OPEN TEXT CORPORATION - Non-GAAP-based Operating Margin was 34%
- Blue Carbon To Be Unveiled at Enterprise World; Enters Beta this Quarter
- Total Revenue Was $434.5 Million, Down 4%; in CC*, Up 3%
WATERLOO, Ontario, Oct. 28, 2015 /PRNewswire/ -- Open Text Corporation (NASDAQ: OTEX) (TSX: OTC) announced today its financial results for the first quarter ended September 30, 2015.
"Fiscal 2016 will be a transformative year for OpenText. Digitalization enables customers to create a better way to work, and project Blue Carbon is the enabling platform. I am pleased to confirm project Blue Carbon will be available in Beta this quarter and unveiled at our annual user conference Enterprise World, taking place November 8 to 13, 2015," said OpenText CEO Mark J. Barrenechea.
Barrenechea further added, "As for Fiscal Q1 results, due to the strength of the US Dollar, foreign currency volatility continued to have a significant impact on our results in the quarter, negatively impacting total revenue by $34M. In constant currency, total revenue grew 3%, and recurring revenue grew 4%. We remain confident in our 2020 target model of adjusted operating margins between 34% to 38%."
Financial Highlights for Q1 FY16 with Year Over Year Comparisons (1)
-------------------------------------------------------------------
Summary of Quarterly Results Q1 FY16 % Change
in CC*
in CC*
---
Q1 FY16 Q1 FY15 $ Change % Change
Revenues: (in millions)
Cloud services and
subscriptions $147.8 $154.1 ($6.3) (4.1)% $156.3 1.4%
Customer support 185.7 183.9 1.8 1.0% 200.7 9.1%
Professional service and
other 49.7 57.6 (7.9) (13.7)% 55.1 (4.3)%
Total Recurring revenues $383.2 $395.6 ($12.4) (3.1)% $412.1 4.2%
License 51.3 58.2 (6.9) (11.8)% 56.0 (3.8)%
Total revenues $434.5 $453.8 ($19.3) (4.2)% $468.1 3.2%
Non-GAAP-based operating
margin (2) 34.1% 34.3% n/a (20) bps 33.6%
GAAP-based operating margin 17.6% 22.7% n/a (510) bps
Non-GAAP-based EPS,
diluted (2) $0.84 $0.97 ($0.13) (13.4)% $0.90 (7.2)%
GAAP-based EPS, diluted $0.34 $0.53 ($0.19) (35.8)%
Operating cash flows (in
millions) $92.7 $138.5 ($45.8) (33.1)%
------------------------ ----- ------ ------ ------
"I am really pleased with our adjusted operating margin performance this quarter. The results reflect the execution of the restructuring actions announced in May and our ongoing focus on cost containment. It is a positive start and provides a solid base to deliver on our annual operating plan," said OpenText CFO John Doolittle.
*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.
Quarterly Business Highlights
-- 11 customer transactions over $1 million, 6 cloud contract signings in
the OpenText Cloud and 5 on-premises
-- Financial, technology and services industries saw the most demand
-- Cloud customer successes in the quarter include Bestop Inc, Molson Coors
Brewing Company and PayFlex
-- On-premises customer successes in the quarter include R-pharm, CTAC,
Tata Steel Nederland B.V., United States Department Of State, Thomson
Reuters Corporation, EDM Group and Solenis
-- OpenText signs definitive agreement to acquire Daegis Inc.
-- OpenText Enterprise World 2015 enables the next generation of digital
companies; Mark J. Barrenechea and Mike Myers to keynote
-- OpenText announces new global partner program to enable the digital
world
-- OpenText digital asset management integrates with SAP® hybris®
solutions to deliver the future of customer experience and engagement
-- OpenText delivers Big Data Analytics in the OpenText Cloud
-- New report names OpenText as a leader in ECM business content services
-- OpenText named a leader in Gartner's Magic Quadrant for Web Content
Management
Dividend Program Highlights
Cash Dividend
As part of our quarterly, non cumulative cash dividend program the Board declared on October 28, 2015 a cash dividend of $0.20 per Common Share. The record date for this dividend is November 27, 2015 and the payment date is December 18, 2015. Future declarations of dividends and the establishment of future record and payment dates are subject to the final determination and discretion of our Board of Directors.
Investor and Analyst Day at Enterprise World 2015
Institutional investors and financial analysts are invited to join us for our Investor and Analyst Day on Wednesday, November 11, 2015 at the MGM Grand Hotel in Las Vegas, Nevada. The event takes place in conjunction with our 17(th) annual user conference Enterprise World. To register, please contact Sonya Mehan, Senior Manager, Investor Relations at smehan@opentext.com.
Summary of Quarterly Results
----------------------------
Q1 FY16 Q4 FY15 Q1 FY15 % Change % Change
(Q1 FY16 vs Q4 FY15) (Q1 FY16 vs Q1 FY15)
Revenue
(million) $434.5 $482.7 $453.8 (10.0)% (4.2)%
GAAP-
based
gross
margin 67.8% 68.8% 67.6% (100) bps 20 bps
GAAP-
based
operating
margin 17.6% 17.1% 22.7% 50 bps (510) bps
GAAP-
based
EPS,
diluted $0.34 $0.56 $0.53 (39.3)% (35.8)%
Non-GAAP-
based
gross
margin
(2) 72.6% 73.6% 71.8% (100) bps 80 bps
Non-GAAP-
based
operating
margin
(2) 34.1% 30.8% 34.3% 330 bps (20) bps
Non-GAAP-
based
EPS,
diluted
(2) $0.84 $0.87 $0.97 (3.4)% (13.4)%
--------- ----- ----- ----- ----- ------
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 15 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/events.cfm .
A replay of the call will be available beginning October 28, 2015 at 7:00 p.m. ET through 11:59 p.m. November 11, 2015 and can be accessed by dialing 1-855-669-9658 (toll-free) or +1-604-674-8052 (international) and using passcode 1469 followed by the number sign.
Please see below note (2) for a reconciliation of non-U.S. GAAP-based financial measures used in this press release, to U.S. GAAP-based financial measures.
About OpenText
OpenText is the largest independent software provider of Enterprise Information Management (EIM). For more information please visit www.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 Fiscal 2016 on growth in earnings and cash flows, creating value through investments in broader Enterprise Information Management (EIM) capabilities, distribution, the Company's presence in the cloud and in growth markets, its financial condition, results of operations and earnings, ongoing tax matters, purchases of common shares by OpenText pursuant to the NCIB, declaration of quarterly dividends, and other matters, may contain words such as "anticipates", "expects", "intends", "plans", "believes", "seeks", "estimates", "may", "could", "would", "might", "will" and variations of these words or similar expressions are considered forward-looking statements or information under applicable securities laws. In addition, any information or statements that refer to expectations, beliefs, plans, projections, objectives, performance or other characterizations of future events or circumstances, including any underlying assumptions, are forward-looking, and based on our current expectations, forecasts and projections about the operating environment, economies and markets in which we operate. Forward-looking statements reflect our current estimates, beliefs and assumptions, which are based on management's perception of historic trends, current conditions and expected future developments, as well as other factors it believes are appropriate in the circumstances, such as certain assumptions about the economy, as well as market, financial and operational assumptions. Management's estimates, beliefs and assumptions are inherently subject to significant business, economic, competitive and other uncertainties and contingencies regarding future events and, as such, are subject to change. We can give no assurance that such estimates, beliefs and assumptions will prove to be correct. Such forward-looking statements involve known and unknown risks, uncertainties and other factors and assumptions that may cause the actual results, performance or achievements to differ materially. Such factors include, but are not limited to: (i) the future performance, financial and otherwise, of OpenText; (ii) the ability of OpenText to bring new products and services to market and to increase sales; (iii) the strength of the Company's product development pipeline; (iv) the Company's growth and profitability prospects; (v) the estimated size and growth prospects of the EIM market; (vi) the Company's competitive position in the EIM market and its ability to take advantage of future opportunities in this market; (vii) the benefits of the Company's products and services to be realized by customers; (viii) the demand for the Company's products and services and the extent of deployment of the Company's products and services in the EIM marketplace; and (ix) the Company's financial condition and capital requirements. The risks and uncertainties that may affect forward-looking statements include, but are not limited to: (i) integration of acquisitions and related restructuring efforts, including the quantum of restructuring charges and the timing thereof; (ii) the possibility that the Company may be unable to meet its future reporting requirements under the Securities Exchange Act of 1934, as amended, and the rules promulgated thereunder; (iii) the risks associated with bringing new products and services to market; (iv) fluctuations in currency exchange rates; (v) delays in the purchasing decisions of the Company's customers; (vi) the competition the Company faces in its industry and/or marketplace; (vii) the final determination of litigation, tax audits and other legal proceedings; (viii) the possibility of technical, logistical or planning issues in connection with the deployment of the Company's products or services; (ix) the continuous commitment of the Company's customers; and (x) demand for the Company's products. For additional information with respect to risks and other factors which could occur, see the Company's Annual Report on Form 10-K, Quarterly Reports on Form 10-Q and other securities filings with the Securities and Exchange Commission (SEC) and other securities regulators. Readers are cautioned not to place undue reliance upon any such forward-looking statements, which speak only as of the date made. Unless otherwise required by applicable securities laws, the Company disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.
OTEX-F
For more information, please contact:
United States:
Greg Secord
Vice President, Investor Relations
Open Text Corporation
San Francisco: 415-963-0825
gsecord@opentext.com
Canada:
Sonya Mehan
Senior Manager, Investor Relations
Open Text Corporation
Waterloo: 519-888-7111 ext. 2446
smehan@opentext.com
Copyright ©2015 Open Text Corporation. OpenText is a trademark or registered trademark of Open Text SA and/or Open Text ULC. 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 SA or other respective owners. All rights reserved. For more information, visit: http://www.opentext.com/2/global/site-copyright.html_SKU.
OPEN TEXT CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands of U.S. dollars, except share data)
September 30, June 30,
2015 2015
---- ----
(unaudited)
ASSETS
Cash and cash equivalents $690,785 $699,999
Short-term investments 18,022 11,166
Accounts receivable trade, net of
allowance for doubtful accounts
of $5,437 as of September 30,
2015 and $5,987 as of June 30,
2015 233,947 284,131
Income taxes recoverable 20,000 21,151
Prepaid expenses and other current
assets 47,099 53,191
Deferred tax assets 31,250 30,711
------ ------
Total current assets 1,041,103 1,100,349
Property and equipment 163,179 160,419
Goodwill 2,161,592 2,161,592
Acquired intangible assets 631,791 679,479
Deferred tax assets 150,861 155,411
Other assets 74,570 85,576
Deferred charges 33,501 37,265
Long-term income taxes recoverable 8,393 8,404
Total assets $4,264,990 $4,388,495
========== ==========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued
liabilities $189,329 $241,370
Current portion of long-term debt 8,000 8,000
Deferred revenues 323,470 358,066
Income taxes payable 15,996 17,001
Deferred tax liabilities 71 997
--- ---
Total current liabilities 536,866 625,434
Long-term liabilities:
Accrued liabilities 29,579 34,682
Deferred credits 11,796 12,943
Pension liability 55,737 56,737
Long-term debt 1,578,000 1,580,000
Deferred revenues 27,542 28,223
Long-term income taxes payable 151,306 151,484
Deferred tax liabilities 64,066 69,185
------ ------
Total long-term liabilities 1,918,026 1,933,254
Shareholders' equity:
Share capital
121,351,776 and 122,293,986 Common
Shares issued and outstanding at
September 30, 2015 and June 30,
2015, respectively; Authorized
Common Shares: unlimited 806,424 808,010
Additional paid-in capital 132,733 126,417
Accumulated other comprehensive
income 51,884 51,828
Retained earnings 838,494 863,015
Treasury stock, at cost (625,725
shares at September 30, 2015 and
625,725 at June 30, 2015,
respectively) (19,986) (19,986)
------- -------
Total OpenText shareholders'
equity 1,809,549 1,829,284
Non-controlling interests 549 523
--- ---
Total shareholders' equity 1,810,098 1,829,807
Total liabilities and
shareholders' equity $4,264,990 $4,388,495
========== ==========
OPEN TEXT CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(In thousands of U.S. dollars, except share and per share data)
(unaudited)
Three Months Ended September 30,
--------------------------------
2015 2014
---- ----
Revenues:
License $51,331 $58,195
Cloud services and subscriptions 147,790 154,053
Customer support 185,667 183,906
Professional service and other 49,747 57,633
------ ------
Total revenues 434,535 453,787
------- -------
Cost of revenues:
License 2,681 2,997
Cloud services and subscriptions 58,916 59,577
Customer support 20,508 22,963
Professional service and other 38,064 43,197
Amortization of acquired technology-
based intangible assets 19,883 18,206
------ ------
Total cost of revenues 140,052 146,940
------- -------
Gross profit 294,483 306,847
------- -------
Operating expenses:
Research and development 46,440 44,742
Sales and marketing 77,945 81,041
General and administrative 35,569 35,743
Depreciation 12,914 12,242
Amortization of acquired customer-
based intangible assets 27,805 25,884
Special charges 17,337 4,169
------ -----
Total operating expenses 218,010 203,821
------- -------
Income from operations 76,473 103,026
------ -------
Other expense, net (4,913) (9,873)
Interest and other related expense, net (19,046) (11,099)
------- -------
Income before income taxes 52,514 82,054
Provision for income taxes 11,202 17,402
------ ------
Net income for the period $41,312 $64,652
------- -------
Net income attributable to non-
controlling interests (26) (26)
Net income attributable to OpenText $41,286 $64,626
======= =======
Earnings per share-basic attributable
to OpenText $0.34 $0.53
===== =====
Earnings per share-diluted
attributable to OpenText $0.34 $0.53
===== =====
Weighted average number of Common
Shares outstanding-basic 122,160 121,918
======= =======
Weighted average number of Common
Shares outstanding-diluted 122,640 122,861
======= =======
Dividends declared per Common Share $0.2000 $0.1725
======= =======
OPEN TEXT CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(In thousands of U.S. dollars)
(unaudited)
Three Months Ended September 30,
--------------------------------
2015 2014
---- ----
Net income for the period $41,312 $64,652
Other comprehensive income-net of tax:
Net foreign currency translation
adjustments 1,723 3,105
Unrealized gain (loss) on cash flow
hedges:
Unrealized loss (3,390) (2,900)
Loss reclassified into net income 512 53
Actuarial gain (loss) relating to defined
benefit pension plans:
Actuarial gain (loss) 1,113 (3,118)
Amortization of actuarial loss into net
income 83 121
Unrealized gain on short-term investments 15 -
Unrealized loss on marketable securities
(Actuate) - (494)
Total other comprehensive income (loss),
net, for the period 56 (3,233)
Total comprehensive income 41,368 61,419
Comprehensive income attributable to non-
controlling interests (26) (26)
--- ---
Total comprehensive income attributable
to OpenText $41,342 $61,393
======= =======
OPEN TEXT CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands of U.S. dollars)
(unaudited)
Three Months Ended September 30,
--------------------------------
2015 2014
---- ----
Cash flows from operating
activities:
Net
income
for the
period $41,312 $64,652
Adjustments to reconcile
net income to net cash
provided by operating
activities:
Depreciation
and
amortization
of
intangible
assets 60,602 56,332
Share-
based
compensation
expense 6,533 4,449
Excess
tax
expense
(benefits)
on
share-
based
compensation
expense 216 (395)
Pension
expense 1,167 1,220
Amortization
of debt
issuance
costs 1,156 1,143
Amortization
of
deferred
charges
and
credits 2,617 2,631
Deferred
taxes (4,184) (1,545)
Changes in operating assets
and liabilities:
Accounts
receivable 52,106 55,543
Prepaid
expenses
and
other
current
assets 5,834 (149)
Income
taxes 3,797 17,806
Accounts
payable
and
accrued
liabilities (48,322) (34,139)
Deferred
revenue (32,393) (26,755)
Other
assets 2,281 (2,262)
----- ------
Net cash
provided
by
operating
activities 92,722 138,531
------ -------
Cash flows from investing
activities:
Additions
of
property
and
equipment (17,197) (30,235)
Proceeds
from
maturity
of
short-
term
investments 2,255 -
Purchase
of
Actuate
Corporation,
net of
cash
acquired (7,701) -
Purchase
of
Informative
Graphics
Corporation,
net of
cash
acquired (88) -
Purchase
of ICCM
Professional
Services
Limited,
net of
cash
acquired (2,027) -
Purchase
consideration
for
prior
period
acquisitions - (222)
Other
investing
activities (926) (7,374)
Net cash
used in
investing
activities (25,684) (37,831)
------- -------
Cash flows from financing
activities:
Excess
tax
(expense)
benefits
on
share-
based
compensation
expense (216) 395
Proceeds
from
issuance
of
Common
Shares 5,252 7,099
Common
Shares
repurchased (50,026) -
Repayment
of long-
term debt (2,000) (13,417)
Debt
issuance
costs - (183)
Payments
of
dividends
to
shareholders (23,312) (21,045)
Net cash
used in
financing
activities (70,302) (27,151)
------- -------
Foreign
exchange
loss on
cash
held in
foreign
currencies (5,950) (8,953)
Increase
(decrease)
in cash
and cash
equivalents
during
the
period (9,214) 64,596
Cash and
cash
equivalents
at
beginning
of the
period 699,999 427,890
Cash and
cash
equivalents
at end
of the
period $690,785 $492,486
======== ========
Notes
-----
(1) All dollar amounts in this press
release are in U.S. Dollars unless
otherwise indicated.
(2) Use of Non-GAAP Financial Measures:
In addition to reporting financial
results in accordance with U.S.
GAAP, the Company provides certain
financial measures that are not in
accordance with U.S. GAAP (non-
GAAP).These non-GAAP financial
measures have certain limitations
in that they do not have a
standardized meaning and thus the
Company's definition may be
different from similar non-GAAP
financial measures used by other
companies and/or analysts and may
differ from period to period. Thus
it may be more difficult to compare
the Company's financial performance
to that of other companies.
However, the Company's management
compensates for these limitations
by providing the relevant
disclosure of the items excluded in
the calculation of these non-GAAP
financial measures both in its
reconciliation to the U.S. GAAP
financial measures and its
consolidated financial statements,
all of which should be considered
when evaluating the Company's
results.
The Company uses these non-GAAP
financial measures to supplement
the information provided in its
consolidated financial statements,
which are presented in accordance
with U.S. GAAP. The presentation of
non-GAAP financial measures are
not meant to be a substitute for
financial measures presented in
accordance with U.S. GAAP, but
rather should be evaluated in
conjunction with and as a
supplement to such U.S. GAAP
measures. OpenText strongly
encourages investors to review its
financial information in its
entirety and not to rely on a
single financial measure. The
Company therefore believes that
despite these limitations, it is
appropriate to supplement the
disclosure of the U.S. GAAP
measures with certain non-GAAP
measures defined below.
Non-GAAP-based net income and non-
GAAP-based EPS are calculated as
net income or net income per share
on a diluted basis, excluding, the
amortization of acquired intangible
assets, other income (expense),
share-based compensation, and
special charges, all net of tax.
Non-GAAP-based gross profit is
the arithmetical sum of GAAP-based
gross profit and the amortization
of acquired technology-based
intangible assets. Non-GAAP-based
gross margin is calculated as non-
GAAP-based gross profit expressed
as a percentage of revenue. Non-
GAAP-based income from operations
is calculated as income from
operations, excluding, the
amortization of acquired intangible
assets, special charges
(recoveries), and share-based
compensation. Non-GAAP-based
operating margin is calculated as
non-GAAP-based income from
operations expressed as a
percentage of 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 and is based
upon the way the Company's
management evaluates the
performance of the Company's
business for use in the Company's
internal reports. In the course of
such evaluation and for the purpose
of making operating decisions, the
Company's management excludes
certain items from its analysis,
including amortization of acquired
intangible assets, special charges
(recoveries), share-based
compensation, other income
(expense), and the taxation impact
of these items. These items are
excluded based upon the manner in
which management evaluates the
business of the Company and are not
excluded in the sense that they may
be used under U.S. GAAP.
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 in this press
release.
The following charts provide
(unaudited) reconciliations of U.S.
GAAP-based financial measures to
non-U.S. GAAP-based financial
measures for the following periods
presented:
Reconciliation of selected GAAP-based measures to Non-GAAP-based measures for the three months ended September 30, 2015.
------------------------------------------------------------------------------------------------------------------------
(In thousands except for per share amounts)
Three Months Ended September 30, 2015
-------------------------------------
GAAP-based GAAP-based Adjustments Note Non-GAAP-based Non-GAAP-
Measures based
Measures
Measures % of Revenue Measures % of Revenue
-------- ------------ -------- ------------
Cost of revenues
Cloud services and
subscriptions $58,916 $(281) (1) $58,635
Customer support 20,508 (158) (1) 20,350
Professional
service and other 38,064 (453) (1) 37,611
Amortization of
acquired
technology-based
intangible assets 19,883 (19,883) (2) -
GAAP-based gross
profit and gross
margin (%) / 294,483 67.8% 20,775 (3) 315,258 72.6%
Non-GAAP-based gross profit
and gross margin (%)
Operating expenses
Research and
development 46,440 (752) (1) 45,688
Sales and marketing 77,945 (3,115) (1) 74,830
General and
administrative 35,569 (1,774) (1) 33,795
Amortization of
acquired customer-
based intangible
assets 27,805 (27,805) (2) -
Special charges
(recoveries) 17,337 (17,337) (4) -
GAAP-based income
from operations
and operating
margin (%) /Non-
GAAP-based income
from operations
and operating
margin (%) 76,473 17.6% 71,558 (5) 148,031 34.1%
Other income
(expense), net (4,913) 4,913 (6) -
Provision for
(recovery of)
income taxes 11,202 14,569 (7) 25,771
GAAP-based net
income /Non-
GAAP-based net
income,
attributable to
OpenText 41,286 61,902 (8) 103,188
GAAP-based
earnings per share
/Non GAAP-based
earnings per
share-diluted,
attributable to
OpenText $0.34 $0.50 (8) $0.84
(1) Adjustment relates to the exclusion of
share based compensation expense from
our Non-GAAP-based operating
expenses as this expense is excluded
from our internal analysis of
operating results.
(2) Adjustment relates to the exclusion of
amortization expense from our Non-
GAAP-based operating expenses as the
timing and frequency of amortization
expense is dependent on our
acquisitions and is hence excluded
from our internal analysis of
operating results.
(3) GAAP-based and Non-GAAP-based gross
profit stated in dollars, and gross
margin stated as a percentage of
revenue.
(4) Adjustment relates to the exclusion of
Special charges (recoveries) from our
Non-GAAP-based operating expenses as
Special charges are generally incurred
in the periods following the relevant
acquisitions and 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, and
operating margin stated as a
percentage of revenue.
(6) Adjustment relates to the exclusion of
Other income (expense) from our Non-
GAAP-based operating expenses as
Other income (expense) relates
primarily 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.
(7) Adjustment relates to differences
between the GAAP-based tax provision
rate of approximately 21% and a non-
GAAP-based tax rate of 20%; these
rate differences are due to the income
tax effects of expenses that are
excluded for the purpose of
calculating non-GAAP-based adjusted
net income. Such excluded expenses
include amortization, share-based
compensation, special charges and
other income (expense), net. Also
excluded are tax expense items
unrelated to current period income
such as changes in reserves for tax
uncertainties and valuation allowance
reserves, tax arising on internal
reorganizations, and "book to return"
adjustments for tax return filings and
tax assessments (in total "adjusted
expenses"). In arriving at our non-
GAAP-based tax rate of 20%, 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 Non-GAAP-based
adjusted net income to GAAP-based net
income:
Three Months Ended September 30,
2015
--------------------------------
Per share
diluted
----------
Non-GAAP-based net income,
attributable to OpenText $103,188 $0.84
Less:
Amortization 47,688 0.39
Share-based compensation 6,533 0.05
Special charges (recoveries) 17,337 0.14
Other (income) expense, net 4,913 0.04
GAAP-based provision for
(recovery of) income taxes 11,202 0.09
Non-GAAP based provision for
income taxes (25,771) (0.21)
GAAP-based net income,
attributable to OpenText $41,286 $0.34
======= =====
Reconciliation of selected GAAP-based measures to Non-GAAP-based measures for the three months ended June 30, 2015.
(In thousands except for per share amounts)
------------------------------------------
Three Months Ended June 30, 2015
--------------------------------
GAAP-based GAAP-based Adjustments Note Non-GAAP-based Non-GAAP-
Measures based
Measures
Measures % of Revenue Measures % of Revenue
-------- ------------ -------- ------------
Cost of revenues
Cloud services and
subscriptions $58,424 $(252) (1) $58,172
Customer support 23,578 (200) (1) 23,378
Professional
service and other 42,743 (421) (1) 42,322
Amortization of
acquired
technology-based
intangible assets 22,454 (22,454) (2) -
GAAP-based gross
profit and gross
margin (%) / 331,998 68.8% 23,327 (3) 355,325 73.6%
Non-GAAP-based gross profit
and gross margin (%)
Operating expenses
Research and
development 52,357 (665) (1) 51,692
Sales and marketing 104,443 (2,508) (1) 101,935
General and
administrative 41,766 (2,061) (1) 39,705
Amortization of
acquired customer-
based intangible
assets 28,741 (28,741) (2) -
Special charges
(recoveries) 8,791 (8,791) (4) -
GAAP-based income
from operations
and operating
margin (%) /Non-
GAAP-based income
from operations
and operating
margin (%) 82,510 17.1% 66,093 (5) 148,603 30.8%
Other income
(expense), net 690 (690) (6) -
Provision for
(recovery of)
income taxes (3,763) 27,272 (7) 23,509
GAAP-based net
income /Non-
GAAP-based net
income,
attributable to
OpenText 68,804 38,131 (8) 106,935
GAAP-based
earnings per share
/Non GAAP-based
earnings per
share-diluted,
attributable to
OpenText $0.56 $0.31 (8) $0.87
(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
revenue.
(4) Adjustment relates to the exclusion of
Special charges (recoveries) from our
Non-GAAP-based operating expenses as
Special charges are generally incurred
in the periods following the relevant
acquisitions and 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, and
operating margin stated as a
percentage of revenue.
(6) Adjustment relates to the exclusion of
Other income (expense) from our Non-
GAAP-based operating expenses as
Other income (expense) relates
primarily 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.
(7) Adjustment relates to differences
between the GAAP-based tax recovery
rate of approximately 6% and a non-
GAAP-based tax rate of 18%; these
rate differences are due to the income
tax effects of expenses that are
excluded for the purpose of
calculating non-GAAP-based adjusted
net income. Such excluded expenses
include amortization, share-based
compensation, special charges and
other income (expense), net. Also
excluded are tax expense items
unrelated to current period income
such as changes in reserves for tax
uncertainties and valuation allowance
reserves, tax arising on internal
reorganizations, and "book to return"
adjustments for tax return filings and
tax assessments (in total "adjusted
expenses"). In arriving at our non-
GAAP-based tax rate of 18%, 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 Non-GAAP-based
adjusted net income to GAAP-based net
income:
Three Months Ended June 30, 2015
--------------------------------
Per share
diluted
----------
Non-GAAP-based net income,
attributable to OpenText $106,935 $0.87
Less:
Amortization 51,195 0.42
Share-based compensation 6,107 0.05
Special charges (recoveries) 8,791 0.07
Other (income) expense, net (690) (0.01)
GAAP-based provision for
(recovery of) income taxes (3,763) (0.03)
Non-GAAP based provision for
income taxes (23,509) (0.19)
------- -----
GAAP-based net income,
attributable to OpenText $68,804 $0.56
======= =====
Reconciliation of selected GAAP-based measures to Non GAAP-based measures for the three months ended September 30, 2014.
(In thousands except for per share amounts)
------------------------------------------
Three Months Ended September 30, 2014
-------------------------------------
GAAP-based GAAP-based Adjustments Note Non-GAAP-based Non-GAAP-
Measures based
Measures
Measures % of Revenue Measures % of Revenue
-------- ------------ -------- ------------
Cost of revenues:
Cloud services and
subscriptions $59,577 $(213) (1) $59,364
Customer support 22,963 (174) (1) 22,789
Professional
service and other 43,197 (263) (1) 42,934
Amortization of
acquired
technology-based
intangible assets 18,206 (18,206) (2) -
GAAP-based gross
profit and gross
margin (%) / 306,847 67.6% 18,856 (3) 325,703 71.8%
Non-GAAP-based gross profit
and gross margin (%)
Operating expenses
Research and
development 44,742 (563) (1) 44,179
Sales and marketing 81,041 (2,074) (1) 78,967
General and
administrative 35,743 (1,162) (1) 34,581
Amortization of
acquired customer-
based intangible
assets 25,884 (25,884) (2) -
Special charges
(recoveries) 4,169 (4,169) (4) -
GAAP-based income
from operations
and operating
margin (%) /Non-
GAAP-based income
from operations
and operating
margin (%) 103,026 22.7% 52,708 (5) 155,734 34.3%
Other income
(expense), net (9,873) 9,873 (6) -
Provision for
(recovery of)
income taxes 17,402 8,606 (7) 26,008
GAAP-based net
income /Non-
GAAP-based net
income,
attributable to
OpenText 64,626 53,975 (8) 118,601
GAAP-based
earnings per share
/Non GAAP-based
earnings per
share-diluted,
attributable to
OpenText $0.53 $0.44 (8) $0.97
(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
revenue.
(4) Adjustment relates to the exclusion of
Special charges (recoveries) from our
Non-GAAP-based operating expenses as
Special charges are generally incurred
in the periods following the relevant
acquisitions and 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, and
operating margin stated as a
percentage of revenue.
(6) Adjustment relates to the exclusion of
Other income (expense) from our Non-
GAAP-based operating expenses as
Other income (expense) relates
primarily 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.
(7) Adjustment relates to differences
between the GAAP-based tax provision
rate of approximately 21% and a non-
GAAP-based tax rate of 18%; these
rate differences are due to the income
tax effects of expenses that are
excluded for the purpose of
calculating non-GAAP-based adjusted
net income. Such excluded expenses
include amortization, share-based
compensation, special charges and
other income (expense), net. Also
excluded are tax expense items
unrelated to current period income
such as changes in reserves for tax
uncertainties and valuation allowance
reserves, tax arising on internal
reorganizations, and "book to return"
adjustments for tax return filings and
tax assessments (in total "adjusted
expenses"). In arriving at our non-
GAAP-based tax rate of 18%, 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 Non-GAAP-based
adjusted net income to GAAP-based net
income:
Three Months Ended September 30,
2014
--------------------------------
Per share
diluted
----------
Non-GAAP-based net income,
attributable to OpenText $118,601 $0.97
Less:
Amortization 44,090 0.36
Share-based compensation 4,449 0.04
Special charges (recoveries) 4,169 0.03
Other (income) expense, net 9,873 0.08
GAAP-based provision for
(recovery of) income taxes 17,402 0.14
Non-GAAP based provision for
income taxes (26,008) (0.21)
GAAP-based net income,
attributable to OpenText $64,626 $0.53
======= =====
(3) The following tables provide a composition of our
major currencies for revenue and expenses,
expressed as a percentage, for the three months
ended September 30, 2015 and 2014:
Three Months Ended Three Months Ended
September 30, 2015 September 30, 2014
------------------ ------------------
Currencies % of Revenue % of Expenses* % of Revenue % of Expenses*
------------ ------------- ------------ -------------
EURO 23% 14% 25% 15%
GBP 9% 8% 9% 9%
CAD 4% 13% 5% 13%
USD 54% 49% 49% 45%
Other 10% 16% 12% 18%
--- --- --- ---
Total 100% 100% 100% 100%
=== === === ===
*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
To view the original version on PR Newswire, visit:http://www.prnewswire.com/news-releases/opentext-reports-first-quarter-fiscal-year-2016-financial-results-300168126.html
SOURCE Open Text Corporation
