Canada | 0-27544 | 98-0154400 |
(State or Other Jurisdiction of Incorporation) | (Commission File Number) | (IRS Employer Identification No.) |
Item 2.02 | Results of Operations and Financial Condition |
Item 8.01 | Other Events |
Item 9.01 | Financial Statements and Exhibits |
(d) | Exhibits |
Exhibit No. | Description | |
99.1 | Press Release of financial results issued by Open Text Corporation on January 27, 2015 |
OPEN TEXT CORPORATION | ||||
January 27, 2015 | By: | /s/ John M. Doolittle | ||
John M. Doolittle Chief Financial Officer |
Exhibit No. | Description | |
99.1 | Press Release of financial results issued by Open Text Corporation on January 27, 2015 |
• | Total revenue was $467.8 million, up 29% |
• | Recurring revenue was $392.0 million, up 39% |
• | Cloud services revenue was $151.3 million, up 259% |
• | Customer support revenue was $179.5 million, up 3% |
• | License revenue was $75.8 million, down 7% |
• | Foreign exchange negatively impacted total revenue by $15 million (4) |
• | Non-GAAP-based EPS, diluted was $0.97 compared to $0.79 up 23%; GAAP-based EPS, diluted was $0.60 compared to $0.45 up 33%, on a post stock-split basis.(2) |
• | Non-GAAP-based income from operations was $153.3 million and 33% of revenues, up 36%; GAAP-based income from operations was $110.6 million and 24% of revenues, up 50%.(2) |
• | Foreign exchange negatively impacted non-GAAP-based EPS by $0.03 (4) |
• | Operating cash flow was $109.6 million, up 80% with an ending cash balance of $542.8 million. |
• | OpenText buys Actuate Corporation |
• | OpenText buys Informative Graphics Corporation |
• | OpenText issued $800.0 million in aggregate principal by way of 5.625% senior notes due 2023 in a private placement on January 15, 2015 |
• | 15 customer transactions over $1 million, 6 in the OpenText Cloud and 9 on-premises |
• | Financial, services and technology sector industries saw the most demand |
• | Cloud customer successes in the quarter include Schneider Electric Industries, Nestle S.A. and Nestle Purina Pet Care |
• | License customer successes in the quarter include DB Schenker, Insurance Australia Group, Singapore Power, IGATE, Fox Entertainment Group, Monster Beverage Corp., GEMA, Airbus and The Bosch Group |
• | OpenText launches data centers to support customers in Japan and across the Asia-Pacific Region |
• | OpenText launches OpenText Core, a new enterprise-grade cloud information management solution |
• | OpenText named one of Canada's Top 100 Employers for the fourth consecutive year |
Summary of Quarterly Results | |||||||||||||||
Q2 FY15 | Q1 FY15 | Q2 FY14 | % Change (Q/Q) | % Change (Y/Y) | |||||||||||
Revenue (million) | $467.8 | $453.8 | $363.5 | 3.1 | % | 28.7 | % | ||||||||
GAAP-based gross margin | 68.1 | % | 67.4 | % | 70.3 | % | 70 | bps | (220 | ) | bps | ||||
GAAP-based operating margin | 23.6 | % | 22.7 | % | 20.3 | % | 90 | bps | 330 | bps | |||||
GAAP-based EPS, diluted | $0.60 | $0.53 | $0.45 | 13.2 | % | 33.3 | % | ||||||||
Non-GAAP-based gross margin (2) | 72.2 | % | 71.6 | % | 74.0 | % | 60 | bps | (180 | ) | bps | ||||
Non-GAAP-based operating margin (2) | 32.8 | % | 34.3 | % | 30.9 | % | (150 | ) | bps | 190 | bps | ||||
Non-GAAP-based EPS, diluted (2) | $0.97 | $0.97 | $0.79 | — | % | 22.8 | % |
Summary of Year to Date Results | ||||||||||||
Q2 FY15 YTD | Q1 FY15 | Q2 FY14 YTD | % Change (Y/Y) | |||||||||
Revenue (million) | $921.6 | $453.8 | $688.0 | 34.0 | % | |||||||
GAAP-based gross margin | 67.8 | % | 67.4 | % | 68.8 | % | (100 | ) | bps | |||
GAAP-based operating margin | 23.2 | % | 22.7 | % | 18.3 | % | 490 | bps | ||||
GAAP-based EPS, diluted | $1.13 | $0.53 | $0.71 | 59.2 | % | |||||||
Non-GAAP-based gross margin (2) | 71.9 | % | 71.6 | % | 74.0 | % | (210 | ) | bps | |||
Non-GAAP-based operating margin (2) | 33.5 | % | 34.3 | % | 30.7 | % | 280 | bps | ||||
Non-GAAP-based EPS, diluted (2) | $1.93 | $0.97 | $1.48 | 30.4 | % |
December 31, 2014 | June 30, 2014 | ||||||
(unaudited) | |||||||
ASSETS | |||||||
Cash and cash equivalents | $ | 542,810 | $ | 427,890 | |||
Accounts receivable trade, net of allowance for doubtful accounts of $6,211 as of December 31, 2014 and $4,727 as of June 30, 2014 | 258,230 | 292,929 | |||||
Income taxes recoverable | 16,374 | 24,648 | |||||
Prepaid expenses and other current assets | 52,533 | 42,053 | |||||
Deferred tax assets | 31,375 | 28,215 | |||||
Total current assets | 901,322 | 815,735 | |||||
Property and equipment | 153,841 | 142,261 | |||||
Goodwill | 1,940,304 | 1,963,557 | |||||
Acquired intangible assets | 637,660 | 725,318 | |||||
Deferred tax assets | 152,030 | 156,712 | |||||
Other assets | 57,823 | 52,041 | |||||
Deferred charges | 44,820 | 52,376 | |||||
Long-term income taxes recoverable | 8,517 | 10,638 | |||||
Total assets | $ | 3,896,317 | $ | 3,918,638 | |||
LIABILITIES AND SHAREHOLDERS' EQUITY | |||||||
Current liabilities: | |||||||
Accounts payable and accrued liabilities | $ | 193,510 | $ | 231,954 | |||
Current portion of long-term debt | 65,289 | 62,582 | |||||
Deferred revenues | 292,162 | 332,664 | |||||
Income taxes payable | 11,729 | 31,630 | |||||
Deferred tax liabilities | 834 | 1,053 | |||||
Total current liabilities | 563,524 | 659,883 | |||||
Long-term liabilities: | |||||||
Accrued liabilities | 33,098 | 41,999 | |||||
Deferred credits | 15,236 | 17,529 | |||||
Pension liability | 65,346 | 60,300 | |||||
Long-term debt | 1,226,500 | 1,256,750 | |||||
Deferred revenues | 18,022 | 17,248 | |||||
Long-term income taxes payable | 161,036 | 162,131 | |||||
Deferred tax liabilities | 54,177 | 60,631 | |||||
Total long-term liabilities | 1,573,415 | 1,616,588 | |||||
Shareholders' equity: | |||||||
Share capital | |||||||
122,078,994 and 121,758,432 Common Shares issued and outstanding at December 31, 2014 and June 30, 2014, respectively; Authorized Common Shares: unlimited | 801,810 | 792,834 | |||||
Additional paid-in capital | 114,951 | 112,398 | |||||
Accumulated other comprehensive income | 39,632 | 39,449 | |||||
Retained earnings | 813,131 | 716,317 | |||||
Treasury stock, at cost (407,725 shares at December 31, 2014 and 763,278 at June 30, 2014, respectively) | (10,680 | ) | (19,132 | ) | |||
Total OpenText shareholders' equity | 1,758,844 | 1,641,866 | |||||
Non-controlling interests | 534 | 301 | |||||
Total shareholders' equity | 1,759,378 | 1,642,167 | |||||
Total liabilities and shareholders' equity | $ | 3,896,317 | $ | 3,918,638 |
Three Months Ended December 31, | Six Months Ended December 31, | |||||||||||||||
2014 | 2013 | 2014 | 2013 | |||||||||||||
Revenues: | ||||||||||||||||
License | $ | 75,824 | $ | 81,164 | $ | 134,439 | $ | 136,470 | ||||||||
Cloud services | 151,269 | 42,131 | 301,275 | 83,778 | ||||||||||||
Customer support | 179,466 | 174,425 | 363,372 | 342,865 | ||||||||||||
Professional service and other | 61,286 | 65,787 | 122,546 | 124,854 | ||||||||||||
Total revenues | 467,845 | 363,507 | 921,632 | 687,967 | ||||||||||||
Cost of revenues: | ||||||||||||||||
License | 3,412 | 3,304 | 6,500 | 6,340 | ||||||||||||
Cloud services | 56,974 | 15,963 | 114,970 | 30,228 | ||||||||||||
Customer support | 23,942 | 24,409 | 47,160 | 46,579 | ||||||||||||
Professional service and other | 46,641 | 51,245 | 92,002 | 96,680 | ||||||||||||
Amortization of acquired technology-based intangible assets | 18,206 | 13,035 | 36,412 | 34,565 | ||||||||||||
Total cost of revenues | 149,175 | 107,956 | 297,044 | 214,392 | ||||||||||||
Gross profit | 318,670 | 255,551 | 624,588 | 473,575 | ||||||||||||
Operating expenses: | ||||||||||||||||
Research and development | 46,170 | 41,917 | 90,912 | 82,133 | ||||||||||||
Sales and marketing | 90,010 | 81,290 | 170,109 | 150,703 | ||||||||||||
General and administrative | 39,849 | 32,815 | 75,605 | 61,701 | ||||||||||||
Depreciation | 12,465 | 6,898 | 24,707 | 13,356 | ||||||||||||
Amortization of acquired customer-based intangible assets | 25,364 | 12,432 | 51,248 | 29,709 | ||||||||||||
Special charges (recoveries) | (5,759 | ) | 6,268 | (1,590 | ) | 9,999 | ||||||||||
Total operating expenses | 208,099 | 181,620 | 410,991 | 347,601 | ||||||||||||
Income from operations | 110,571 | 73,931 | 213,597 | 125,974 | ||||||||||||
Other income (expense), net | (9,314 | ) | (740 | ) | (19,187 | ) | 1,186 | |||||||||
Interest and other related expense, net | (8,455 | ) | (3,040 | ) | (19,554 | ) | (7,425 | ) | ||||||||
Income before income taxes | 92,802 | 70,151 | 174,856 | 119,735 | ||||||||||||
Provision for income taxes | 18,308 | 16,651 | 35,710 | 35,605 | ||||||||||||
Net income for the period | $ | 74,494 | $ | 53,500 | $ | 139,146 | $ | 84,130 | ||||||||
Net (income) loss attributable to non-controlling interests | (207 | ) | — | (233 | ) | — | ||||||||||
Net income attributable to OpenText | $ | 74,287 | $ | 53,500 | $ | 138,913 | $ | 84,130 | ||||||||
Earnings per share—basic attributable to OpenText | $ | 0.61 | $ | 0.45 | $ | 1.14 | $ | 0.71 | ||||||||
Earnings per share—diluted attributable to OpenText | $ | 0.60 | $ | 0.45 | $ | 1.13 | $ | 0.71 | ||||||||
Weighted average number of Common Shares outstanding—basic | 122,051 | 118,272 | 121,984 | 118,200 | ||||||||||||
Weighted average number of Common Shares outstanding—diluted | 122,985 | 119,186 | 122,934 | 118,950 | ||||||||||||
Dividends declared per Common Share | $ | 0.1725 | $ | 0.1500 | $ | 0.3450 | $ | 0.3000 |
Three Months Ended December 31, | Six Months Ended December 31, | |||||||||||||||
2014 | 2013 | 2014 | 2013 | |||||||||||||
Net income for the period | $ | 74,494 | $ | 53,500 | $ | 139,146 | $ | 84,130 | ||||||||
Other comprehensive income—net of tax: | ||||||||||||||||
Net foreign currency translation adjustments | 5,241 | 113 | 8,346 | 354 | ||||||||||||
Unrealized gain (loss) on cash flow hedges: | ||||||||||||||||
Unrealized gain (loss) | (1,316 | ) | (1,433 | ) | (4,216 | ) | 87 | |||||||||
Loss reclassified into net income | 944 | 589 | 997 | 1,173 | ||||||||||||
Actuarial gain (loss) relating to defined benefit pension plans: | ||||||||||||||||
Actuarial gain (loss) | (3,937 | ) | 944 | (7,055 | ) | 1,027 | ||||||||||
Amortization of actuarial loss into net income | 84 | 73 | 205 | 146 | ||||||||||||
Unrealized gain on marketable securities | 2,400 | — | 1,906 | — | ||||||||||||
Total other comprehensive income (loss), net, for the period | 3,416 | 286 | 183 | 2,787 | ||||||||||||
Total comprehensive income | 77,910 | 53,786 | 139,329 | 86,917 | ||||||||||||
Comprehensive income attributable to non-controlling interests | (207 | ) | — | (233 | ) | — | ||||||||||
Total comprehensive income attributable to OpenText | $ | 77,703 | $ | 53,786 | $ | 139,096 | $ | 86,917 |
Three Months Ended December 31, | Six Months Ended December 31, | ||||||||||||||
2014 | 2013 | 2014 | 2013 | ||||||||||||
Cash flows from operating activities: | |||||||||||||||
Net income for the period | $ | 74,494 | $ | 53,500 | $ | 139,146 | $ | 84,130 | |||||||
Adjustments to reconcile net income to net cash provided by operating activities: | |||||||||||||||
Depreciation and amortization of intangible assets | 56,035 | 32,365 | 112,367 | 77,630 | |||||||||||
Share-based compensation expense | 4,929 | 6,677 | 9,378 | 11,289 | |||||||||||
Excess tax benefits on share-based compensation expense | (1,232 | ) | (1,008 | ) | (1,627 | ) | (1,081 | ) | |||||||
Pension expense | 1,202 | 437 | 2,422 | 790 | |||||||||||
Amortization of debt issuance costs | 1,132 | 519 | 2,275 | 1,044 | |||||||||||
Amortization of deferred charges and credits | 2,632 | 2,967 | 5,263 | 5,934 | |||||||||||
Loss on sale and write down of property and equipment | — | (6 | ) | — | 15 | ||||||||||
Deferred taxes | 2,764 | (1,329 | ) | 1,219 | (3,198 | ) | |||||||||
Changes in operating assets and liabilities: | |||||||||||||||
Accounts receivable | (15,294 | ) | (19,602 | ) | 40,249 | 9,176 | |||||||||
Prepaid expenses and other current assets | (548 | ) | (729 | ) | (697 | ) | (4,161 | ) | |||||||
Income taxes | (6,207 | ) | (5,093 | ) | 11,599 | 2,409 | |||||||||
Deferred charges and credits | — | 5,788 | — | 8,488 | |||||||||||
Accounts payable and accrued liabilities | (3,187 | ) | 7,247 | (37,326 | ) | (10,846 | ) | ||||||||
Deferred revenue | (5,990 | ) | (21,574 | ) | (32,745 | ) | (40,134 | ) | |||||||
Other assets | (1,158 | ) | 716 | (3,420 | ) | (686 | ) | ||||||||
Net cash provided by operating activities | 109,572 | 60,875 | 248,103 | 140,799 | |||||||||||
Cash flows from investing activities: | |||||||||||||||
Additions of property and equipment | (18,026 | ) | (11,913 | ) | (48,261 | ) | (20,228 | ) | |||||||
Purchase of patents | — | (192 | ) | — | (192 | ) | |||||||||
Purchase of Cordys Holding B.V., net of cash acquired | — | — | — | (30,588 | ) | ||||||||||
Purchase of a division of Spicer Corporation | (222 | ) | — | (222 | ) | — | |||||||||
Purchase consideration for prior period acquisitions | (221 | ) | (221 | ) | (443 | ) | (443 | ) | |||||||
Other investing activities | (1,059 | ) | 526 | (8,433 | ) | (974 | ) | ||||||||
Net cash used in investing activities | (19,528 | ) | (11,800 | ) | (57,359 | ) | (52,425 | ) | |||||||
Cash flows from financing activities: | |||||||||||||||
Excess tax benefits on share-based compensation expense | 1,232 | 1,008 | 1,627 | 1,081 | |||||||||||
Proceeds from issuance of Common Shares | 2,039 | 3,606 | 9,138 | 5,429 | |||||||||||
Repayment of long-term debt | (13,413 | ) | (11,419 | ) | (26,830 | ) | (19,087 | ) | |||||||
Debt issuance costs | (1,220 | ) | (273 | ) | (1,403 | ) | (273 | ) | |||||||
Payments of dividends to shareholders | (21,054 | ) | (17,747 | ) | (42,099 | ) | (35,468 | ) | |||||||
Net cash used in financing activities | (32,416 | ) | (24,825 | ) | (59,567 | ) | (48,318 | ) | |||||||
Foreign exchange gain (loss) on cash held in foreign currencies | (7,304 | ) | (43 | ) | (16,257 | ) | 4,853 | ||||||||
Increase in cash and cash equivalents during the period | 50,324 | 24,207 | 114,920 | 44,909 | |||||||||||
Cash and cash equivalents at beginning of the period | 492,486 | 491,147 | 427,890 | 470,445 | |||||||||||
Cash and cash equivalents at end of the period | $ | 542,810 | $ | 515,354 | $ | 542,810 | $ | 515,354 |
(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. |
Reconciliation of selected GAAP-based measures to Non-GAAP-based measures for the three months ended December 31, 2014. (In thousands except for per share amounts) | ||||||||||||||
Three Months Ended December 31, 2014 | ||||||||||||||
GAAP-based Measures | GAAP-based Measures % of Revenue | Adjustments | Note | Non-GAAP-based Measures | Non-GAAP-based Measures % of Revenue | |||||||||
Cost of revenues | ||||||||||||||
Cloud services | $ | 56,974 | $ | (186 | ) | (1) | $ | 56,788 | ||||||
Customer support | 23,942 | (234 | ) | (1) | 23,708 | |||||||||
Professional service and other | 46,641 | (335 | ) | (1) | 46,306 | |||||||||
Amortization of acquired technology-based intangible assets | 18,206 | (18,206 | ) | (2) | — | |||||||||
GAAP-based gross profit and gross margin (%) / Non-GAAP-based gross profit and gross margin (%) | 318,670 | 68.1 | % | 18,961 | (3) | 337,631 | 72.2 | % | ||||||
Operating expenses | ||||||||||||||
Research and development | 46,170 | (614 | ) | (1) | 45,556 | |||||||||
Sales and marketing | 90,010 | (2,594 | ) | (1) | 87,416 | |||||||||
General and administrative | 39,849 | (966 | ) | (1) | 38,883 | |||||||||
Amortization of acquired customer-based intangible assets | 25,364 | (25,364 | ) | (2) | — | |||||||||
Special charges (recoveries) | (5,759 | ) | 5,759 | (4) | — | |||||||||
GAAP-based income from operations and operating margin (%) / Non-GAAP-based income from operations and operating margin (%) | 110,571 | 23.6 | % | 42,740 | (5) | 153,311 | 32.8 | % | ||||||
Other income (expense), net | (9,314 | ) | 9,314 | (6) | — | |||||||||
Provision for (recovery of) income taxes | 18,308 | 7,559 | (7) | 25,867 | ||||||||||
GAAP-based net income / Non-GAAP-based net income, attributable to OpenText | 74,287 | 44,495 | (8) | 118,782 | ||||||||||
GAAP-based earnings per share / Non GAAP-based earnings per share-diluted, attributable to OpenText | $ | 0.60 | $ | 0.37 | (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 of approximately 20% 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. |
(8) | Reconciliation of Non-GAAP-based adjusted net income to GAAP-based net income: |
Three Months Ended December 31, 2014 | ||||||
Per share diluted | ||||||
Non-GAAP-based net income, attributable to OpenText | $ | 118,782 | $ | 0.97 | ||
Less: | ||||||
Amortization | 43,570 | 0.35 | ||||
Share-based compensation | 4,929 | 0.04 | ||||
Special charges (recoveries) | (5,759 | ) | (0.05 | ) | ||
Other (income) expense, net | 9,314 | 0.08 | ||||
GAAP-based provision for (recovery of) income taxes | 18,308 | 0.15 | ||||
Non-GAAP based provision for income taxes | (25,867 | ) | (0.20 | ) | ||
GAAP-based net income, attributable to OpenText | $ | 74,287 | $ | 0.60 |
Reconciliation of selected GAAP-based measures to Non-GAAP-based measures for the six months ended December 31, 2014. (In thousands except for per share amounts) | ||||||||||||||
Six Months Ended December 31, 2014 | ||||||||||||||
GAAP-based Measures | GAAP-based Measures % of Revenue | Adjustments | Note | Non-GAAP-based Measures | Non-GAAP-based Measures % of Revenue | |||||||||
Cost of revenues | ||||||||||||||
Cloud services | $ | 114,970 | $ | (399 | ) | (1) | $ | 114,571 | ||||||
Customer support | 47,160 | (408 | ) | (1) | 46,752 | |||||||||
Professional service and other | 92,002 | (598 | ) | (1) | 91,404 | |||||||||
Amortization of acquired technology-based intangible assets | 36,412 | (36,412 | ) | (2) | — | |||||||||
GAAP-based gross profit and gross margin (%) / Non-GAAP-based gross profit and gross margin (%) | 624,588 | 67.8 | % | 37,817 | (3) | 662,405 | 71.9 | % | ||||||
Operating expenses | ||||||||||||||
Research and development | 90,912 | (1,177 | ) | (1) | 89,735 | |||||||||
Sales and marketing | 170,109 | (4,668 | ) | (1) | 165,441 | |||||||||
General and administrative | 75,605 | (2,128 | ) | (1) | 73,477 | |||||||||
Amortization of acquired customer-based intangible assets | 51,248 | (51,248 | ) | (2) | — | |||||||||
Special charges (recoveries) | (1,590 | ) | 1,590 | (4) | — | |||||||||
GAAP-based income from operations and operating margin (%) / Non-GAAP-based income from operations and operating margin (%) | 213,597 | 23.2 | % | 95,448 | (5) | 309,045 | 33.5 | % | ||||||
Other income (expense), net | (19,187 | ) | 19,187 | (6) | — | |||||||||
Provision for (recovery of) income taxes | 35,710 | 16,165 | (7) | 51,875 | ||||||||||
GAAP-based net income / Non-GAAP-based net income, attributable to OpenText | 138,913 | 98,470 | (8) | 237,383 | ||||||||||
GAAP-based earnings per share / Non GAAP-based earnings per share-diluted, attributable to OpenText | $ | 1.13 | $ | 0.80 | (8) | $ | 1.93 |
(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 of approximately 20% 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. |
(8) | Reconciliation of Non-GAAP-based adjusted net income to GAAP-based net income: |
Six Months Ended December 31, 2014 | ||||||
Per share diluted | ||||||
Non-GAAP-based net income, attributable to OpenText | $ | 237,383 | $ | 1.93 | ||
Less: | ||||||
Amortization | 87,660 | 0.71 | ||||
Share-based compensation | 9,378 | 0.08 | ||||
Special charges (recoveries) | (1,590 | ) | (0.01 | ) | ||
Other (income) expense, net | 19,187 | 0.16 | ||||
GAAP-based provision for (recovery of) income taxes | 35,710 | 0.29 | ||||
Non-GAAP based provision for income taxes | (51,875 | ) | (0.43 | ) | ||
GAAP-based net income, attributable to OpenText | $ | 138,913 | $ | 1.13 |
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 Measures | GAAP-based Measures % of Revenue | Adjustments | Note | Non-GAAP-based Measures | Non-GAAP-based Measures % of Revenue | |||||||||
Cost of revenues | ||||||||||||||
Cloud services | $ | 57,996 | $ | (213 | ) | (1) | $ | 57,783 | ||||||
Customer support | 23,218 | (174 | ) | (1) | 23,044 | |||||||||
Professional service and other | 45,361 | (263 | ) | (1) | 45,098 | |||||||||
Amortization of acquired technology-based intangible assets | 18,206 | (18,206 | ) | (2) | — | |||||||||
GAAP-based gross profit and gross margin (%) / Non-GAAP-based gross profit and gross margin (%) | 305,918 | 67.4 | % | 18,856 | (3) | 324,774 | 71.6 | % | ||||||
Operating expenses | ||||||||||||||
Research and development | 44,742 | (563 | ) | (1) | 44,179 | |||||||||
Sales and marketing | 80,099 | (2,074 | ) | (1) | 78,025 | |||||||||
General and administrative | 35,756 | (1,162 | ) | (1) | 34,594 | |||||||||
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 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. |
(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 |
Reconciliation of selected GAAP-based measures to Non GAAP-based measures for the three months ended December 31, 2013. (In thousands except for per share amounts) | ||||||||||||||
Three Months Ended December 31, 2013 | ||||||||||||||
GAAP-based Measures | GAAP-based Measures % of Revenue | Adjustments | Note | Non-GAAP-based Measures | Non-GAAP-based Measures % of Revenue | |||||||||
Cost of revenues: | ||||||||||||||
Cloud services | $ | 15,963 | $ | 60 | (1) | $ | 16,023 | |||||||
Customer support | 24,409 | (312 | ) | (1) | 24,097 | |||||||||
Professional service and other | 51,245 | (328 | ) | (1) | 50,917 | |||||||||
Amortization of acquired technology-based intangible assets | 13,035 | (13,035 | ) | (2) | — | |||||||||
GAAP-based gross profit and gross margin (%) / Non-GAAP-based gross profit and gross margin (%) | 255,551 | 70.3 | % | 13,615 | (3) | 269,166 | 74.0 | % | ||||||
Operating expenses | ||||||||||||||
Research and development | 41,917 | (794 | ) | (1) | 41,123 | |||||||||
Sales and marketing | 81,290 | (1,921 | ) | (1) | 79,369 | |||||||||
General and administrative | 32,815 | (3,382 | ) | (1) | 29,433 | |||||||||
Amortization of acquired customer-based intangible assets | 12,432 | (12,432 | ) | (2) | — | |||||||||
Special charges (recoveries) | 6,268 | (6,268 | ) | (4) | — | |||||||||
GAAP-based income from operations and operating margin (%) / Non-GAAP-based income from operations and operating margin (%) | 73,931 | 20.3 | % | 38,412 | (5) | 112,343 | 30.9 | % | ||||||
Other income (expense), net | (740 | ) | 740 | (6) | — | |||||||||
Provision for (recovery of) income taxes | 16,651 | (1,349 | ) | (7) | 15,302 | |||||||||
GAAP-based net income / Non-GAAP-based net income, attributable to OpenText | 53,500 | 40,501 | (8) | 94,001 | ||||||||||
GAAP-based earnings per share / Non GAAP-based earnings per share-diluted, attributable to OpenText | $ | 0.45 | $ | 0.34 | (8) | $ | 0.79 |
(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 of approximately 24% and a Non-GAAP-based tax rate of 14%; 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. |
(8) | Reconciliation of Non-GAAP-based adjusted net income to GAAP-based net income: |
Three Months Ended December 31, 2013 | ||||||
Per share diluted | ||||||
Non-GAAP-based net income, attributable to OpenText | $ | 94,001 | $ | 0.79 | ||
Less: | ||||||
Amortization | 25,467 | 0.21 | ||||
Share-based compensation | 6,677 | 0.06 | ||||
Special charges (recoveries) | 6,268 | 0.05 | ||||
Other (income) expense, net | 740 | 0.01 | ||||
GAAP-based provision for (recovery of) income taxes | 16,651 | 0.14 | ||||
Non-GAAP based provision for income taxes | (15,302 | ) | (0.13 | ) | ||
GAAP-based net income, attributable to OpenText | $ | 53,500 | $ | 0.45 |
Reconciliation of selected GAAP-based measures to Non GAAP-based measures for the six months ended December 31, 2013. (In thousands except for per share amounts) | ||||||||||||||
Six Months Ended December 31, 2013 | ||||||||||||||
GAAP-based Measures | GAAP-based Measures % of Revenue | Adjustments | Note | Non-GAAP-based Measures | Non-GAAP-based Measures % of Revenue | |||||||||
Cost of revenues: | ||||||||||||||
Cloud services | $ | 30,228 | $ | 22 | (1) | $ | 30,250 | |||||||
Customer support | 46,579 | (409 | ) | (1) | 46,170 | |||||||||
Professional service and other | 96,680 | (498 | ) | (1) | 96,182 | |||||||||
Amortization of acquired technology-based intangible assets | 34,565 | (34,565 | ) | (2) | — | |||||||||
GAAP-based gross profit and gross margin (%) / Non-GAAP-based gross profit and gross margin (%) | 473,575 | 68.8 | % | 35,450 | (3) | 509,025 | 74.0 | % | ||||||
Operating expenses | ||||||||||||||
Research and development | 82,133 | (1,522 | ) | (1) | 80,611 | |||||||||
Sales and marketing | 150,703 | (4,274 | ) | (1) | 146,429 | |||||||||
General and administrative | 61,701 | (4,608 | ) | (1) | 57,093 | |||||||||
Amortization of acquired customer-based intangible assets | 29,709 | (29,709 | ) | (2) | — | |||||||||
Special charges (recoveries) | 9,999 | (9,999 | ) | (4) | — | |||||||||
GAAP-based income from operations and operating margin (%) / Non-GAAP-based income from operations and operating margin (%) | 125,974 | 18.3 | % | 85,562 | (5) | 211,536 | 30.7 | % | ||||||
Other income (expense), net | 1,186 | (1,186 | ) | (6) | — | |||||||||
Provision for (recovery of) income taxes | 35,605 | (7,029 | ) | (7) | 28,576 | |||||||||
GAAP-based net income / Non-GAAP-based net income, attributable to OpenText | 84,130 | 91,405 | (8) | 175,535 | ||||||||||
GAAP-based earnings per share / Non GAAP-based earnings per share-diluted, attributable to OpenText | $ | 0.71 | $ | 0.77 | (8) | $ | 1.48 |
(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 of approximately 30% and a Non-GAAP-based tax rate of 14%; 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. |
(8) | Reconciliation of Non-GAAP-based adjusted net income to GAAP-based net income: |
Six Months Ended December 31, 2013 | ||||||
Per share diluted | ||||||
Non-GAAP-based net income, attributable to OpenText | $ | 175,535 | $ | 1.48 | ||
Less: | ||||||
Amortization | 64,274 | 0.54 | ||||
Share-based compensation | 11,289 | 0.09 | ||||
Special charges (recoveries) | 9,999 | 0.08 | ||||
Other (income) expense, net | (1,186 | ) | (0.01 | ) | ||
GAAP-based provision for (recovery of) income taxes | 35,605 | 0.30 | ||||
Non-GAAP based provision for income taxes | (28,576 | ) | (0.23 | ) | ||
GAAP-based net income, attributable to OpenText | $ | 84,130 | $ | 0.71 |
(3) | The following tables provide a composition of our major currencies for revenue and expenses, expressed as a percentage, for the three and six months ended December 31, 2014 and 2013: |
Three Months Ended December 31, 2014 | Three Months Ended December 31, 2013 | ||||||||
Currencies | % of Revenue | % of Expenses* | % of Revenue | % of Expenses* | |||||
EURO | 24 | % | 16 | % | 29 | % | 19 | % | |
GBP | 9 | % | 8 | % | 8 | % | 9 | % | |
CAD | 5 | % | 12 | % | 6 | % | 17 | % | |
USD | 50 | % | 48 | % | 46 | % | 40 | % | |
Other | 12 | % | 16 | % | 11 | % | 15 | % | |
Total | 100 | % | 100 | % | 100 | % | 100 | % |
Six Months Ended December 31, 2014 | Six Months Ended December 31, 2013 | ||||||||
Currencies | % of Revenue | % of Expenses* | % of Revenue | % of Expenses* | |||||
EURO | 25 | % | 15 | % | 28 | % | 18 | % | |
GBP | 8 | % | 9 | % | 8 | % | 9 | % | |
CAD | 5 | % | 12 | % | 6 | % | 17 | % | |
USD | 50 | % | 46 | % | 48 | % | 41 | % | |
Other | 12 | % | 18 | % | 10 | % | 15 | % | |
Total | 100 | % | 100 | % | 100 | % | 100 | % |
Q215 versus Q214 Rates | |||||||||||
Reported | FX Impact higher/(lower) | Excluding the Impact of FX | FX Impact higher/(lower) | ||||||||
Total revenue (in millions) | $ | 467.8 | $ | (15.0 | ) | $ | 482.8 | (3.2 | )% | ||
Non-GAAP-based EPS | $ | 0.97 | $ | (0.03 | ) | $ | 1.00 | (3.0 | )% |
Q215 YTD versus Fiscal 2014 Rates | |||||||||||
Reported | FX Impact higher/(lower) | Excluding the Impact of FX | FX Impact higher/(lower) | ||||||||
Total revenue (in millions) | $ | 921.6 | $ | (11.2 | ) | $ | 932.8 | (1.2 | )% | ||
Non-GAAP-based EPS | $ | 1.93 | $ | (0.02 | ) | $ | 1.95 | (1.0 | )% |
Q215 versus Beginning of Fiscal 2015 Rates | |||||||||||
Reported | FX Impact higher/(lower) | Excluding the Impact of FX | FX Impact higher/(lower) | ||||||||
Total revenue (in millions) | $ | 467.8 | $ | (16.0 | ) | $ | 483.8 | (3.4 | )% | ||
Non-GAAP-based EPS | $ | 0.97 | $ | (0.04 | ) | $ | 1.01 | (4.1 | )% |
Q215 YTD versus Beginning Fiscal 2015 Rates | |||||||||||
Reported | FX Impact higher/(lower) | Excluding the Impact of FX | FX Impact higher/(lower) | ||||||||
Total revenue (in millions) | $ | 921.6 | $ | (18.1 | ) | $ | 939.7 | (2.0 | )% | ||
Non-GAAP-based EPS | $ | 1.93 | $ | (0.05 | ) | $ | 1.98 | (2.6 | )% |