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Open Text Corp

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


Net Income


A-EBITDA


GAAP


Non-GAAP


Operating


Free 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

 

"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 /CNW/ -- 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 

(Q3 FY'25 vs
Q2 FY'25)


% Change

(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) %




(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.

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.

OTEX-F

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

March 31,


Nine Months Ended

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

March 31,


Nine Months Ended
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

Earnings


Accumulated
Other

Comprehensive

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

($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

Earnings


Accumulated
Other

Comprehensive

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

($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

Earnings


Accumulated
Other

Comprehensive

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

($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

Earnings


Accumulated
Other

Comprehensive

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

($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

March 31,


Nine Months Ended

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

for the three months ended March 31, 2025

(In thousands, except for per share data)


Three Months Ended March 31, 2025


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

$  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

for the nine months ended March 31, 2025

(In thousands, except for per share data)


Nine Months Ended March 31, 2025


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

$   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

for the three months ended December 31, 2024

(In thousands, except for per share data)


Three Months Ended December 31, 2024


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

$   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

for the three months ended March 31, 2024

(In thousands, except for per share data)


Three Months Ended March 31, 2024


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

$   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

for the nine months ended March 31, 2024

(In thousands, except for per share data)


Nine Months Ended March 31, 2024


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

$   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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SOURCE Open Text Corporation