OpenText Reports First Quarter Fiscal Year 2019 Financial Results

 


Three Months Ended June 30, 2018



Per share diluted

GAAP-based net income, attributable to OpenText

$

61,723


$

0.23


Add:



Amortization

94,776


0.35


Share-based compensation

7,121


0.03


Special charges (recoveries)

7,821


0.03


Other (income) expense, net

8,938


0.03


GAAP-based provision for (recovery of) income taxes

43,182


0.16


Non-GAAP-based provision for income taxes

(31,322)


(0.11)


Non-GAAP-based net income, attributable to OpenText

$

192,239


$

0.72


 

 

Reconciliation of Adjusted EBITDA


Three Months Ended June 30, 2018

GAAP-based net income, attributable to OpenText

$

61,723


Add:


Provision for (recovery of) income taxes

43,182


Interest and other related expense, net

35,345


Amortization of acquired technology-based intangible assets

47,477


Amortization of acquired customer-based intangible assets

47,299


Depreciation

22,901


Share-based compensation

7,121


Special charges (recoveries)

7,821


Other (income) expense, net

8,938


Adjusted EBITDA

$

281,807


 


Reconciliation of selected GAAP-based measures to Non-GAAP-based measures for the three months ended September 30, 2017.

(In thousands except for per share amounts)


Three Months Ended September 30, 2017


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

$

84,134



$

(522)


(1)

$

83,612



Customer support

32,770



(329)


(1)

32,441



Professional service and other

59,428



(597)


(1)

58,831



Amortization of acquired technology-based intangible assets

43,960



(43,960)


(2)



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

417,435


65.2

%

45,408


(3)

462,843


72.2

%

Operating expenses







Research and development

77,574



(1,626)


(1)

75,948



Sales and marketing

122,615



(3,088)


(1)

119,527



General and administrative

48,902



(2,073)


(1)

46,829



Amortization of acquired customer-based intangible assets

43,789



(43,789)


(2)



Special charges (recoveries)

18,031



(18,031)


(4)



GAAP-based income from operations / Non-GAAP-based income from operations

87,646



114,015


(5)

201,661



Other income (expense), net

10,224



(10,224)


(6)



Provision for (recovery of) income taxes

27,369



(2,191)


(7)

25,178



GAAP-based net income / Non-GAAP-based net income, attributable to OpenText

36,596



105,982


(8)

142,578



GAAP-based earnings per share / Non-GAAP-based earnings per share-diluted, attributable to OpenText

$

0.14



$

0.40


(8)

$

0.54


















(1)

Adjustment relates to the exclusion of share-based compensation expense from our Non-GAAP-based operating expenses as this expense is excluded from our internal analysis of operating results.

(2)

Adjustment relates to the exclusion of amortization expense from our Non-GAAP-based operating expenses as the timing and frequency of amortization expense is dependent on our acquisitions and is hence excluded from our internal analysis of operating results.

(3)

GAAP-based and Non-GAAP-based gross profit stated in dollars, and gross margin stated as a percentage of total revenue.

(4)

Adjustment relates to the exclusion of Special charges (recoveries) from our Non-GAAP-based operating expenses as Special charges (recoveries) are generally incurred in the periods relevant to an acquisition and include certain charges or recoveries that are not indicative or related to continuing operations, and are therefore excluded from our internal analysis of operating results.

(5)

GAAP-based and Non-GAAP-based income from operations stated in dollars.

(6)

Adjustment relates to the exclusion of Other income (expense) from our Non-GAAP-based operating expenses as Other income (expense) generally relates to the transactional impact of foreign exchange and is generally not indicative or related to continuing operations and is therefore excluded from our internal analysis of operating results. Other income (expense) also includes our share of income (losses) from our holdings in non-marketable securities investments as a limited partner. We do not actively trade equity securities in these privately held companies nor do we plan our ongoing operations based around any anticipated fundings or distributions from these investments. We exclude gains and losses on these investments as we do not believe they are reflective of our ongoing business and operating results.

(7)

Adjustment relates to differences between the GAAP-based tax provision rate of approximately 43% and a Non-GAAP-based tax rate of approximately 15%; these rate differences are due to the income tax effects of items that are excluded for the purpose of calculating Non-GAAP-based adjusted net income. Such excluded items include amortization, share-based compensation, Special charges (recoveries) and other income (expense), net. Also excluded are tax benefits/expense items unrelated to current period income such as changes in reserves for tax uncertainties and valuation allowance reserves, and "book to return" adjustments for tax return filings and tax assessments. Included is the amount of net tax benefits arising from the internal reorganization that occurred in Fiscal 2017 assumed to be allocable to the current period based on the forecasted utilization period. In arriving at our Non-GAAP-based tax rate of approximately 15%, 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:


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