OPEN TEXT CORP
For the period ended Sep 30, 2024. Filed Oct 31, 2024.
View on SEC.govAbout this filing
A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Sep 30, 2024 · Filed Oct 31, 2024
OTEX$24.85-4.9%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2024-03-31; filed 2024-05-02.
0001002638-24-000025
Item 2. Management's Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2024-09-30; filed 2024-10-31.
0001002638-24-000075
Item 2. Management's Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 308 previous paragraphs and 216 current paragraphs.
103 unchanged; 70 reworded; 43 added; 119 removed; 16 previous and 0 current paragraphs rearranged.
Tables are not compared: 31 previous and 26 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (43)
Current report
•Total revenue was $1,269.0 million, down 11.0% compared to the same period in the prior fiscal year; down 10.7% after factoring in the unfavorable impact of $4.2 million of foreign exchange rate changes.
Current report
•GAAP-based gross margin was 71.7% compared to 71.4% in the same period in the prior fiscal year.
Current report
•Non-GAAP-based gross margin was 75.8% compared to 77.3% in the same period in the prior fiscal year.
Current report
•GAAP-based net income attributable to OpenText was $84.4 million compared to $80.9 million in the same period in the prior fiscal year.
Current report
•Non-GAAP-based net income attributable to OpenText was $248.8 million compared to $274.3 million in the same period in the prior fiscal year.
Current report
•During the three months ended September 30, 2024, we repurchased and cancelled 2,649,131 Common Shares for $86.5 million, inclusive of 2% Canadian excise taxes recorded (nil in the three months ended September 30, 2023).
Current report
Transition Services Agreement
Current report
In connection with the AMC Divestiture, we entered into a Transition Service Agreement (TSA) with Rocket Software, whereby we will provide certain transition services to Rocket Software for up to 24 months from May 1, 2024. These transition service costs are reimbursable by Rocket Software. During the three months ended September 30, 2024, we billed Rocket Software $14.5 million under the TSA. The following table illustrates the financial statement impact of these TSA reimbursements, which have been recorded as an offset to the respective costs incurred, within our Condensed Consolidated Statements of Income.
Current report
Beginning with the quarter ended September 30, 2024, we are disclosing the cloud renewal rate on a net basis (cloud net renewal rate). The cloud net renewal rate, excluding the impact of Carbonite Inc. and Zix, was 94% for the quarter ended September 30, 2024. This rate includes increases and decreases in renewed contract values driven by product mix, volume and consumption, and changes for price adjustments relating to renewed contract values, which were not part of the historical calculation of the cloud renewal rate.
Current report
Cloud services and subscriptions revenues increased by $6.0 million or 1.3% during the three months ended September 30, 2024 as compared to the same period in the prior fiscal year; up 1.7% after factoring in the unfavorable impact of $1.6 million of foreign exchange rate changes. Geographically, the overall change was attributable to a decrease in Americas of $2.4 million, an increase in EMEA of $9.0 million, and a decrease in Asia Pacific of $0.7 million.
Current report
Beginning with the quarter ended September 30, 2024, we are disclosing the customer support renewal rate on a net basis (customer support net renewal rate). The customer support net renewal rate was 91% for the quarter ended September 30, 2024. This rate includes increases in renewed contract values driven by volume and consumption, and excludes reductions driven by shifts from customer support renewals where customers migrate to other product types, which were not part of the historical calculation of the customer support renewal rate.
Current report
Customer support revenues decreased by $102.2 million or 14.7% during the three months ended September 30, 2024 as compared to the same period in the prior fiscal year; down 14.3% after factoring in the unfavorable impact of $2.5 million of foreign exchange rate changes. The decrease was primarily due to the exclusion of customer support revenue contributions as a result of the AMC Divestiture. Geographically, the overall change was attributable to a decrease in Americas of $76.4 million, a decrease in EMEA of $20.2 million, and a decrease in Asia Pacific of $5.6 million.
Current report
License revenues decreased by $47.2 million or 27.3% during the three months ended September 30, 2024 as compared to the same period in the prior fiscal year; down 27.2% after factoring in the unfavorable impact of $0.1 million of foreign exchange rate changes. The decrease was primarily due to the exclusion of license revenue contributions as a result of the AMC Divestiture. Geographically, the overall change was attributable to a decrease in Americas of $31.0 million, a decrease in EMEA of $10.1 million, and a decrease in Asia Pacific of $6.1 million.
Current report
Professional service and other revenues decreased by $13.0 million or 12.5% during the three months ended September 30, 2024 as compared to the same period in the prior fiscal year; down 12.5% after factoring in the impact of foreign exchange rate changes. The decrease was partially due to the exclusion of professional services revenue contributions as a result of the AMC Divestiture. Geographically, the overall change was attributable to a decrease in Americas of $7.2 million, a decrease in EMEA of $4.9 million and a decrease in Asia Pacific of $0.9 million.
Current report
(1)Beginning in the first quarter of Fiscal 2025, the Company reclassified certain expenses previously included within Research and development to Sales and marketing in the Condensed Consolidated Statements of Income to provide a better representation of the function of the expenses and reclassified prior period information to conform to the current presentation.
Current report
Research and development expenses decreased by $35.5 million during the three months ended September 30, 2024 as compared to the same period in the prior fiscal year. Payroll and payroll-related benefits, which is comprised of salaries, benefits and variable short-term incentives, decreased by $21.8 million, facility-related expenses decreased by $7.2 million, share-based compensation expense decreased by $3.3 million, and contract labour and consulting expense decreased by $2.3 million. Overall, our research and development expenses, as a percentage of total revenues, decreased to 15% compared to the same period in the prior fiscal year at 16%.
Current report
Sales and marketing expenses decreased by $34.1 million during the three months ended September 30, 2024 as compared to the same period in the prior fiscal year. Payroll and payroll-related benefits, which is comprised of salaries, benefits and variable short-term incentives, decreased by $22.7 million, facility-related expenses decreased by $3.8 million, marketing expenses decreased by $3.0 million, share-based compensation expense decreased by $2.8 million, and travel and communication expenses decreased by $1.4 million. Overall, our sales and marketing expenses, as a percentage of total revenues, decreased to 19% compared to the same period in the prior fiscal year at 20%.
Current report
Special charges (recoveries) increased by $33.3 million during the three months ended September 30, 2024 over the comparative period. This was primarily due to an increase in restructuring costs of $42.5 million related to the Business Optimization Plan and an increase in divestiture costs of $2.6 million, partially offset by a decrease of $8.7 million related to Micro Focus Restructuring Plan, as compared to the same period in the prior fiscal year.
Current report
(2)Other miscellaneous expense primarily consists of the amortization of debt discount and the debt issuance costs. For more details, see Note 9 “Long-Term Debt” to our Condensed Consolidated Financial Statements.
Current report
Provision for Income Taxes
Current report
Numerous countries have agreed to a statement in support of the Organization for Economic Co-Operation and Development model rules that propose a global minimum tax rate of 15.0% for companies with revenue above €750.0 million, calculated on a country-by-country basis, and E.U. member states have agreed to implement the global minimum tax. On June 20, 2024, Canada enacted the new Global Minimum Tax Act (GMTA), imposing a 15.0% global minimum tax on profits. Certain other countries have enacted or are expected to enact legislation, with widespread implementation of a global minimum tax expected by 2025. We are unable to predict when and how such rules in various jurisdictions will be enacted into law; however, it is possible that the implementation of relevant legislation could impact our liability for taxes. As of the three months ended September 30, 2024, the impact of the global minimum tax is not material.
Current report
Reconciliation of selected GAAP-based measures to Non-GAAP-based measures
Current report
(In thousands, except for per share data)
Current report
(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.
Current report
(3)GAAP-based and Non-GAAP-based gross profit stated in dollars and gross margin stated as a percentage of total revenue.
Current report
(5)GAAP-based and Non-GAAP-based income from operations stated in dollars.
Current report
(7)Adjustment relates to differences between the GAAP-based tax provision rate of approximately 2% 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.
Current report
(8)Reconciliation of GAAP-based net income to Non-GAAP-based net income:
Current report
Reconciliation of Adjusted EBITDA
Current report
Reconciliation of selected GAAP-based measures to Non-GAAP-based measures
Current report
(In thousands, except for per share data)
Current report
(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.
Current report
(3)GAAP-based and Non-GAAP-based gross profit stated in dollars and gross margin stated as a percentage of total revenue.
Current report
(5)GAAP-based and Non-GAAP-based income from operations stated in dollars.
Current report
(8)Reconciliation of GAAP-based net income to Non-GAAP-based net income:
Current report
Reconciliation of Adjusted EBITDA
Current report
(ii)$4.3 million due to net change in TSA obligation driven by cash collections on behalf of Rocket Software related to certain transition services performed by the Company related to the divested AMC business.
Current report
(iv)$2.0 million increase due to reduced debt issuance costs payments.
Current report
Our long-term debt and credit facilities consist of senior notes, a term loan facility, and a revolving credit facility, as described below and further detailed in Note 9 “Long-Term Debt” to our Condensed Consolidated Financial Statements.
Current report
On May 6, 2024, we used a portion of the net proceeds from the AMC Divestiture to prepay in full the outstanding principal balance of $940 million under Term Loan B, at which point all remaining commitments under Term Loan B were reduced to zero and Term Loan B was terminated.
Showing the first 40 of 43 passages. Open the source sections for the rest.
Removed paragraphs (119)
Previous report
•Total revenue was $1,447.1 million, up 16.3% compared to the same period in the prior fiscal year; up 16.0% after factoring in the favorable impact of $3.5 million of foreign exchange rate changes.
Previous report
•GAAP-based gross margin was 73.0% compared to 70.3% in the same period in the prior fiscal year.
Previous report
•Non-GAAP-based gross margin was 76.7% compared to 75.8% in the same period in the prior fiscal year.
Previous report
•GAAP-based net income attributable to OpenText was $98.3 million compared to $57.6 million in the same period in the prior fiscal year.
Previous report
•Non-GAAP-based net income attributable to OpenText was $257.0 million compared to $197.8 million in the same period in the prior fiscal year.
Previous report
•We repaid $175 million drawn under the Acquisition Term Loan in January 2024.
Previous report
•On May 1, 2024, we completed the previously announced sale of our AMC business to Rocket Software, for $2.275 billion in cash before taxes, fees and other adjustments. As part of this sale, we have agreed to provide certain transition services to Rocket Software following completion of the divestiture for up to 24 months.
Previous report
•On May 1, 2024, we provided notices to prepay $2.0 billion of our aggregate outstanding debt including an additional $1.06 billion on the Acquisition Term Loan and $940 million under Term Loan B using net proceeds from the AMC Divestiture. We expect the prepayments to be made on or about May 6, 2024, at which point the remaining balance of the Acquisition Term Loan will be $2.23 billion and the Term Loan B will have been repaid in full.
Previous report
On January 31, 2023, we acquired all of the issued and to be issued share capital of Micro Focus for a total purchase price of $6.2 billion, inclusive of Micro Focus’ cash and repayment of Micro Focus’ outstanding indebtedness, subject to final adjustments. The results of operations of Micro Focus have been consolidated with those of OpenText beginning February 1, 2023. The Micro Focus Acquisition has contributed to the growth in our revenues and impacts period-over-period comparability. See Note 19 “Acquisitions and Divestitures” to our Condensed Consolidated Financial Statements for more details.
Previous report
As of March 31, 2024, the Company determined that the assets and liabilities of the AMC business met the criteria for held for sale classification and the respective assets and liabilities have been reclassified to Assets held for sale and Liabilities held for sale reported in our Condensed Consolidated Balance Sheets. The Company has determined that the AMC business does not constitute a component, as its operations and cash flows cannot be clearly distinguished from the rest of the Company’s operations and cash flows due to significant shared costs, therefore, the transaction does not meet the discontinued operations criteria, and the results of operations from the AMC business are presented within Income from operations in our Condensed Consolidated Statements of Income. The Company expects that the sale proceeds less costs to sell will exceed the carrying value of the net assets for the AMC business. The carrying value is subject to change based on developments leading up to the closing date. See Note 19 “Acquisitions and Divestitures” to our Condensed Consolidated Financial Statements for more details.
Previous report
The completion of the Micro Focus Acquisition during Fiscal 2023 substantially expanded our scope and size by adding assets and operations to our existing business. We have incurred and will continue to incur additional integration costs. As part of the Micro Focus Acquisition, we made a strategic decision to implement a restructuring plan that impacted its global workforce and further reduced our real estate footprint around the world in an effort to further streamline our operations, consistent with previously announced cost synergies of $400 million (Micro Focus Acquisition Restructuring Plan). The total size of the plan is expected to result in a reduction in the combined workforce of approximately 8%, or 2,000 employees, with an estimated cost of $155 million to $170 million, of which we have incurred $133.5 million as of March 31, 2024. We expect the Micro Focus Acquisition Restructuring Plan to be completed by the end of Fiscal 2024. See Part I, Item 1A, “Risk Factors” in our Annual Report on Form 10-K for Fiscal 2023. The Micro Focus Acquisition has a significant impact on period-over-period comparability as more fully discussed below.
Previous report
On May 1, 2024, we completed the previously announced sale of the AMC business to Rocket Software, for $2.275 billion in cash before taxes, fees and other adjustments. For the three and nine months ended March 31, 2024, the results of the AMC business were recorded and presented within our Condensed Consolidated Financial Statements. See Note 25 “Subsequent Events” to our Condensed Consolidated Financial Statements for more details. On May 1, 2024, we provided notices to prepay $2.0 billion of our aggregate outstanding debt including $940 million of the aggregate principal amounts outstanding under the Term Loan B (as defined below) and $1.06 billion of the outstanding balance on the Acquisition Term Loan (as defined below), using the net proceeds from the AMC Divestiture. We do not expect the divestiture to have a material impact to our Fiscal 2024 operating results. See Part II, Item 1A “Risk Factors” herein and Part I, Item 1A, “Risk Factors” in our Annual Report on Form 10-K for Fiscal 2023. Due to the limited time since the transaction’s closing date and the size and complexity of the transaction, the Company has not completed the accounting for the business divestiture, including the determination of the gain or loss to be recognized in connection with its completion.
Previous report
Total cost of revenues increased by $21.6 million for the three months ended March 31, 2024, relative to the three months ended March 31, 2023, primarily from additional cost of revenues as a result of the Micro Focus Acquisition, partially offset by
Previous report
reductions in amortization related to intangible assets associated with the AMC Divestiture and its held for sale classification. Micro Focus incurred $140.4 million of cost of revenues during the three months ended March 31, 2024, an increase of $32.2 million as compared to the same period in the prior fiscal year.
Previous report
Total operating expenses increased by $17.8 million for the three months ended March 31, 2024, relative to the three months ended March 31, 2023, primarily from additional operating expenses as a result of the Micro Focus Acquisition, partially offset by decreased acquisition related costs. Micro Focus incurred $321.1 million of operating expenses during the three months ended March 31, 2024, of which $262.4 million was related to research and development, sales and marketing, and general and administrative expenses. Micro Focus total operating expenses increased by $5.8 million during the three months ended March 31, 2024, of which $38.7 million was related to research and development, sales and marketing, and general and administrative expenses, which were partly offset by decreased acquisition related costs, as compared to the same period in the prior fiscal year.
Previous report
The comparability of our operating results for the nine months ended March 31, 2024, as compared to the nine months ended March 31, 2023, was impacted by the Micro Focus Acquisition, the results of which were consolidated with those of Open Text beginning February 1, 2023. As such, consolidated operating results for the nine months ended March 31, 2023 and 2024 include two and nine months, respectively, of Micro Focus operating results.
Previous report
Our total revenues increased by $1,413.3 million across all of our product types for the nine months ended March 31, 2024 relative to the nine months ended March 31, 2023, primarily due to revenue contributions from the Micro Focus Acquisition and the favorable impact of $45.0 million of foreign exchange rate changes. Micro Focus contributed $1,729.0 million to our total revenues for the nine months ended March 31, 2024, of which $1,105.8 million related to customer support revenues and $386.4 million related to license revenues. Micro Focus total revenues increased by $1,354.6 million during the nine months ended March 31, 2024, as compared to the same period in the prior fiscal year.
Previous report
Total cost of revenues increased by $314.3 million for the nine months ended March 31, 2024 relative to the nine months ended March 31, 2023, primarily from additional cost of revenues as a result of the Micro Focus Acquisition. Micro Focus incurred $454.0 million of cost of revenues for the nine months ended March 31, 2024, an increase of $345.8 million as compared to the same period in the prior fiscal year.
Previous report
Total operating expenses increased by $800.1 million for the nine months ended March 31, 2024, relative to the nine months ended March 31, 2023, primarily from additional operating expenses as a result of the Micro Focus Acquisition. Micro Focus incurred $1,029.6 million of operating expenses for the nine months ended March 31, 2024, of which $784.5 million was related to research and development, sales and marketing, and general and administrative expenses. Micro Focus total operating expenses increased by $714.3 million during the nine months ended March 31, 2024, of which $560.8 million was related to research and development, sales and marketing, and general and administrative expenses, as compared to the same period in the prior fiscal year.
Previous report
Cloud services and subscriptions revenues increased by $19.1 million or 4.4% during the three months ended March 31, 2024 as compared to the same period in the prior fiscal year; up 4.4% after factoring in the favorable impact of $0.1 million of foreign exchange rate changes. The increase was primarily driven by incremental Cloud services and subscriptions revenues from the Micro Focus Acquisition over the comparative period. Geographically, the overall change was attributable to an increase in EMEA of $8.0 million, an increase in Americas of $12.1 million and a decrease in Asia Pacific of $1.0 million.
Previous report
Cloud services and subscriptions revenues increased by $106.9 million or 8.6% during the nine months ended March 31, 2024 as compared to the same period in the prior fiscal year; up 8.0% after factoring in the favorable impact of $6.5 million of foreign exchange rate changes. The increase was primarily driven by incremental Cloud services and subscriptions revenues from the Micro Focus Acquisition over the comparative period. Geographically, the overall change was attributable to an increase in Americas of $56.6 million, an increase in EMEA of $43.0 million and an increase in Asia Pacific of $7.3 million.
Previous report
There were 97 cloud services contracts greater than $1.0 million that closed during the first nine months of Fiscal 2024, compared to 54 contracts during the first nine months of Fiscal 2023.
Previous report
Cost of Cloud services and subscriptions revenues increased by $114.2 million during the nine months ended March 31, 2024 as compared to the same period in the prior fiscal year. This was due to an increase in third-party network usage fees of $70.2 million and an increase in labour-related costs of $44.3 million both partially driven by incremental Cloud services and subscriptions costs of revenues from the Micro Focus Acquisition. Overall, the gross margin percentage on Cloud services and subscriptions revenues decreased to 60% from 66%.
Previous report
Customer support revenues increased by $115.6 million or 20.1% during the three months ended March 31, 2024 as compared to the same period in the prior fiscal year; up 19.6% after factoring in the favorable impact of $2.5 million of foreign exchange rate changes. The increase was primarily driven by incremental Customer support revenues from the Micro Focus Acquisition over the comparative period. Geographically, the overall change was attributable to an increase in Americas of $41.9 million, an increase in EMEA of $55.1 million and an increase in Asia Pacific of $18.6 million.
Previous report
Customer support revenues increased by $875.2 million or 72.3% during the nine months ended March 31, 2024 as compared to the same period in the prior fiscal year; up 70.3% after factoring in the favorable impact of $25.2 million of foreign exchange rate changes. The increase was primarily driven by incremental Customer support revenues from the Micro Focus Acquisition over the comparative period. Geographically, the overall change was attributable to an increase in Americas of $433.9 million, an increase in EMEA of $341.7 million and an increase in Asia Pacific of $99.6 million.
Previous report
Cost of Customer support revenues increased by $100.0 million during the nine months ended March 31, 2024 as compared to the same period in the prior fiscal year. This was primarily due to an increase in labour-related costs of $96.6 million driven by incremental Customer support cost of revenues from the Micro Focus Acquisition over the comparative period. Overall, the gross margin percentage on Customer support revenues decreased to 89% from 90%.
Previous report
License revenues increased by $60.6 million or 43.4% during the three months ended March 31, 2024 as compared to the same period in the prior fiscal year; up 43.2% after factoring in the favorable impact of $0.3 million of foreign exchange rate changes. The increase was primarily driven by incremental License revenues from the Micro Focus Acquisition over the comparative period and license revenue relating to the grant of certain IP rights. Geographically, the overall change was attributable to an increase in Americas of $24.7 million, an increase in EMEA of $30.1 million and an increase in Asia Pacific of $5.8 million.
Previous report
Cost of License revenues increased by $2.9 million during the three months ended March 31, 2024 as compared to the same period in the prior fiscal year as a result of higher third-party technology costs primarily driven by incremental cost of License revenues from the Micro Focus Acquisition over the comparative period. Overall, the gross margin percentage on License revenues remained stable at 97%, compared with the same period in the prior fiscal year.
Previous report
License revenues increased by $352.4 million or 113.6% during the nine months ended March 31, 2024 as compared to the same period in the prior fiscal year; up 110.9% after factoring in the favorable impact of $8.4 million of foreign exchange rate changes. The increase was primarily driven by incremental License revenues from the Micro Focus Acquisition over the comparative period and license revenue relating to the grant of certain IP rights. Geographically, the overall change was attributable to an increase in Americas of $160.6 million, an increase in EMEA of $148.0 million and an increase in Asia Pacific of $43.9 million.
Previous report
Professional service and other revenues increased by $7.2 million or 7.7% during the three months ended March 31, 2024 as compared to the same period in the prior fiscal year; up 7.0% after factoring in the favorable impact of $0.6 million of foreign exchange rate changes. The increase was primarily driven by incremental Professional service and other revenues from the Micro Focus Acquisition over the comparative period. Geographically, the overall change was attributable to an increase in EMEA of $8.6 million, a decrease in Americas of $0.9 million and a decrease in Asia Pacific of $0.5 million.
Previous report
Professional service and other revenues increased by $78.8 million or 35.0% during the nine months ended March 31, 2024 as compared to the same period in the prior fiscal year; up 32.8% after factoring in the favorable impact of $4.9 million of foreign exchange rate changes. The increase was primarily driven by incremental Professional service and other revenues from the Micro Focus Acquisition over the comparative period. Geographically, the overall change was attributable to an increase in Americas of $14.9 million, an increase in Asia Pacific of $8.2 million and an increase in EMEA of $55.8 million.
Previous report
Cost of Professional service and other revenues increased by $44.4 million during the nine months ended March 31, 2024 as compared to the same period in the prior fiscal year. This was due to an increase in labour-related costs of $46.1 million primarily driven by incremental Professional service and other cost of revenues from the Micro Focus Acquisition over the comparative period, offset by a decrease in other miscellaneous costs of $1.7 million. Overall, the gross margin percentage on Professional service and other revenues increased to 24% from 17% in the same period in the prior fiscal year.
Previous report
Research and development expenses increased by $23.3 million during the three months ended March 31, 2024 as compared to the same period in the prior fiscal year, primarily as a result of the Micro Focus Acquisition. Payroll and payroll-related benefits, which is comprised of salaries, benefits and variable short-term incentives, increased by $13.4 million, facility- related expenses increased by $8.7 million and travel and communication increased by $1.1 million. These increases were partially offset by a reduction in contract labour and consulting of $1.8 million. Overall, our research and development expenses, as a percentage of total revenues, decreased to 16% compared to the same period in the prior fiscal year at 17%.
Previous report
Research and development expenses increased by $258.1 million during the nine months ended March 31, 2024 as compared to the same period in the prior fiscal year, primarily as a result of the Micro Focus Acquisition. Payroll and payroll-related benefits, which is comprised of salaries, benefits and variable short-term incentives, increased by $172.9 million, facility-related expenses increased by $56.1 million, contract labour and consulting increased by $9.0 million, and share-based compensation expense increased by $9.8 million. Overall, our research and development expenses, as a percentage of total revenues, increased to 16% compared to the same period in the prior fiscal year at 14%.
Previous report
Sales and marketing expenses increased by $25.2 million during the three months ended March 31, 2024 as compared to the same period in the prior fiscal year, primarily as a result of the Micro Focus Acquisition. Payroll and payroll-related benefits, which is comprised of salaries, benefits and variable short-term incentives, increased by $17.7 million, credit loss expense increased by $4.8 million, commissions increased by $4.3 million and facility-related expenses increased by $1.5 million. Overall, our sales and marketing expenses, as a percentage of total revenues, decreased to 20% compared to 22% in the same period in the prior fiscal year.
Previous report
Sales and marketing expenses increased by $233.0 million during the nine months ended March 31, 2024 as compared to the same period in the prior fiscal year, primarily as a result of the Micro Focus Acquisition. Payroll and payroll-related benefits, which is comprised of salaries, benefits and variable short-term incentives, increased by $161.0 million, commissions increased by $20.4 million, facility-related expenses increased by $18.1 million, share-based compensation expense increased by $9.1 million, contract labour and consulting expenses increased by $8.7 million, travel and communication expenses increased by $7.9 million and marketing expenses increased by $5.1 million. Overall, our sales and marketing expenses, as a percentage of total revenues, decreased to 19% from 21% in the same period in the prior fiscal year.
Previous report
General and administrative expenses increased by $18.9 million during the three months ended March 31, 2024 as compared to the same period in the prior fiscal year. Other miscellaneous costs, which include professional fees such as legal, audit and tax related expenses, increased by $24.9 million primarily driven by increased costs related to IP, including the grant of certain IP rights and the resolution of certain historical IP related matters and higher professional fees. These increases were partially offset by reductions in facility-related expenses of $3.9 million and travel and communication of $1.4 million. Overall, general and administrative expenses, as a percentage of total revenues, remained stable at 10% compared to the same period in the prior fiscal year.
Previous report
Depreciation expenses increased during the three and nine months ended March 31, 2024 by $1.5 million and $23.0 million, respectively, compared to the same periods in the prior fiscal year, primarily as a result of the Micro Focus Acquisition.
Previous report
Amortization of acquired customer-based intangible assets increased during the three months ended March 31, 2024 by $3.6 million as compared to the same period in the prior fiscal year. This was primarily related to amortization of newly acquired customer-based intangible assets from the Micro Focus Acquisition, partially offset by reduced amortization related to the AMC Divestiture’s held for sale classification in the current period.
Previous report
Amortization of acquired customer-based intangible assets increased during the nine months ended March 31, 2024 by $129.8 million as compared to the same period in the prior fiscal year. This was primarily related to amortization of newly acquired customer-based intangible assets from the Micro Focus Acquisition, partially offset by reduced amortization related to the AMC Divestiture’s held for sale classification in the current period.
Showing the first 40 of 119 passages. Open the source sections for the rest.
Reworded paragraphs (70)
Previous wording
When used in this report, the words “anticipates”, “expects”, “intends”, “plans”, “believes”, “seeks”, “estimates”, “may”, “could”, “would”, “might”, “will” and other similar language, as they relate to Open Text Corporation (OpenText or the Company), are intended to identify forward-looking statements under applicable securities laws. Specific forward-looking statements in this report include, but are not limited to, statements regarding: (i) our focus in the fiscal years beginning July 1, 2023 and ending June 30, 2024 (Fiscal 2024) and July 1, 2024 and ending June 30, 2025 (Fiscal 2025) on growth in earnings and cash flows; (ii) creating value through investments in broader Information Management capabilities; (iii) our future business plans and operations, and business planning process; (iv) business trends; (v) distribution; (vi) the Company’s presence in the cloud and in growth markets; (vii) product and solution developments, enhancements and releases, the timing thereof and the customers targeted; (viii) the Company’s financial condition, results of operations and earnings; (ix) the basis for any future growth and for our financial performance; (x) declaration of quarterly dividends; (xi) future tax rates; (xii) the changing regulatory environment; (xiii) annual recurring revenues; (xiv) research and development and related expenditures; (xv) our building, development and consolidation of our network infrastructure; (xvi) competition and changes in the competitive landscape; (xvii) our management and protection of intellectual property and other proprietary rights; (xviii) existing and foreign sales and exchange rate fluctuations; (xix) cyclical or seasonal aspects of our business; (xx) capital expenditures; (xxi) potential legal and/or regulatory proceedings; (xxii) acquisitions and their expected impact, including our ability to realize the benefits expected from the acquisitions and to successfully integrate the assets we acquire or utilize such assets to their full capacity, including in connection with the acquisition of Micro Focus International Limited, formerly Micro Focus International plc, and its subsidiaries (Micro Focus) (see Note 19 “Acquisitions and Divestitures” to our Condensed Consolidated Financial Statements for more details); (xxiii) tax audits; (xxiv) the expected impact of our decision to cease all direct business in Russia and Belarus and with known Russian-owned companies;(xxv) expected costs of the restructuring plans; (xxvi) targets regarding greenhouse gas emissions, waste diversion, energy consumption and Equity, Diversity and Inclusion (ED&I) initiatives; (xvii) integration of Micro Focus, resulting synergies and timing thereof; (xxviii) divestitures and their expected impact, including in connection with the divestiture of the Application, Modernization and Connectivity (AMC) business (the AMC Divestiture) (see Note 19 “Acquisitions and Divestitures” to our Condensed Consolidated Financial Statements for more…
Excerpt shortened here; the source contains the full paragraph.
Current wording
When used in this report, the words “anticipates”, “expects”, “intends”, “plans”, “believes”, “seeks”, “estimates”, “may”, “could”, “would”, “might”, “will” and other similar language, as they relate to Open Text Corporation (OpenText or the Company), are intended to identify forward-looking statements under applicable securities laws. Specific forward-looking statements in this report include, but are not limited to, statements regarding: (i) our focus in the fiscal years beginning July 1, 2024 and ending June 30, 2025 (Fiscal 2025) and July 1, 2025 and ending June 30, 2026 (Fiscal 2026) on growth in earnings and cash flows; (ii) creating value through investments in broader Information Management capabilities; (iii) our future business plans and operations, strategic goals and business planning process, including the Company’s business optimization plan announced in July 2024 (the Business Optimization Plan); (iv) business trends; (v) distribution; (vi) the Company’s presence in the cloud and in growth markets; (vii) product and solution developments, enhancements and releases, the timing thereof and the customers targeted; (viii) the Company’s financial condition, results of operations and earnings; (ix) the basis for any future growth and for our financial performance; (x) declaration of quarterly dividends; (xi) future tax rates, including Canada's newly enacted global minimum tax act; (xii) the changing regulatory environment; (xiii) annual recurring revenues; (xiv) research and development and related expenditures; (xv) our building, development and consolidation of our network infrastructure; (xvi) competition and changes in the competitive landscape; (xvii) our management and protection of intellectual property and other proprietary rights; (xviii) existing and foreign sales and exchange rate fluctuations; (xix) cyclical or seasonal aspects of our business; (xx) capital expenditures; (xxi) potential legal and/or regulatory proceedings, including the Company's expected refund of the State Aid charging notice relating to the CJEU's judgment on the ruling of the European Commission; (xxii) acquisitions and their expected impact, including our ability to realize the benefits expected from the acquisitions and to successfully integrate the assets we acquire or utilize such assets to their full capacity, including in connection with the acquisition of Micro Focus International Limited, formerly Micro Focus International plc, and its subsidiaries (Micro Focus) (see Note 17 “Acquisitions and Divestitures” to our Condensed Consolidated Financial Statements for more details); (xxiii) tax audits; (xxiv) the expected impact of the Russia-Ukraine and Middle East conflicts on our business;(xxv) expected costs of the restructuring and business optimization plans; (xxvi) targets regarding greenhouse gas emissions, waste diversion, energy consumption and Equity, Diversity and Inclusion (ED&I) initiatives; (xvii) integration of Micro Focus, resulting syne…
Excerpt shortened here; the source contains the full paragraph.
Previous wording
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, 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. The forward-looking statements contained in this report are based on certain assumptions including the following: (i) countries continuing to implement and enforce existing and additional customs and security regulations relating to the provision of electronic information for imports and exports; (ii) our continued operation of a secure and reliable business network; (iii) the stability of general political, economic and market conditions; (iv) our ability to manage inflation, including increased labour costs associated with attracting and retaining employees, and rising interest rates; (v) our continued ability to manage certain foreign currency risk through hedging; (vi) equity and debt markets continuing to provide us with access to capital; (vii) our continued ability to identify, source and finance attractive and executable business combination opportunities; (viii) our continued ability to avoid infringing third party intellectual property rights; and (ix) our ability to successfully implement our restructuring plans. 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.
Current wording
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, 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. The forward-looking statements contained in this report are based on certain assumptions including the following: (i) countries continuing to implement and enforce existing and additional customs and security regulations relating to the provision of electronic information for imports and exports; (ii) our continued operation of a secure and reliable business network; (iii) the stability of general political, economic and market conditions; (iv) our ability to manage inflation, including increased labour costs associated with attracting and retaining employees, and higher interest rates; (v) our continued ability to manage certain foreign currency risk through hedging; (vi) equity and debt markets continuing to provide us with access to capital; (vii) our continued ability to identify, source and finance attractive and executable business combination opportunities; (viii) our continued ability to avoid infringing third party intellectual property rights; and (ix) our ability to successfully implement our restructuring plans. 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.
Previous wording
business prospects; (v) integration of acquisitions and related restructuring efforts, including the quantum of restructuring charges and the timing thereof; (vi) the possibility that we may be unable to successfully integrate the assets we acquire or fail to utilize such assets to their full capacity and not realize the benefits we expect from our acquired portfolios and businesses, including the acquisition of Micro Focus, (vii) the potential for the incurrence of or assumption of debt in connection with acquisitions, its impact on future operations and on the ratings or outlooks of rating agencies on our outstanding debt securities, and the possibility of not being able to generate sufficient cash to service all indebtedness; (viii) the possibility that the Company may be unable to meet its future reporting requirements under the Exchange Act, and the rules promulgated thereunder, or applicable Canadian securities regulation; (ix) the risks associated with bringing new products and services to market; (x) fluctuations in currency exchange rates (including as a result of the impact of any policy changes resulting from trade and tariff disputes) and the impact of mark-to-market valuation relating to associated derivatives; (xi) delays in the purchasing decisions of the Company’s customers; (xii) competition the Company faces in its industry and/or marketplace; (xiii) the final determination of litigation, tax audits (including tax examinations in Canada, the United States or elsewhere) and other legal proceedings; (xiv) potential exposure to greater than anticipated tax liabilities or expenses, including with respect to changes in Canadian, United States or international tax regimes; (xv) the possibility of technical, logistical or planning issues in connection with the deployment of the Company’s products or services; (xvi) the continuous commitment of the Company’s customers; (xvii) demand for the Company’s products and services; (xviii) increase in exposure to international business risks including the impact of geopolitical instability, political unrest, war and other global conflicts, and other geopolitical tensions, including the Russia-Ukraine and the Israel-Hamas wars, as we continue to increase our international operations; (xix) adverse macroeconomic conditions, including inflation, disruptions in global supply chains and increased labour costs; (xx) inability to raise capital at all or on not unfavorable terms in the future; (xxi) downward pressure on our share price and dilutive effect of future sales or issuances of equity securities (including in connection with future acquisitions); (xxii) potential changes in ratings or outlooks of rating agencies on our outstanding debt securities; and (xxiii) risks related to the AMC Divestiture and the impact of the divestiture on our remaining business. Other factors that may affect forward-looking statements include, but are not limited to: (i) the future performance, financial and otherwise…
Excerpt shortened here; the source contains the full paragraph.
Current wording
Forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause our actual results, performance or achievements to differ materially from the anticipated results, performance or achievements expressed or implied by such forward-looking statements. The risks and uncertainties that may affect forward-looking statements include, but are not limited to: (i) our inability to realize successfully any anticipated synergy benefits from the acquisition of Micro Focus (Micro Focus Acquisition); (ii) the actual and potential impacts of the use of cash and incurrence of indebtedness, including the granting of security interests related to such debt; (iii) the change in scope and size of our operations as a result of the Micro Focus Acquisition and the AMC Divestiture; (iv) the uncertainty around expectations related to Micro Focus’ business prospects; (v) integration of acquisitions and related restructuring efforts, including the quantum of restructuring charges and the timing thereof; (vi) the possibility that we may be unable to successfully integrate the assets we acquire or fail to utilize such assets to their full capacity and not realize the benefits we expect from our acquired portfolios and businesses, including the acquisition of Micro Focus; (vii) the potential for the incurrence of or assumption of debt in connection with acquisitions, its impact on future operations and on the ratings or outlooks of rating agencies on our outstanding debt securities, and the possibility of not being able to generate sufficient cash to service all indebtedness; (viii) the possibility that the Company may be unable to meet its future reporting requirements under the Exchange Act, and the rules promulgated thereunder, or applicable Canadian securities regulation; (ix) the risks associated with bringing new products and services to market; (x) fluctuations in currency exchange rates (including as a result of the impact of any policy changes resulting from trade and tariff disputes) and the impact of mark-to-market valuation relating to associated derivatives; (xi) delays in the purchasing decisions of the Company’s customers; (xii) competition the Company faces in its industry and/or marketplace; (xiii) the final determination of litigation, tax audits (including tax examinations in Canada, the United States or elsewhere) and other legal proceedings; (xiv) potential exposure to greater than anticipated tax liabilities or expenses, including with respect to changes in Canadian, United States or international tax regimes; (xv) the possibility of technical, logistical or planning issues in connection with the deployment of the Company’s products or services; (xvi) the continuous commitment of the Company’s customers; (xvii) demand for the Company’s products and services; (xviii) increase in exposure to international business risks including the impact of geopolitical instability, political unrest, war and other global conflict…
Excerpt shortened here; the source contains the full paragraph.
Previous wording
All dollar and percentage comparisons made herein refer to the three and nine months ended March 31, 2024 compared with the three and nine months ended March 31, 2023, unless otherwise noted.
Current wording
All dollar and percentage comparisons made herein refer to the three months ended September 30, 2024 compared with the three months ended September 30, 2023, unless otherwise noted.
Previous wording
Our comprehensive Information Management platform and services provide secure and scalable solutions for global companies, small and medium-sized businesses (SMBs), governments and consumers around the world. We have a complete and integrated portfolio of Information Management solutions delivered at scale in the OpenText Cloud, helping organizations master modern work, automate application delivery and modernization, and optimize their digital supply chains. To do this, we bring together our Content Cloud, Cybersecurity Cloud, Business Network Cloud, IT Operations Management Cloud, Application Automation Cloud and Analytics & AI Cloud. We also accelerate information modernization with intelligent tools and services for moving off paper, automating classification and building clean data lakes for Artificial Intelligence (AI), analytics and automation.
Current wording
Our comprehensive Information Management platform and services provide secure and scalable solutions for global companies, small and medium-sized businesses (SMBs), governments and consumers around the world. We have a complete and integrated portfolio of Information Management solutions delivered at scale in the OpenText Cloud, helping organizations master modern work, automate application delivery and modernization and optimize their digital supply chains. To do this, we bring together our Content Cloud, Cybersecurity Cloud, Business Network Cloud, IT Operations Management Cloud, Application Modernization Cloud and Analytics Cloud. We also accelerate information modernization with intelligent tools and services for moving off paper, automating classification and building clean data lakes for Artificial Intelligence (AI), analytics and automation.
Previous wording
As of March 31, 2024, we employed a total of approximately 23,700 individuals. Of the total 23,700 individuals we employed as of March 31, 2024, 8,700 or 37% are in the Americas, 5,400 or 23% are in EMEA and 9,600 or 40% are in Asia Pacific. Currently, we have employees in 44 countries enabling strong access to multiple talent pools while ensuring reach and proximity to our customers. See “Results of Operations” below for our definitions of geographic regions.
Current wording
As of September 30, 2024, we employed a total of approximately 21,800 individuals. Of the total 21,800 individuals we employed as of September 30, 2024, 7,700 or 35% are in the Americas, 4,800 or 22% are in EMEA and 9,300 or 43% are in Asia Pacific. Currently, we have employees in 42 countries enabling strong access to multiple talent pools while ensuring reach and proximity to our customers. See “Results of Operations” below for our definitions of geographic regions.
Previous wording
During the third quarter of Fiscal 2024 (which includes the results of Micro Focus, which has an impact on period-over-period comparisons) we saw the following activity:
Current wording
During the first quarter of Fiscal 2025 we saw the following activity, as compared to the first quarter of Fiscal 2024, which includes the results of the AMC Business prior to the AMC Divestiture, which has an impact on period-over-period comparisons. See “Divestiture of AMC Business” under “Results of Operations”, below for more details:
Previous wording
•Total annual recurring revenue, which we define as the sum of cloud services and subscriptions revenue and customer support revenue, was $1,146.0 million, up 13.3% compared to the same period in the prior fiscal year; up 13.1% after factoring in the favorable impact of $2.6 million of foreign exchange rate changes.
Current wording
•Total annual recurring revenue, which we define as the sum of cloud services and subscriptions revenue and customer support revenue, was $1,052.5 million, down 8.4% compared to the same period in the prior fiscal year; down 8.0% after factoring in the unfavorable impact of $4.1 million of foreign exchange rate changes.
Previous wording
•Cloud services and subscriptions revenue was $454.5 million, up 4.4% compared to the same period in the prior fiscal year; up 4.4% after factoring in the favorable impact of $0.1 million of foreign exchange rate changes.
Current wording
•Cloud services and subscriptions revenue was $457.0 million, up 1.3% compared to the same period in the prior fiscal year; up 1.7% after factoring in the unfavorable impact of $1.6 million of foreign exchange rate changes.
Previous wording
•GAAP-based earnings per share (EPS), diluted, was $0.36 compared to $0.21 in the same period in the prior fiscal year.
Current wording
•GAAP-based earnings per share (EPS), diluted, was $0.32 compared to $0.30 in the same period in the prior fiscal year.
Previous wording
•Non-GAAP-based EPS, diluted, was $0.94 compared to $0.73 the same period in the prior fiscal year.
Current wording
•Non-GAAP-based EPS, diluted, was $0.93 compared to $1.01 the same period in the prior fiscal year.
Previous wording
•Adjusted EBITDA, a non-GAAP measure, was $463.7 million compared to $365.1 million in the same period in the prior fiscal year.
Current wording
•Adjusted EBITDA, a non-GAAP measure, was $443.8 million compared to $494.8 million in the same period in the prior fiscal year.
Previous wording
•Operating cash flow was $782.5 million for the nine months ended March 31, 2024 compared to $663.9 million in the same period in the prior fiscal year, up 17.9%.
Current wording
•Operating cash flow was $(77.8) million for the three months ended September 30, 2024 compared to $47.1 million in the same period in the prior fiscal year, down 265.1%.
Previous wording
•Cash and cash equivalents were $1,125.3 million as of March 31, 2024, compared to $1,231.6 million as of June 30, 2023.
Current wording
•Cash and cash equivalents were $1,000.2 million as of September 30, 2024, compared to $1,280.7 million as of June 30, 2024.
Previous wording
•Enterprise cloud bookings were $165.1 million, compared to $108.2 million in the same period in the prior fiscal year. We define Enterprise cloud bookings as the total value from cloud services and subscription contracts entered into in the period that is new, committed and incremental to our existing contracts, entered into with our enterprise-based customers.
Current wording
•Enterprise cloud bookings were $133.5 million, compared to $121.0 million in the same period in the prior fiscal year. We define Enterprise cloud bookings as the total value from cloud services and subscription contracts entered into in the period that is new, committed and incremental to our existing contracts, entered into with our enterprise-based customers.
Previous wording
On May 1, 2024, the Company completed the previously announced sale of its AMC business to Rocket Software for $2.275 billion in cash before taxes, fees and other adjustments. For the three and nine months ended March 31, 2024, the results of the AMC business were recorded and presented within our Condensed Consolidated Financial Statements. See Note 25 “Subsequent Events” to our Condensed Consolidated Financial Statements for more details.
Current wording
On May 1, 2024, the Company completed the AMC Divestiture for $2.275 billion in cash before taxes, fees and other adjustments. For the three months ended September 30, 2023, the results of the AMC business were recorded and presented within our Condensed Consolidated Financial Statements. See Note 17 “Acquisitions and Divestitures” to our Condensed Consolidated Financial Statements for more details.
Previous wording
We continue to monitor the geopolitical conflicts and diplomatic tensions around the world, including the Russia-Ukraine and Israel-Hamas wars. We have ceased all direct business in Russia and Belarus and with known Russian-owned companies. We continue to operate our Israeli-based business and support our employees in the region. While our operations within these locations are not material and we do not expect these geopolitical conflicts to have a material adverse effect on our overall business, results of operations or financial condition, it is not possible to predict the broader consequences of these conflicts, including adverse effects on the global economy, on our business and operations as well as those of our customers, partners and third party service providers. For more information, see Part I, Item 1A “Risk Factors” and Part II, Item 7 “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included in our Annual Report on Form 10-K for Fiscal 2023.
Current wording
We continue to monitor the geopolitical conflicts and diplomatic tensions around the world, including the Russia-Ukraine and Middle East conflicts. We have ceased all direct business in Russia and Belarus. We continue to operate our Israeli-based business and support our employees in the region. While our operations within these locations are not material and we do not expect these geopolitical conflicts to have a material adverse effect on our overall business, results of operations or financial condition, it is not possible to predict the broader consequences or broader expansion of these conflicts, including adverse effects on the global economy, on our business and operations as well as those of our customers, partners and third party service providers. For more information, see Part I, Item 1A “Risk Factors” and Part II, Item 7 “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included in our Annual Report on Form 10-K for Fiscal 2024.
Previous wording
As an organization, we are committed to “Total Growth,” meaning we strive towards delivering value through organic initiatives, innovations and acquisitions, as well as financial performance. With an emphasis on increasing recurring revenues and expanding profitability, we believe our Total Growth strategy will ultimately drive cash flow growth, thus helping to fuel our innovation, broaden our go-to-market distribution and identify and execute strategic acquisitions. We are well positioned to expand our product portfolio and improve our ability to innovate and grow organically, which helps us to meet our long-term growth targets. Our Total Growth strategy is a durable model that we believe will create both near and long-term shareholder value through organic and acquired growth, capital efficiency and profitability.
Current wording
As an organization, we are committed to “Total Growth,” meaning we strive towards delivering value through organic initiatives and innovations and acquisitions. With an emphasis on increasing recurring revenues and expanding profitability, we believe our Total Growth strategy will ultimately drive cash flow growth, thus helping to fuel our innovation, broaden our go-to-market distribution and identify and execute strategic acquisitions. We are well positioned to expand our product portfolio and improve our ability to innovate and grow organically, which helps us to meet our long-term growth targets. Our Total Growth strategy is a durable model that we believe will create both near and long-term shareholder value through organic and acquired growth, capital efficiency and profitability.
Previous wording
We are committed to continuous innovation. Our investments in research and development (R&D) push product innovation, increasing the value of our offerings to our existing customer base and new customers, which includes Global 10,000 companies (G10K), SMBs and consumers. The G10K are the world's largest companies, ranked by estimated total revenues, as well as the world's largest governments and global organizations. More valuable products, coupled with our established global partner program, lead to greater distribution and cross-selling opportunities which further help us to achieve organic growth. On a fiscal year-to-date basis, we have invested $688.7 million or 15.6% of revenue in R&D expense, which is in line with our target spend for R&D expense this fiscal year.
Current wording
We are committed to continuous innovation. Our investments in research and development (R&D) push product innovation, increasing the value of our offerings to our existing customer base and new customers, which includes Global 10,000 companies (G10K), SMBs and consumers. The G10K are the world’s largest companies, ranked by estimated total revenues, as well as the world’s largest governments and global organizations. More valuable products, coupled with our established global partner program, lead to greater distribution and cross-selling opportunities which further help us to achieve organic growth. On a fiscal year-to-date basis, we have invested $190.7 million or 15.0% of revenue in R&D expense, which is in line with our target spend for R&D expense this fiscal year.
Previous wording
We will continue to closely monitor the potential impacts of inflation with respect to wages, services and goods, concerns regarding any potential recession, rising interest rates, financial market volatility, the Russia-Ukraine and Israel-Hamas conflicts and other geopolitical disputes on our business. See Part II, Item 1A “Risk Factors” herein and Part I, Item 1A, “Risk Factors” in our Annual Report on Form 10-K for Fiscal 2023.
Current wording
We will continue to closely monitor the potential impacts of inflation with respect to wages, services and goods, concerns regarding any potential recession, higher interest rates, financial market volatility, the Russia-Ukraine and Middle East conflicts and other geopolitical disputes on our business. See Part II, Item 1A “Risk Factors” herein and Part I, Item 1A, “Risk Factors” in our Annual Report on Form 10-K for Fiscal 2024.
Previous wording
The comparability of our operating results for the three months ended March 31, 2024, as compared to the three months ended March 31, 2023, was impacted by the Micro Focus Acquisition, the results of which were consolidated with those of Open Text beginning February 1, 2023. As such, consolidated operating results for the three months ended March 31, 2023 and 2024 include two and three months, respectively, of Micro Focus operating results.
Current wording
On May 1, 2024, the Company completed the sale of its AMC business to Rocket Software. The AMC business was comprised of the legacy OpenText connectivity business and the legacy Micro Focus AMC business. The comparability of our operating results for the three months ended September 30, 2024 as compared to the three months ended September 30, 2023 was impacted by the recent divestiture of our AMC business, the results of which were excluded from those of OpenText beginning May 1, 2024. As such, consolidated operating results for the three months ended September 30, 2023 and 2024 included three and nil months, respectively, of AMC business operating results.
Previous wording
Our total revenues increased by $202.5 million across all of our product types for the three months ended March 31, 2024, relative to the three months ended March 31, 2023, primarily due to revenue contributions from the Micro Focus Acquisition and a favorable impact of $3.5 million of foreign exchange rate changes. Micro Focus contributed $564.7 million to our total revenues for the three months ended March 31, 2024, of which $366.5 million related to customer support revenues and $117.6 million related to license revenues. Micro Focus total revenues increased by $190.3 million during the three months ended March 31, 2024, as compared to the same period in the prior fiscal year.
Current wording
Our total revenues decreased by $156.4 million primarily across license and customer support product types in the three months ended September 30, 2024, relative to the three months ended September 30, 2023, primarily due to the exclusion of revenue contributions from the AMC business, in addition to a unfavorable impact of $4.2 million of foreign exchange rate changes. The AMC business contributed $132.8 million to our total revenues during the three months ended September 30, 2023, of which $84.1 million related to customer support revenues, $44.2 million related to license revenues, and $4.5 million related to professional services and other revenue.
Previous wording
(3)EMEA primarily consists of countries in Europe, the Middle East and Africa.
Current wording
(3)EMEA consists of countries in Europe, the Middle East and Africa.
Previous wording
Cloud services and subscriptions revenues are from hosting arrangements where in connection with the licensing of software, the end user does not take possession of the software, as well as from end-to-end fully outsourced business-to-business integration solutions to our customers (collectively referred to as cloud arrangements). The software application resides on our hardware or that of a third party, and the customer accesses and uses the software on an as-needed basis via an identified line. Our cloud arrangements can be broadly categorized as platform as a service (PaaS), SaaS, cloud subscriptions and managed services. For the quarter ended March 31, 2024, our cloud renewal rate, excluding the impact of Carbonite, Zix and Micro Focus, decreased to 92% from 95% over the quarter ended March 31, 2023.
Current wording
Cloud services and subscriptions revenues are from hosting arrangements where in connection with the licensing of software, the end user does not take possession of the software, as well as from end-to-end fully outsourced business-to-business integration solutions to our customers (collectively referred to as cloud arrangements). The software application resides on our hardware or that of a third party, and the customer accesses and uses the software on an as-needed basis via an identified line. Our cloud arrangements can be broadly categorized as platform as a service, software as a service, cloud subscriptions and managed services.
Previous wording
There were 28 cloud services contracts greater than $1.0 million that closed during the third quarter of Fiscal 2024, compared to 13 contracts during the third quarter of Fiscal 2023.
Current wording
There were 23 cloud services contracts greater than $1.0 million that closed during the first quarter of Fiscal 2025, compared to 21 contracts during the first quarter of Fiscal 2024.
Previous wording
Cost of Cloud services and subscriptions revenues increased by $28.7 million during the three months ended March 31, 2024 as compared to the same period in the prior fiscal year. This was due to an increase in third-party network usage fees of $25.3 million and an increase in labour-related costs of $3.9 million both partially driven by incremental Cloud services and subscriptions costs of revenues from the Micro Focus Acquisition. Overall, the gross margin percentage on Cloud services and subscriptions revenues decreased to 59% from 64%.
Current wording
Cost of Cloud services and subscriptions revenues increased by $3.8 million during the three months ended September 30, 2024 as compared to the same period in the prior fiscal year. This was primarily due to an increase in third-party network usage fees of $12.3 million, partially offset by a decrease in labour-related costs of $8.7 million. Overall, the gross margin percentage on Cloud services and subscriptions revenues remained stable at 62%.
Previous wording
Customer support revenues consist of revenues from our customer support and maintenance agreements. These agreements allow our customers to receive technical support, enhancements and upgrades to new versions of our software products when available. Customer support revenues are generated from support and maintenance relating to current year sales of software products and from the renewal of existing maintenance agreements for software licenses sold in prior periods. Therefore, changes in Customer support revenues do not always correlate directly to the changes in license revenues from period to period. The terms of support and maintenance agreements are typically twelve months, and are renewable, generally on an annual basis, at the option of the customer. Our management reviews our Customer support renewal rates on a quarterly basis, and we use these rates as a method of monitoring our customer service performance. For the quarter ended March 31, 2024, our Customer support renewal rate remained stable at 95% compared to the quarter ended March 31, 2023, excluding the impact of Carbonite, Zix and Micro Focus.
Current wording
Customer support revenues consist of revenues from our customer support and maintenance agreements. These agreements allow our customers to receive technical support, enhancements and upgrades to new versions of our software products when available. Customer support revenues are generated from support and maintenance relating to current year sales of software products and from the renewal of existing maintenance agreements for software licenses sold in prior periods. Therefore, changes in Customer support revenues do not always correlate directly to the changes in license revenues from period to period. The terms of support and maintenance agreements are typically twelve months, and are renewable, generally on an annual basis, at the option of the customer. Our management reviews our customer support renewal rates on a quarterly basis, and we use these rates as a method of monitoring our customer service performance.
Previous wording
Cost of Customer support revenues increased by $7.6 million during the three months ended March 31, 2024 as compared to the same period in the prior fiscal year. This was primarily due to an increase in labour-related costs of $8.2 million driven by incremental Customer support cost of revenues from the Micro Focus Acquisition over the comparative period. Overall, the gross margin percentage on Customer support revenues increased to 89% from 88%.
Current wording
Cost of Customer support revenues decreased by $12.4 million during the three months ended September 30, 2024 as compared to the same period in the prior fiscal year. This was primarily due to a decrease in labour-related costs of $11.9 million over the comparative period. Overall, the gross margin percentage on Customer support revenues remained stable at 89%.
Previous wording
During the third quarter of Fiscal 2024, we closed 55 license contracts greater than $0.5 million, of which 23 contracts were greater than $1.0 million, contributing $92.3 million of License revenues. This was compared to 42 license contracts greater than $0.5 million during the third quarter of Fiscal 2023, of which 22 contracts were greater than $1.0 million, contributing $58.6 million of License revenues.
Current wording
During the first quarter of Fiscal 2025, we closed 39 license contracts greater than $0.5 million, of which 15 contracts were greater than $1.0 million, contributing $39.6 million of License revenues. This was compared to 51 license contracts greater than $0.5 million during the first quarter of Fiscal 2024, of which 21 contracts were greater than $1.0 million, contributing $63.9 million of License revenues.
Previous wording
Cost of License revenues increased by $6.1 million during the nine months ended March 31, 2024 as compared to the same period in the prior fiscal year as a result of increased third-party technology costs. Overall, the gross margin percentage on License revenues remained stable at 97%, compared with the same period in the prior fiscal year.
Current wording
Cost of License revenues increased by $2.8 million during the three months ended September 30, 2024 as compared to the same period in the prior fiscal year. Overall, the gross margin percentage on License revenues decreased to 95% from 98%.
Previous wording
Cost of Professional service and other revenues decreased by $3.1 million during the three months ended March 31, 2024 as compared to the same period in the prior fiscal year. This was driven by a decrease in labour-related costs of $3.0 million. Overall, the gross margin percentage on Professional service and other revenues increased to 25% from 16% in the same period in the prior fiscal year.
Current wording
Cost of Professional service and other revenues decreased by $13.0 million during the three months ended September 30, 2024 as compared to the same period in the prior fiscal year. This was primarily due to a decrease in labour-related costs of $12.9 million. Overall, the gross margin percentage on Professional service and other revenues increased to 26% from 23%.
Previous wording
Amortization of acquired technology-based intangible assets decreased during the three months ended March 31, 2024 by $14.5 million as compared to the same period in the prior fiscal year. This was primarily due to intangible assets from previous acquisitions becoming fully amortized and reduced amortization related to the AMC Divestiture’s held for sale classification, partially offset by amortization of newly acquired technology-based intangible assets from the Micro Focus Acquisition.
Current wording
Amortization of acquired technology-based intangible assets decreased during the three months ended September 30, 2024 by $29.6 million as compared to the same period in the prior fiscal year. This was primarily due to a reduction in amortization related to technology-based intangible assets from previous acquisitions becoming fully amortized and reduced amortization related to the AMC Divestiture.
Previous wording
Our research and development labour resources decreased by 564 employees, from 8,544 employees at March 31, 2023 to 7,980 employees at March 31, 2024.
Current wording
Our research and development labour resources decreased by 809 employees, from 8,235 employees at September 30, 2023 to 7,426 employees at September 30, 2024.
Previous wording
Our sales and marketing labour resources decreased by 566 employees, from 5,086 employees at March 31, 2023 to 4,520 employees at March 31, 2024.
Current wording
Our sales and marketing labour resources decreased by 732 employees, from 4,654 employees at September 30, 2023 to 3,922 employees at September 30, 2024.
Previous wording
General and administrative expenses increased by $167.7 million during the nine months ended March 31, 2024 as compared to the same period in the prior fiscal year, driven by the Micro Focus Acquisition and other miscellaneous costs. Other miscellaneous costs, which include professional fees such as legal, audit and tax related expenses, increased by $81.6 million primarily driven by increased costs related to IP, including the grant of certain IP rights and the resolution of certain historical IP related matters and higher professional fees. Additionally, payroll and payroll-related benefits, which is comprised of salaries, benefits and variable short-term incentives, increased by $61.2 million, contract labour and consulting expenses increased by $15.8 million, travel and communication expenses increased by $5.4 million and share-based compensation expenses increased by $3.1 million. Overall, general and administrative expenses, as a percentage of total revenues, increased to 10% from 9% in the same period in the prior fiscal year.
Current wording
General and administrative expenses decreased by $24.5 million during the three months ended September 30, 2024 as compared to the same period in the prior fiscal year. Contract labour and consulting expenses decreased by $10.3 million, payroll and payroll-related benefits, which is comprised of salaries, benefits and variable short-term incentives, decreased by $7.9 million, travel and communication expenses decreased by $3.7 million, and other miscellaneous costs, which include professional fees such as legal, audit and tax related expenses decreased by $2.5 million. Overall, general and administrative expenses, as a percentage of total revenues, decreased to 8% compared to 9% for the same period in the prior fiscal year.
Previous wording
Our general and administrative labour resources decreased by 302 employees, from 3,816 employees at March 31, 2023 to 3,514 employees at March 31, 2024.
Current wording
Our general and administrative labour resources decreased by 221 employees, from 3,463 employees at September 30, 2023 to 3,242 employees at September 30, 2024.
Previous wording
Depreciation expenses, as a percentage of total revenue remained stable for the three and nine months ended March 31, 2024 at 2% compared to 2% for the same periods in the prior fiscal year.
Current wording
Depreciation expenses decreased during the three months ended September 30, 2024 by $1.9 million compared to the same periods in the prior fiscal year. Depreciation expenses, as a percentage of total revenues, increased for the three months ended September 30, 2024 to 3% compared to 2% for the same period in the prior fiscal year.
Previous wording
Amortization of acquired technology-based intangible assets increased during the nine months ended March 31, 2024 by $49.6 million as compared to the same period in the prior fiscal year. This was primarily due to amortization of newly acquired technology-based intangible assets from the Micro Focus Acquisition, partially offset by intangible assets from previous acquisitions becoming fully amortized and reduced amortization related to the AMC Divestiture’s held for sale classification.
Current wording
Amortization of acquired customer-based intangible assets decreased during the three months ended September 30, 2024 by $38.7 million as compared to the same period in the prior fiscal year. This was primarily due to a reduction in amortization related to customer-based intangible assets from previous acquisitions becoming fully amortized and reduced amortization related to the AMC Divestiture.
Previous wording
Special charges (recoveries) typically relate to amounts that we expect to pay in connection with restructuring plans, acquisition-related costs and other similar charges and recoveries. Generally, we implement such plans in the context of integrating acquired entities with existing OpenText operations and most recently in response to our return to office planning. Actions related to such restructuring plans are typically completed within a period of one year. In certain limited situations, if the planned activity does not need to be implemented, or an expense lower than anticipated is paid out, we record a recovery of the originally recorded expense to Special charges (recoveries).
Current wording
Special charges (recoveries) typically relate to amounts that we expect to pay in connection with restructuring plans, acquisition and divestiture-related costs and other similar charges and recoveries. Generally, we implement such plans in the context of integrating acquired entities with existing OpenText operations. Actions related to such restructuring plans are typically completed within a period of one year. In certain limited situations, if the planned activity does not need to be implemented, or an expense lower than anticipated is paid out, we record a recovery of the originally recorded expense to Special charges (recoveries).
Previous wording
(2)Represents the unrealized gains (losses) on our derivatives not designated as hedges related to the Micro Focus Acquisition (see Note 17 “Derivative Instruments and Hedging Activities” to our Condensed Consolidated Financial Statements for more details).
Current wording
(1)Represents the unrealized gains (losses) on our derivatives not designated as hedges related to the Micro Focus Acquisition (see Note 15 “Derivative Instruments and Hedging Activities” to our Condensed Consolidated Financial Statements for more details).
Showing the first 40 of 70 pairs. Open the source sections for the rest.
Rearranged previous paragraphs (16)
Previous report — wording carried elsewhere
Forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause our actual results, performance or achievements to differ materially from the anticipated results, performance or achievements expressed or implied by such forward-looking statements. The risks and uncertainties that may affect forward-looking statements include, but are not limited to: (i) our inability to realize successfully any anticipated synergy benefits from the acquisition of Micro Focus (Micro Focus Acquisition); (ii) the actual and potential impacts of the use of cash and incurrence of indebtedness, including the granting of security interests related to such debt; (iii) the change in scope and size of our operations as a result of the Micro Focus Acquisition and the AMC Divestiture; (iv) the uncertainty around expectations related to Micro Focus’
Previous report — wording carried elsewhere
Following the end of the third quarter of Fiscal 2024, we saw the following activity:
Previous report — wording carried elsewhere
During the first nine months of Fiscal 2024, we closed 189 license contracts greater than $0.5 million, of which 79 contracts were greater than $1.0 million, contributing $303.9 million of License revenues. This was compared to 102 license contracts greater than $0.5 million during the first nine months of Fiscal 2023, of which 46 contracts were greater than $1.0 million, contributing $124.2 million of License revenues.
Previous report — wording carried elsewhere
Provision for (recovery of) Income Taxes
Previous report — wording carried elsewhere
(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.
Previous report — wording carried elsewhere
(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. See Note 18 “Special Charges (Recoveries)” to our Condensed Consolidated Financial Statements for more details.
Previous report — wording carried elsewhere
(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 on our ongoing business and operating results.
Previous report — wording carried elsewhere
(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.
Previous report — wording carried elsewhere
(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. See Note 18 “Special Charges (Recoveries)” to our Condensed Consolidated Financial Statements for more details.
Previous report — wording carried elsewhere
(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.
Previous report — wording carried elsewhere
(7)Adjustment relates to differences between the GAAP-based tax provision rate of approximately 27% and a Non-GAAP-based tax rate of approximately 14%; these rate differences are due to the income tax effects of items that are excluded for the purpose of calculating Non-GAAP-based adjusted net income. Such excluded items include amortization, share-based compensation, special charges (recoveries) and other income (expense), net. Also excluded are tax benefits/expense items unrelated to current period income such as changes in reserves for tax uncertainties and valuation allowance 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.
Previous report — wording carried elsewhere
The Revolver has no fixed repayment date prior to the end of the term. Borrowings under the Revolver currently bear interest per annum at a floating rate of interest equal to Term SOFR (as defined in the Revolver) and a fixed margin dependent on our consolidated net leverage ratio ranging from 1.25% to 1.75%.
Previous report — wording carried elsewhere
The Company established a Normal Course Issuer Bid (the Fiscal 2022 NCIB) in order to provide it with a means to execute purchases over the TSX as part of the overall Fiscal 2022 Repurchase Plan.
Previous report — wording carried elsewhere
We are currently involved in various claims and legal proceedings.
Previous report — wording carried elsewhere
We strongly disagree with the CRA's positions and believe the reassessments of Fiscal 2012, Fiscal 2013, Fiscal 2014, Fiscal 2015 and Fiscal 2016 (including any penalties) are without merit, and we are continuing to contest these reassessments. On June 30, 2022, we filed a notice of appeal with the Tax Court of Canada seeking to reverse all such reassessments (including penalties) in full and the customary court process is ongoing.
Previous report — wording carried elsewhere
See Part I, Item 1A, “Risk Factors” in our Annual Report on Form 10-K for Fiscal 2023.