, 2021June 30, 2020
ASSETS 
Cash and cash equivalents$1,607,306 $1,692,850 
Accounts receivable trade, net of allowance for credit losses of $22,151 as of June 30, 2021 and $20,906 as of June 30, 2020
438,547 466,357 
Contract assets25,344 29,570 
Income taxes recoverable32,312 61,186 
Prepaid expenses and other current assets98,551 136,436 
Total current assets2,202,060 2,386,399 
Property and equipment233,595 244,555 
Operating lease right of use assets234,532 207,869 
Long-term contract assets19,222 15,427 
Goodwill4,691,673 4,672,356 
Acquired intangible assets1,187,260 1,612,564 
Deferred tax assets796,738 911,565 
Other assets208,894 154,467 
Long-term income taxes recoverable35,362 29,620 
Total assets$9,609,336 $10,234,822 
LIABILITIES AND SHAREHOLDERS' EQUITY  
Current liabilities: 
Accounts payable and accrued liabilities$423,592 $373,314 
Current portion of long-term debt10,000 610,000 
Operating lease liabilities58,315 64,071 
Deferred revenues852,629 812,218 
Income taxes payable17,368 44,630 
Total current liabilities1,361,904 1,904,233 
Long-term liabilities:  
Accrued liabilities28,830 34,955 
Pension liability74,511 73,129 
Long-term debt3,578,859 3,584,311 
Long-term operating lease liabilities224,453 217,165 
Long-term deferred revenues98,989 94,382 
Long-term income taxes payable34,113 171,200 
Deferred tax liabilities108,224 148,738 
Total long-term liabilities4,147,979 4,323,880 
Shareholders' equity:  
Share capital and additional paid-in capital  
271,540,755 and 271,863,354 Common Shares issued and outstanding at June 30, 2021 and June 30, 2020, respectively; authorized Common Shares: unlimited
1,947,764 1,851,777 
Accumulated other comprehensive income66,238 17,825 
Retained earnings2,153,326 2,159,396 
Treasury stock, at cost (1,567,664 and 622,297 shares at June 30, 2021 and June 30, 2020, respectively)
(69,386)(23,608)
Total OpenText shareholders' equity4,097,942 4,005,390 
Non-controlling interests1,511 1,319 
Total shareholders' equity4,099,453 4,006,709 
Total liabilities and shareholders' equity$9,609,336 $10,234,822 
 

6



OPEN TEXT CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
(In thousands of U.S. dollars, except share and per share data)
(unaudited)

 Three Months Ended June 30,
 20212020
Revenues:
Cloud services and subscriptions$360,160 $332,618 
Customer support334,256 324,915 
License132,541 105,803 
Professional service and other66,570 63,276 
Total revenues893,527 826,612 
Cost of revenues:
Cloud services and subscriptions127,583 116,569 
Customer support32,938 32,568 
License4,315 3,404 
Professional service and other53,662 48,435 
Amortization of acquired technology-based intangible assets53,215 59,719 
Total cost of revenues271,713 260,695 
Gross profit621,814 565,917 
Operating expenses:
Research and development117,235 100,766 
Sales and marketing183,237 152,882 
General and administrative73,019 62,574 
Depreciation21,021 23,649 
Amortization of acquired customer-based intangible assets52,469 58,998 
Special charges (recoveries)3,152 75,849 
Total operating expenses450,133 474,718 
Income from operations171,681 91,199 
Other income (expense), net45,017 7,790 
Interest and other related expense, net(37,550)(40,529)
Income before income taxes179,148 58,460 
Provision for (recovery of) income taxes(2,215)32,037 
Net income for the period$181,363 $26,423 
Net (income) loss attributable to non-controlling interests(80)(31)
Net income attributable to OpenText$181,283 $26,392 
Earnings per share—basic attributable to OpenText$0.66 $0.10 
Earnings per share—diluted attributable to OpenText$0.66 $0.10 
Weighted average number of Common Shares outstanding—basic (in '000's)
272,892 271,717 
Weighted average number of Common Shares outstanding—diluted (in '000's)
273,981 272,367 










7



OPEN TEXT CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
(In thousands of U.S. dollars, except share and per share data)

 Year Ended June 30,
 202120202019
Revenues:
Cloud services and subscriptions$1,407,445 $1,157,686 $907,812 
Customer support1,334,062 1,275,586 1,247,915 
License384,711 402,851 428,092 
Professional service and other259,897 273,613 284,936 
Total revenues3,386,115 3,109,736 2,868,755 
Cost of revenues:
Cloud services and subscriptions481,818 449,940 383,993 
Customer support122,753 123,894 124,343 
License13,916 11,321 14,347 
Professional service and other197,183 212,903 224,635 
Amortization of acquired technology-based intangible assets218,796 205,717 183,385 
Total cost of revenues1,034,466 1,003,775 930,703 
Gross profit2,351,649 2,105,961 1,938,052 
Operating expenses:
Research and development421,447 370,411 321,836 
Sales and marketing622,221 585,044 518,035 
General and administrative263,521 237,532 207,909 
Depreciation85,265 89,458 97,716 
Amortization of acquired customer-based intangible assets216,544 219,559 189,827 
Special charges (recoveries)1,748 100,428 35,719 
Total operating expenses1,610,746 1,602,432 1,371,042 
Income from operations740,903 503,529 567,010 
Other income (expense), net61,434 (11,946)10,156 
Interest and other related expense, net(151,567)(146,378)(136,592)
Income before income taxes650,770 345,205 440,574 
Provision for (recovery of) income taxes339,906 110,837 154,937 
Net income$310,864 $234,368 $285,637 
Net (income) loss attributable to non-controlling interests(192)(143)(136)
Net income attributable to OpenText$310,672 $234,225 $285,501 
Earnings per share—basic attributable to OpenText$1.14 $0.86 $1.06 
Earnings per share—diluted attributable to OpenText$1.14 $0.86 $1.06 
Weighted average number of Common Shares outstanding—basic
(in '000's)
272,533 270,847 268,784 
Weighted average number of Common Shares outstanding—diluted
(in '000's)
273,479 271,817 269,908 
8



OPEN TEXT CORPORATION
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(In thousands of U.S. dollars)

 Year Ended June 30,
 202120202019
Net income$310,864 $234,368 $285,637 
Other comprehensive income (loss)—net of tax:
Net foreign currency translation adjustments42,440 (7,784)(3,882)
Unrealized gain (loss) on cash flow hedges:
Unrealized gain (loss) - net of tax expense (recovery) effect of $1,532, ($599) and $6 for the year ended June 30, 2021, 2020 and 2019, respectively
4,246 (1,662)16 
(Gain) loss reclassified into net income - net of tax (expense) recovery effect of ($1,182), $355 and $539 for the year ended June 30, 2021, 2020 and 2019, respectively
(3,280)985 1,494 
Actuarial gain (loss) relating to defined benefit pension plans:
Actuarial gain (loss) - net of tax expense (recovery) effect of $990, $1,219 and ($2,004) for the year ended June 30, 2021, 2020 and 2019, respectively
3,987 1,245 (7,421)
Amortization of actuarial (gain) loss into net income - net of tax (expense) recovery effect of $379, $520 and $292 for the year ended June 30, 2021, 2020 and 2019, respectively
1,020 917 272 
Total other comprehensive income (loss) net48,413 (6,299)(9,521)
Total comprehensive income359,277 228,069 276,116 
Comprehensive (income) loss attributable to non-controlling interests(192)(143)(136)
Total comprehensive income attributable to OpenText$359,085 $227,926 $275,980 

9



OPEN TEXT CORPORATION
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
(In thousands of U.S. dollars and shares)

Common Shares and Additional Paid in CapitalTreasury StockRetained
Earnings
Accumulated  Other
Comprehensive
Income
Non-Controlling InterestsTotal
SharesAmountSharesAmount
Balance as of June 30, 2018267,651 $1,707,073 (691)$(18,732)$1,994,235 $33,645 $1,037 $3,717,258 
Issuance of Common Shares
Under employee stock option plans1,472 35,626 — — — — — 35,626 
Under employee stock purchase plans711 21,835 — — — — — 21,835 
Share-based compensation— 26,770 — — — — — 26,770 
Purchase of treasury stock— — (726)(26,499)— — — (26,499)
Issuance of treasury stock— (16,465)614 16,465 — — — — 
Dividends declared
($0.6300 per Common Share)
— — — — (168,859)— — (168,859)
Cumulative effect of ASU 2016-16— — — — (26,780)— — (26,780)
Cumulative effect of Topic 606— — — — 29,786 — — 29,786 
Other comprehensive income (loss) - net— — — — — (9,521)— (9,521)
Non-controlling interest— (625)— — — — 42 (583)
Net income— — — — 285,501 — 136 285,637 
Balance as of June 30, 2019269,834 $1,774,214 (803)$(28,766)$2,113,883 $24,124 $1,215 $3,884,670 
Issuance of Common Shares
Under employee stock option plans1,530 41,282 — — — — — 41,282 
Under employee stock purchase plans499 17,757 — — — — — 17,757 
Share-based compensation— 29,532 — — — — — 29,532 
Purchase of treasury stock— — (300)(12,424)— — — (12,424)
Issuance of treasury stock— (11,008)481 17,582 — — — 6,574 
Dividends declared
($0.6984 per Common Share)
— — — — (188,712)— — (188,712)
Other comprehensive income (loss) - net— — — — — (6,299)— (6,299)
Non-controlling interest— — — — — — (39)(39)
Net income— — — — 234,225 — 143 234,368 
Balance as of June 30, 2020271,863 $1,851,777 (622)$(23,608)$2,159,396 $17,825 $1,319 $4,006,709 
Adoption of ASU 2016-13 - cumulative effect, net— — — — (2,450)— — (2,450)
Issuance of Common Shares
Under employee stock option plans1,605 49,565 — — — — — 49,565 
Under employee stock purchase plans573 22,307 193 6,690 — — — 28,997 
Share-based compensation— 51,969 — — — — — 51,969 
Purchase of treasury stock— — (1,455)(64,847)— — — (64,847)
Issuance of treasury stock— (12,379)316 12,379 — — — — 
Repurchase of Common Shares(2,500)(15,475)— — (103,630)— — (119,105)
Dividends declared
($0.7770 per Common Share)
— — — — (210,662)— — (210,662)
Other comprehensive income (loss) - net— — — — — 48,413 — 48,413 
Net income— — — — 310,672 — 192 310,864 
Balance as of June 30, 2021271,541 $1,947,764 (1,568)$(69,386)$2,153,326 $66,238 $1,511 $4,099,453 


10



OPEN TEXT CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands of U.S. dollars)
(unaudited)
Three Months Ended June 30,
 20212020
Cash flows from operating activities:
Net income for the period$181,363 $26,423 
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization of intangible assets126,705 142,366 
Share-based compensation expense13,350 8,002 
Pension expense1,946 1,479 
Amortization of debt issuance costs1,153 1,130 
Accelerated amortization of right of use assets— 36,864 
Loss on sale and write down of property and equipment792 9,714 
Deferred taxes(7,805)14,677 
Share in net (income) loss of equity investees(42,877)(2,225)
Changes in operating assets and liabilities:
Accounts receivable(26,118)(1,689)
Contract assets(10,298)(13,636)
Prepaid expenses and other current assets40,261 458 
Income taxes(23,169)(478)
Accounts payable and accrued liabilities53,415 72,876 
Deferred revenue(23,305)(12,974)
Other assets11,149 (6,309)
Operating lease assets and liabilities, net(373)3,572 
Net cash provided by operating activities296,189 280,250 
Cash flows from investing activities:
Additions of property and equipment(27,408)(17,704)
Purchase of Dynamic Solutions Group Inc.(600)— 
Other investing activities(2,550)(2,783)
Net cash used in investing activities(30,558)(20,487)
Cash flows from financing activities:
Proceeds from issuance of Common Shares from exercise of stock options and ESPP34,287 13,493 
Repayment of long-term debt and Revolver(2,500)(2,500)
Debt issuance costs— (3,636)
Repurchase of Common Shares(119,105)— 
Payments of dividends to shareholders(54,374)(47,335)
Net cash provided by (used in) financing activities(141,692)(39,978)
Foreign exchange gain (loss) on cash held in foreign currencies7,181 19,882 
Increase (decrease) in cash, cash equivalents and restricted cash during the period131,120 239,667 
Cash, cash equivalents and restricted cash at beginning of the period1,478,680 1,457,596 
Cash, cash equivalents and restricted cash at end of the period$1,609,800 $1,697,263 

Reconciliation of cash, cash equivalents and restricted cash:June 30, 2021June 30, 2020
Cash and cash equivalents$1,607,306 $1,692,850 
Restricted cash (1)
2,494 4,413 
Total cash, cash equivalents and restricted cash$1,609,800 $1,697,263 
(1) Restricted cash is classified under the Prepaid expenses and other current assets and Other assets line items on the Consolidated Balance Sheets.





11




OPEN TEXT CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands of U.S. dollars)
Year Ended June 30,
 202120202019
Cash flows from operating activities:
Net income$310,864 $234,368 $285,637 
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization of intangible assets520,605 514,734 470,928 
Share-based compensation expense51,969 29,532 26,770 
Pension expense6,616 5,802 4,624 
Amortization of debt issuance costs4,548 4,633 4,330 
Accelerated amortization of right of use assets— 36,864 — 
Loss on extinguishment of debt— 17,854 — 
Loss on sale and write down of property and equipment2,771 9,714 9,438 
Deferred taxes73,039 51,388 47,425 
Share in net (income) loss of equity investees(62,897)(8,700)(13,668)
Changes in operating assets and liabilities:
Accounts receivable60,954 84,499 75,508 
Contract assets(39,333)(40,301)(37,623)
Prepaid expenses and other current assets37,733 (6,897)(819)
Income taxes(140,763)(35,086)27,291 
Accounts payable and accrued liabilities26,088 30,613 (21,732)
Deferred revenue39,295 25,306 (1,827)
Other assets11,914 1,127 (4)
Operating lease assets and liabilities, net(27,283)(914)— 
Net cash provided by operating activities876,120 954,536 876,278 
Cash flows from investing activities:
Additions of property and equipment(63,675)(72,709)(63,837)
Purchase of XMedius444 (73,335)— 
Purchase of Carbonite, Inc., net of cash and restricted cash acquired— (1,305,097)— 
Purchase of Dynamic Solutions Group Inc.(971)(4,149)— 
Purchase of Catalyst Repository Systems Inc.— — (70,800)
Purchase of Liaison Technologies, Inc.— — (310,644)
Purchase of Guidance Software, Inc., net of cash acquired— — (2,279)
Other investing activities(4,568)(14,127)(16,966)
Net cash used in investing activities(68,770)(1,469,417)(464,526)
Cash flows from financing activities:
Proceeds from issuance of Common Shares from exercise of stock options and ESPP80,067 66,600 57,889 
Proceeds from long-term debt and Revolver— 3,150,000 — 
Repayment of long-term debt and Revolver(610,000)(1,713,631)(10,000)
Debt extinguishment costs— (11,248)— 
Debt issuance costs— (21,806)(322)
Repurchase of Common Shares(119,105)— — 
Purchase of treasury stock(64,847)(12,424)(26,499)
Purchase of non-controlling interest— — (583)
Payments of dividends to shareholders(210,662)(188,712)(168,859)
Net cash provided by (used in) financing activities(924,547)1,268,779 (148,374)
Foreign exchange gain (loss) on cash held in foreign currencies29,734 (178)(3,826)
Increase (decrease) in cash, cash equivalents and restricted cash during the period(87,463)753,720 259,552 
Cash, cash equivalents and restricted cash at beginning of the period1,697,263 943,543 683,991 
Cash, cash equivalents and restricted cash at end of the period$1,609,800 $1,697,263 $943,543 

12




OPEN TEXT CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands of U.S. dollars)
Reconciliation of cash, cash equivalents and restricted cash:June 30, 2021June 30, 2020June 30, 2019
Cash and cash equivalents$1,607,306 $1,692,850 $941,009 
Restricted cash (1)
2,494 4,413 2,534 
Total cash, cash equivalents and restricted cash$1,609,800 $1,697,263 $943,543 
(1) Restricted cash is classified under the Prepaid expenses and other current assets and Other assets line items on the Consolidated Balance Sheets.
13



Notes
(1)    All dollar amounts in this press release are in U.S. Dollars unless otherwise indicated.
(2)    Use of Non-GAAP Financial Measures: In addition to reporting financial results in accordance with U.S. GAAP, the Company provides certain financial measures that are not in accordance with U.S. GAAP (Non-GAAP). These Non-GAAP financial measures have certain limitations in that they do not have a standardized meaning and thus the Company's definition may be different from similar Non-GAAP financial measures used by other companies and/or analysts and may differ from period to period. Thus it may be more difficult to compare the Company's financial performance to that of other companies. However, the Company's management compensates for these limitations by providing the relevant disclosure of the items excluded in the calculation of these Non-GAAP financial measures both in its reconciliation to the U.S. GAAP financial measures and its consolidated financial statements, all of which should be considered when evaluating the Company's results.
The Company uses these Non-GAAP financial measures to supplement the information provided in its consolidated financial statements, which are presented in accordance with U.S. GAAP. The presentation of Non-GAAP financial measures 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 or earnings per share, attributable to OpenText, on a diluted basis, excluding the effects of the amortization of acquired intangible assets, other income (expense), share-based compensation, and special charges (recoveries), all net of tax and any tax benefits/expense items unrelated to current period income, as further described in the tables below. Non-GAAP-based gross profit is the arithmetical sum of GAAP-based gross profit and the amortization of acquired technology-based intangible assets and share-based compensation within cost of sales. Non-GAAP-based gross margin is calculated as Non-GAAP-based gross profit expressed as a percentage of total revenue. Non-GAAP-based income from operations is calculated as 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, attributable to OpenText, excluding interest income (expense), provision for income taxes, depreciation and amortization of acquired intangible assets, other income (expense), share-based compensation and special charges (recoveries). Adjusted EBITDA margin is calculated as adjusted EBITDA expressed as a percentage of total revenue.
The Company's management believes that the presentation of the above defined Non-GAAP financial measures provides useful information to investors because they portray the financial results of the Company before the impact of certain non-operational charges. The use of the term “non-operational charge” is defined for this purpose as an expense that does not impact the ongoing operating decisions taken by the Company's management. These items are excluded based upon the way the Company's management evaluates the performance of the Company's business for use in the Company's internal reports and are not excluded in the sense that they may be used under U.S. GAAP.
The Company does not acquire businesses on a predictable cycle, and therefore believes that the presentation of Non-GAAP measures, which in certain cases adjust for the impact of amortization of intangible assets and the related tax effects that are primarily related to acquisitions, will provide readers of financial statements with a more consistent basis for comparison across accounting periods and be more useful in helping readers understand the Company’s operating results and underlying operational trends. Additionally, the Company has engaged in various restructuring activities over the past several years, primarily due to acquisitions and most recently in response to the COVID-19 pandemic, that have resulted in costs associated with reductions in headcount, consolidation of leased facilities and related costs, all which are recorded under the Company’s “Special charges (recoveries)” caption on the Consolidated Statements of Income. Each restructuring activity is a discrete event based on a unique set of business objectives or circumstances, and each differs in terms of its operational implementation, business impact and scope, and the size of each restructuring plan can vary significantly from period to period. Therefore, the Company believes that the exclusion of these special charges (recoveries) will also better aid readers of financial statements in the understanding and comparability of the Company's operating results and underlying operational trends.
In summary, the Company believes the provision of supplemental Non-GAAP measures allow investors to evaluate the operational and financial performance of the Company's core business using the same evaluation measures that management uses, and is therefore a useful indication of OpenText's performance or expected performance of future operations and facilitates period-to-period comparison of operating performance (although prior performance is not necessarily indicative of future performance). As a result, the Company considers it appropriate and reasonable to provide, in addition to U.S. GAAP measures, supplementary Non-GAAP financial measures that exclude certain items from the presentation of its financial results.
The following charts provide unaudited reconciliations of U.S. GAAP-based financial measures to Non-GAAP-based financial measures for the following periods presented.
14



Reconciliation of selected GAAP-based measures to Non-GAAP-based measures
for the three months ended June 30, 2021
(In thousands, except for per share data)
 Three Months Ended June 30, 2021
 
GAAP-based Measures
GAAP-based Measures
% of Total Revenue
Adjustments
Note
Non-GAAP-based Measures
Non-GAAP-based Measures
% of Total Revenue
Cost of revenues   
Cloud services and subscriptions$127,583 $(935)(1)$126,648 
Customer support32,938 (505)(1)32,433 
Professional service and other53,662 (698)(1)52,964 
Amortization of acquired technology-based intangible assets53,215 (53,215)(2)— 
GAAP-based gross profit and gross margin (%) /
Non-GAAP-based gross profit and gross margin (%)
621,814 69.6%55,353 (3)677,167 75.8%
Operating expenses
Research and development117,235 (2,664)(1)114,571 
Sales and marketing183,237 (4,718)(1)178,519 
General and administrative73,019 (3,830)(1)69,189 
Amortization of acquired customer-based intangible assets52,469 (52,469)(2)— 
Special charges (recoveries)3,152 (3,152)(4)— 
GAAP-based income from operations / Non-GAAP-based income from operations171,681 122,186 (5)293,867 
Other income (expense), net45,017 (45,017)(6)— 
Provision for (recovery of) income taxes(2,215)38,099 (7)35,884 
GAAP-based net income / Non-GAAP-based net income, attributable to OpenText181,283 39,070 (8)220,353 
GAAP-based earnings per share / Non-GAAP-based earnings per share-diluted, attributable to OpenText$0.66 $0.14 (8)$0.80 

(1)    Adjustment relates to the exclusion of share-based compensation expense from our Non-GAAP-based operating expenses as this expense is excluded from our internal analysis of operating results.
(2)    Adjustment relates to the exclusion of amortization expense from our Non-GAAP-based operating expenses as the timing and frequency of amortization expense is dependent on our acquisitions and is hence excluded from our internal analysis of operating results.
(3)    GAAP-based and Non-GAAP-based gross profit stated in dollars and gross margin stated as a percentage of total revenue.
(4)    Adjustment relates to the exclusion of special charges (recoveries) from our Non-GAAP-based operating expenses as special charges (recoveries) are generally incurred in the periods relevant to an acquisition and include certain charges or recoveries that are not indicative or related to continuing operations, and are therefore excluded from our internal analysis of operating results.
(5)    GAAP-based and Non-GAAP-based income from operations stated in dollars.
(6)    Adjustment relates to the exclusion of other income (expense) from our Non-GAAP-based operating expenses as other income (expense) generally relates to the transactional impact of foreign exchange and is generally not indicative or related to continuing operations and is therefore excluded from our internal analysis of operating results. Other income (expense) also includes our share of income (losses) from our holdings in investments as a limited partner. We do not actively trade equity securities in these privately held companies nor do we plan our ongoing operations based around any anticipated fundings or distributions from these investments. We exclude gains and losses on these investments as we do not believe they are reflective of our ongoing business and operating results.
(7)    Adjustment relates to differences between the GAAP-based tax recovery rate of approximately 1% and a Non-GAAP-based tax rate of approximately 14%; these rate differences are due to the income tax effects of items that are excluded for the purpose of calculating Non-GAAP-based adjusted net income. Such excluded items include amortization, share-based compensation, special charges (recoveries) and other income (expense), net. Also excluded are tax benefits/expense items unrelated to current period income such as changes in reserves for tax uncertainties and valuation allowance
15



reserves, and “book to return” adjustments for tax return filings and tax assessments. Included is the amount of net tax benefits arising from the internal reorganization that occurred in Fiscal 2017 assumed to be allocable to the current period based on the forecasted utilization period. In arriving at our Non-GAAP-based tax rate of approximately 14%, we analyzed the individual adjusted expenses and took into consideration the impact of statutory tax rates from local jurisdictions incurring the expense.

(8)    Reconciliation of GAAP-based net income to Non-GAAP-based net income:
Three Months Ended June 30, 2021
Per share diluted
GAAP-based net income, attributable to OpenText$181,283 $0.66 
Add:
Amortization105,684 0.39 
Share-based compensation13,350 0.05 
Special charges (recoveries)3,152 0.01 
Other (income) expense, net(45,017)(0.16)
GAAP-based provision for (recovery of) income taxes(2,215)(0.02)
Non-GAAP-based provision for income taxes(35,884)(0.13)
Non-GAAP-based net income, attributable to OpenText$220,353 $0.80 
Reconciliation of Adjusted EBITDA
Three Months Ended June 30, 2021
GAAP-based net income, attributable to OpenText$181,283 
Add:
Provision for (recovery of) income taxes(2,215)
Interest and other related expense, net37,550 
Amortization of acquired technology-based intangible assets53,215 
Amortization of acquired customer-based intangible assets52,469 
Depreciation21,021 
Share-based compensation13,350 
Special charges (recoveries)3,152 
Other (income) expense, net(45,017)
Adjusted EBITDA$314,808 
GAAP-based net income margin20.3 %
Adjusted EBITDA margin35.2 %
Reconciliation of Free cash flows
Three Months Ended June 30, 2021
GAAP-based cash flows provided by operating activities$296,189 
Add:
Capital expenditures (1)
(27,408)
Free cash flows$268,781 
(1) Defined as "Additions of property and equipment" in the Consolidated Statements of Cash Flows.
16



Reconciliation of selected GAAP-based measures to Non-GAAP-based measures
for the year ended June 30, 2021
(In thousands, except for per share data)
 Year Ended June 30, 2021
 
GAAP-based
Measures
GAAP-based Measures
% of Total Revenue
Adjustments
Note
Non-GAAP-based
Measures
Non-GAAP-based Measures
% of Total Revenue
Cost of revenues   
Cloud services and subscriptions$481,818 $(3,419)(1)$478,399 
Customer support122,753 (1,910)(1)120,843 
Professional service and other197,183 (2,565)(1)194,618 
Amortization of acquired technology-based intangible assets218,796 (218,796)(2)— 
GAAP-based gross profit and gross margin (%) /
Non-GAAP-based gross profit and gross margin (%)
2,351,649 69.4%226,690 (3)2,578,339 76.1%
Operating expenses
Research and development421,447 (9,859)(1)411,588 
Sales and marketing622,221 (18,312)(1)603,909 
General and administrative263,521 (15,904)(1)247,617 
Amortization of acquired customer-based intangible assets216,544 (216,544)(2)— 
Special charges (recoveries)1,748 (1,748)(4)— 
GAAP-based income from operations / Non-GAAP-based income from operations740,903 489,057 (5)1,229,960 
Other income (expense), net61,434 (61,434)(6)— 
Provision for (recovery of) income taxes339,906 (188,931)(7)150,975 
GAAP-based net income / Non-GAAP-based net income, attributable to OpenText310,672 616,554 (8)927,226 
GAAP-based earnings per share / Non-GAAP-based earnings per share-diluted, attributable to OpenText$1.14 $2.25 (8)$3.39 

(1)    Adjustment relates to the exclusion of share-based compensation expense from our Non-GAAP-based operating expenses as this expense is excluded from our internal analysis of operating results.
(2)    Adjustment relates to the exclusion of amortization expense from our Non-GAAP-based operating expenses as the timing and frequency of amortization expense is dependent on our acquisitions and is hence excluded from our internal analysis of operating results.
(3)    GAAP-based and Non-GAAP-based gross profit stated in dollars and gross margin stated as a percentage of total revenue.
(4)    Adjustment relates to the exclusion of special charges (recoveries) from our Non-GAAP-based operating expenses as special charges (recoveries) are generally incurred in the periods relevant to an acquisition and include certain charges or recoveries that are not indicative or related to continuing operations, and are therefore excluded from our internal analysis of operating results.
(5)    GAAP-based and Non-GAAP-based income from operations stated in dollars.
(6)    Adjustment relates to the exclusion of other income (expense) from our Non-GAAP-based operating expenses as other income (expense) generally relates to the transactional impact of foreign exchange and is generally not indicative or related to continuing operations and is therefore excluded from our internal analysis of operating results. Other income (expense) also includes our share of income (losses) from our holdings in investments as a limited partner. We do not actively trade equity securities in these privately held companies nor do we plan our ongoing operations based around any anticipated fundings or distributions from these investments. We exclude gains and losses on these investments as we do not believe they are reflective of our ongoing business and operating results.
(7)    Adjustment relates to differences between the GAAP-based tax provision rate of approximately 52% and a Non-GAAP-based tax rate of approximately 14%; these rate differences are due to the income tax effects of items that are excluded for the purpose of calculating Non-GAAP-based adjusted net income. Such excluded items include amortization, share-based compensation, special charges (recoveries) and other income (expense), net. Also excluded are tax benefits/expense items unrelated to current period income such as changes in reserves for tax uncertainties and valuation allowance
17



reserves, and “book to return” adjustments for tax return filings and tax assessments. Included is the amount of net tax benefits arising from the internal reorganization that occurred in Fiscal 2017 assumed to be allocable to the current period based on the forecasted utilization period. In arriving at our Non-GAAP-based tax rate of approximately 14%, we analyzed the individual adjusted expenses and took into consideration the impact of statutory tax rates from local jurisdictions incurring the expense. The GAAP-based tax provision rate for the year ended June 30, 2021 includes the income tax provision charge from the IRS settlement partially offset by a tax benefit from the release of unrecognized tax benefits due to the conclusion of relevant tax audits that was recognized during the second quarter of Fiscal 2021.

(8)    Reconciliation of GAAP-based net income to Non-GAAP-based net income:
Year Ended June 30, 2021
Per share diluted
GAAP-based net income, attributable to OpenText$310,672 $1.14 
Add:
Amortization435,340 1.59 
Share-based compensation51,969 0.19 
Special charges (recoveries)1,748 0.01 
Other (income) expense, net(61,434)(0.22)
GAAP-based provision for (recovery of) income taxes339,906 1.23 
Non-GAAP-based provision for income taxes(150,975)(0.55)
Non-GAAP-based net income, attributable to OpenText$927,226 $3.39 
Reconciliation of Adjusted EBITDA
Year Ended June 30, 2021
GAAP-based net income, attributable to OpenText$310,672 
Add:
Provision for (recovery of) income taxes339,906 
Interest and other related expense, net151,567 
Amortization of acquired technology-based intangible assets218,796 
Amortization of acquired customer-based intangible assets216,544 
Depreciation85,265 
Share-based compensation51,969 
Special charges (recoveries)1,748 
Other (income) expense, net(61,434)
Adjusted EBITDA$1,315,033 
GAAP-based net income margin9.2 %
Adjusted EBITDA margin38.8 %
Reconciliation of Free cash flows
Year Ended June 30, 2021
GAAP-based cash flows provided by operating activities$876,120 
Add:
Capital expenditures (1)
(63,675)
Free cash flows$812,445 
(1) Defined as "Additions of property and equipment" in the Consolidated Statements of Cash Flows.
18



Reconciliation of selected GAAP-based measures to Non-GAAP-based measures
for the three months ended March 31, 2021
(In thousands, except for per share data)
 Three Months Ended March 31, 2021
 
GAAP-based
Measures
GAAP-based Measures
% of Total Revenue
Adjustments
Note
Non-GAAP-based
Measures
Non-GAAP-based Measures
% of Total Revenue
Cost of revenues   
Cloud services and subscriptions$123,729 $(505)(1)$123,224 
Customer support30,953 (464)(1)30,489 
Professional service and other50,321 (684)(1)49,637 
Amortization of acquired technology-based intangible assets53,453 (53,453)(2)— 
GAAP-based gross profit and gross margin (%) /
Non-GAAP-based gross profit and gross margin (%)
571,665 68.6%55,106 (3)626,771 75.2%
Operating expenses
Research and development110,071 (2,146)(1)107,925 
Sales and marketing158,687 (4,580)(1)154,107 
General and administrative71,548 (3,978)(1)67,570 
Amortization of acquired customer-based intangible assets54,156 (54,156)(2)— 
Special charges (recoveries)2,846 (2,846)(4)— 
GAAP-based income from operations / Non-GAAP-based income from operations152,396 122,812 (5)275,208 
Other income (expense), net8,283 (8,283)(6)— 
Provision for (recovery of) income taxes31,818 1,485 (7)33,303 
GAAP-based net income / Non-GAAP-based net income, attributable to OpenText91,490 113,044 (8)204,534 
GAAP-based earnings per share / Non-GAAP-based earnings per share-diluted, attributable to OpenText$0.33 $0.42 (8)$0.75 

(1)    Adjustment relates to the exclusion of share-based compensation expense from our Non-GAAP-based operating expenses as this expense is excluded from our internal analysis of operating results.
(2)    Adjustment relates to the exclusion of amortization expense from our Non-GAAP-based operating expenses as the timing and frequency of amortization expense is dependent on our acquisitions and is hence excluded from our internal analysis of operating results.
(3)    GAAP-based and Non-GAAP-based gross profit stated in dollars and gross margin stated as a percentage of total revenue.
(4)    Adjustment relates to the exclusion of special charges (recoveries) from our Non-GAAP-based operating expenses as special charges (recoveries) are generally incurred in the periods relevant to an acquisition and include certain charges or recoveries that are not indicative or related to continuing operations, and are therefore excluded from our internal analysis of operating results.
(5)    GAAP-based and Non-GAAP-based income from operations stated in dollars.
(6)    Adjustment relates to the exclusion of other income (expense) from our Non-GAAP-based operating expenses as other income (expense) generally relates to the transactional impact of foreign exchange and is generally not indicative or related to continuing operations and is therefore excluded from our internal analysis of operating results. Other income (expense) also includes our share of income (losses) from our holdings in investments as a limited partner. We do not actively trade equity securities in these privately held companies nor do we plan our ongoing operations based around any anticipated fundings or distributions from these investments. We exclude gains and losses on these investments as we do not believe they are reflective of our ongoing business and operating results.
(7)    Adjustment relates to differences between the GAAP-based tax provision rate of approximately 26% and a Non-GAAP-based tax rate of approximately 14%; these rate differences are due to the income tax effects of items that are excluded for the purpose of calculating Non-GAAP-based adjusted net income. Such excluded items include amortization, share-based compensation, special charges (recoveries) and other income (expense), net. Also excluded are tax benefits/expense items unrelated to current period income such as changes in reserves for tax uncertainties and valuation allowance
19



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, 2021
Per share diluted
GAAP-based net income, attributable to OpenText$91,490 $0.33 
Add:
Amortization107,609 0.39 
Share-based compensation12,357 0.05 
Special charges (recoveries)2,846 0.01 
Other (income) expense, net(8,283)(0.03)
GAAP-based provision for (recovery of) income taxes31,818 0.12 
Non-GAAP-based provision for income taxes(33,303)(0.12)
Non-GAAP-based net income, attributable to OpenText$204,534 $0.75 
Reconciliation of Adjusted EBITDA
Three Months Ended March 31, 2021
GAAP-based net income, attributable to OpenText$91,490 
Add:
Provision for (recovery of) income taxes31,818 
Interest and other related expense, net37,333 
Amortization of acquired technology-based intangible assets53,453 
Amortization of acquired customer-based intangible assets54,156 
Depreciation21,961 
Share-based compensation12,357 
Special charges (recoveries)2,846 
Other (income) expense, net(8,283)
Adjusted EBITDA$297,131 
GAAP-based net income margin11.0 %
Adjusted EBITDA margin35.7 %
Reconciliation of Free cash flows
Three Months Ended March 31, 2021
GAAP-based cash flows provided by operating activities$63,572 
Add:
Capital expenditures (1)
(13,311)
Free cash flows$50,261 
(1) Defined as "Additions of property and equipment" in the Consolidated Statements of Cash Flows.
20



Reconciliation of selected GAAP-based measures to Non-GAAP-based measures
for the three months ended June 30, 2020
(In thousands, except for per share data)
 Three Months Ended June 30, 2020
 
GAAP-based
Measures
GAAP-based Measures
% of Total Revenue
Adjustments
Note
Non-GAAP-based
Measures
Non-GAAP-based Measures
% of Total Revenue
Cost of revenues   
Cloud services and subscriptions$116,569 $(490)(1)$116,079 
Customer support32,568 (310)(1)32,258 
Professional service and other48,435 (377)(1)48,058 
Amortization of acquired technology-based intangible assets59,719 (59,719)(2)— 
GAAP-based gross profit and gross margin (%) /
Non-GAAP-based gross profit and gross margin (%)
565,917 68.5 %60,896 (3)626,813 75.8 %
Operating expenses
Research and development100,766 (1,590)(1)99,176 
Sales and marketing152,882 (2,575)(1)150,307 
General and administrative62,574 (2,660)(1)59,914 
Amortization of acquired customer-based intangible assets58,998 (58,998)(2)— 
Special charges (recoveries)75,849 (75,849)(4)— 
GAAP-based income from operations / Non-GAAP-based income from operations91,199 202,568 (5)293,767 
Other income (expense), net7,790 (7,790)(6)— 
Provision for (recovery of) income taxes32,037 3,416 (7)35,453 
GAAP-based net income / Non-GAAP-based net income, attributable to OpenText26,392 191,362 (8)217,754 
GAAP-based earnings per share / Non-GAAP-based earnings per share-diluted, attributable to OpenText$0.10 $0.70 (8)$0.80 

(1)    Adjustment relates to the exclusion of share-based compensation expense from our Non-GAAP-based operating expenses as this expense is excluded from our internal analysis of operating results.
(2)    Adjustment relates to the exclusion of amortization expense from our Non-GAAP-based operating expenses as the timing and frequency of amortization expense is dependent on our acquisitions and is hence excluded from our internal analysis of operating results.
(3)    GAAP-based and Non-GAAP-based gross profit stated in dollars and gross margin stated as a percentage of total revenue.
(4)    Adjustment relates to the exclusion of special charges (recoveries) from our Non-GAAP-based operating expenses as special charges (recoveries) are generally incurred in the periods relevant to an acquisition and include certain charges or recoveries that are not indicative or related to continuing operations, and are therefore excluded from our internal analysis of operating results.
(5)    GAAP-based and Non-GAAP-based income from operations stated in dollars.
(6)    Adjustment relates to the exclusion of other income (expense) from our Non-GAAP-based operating expenses as other income (expense) generally relates to the transactional impact of foreign exchange and is generally not indicative or related to continuing operations and is therefore excluded from our internal analysis of operating results. Other income (expense) also includes our share of income (losses) from our holdings in investments as a limited partner. We do not actively trade equity securities in these privately held companies nor do we plan our ongoing operations based around any anticipated fundings or distributions from these investments. We exclude gains and losses on these investments as we do not believe they are reflective of our ongoing business and operating results.
(7)    Adjustment relates to differences between the GAAP-based tax provision rate of approximately 55% and a Non-GAAP-based tax rate of approximately 14%; these rate differences are due to the income tax effects of items that are excluded for the purpose of calculating Non-GAAP-based adjusted net income. Such excluded items include amortization, share-based compensation, special charges (recoveries) and other income (expense), net. Also excluded are tax benefits/expense items unrelated to current period income such as changes in reserves for tax uncertainties and valuation allowance
21



reserves, and “book to return” adjustments for tax return filings and tax assessments. Included is the amount of net tax benefits arising from the internal reorganization that occurred in Fiscal 2017 assumed to be allocable to the current period based on the forecasted utilization period. In arriving at our Non-GAAP-based tax rate of approximately 14%, we analyzed the individual adjusted expenses and took into consideration the impact of statutory tax rates from local jurisdictions incurring the expense.

(8)    Reconciliation of GAAP-based net income to Non-GAAP-based net income:
Three Months Ended June 30, 2020
Per share diluted
GAAP-based net income, attributable to OpenText$26,392 $0.10 
Add:
Amortization118,717 0.44 
Share-based compensation8,002 0.03 
Special charges (recoveries)75,849 0.28 
Other (income) expense, net(7,790)(0.03)
GAAP-based provision for (recovery of) income taxes32,037 0.12 
Non-GAAP-based provision for income taxes(35,453)(0.14)
Non-GAAP-based net income, attributable to OpenText$217,754 $0.80 
Reconciliation of Adjusted EBITDA
Three Months Ended June 30, 2020
GAAP-based net income, attributable to OpenText$26,392 
Add:
Provision for (recovery of) income taxes32,037 
Interest and other related expense, net40,529 
Amortization of acquired technology-based intangible assets59,719 
Amortization of acquired customer-based intangible assets58,998 
Depreciation23,649 
Share-based compensation8,002 
Special charges (recoveries)75,849 
Other (income) expense, net(7,790)
Adjusted EBITDA$317,385 
GAAP-based net income margin3.2 %
Adjusted EBITDA margin38.4 %
Reconciliation of Free cash flows
Three Months Ended June 30, 2020
GAAP-based cash flows provided by operating activities$280,250 
Add:
Capital expenditures (1)
(17,704)
Free cash flows$262,546 
(1) Defined as "Additions of property and equipment" in the Consolidated Statements of Cash Flows.



22



Reconciliation of selected GAAP-based measures to Non-GAAP-based measures
for the year ended June 30, 2020
(In thousands, except for per share data)
 Year Ended June 30, 2020
 
GAAP-based
Measures
GAAP-based Measures
% of Total Revenue
Adjustments
Note
Non-GAAP-based
Measures
Non-GAAP-based Measures
% of Total Revenue
Cost of revenues   
Cloud services and subscriptions$449,940 $(1,642)(1)$448,298 
Customer support123,894 (1,207)(1)122,687 
Professional service and other212,903 (1,294)(1)211,609 
Amortization of acquired technology-based intangible assets205,717 (205,717)(2)— 
GAAP-based gross profit and gross margin (%) /
Non-GAAP-based gross profit and gross margin (%)
2,105,961 67.7 %209,860 (3)2,315,821 74.5 %
Operating expenses
Research and development370,411 (5,309)(1)365,102 
Sales and marketing585,044 (9,335)(1)575,709 
General and administrative237,532 (10,745)(1)226,787 
Amortization of acquired customer-based intangible assets219,559 (219,559)(2)— 
Special charges (recoveries)100,428 (100,428)(4)— 
GAAP-based income from operations / Non-GAAP-based income from operations503,529 555,236 (5)1,058,765 
Other income (expense), net(11,946)11,946 (6)— 
Provision for (recovery of) income taxes110,837 16,897 (7)127,734 
GAAP-based net income / Non-GAAP-based net income, attributable to OpenText234,225 550,285 (8)784,510 
GAAP-based earnings per share / Non-GAAP-based earnings per share-diluted, attributable to OpenText$0.86 $2.03 (8)$2.89 

(1)    Adjustment relates to the exclusion of share-based compensation expense from our Non-GAAP-based operating expenses as this expense is excluded from our internal analysis of operating results.
(2)    Adjustment relates to the exclusion of amortization expense from our Non-GAAP-based operating expenses as the timing and frequency of amortization expense is dependent on our acquisitions and is hence excluded from our internal analysis of operating results.
(3)    GAAP-based and Non-GAAP-based gross profit stated in dollars and gross margin stated as a percentage of total revenue.
(4)    Adjustment relates to the exclusion of special charges (recoveries) from our Non-GAAP-based operating expenses as special charges (recoveries) are generally incurred in the periods relevant to an acquisition and include certain charges or recoveries that are not indicative or related to continuing operations, and are therefore excluded from our internal analysis of operating results.
(5)    GAAP-based and Non-GAAP-based income from operations stated in dollars.
(6)    Adjustment relates to the exclusion of other income (expense) from our Non-GAAP-based operating expenses as other income (expense) generally relates to the transactional impact of foreign exchange and is generally not indicative or related to continuing operations and is therefore excluded from our internal analysis of operating results. Other income (expense) also includes our share of income (losses) from our holdings in investments as a limited partner. We do not actively trade equity securities in these privately held companies nor do we plan our ongoing operations based around any anticipated fundings or distributions from these investments. We exclude gains and losses on these investments as we do not believe they are reflective of our ongoing business and operating results.
(7)    Adjustment relates to differences between the GAAP-based tax provision rate of approximately 32% and a Non-GAAP-based tax rate of approximately 14%; these rate differences are due to the income tax effects of items that are excluded for the purpose of calculating Non-GAAP-based adjusted net income. Such excluded items include amortization, share-based compensation, special charges (recoveries) and other income (expense), net. Also excluded are tax benefits/expense items unrelated to current period income such as changes in reserves for tax uncertainties and valuation allowance
23



reserves, and “book to return” adjustments for tax return filings and tax assessments. Included is the amount of net tax benefits arising from the internal reorganization that occurred in Fiscal 2017 assumed to be allocable to the current period based on the forecasted utilization period. In arriving at our Non-GAAP-based tax rate of approximately 14%, we analyzed the individual adjusted expenses and took into consideration the impact of statutory tax rates from local jurisdictions incurring the expense.

(8)    Reconciliation of GAAP-based net income to Non-GAAP-based net income:
Year Ended June 30, 2020
Per share diluted
GAAP-based net income, attributable to OpenText$234,225 $0.86 
Add:
Amortization425,276 1.56 
Share-based compensation29,532 0.11 
Special charges (recoveries)100,428 0.37 
Other (income) expense, net11,946 0.04 
GAAP-based provision for (recovery of) income taxes110,837 0.41 
Non-GAAP-based provision for income taxes(127,734)(0.46)
Non-GAAP-based net income, attributable to OpenText$784,510 $2.89 
Reconciliation of Adjusted EBITDA
Year Ended June 30, 2020
GAAP-based net income, attributable to OpenText$234,225 
Add:
Provision for (recovery of) income taxes110,837 
Interest and other related expense, net146,378 
Amortization of acquired technology-based intangible assets205,717 
Amortization of acquired customer-based intangible assets219,559 
Depreciation89,458 
Share-based compensation29,532 
Special charges (recoveries)100,428 
Other (income) expense, net11,946 
Adjusted EBITDA$1,148,080 
GAAP-based net income margin7.5 %
Adjusted EBITDA margin36.9 %
Reconciliation of Free cash flows
Year Ended June 30, 2020
GAAP-based cash flows provided by operating activities$954,536 
Add:
Capital expenditures (1)
(72,709)
Free cash flows$881,827 
(1) Defined as "Additions of property and equipment" in the Consolidated Statements of Cash Flows.


24




(3)    The following tables provide a composition of our major currencies for revenue and expenses, expressed as a percentage, for the three months and year ended June 30, 2021 and 2020:
 Three Months Ended June 30, 2021Three Months Ended June 30, 2020
Currencies% of Revenue
% of Expenses(1)
% of Revenue
% of Expenses(1)
EURO24 %14 %22 %13 %
GBP%%%%
CAD%13 %%%
USD60 %53 %63 %57 %
Other%15 %%17 %
Total100 %100 %100 %100 %

 Year Ended June 30, 2021Year Ended June 30, 2020
Currencies% of Revenue
% of Expenses(1)
% of Revenue
% of Expenses(1)
EURO23 %14 %22 %14 %
GBP%%%%
CAD%11 %%%
USD61 %54 %61 %55 %
Other%16 %%16 %
Total100 %100 %100 %100 %
(1) Expenses include all cost of revenues and operating expenses included within the Consolidated Statements of Income, except for amortization of intangible assets, share-based compensation and special charges (recoveries).
25
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