OpenText Reports Second Quarter Fiscal Year 2014 Financial Results
WATERLOO, Ontario, Jan. 23, 2014 /CNW/ - Open Text Corporation (NASDAQ: OTEX) (TSX: OTC) announced today its financial results for the second quarter ended December 31, 2013.
Financial Highlights for Q2 FY14 (1)
- Total revenue was $363.5 million, up 3% Y/Y
- License revenue was $81.2 million, up 7% Y/Y
- Customer Support revenue was $174.4 million, up 6% Y/Y
- Non-GAAP-based EPS, diluted was $1.58 compared to $1.58, flat Y/Y; GAAP-based EPS, diluted was $0.90 compared to $1.04 Y/Y (2)
- Non-GAAP-based income from operations was $112.3 million and 31% of revenues; GAAP-based income from operations was $73.9 million and 20% of revenues (2)
- Operating cash flow was $60.9 million, compared to $74.7 million Y/Y, down 19%Y/Y, with an ending cash balance of $515.4 million.
"The OpenText product lineup has never been stronger with our Enterprise Suites for EIM, AppWorks for Developers and now GXS for B2B integration," said OpenText CEO Mark J. Barrenechea. "We are committed to leading Enterprise Information Management with the best products and cloud-based services. The OpenText Cloud now manages over 16 billion transactions per year, approximately 600,000 trading partners and 40,000 customers. I am pleased with our progress that includes 7% year over year license growth."
Business Highlights
- OpenText buys GXS, a Maryland-based leader in business-to-business (B2B) cloud integration
- Financial, services and public sector industries saw the most demand
- 6 license transactions over $1 million and 15 license transactions between $500K and $1 million
- Hosted OpenText Enterprise World 2013, the Company's largest conference ever; launched seven product suites and developer platform AppWorks
- Customer successes in the quarter include CZ, Home Trust, Sobeys Inc., Insurance Corporation of British Columbia, Fox Entertainment Group, MMM Group, Qatar University and iGATE-CHCS Services, Inc.
- OpenText begins to ship integration suites as part of Project Red Oxygen
- Unveiled new generation of web-based high-performance remote application access solution
- Launched new secure messaging cloud services
- Unveiled OpenText Extended ECM for Oracle E-Business Suite
- Partnered with hybris software, an SAP company, to enhance its customer experience management (CEM) ecosystem
- OpenText named a leader in Document Output for Customer Communications Management in leading analyst firm report (Forrester Research, Inc.)
Dividend Program Highlights
Stock Dividends
On January 23, 2014, we announced that our Board of Directors approved a two-for-one stock split of our outstanding Common Shares. The two-for-one stock split will be implemented by way of a stock dividend whereby shareholders will receive one Common Share for each Common Share held. The record date for the stock dividend will be February 7, 2014 and the payment date will be February 18, 2014. We are undertaking the stock split to make our Common Shares more readily accessible to individual shareholders, increase and broaden our shareholder base, and improve the liquidity of the market for our Common Shares. As of January 22, 2014 there were 60,473,680 OpenText Common Shares outstanding. Adjusting for the stock split, there will be 120,947,360 OpenText Common Shares outstanding.
Cash Dividends
As part of our quarterly, non cumulative cash dividend program we declared, on January 23, 2014 a dividend of $0.15 per Common Share (or $0.30 per Common Share on a pre stock split basis). The record date for this dividend is February 25, 2014 and the payment date is March 14, 2014. Future declarations of dividends and the establishment of future record and payment dates are subject to the final determination and discretion of our Board of Directors.
| Summary of Quarterly Results |
|||||||||||||||
| Q2 FY14 |
Q1 FY14 |
Q2 FY13 |
% Change (Q/Q) |
% Change (Y/Y) |
|||||||||||
| Revenue (million) |
$ |
363.5 |
$ |
324.5 |
$ |
352.2 |
12.0% |
3.2% |
|||||||
| GAAP-based gross margin |
70.3% |
67.2% |
64.8% |
310 |
bps |
550 |
bps |
||||||||
| GAAP-based operating margin |
20.3% |
16.0% |
19.1% |
430 |
bps |
120 |
bps |
||||||||
| GAAP-based EPS, diluted |
$ |
0.90 |
$ |
0.52 |
$ |
1.04 |
73.1% |
(13.5)% |
|||||||
| Non-GAAP-based gross margin (2) |
74.0% |
73.9% |
71.5% |
10 |
bps |
250 |
bps |
||||||||
| Non-GAAP-based operating margin (2) |
30.9% |
30.6% |
32.1% |
30 |
bps |
(120) |
bps |
||||||||
| Non-GAAP-based EPS, diluted (2) |
$ |
1.58 |
$ |
1.37 |
$ |
1.58 |
15.3% |
—% |
|||||||
| Summary of Year to Date Results |
||||||||||||
| Q2 FY14 |
Q1 FY14 |
Q2 FY13 |
% Change (Y/Y) |
|||||||||
| Revenue (million) |
$ |
688.0 |
$ |
324.5 |
$ |
678.4 |
1.4% |
|||||
| GAAP-based gross margin |
68.8% |
67.2% |
63.8% |
500 |
bps |
|||||||
| GAAP-based operating margin |
18.3% |
16.0% |
15.8% |
250 |
bps |
|||||||
| GAAP-based EPS, diluted |
$ |
1.41 |
$ |
0.52 |
$ |
1.37 |
2.9% |
|||||
| Non-GAAP-based gross margin (2) |
74.0% |
73.9% |
70.8% |
320 |
bps |
|||||||
| Non-GAAP-based operating margin (2) |
30.7% |
30.6% |
30.5% |
20 |
bps |
|||||||
| Non-GAAP-based EPS, diluted (2) |
$ |
2.95 |
$ |
1.37 |
$ |
2.89 |
2.1% |
|||||
Conference Call Information
The public is invited to listen to the earnings conference call today at 5:00 p.m. ET (2:00 p.m. PT) by dialing 1-800-814-4859 (toll-free) or 416-644-3414 (international). Please dial-in 15 minutes ahead of time to ensure proper connection. Alternatively, a live webcast of the earnings conference call will be available on the Investor Relations section of the Company's website at http://investors.opentext.com/events.cfm
An audio replay of the conference call will also be made available approximately two hours after the conclusion of the call. The audio replay will remain available until 11:59 p.m. on February 6, 2014 and can be accessed by dialing 1-877-289-8525 (toll-free) or 416-640-1917 (international) and entering the confirmation code: 4661601 followed by the number sign.
Please see below note (2) for a reconciliation of non-U.S. GAAP-based financial measures used in this press release, to U.S. GAAP-based financial measures.
About OpenText
OpenText is the largest independent software provider of Enterprise Information Management (EIM). For more information please visit www.opentext.com.
Cautionary Statement Regarding Forward-Looking Statements
Certain statements in this press release, including statements about the focus of Open Text Corporation ("OpenText" or "the Company") in Fiscal 2014 on growth in earnings and cash flows, creating value through investments in broader Enterprise Information Management (EIM) capabilities, distribution, the Company's presence in the cloud and in growth markets, its financial conditions, results of operations and earnings, declaration of quarterly dividends, and other matters, may contain words such as "anticipates", "expects", "intends", "plans", "believes", "seeks", "estimates", "may", "could", "would", and other similar language and are considered forward-looking statements or information under applicable securities laws. In addition, any information or statements that refer to expectations, beliefs, plans, projections, objectives, performance or other characterizations of future events or circumstances, including any underlying assumptions, are forward-looking, and based on our current expectations, forecasts and projections about the operating environment, economies and markets in which we operate. Such forward-looking statements involve known and unknown risks, uncertainties and other factors and assumptions that may cause the actual results, performance or achievements to differ materially. Such factors include, but are not limited to: (i) the future performance, financial and otherwise, of OpenText; (ii) the ability of OpenText to bring new products to market and to increase sales; (iii) the strength of the Company's product development pipeline; (iv) the Company's growth and profitability prospects; (v) the estimated size and growth prospects of the EIM market; (vi) the Company's competitive position in the EIM market and its ability to take advantage of future opportunities in this market; (vii) the benefits of the Company's products to be realized by customers; (viii) the demand for the Company's product and the extent of deployment of the Company's products in the EIM marketplace; and (ix) the Company's financial condition and capital requirements. The risks and uncertainties that may affect forward-looking statements include, but are not limited to: (i) integration of acquisitions and related restructuring efforts, including the quantum of restructuring charges and the timing thereof; (ii) the possibility that the Company may be unable to meet its future reporting requirements under the Exchange Act, and the rules promulgated thereunder; (iii) the risks associated with bringing new products to market; (iv) fluctuations in currency exchange rates; (v) delays in the purchasing decisions of the Company's customers; (vi) the competition the Company faces in its industry and/or marketplace; (vii) the possibility of technical, logistical or planning issues in connection with the deployment of the Company's products or services; (viii) the continuous commitment of the Company's customers; and (ix) demand for the Company's products. For additional information with respect to risks and other factors which could occur, see the Company's Annual Report on Form 10-K, Quarterly Reports on Form 10-Q and other securities filings with the Securities and Exchange Commission (SEC) and other securities regulators. Readers are cautioned not to place undue reliance upon any such forward-looking statements, which speak only as of the date made. Unless otherwise required by applicable securities laws, the Company disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.
OTEX-F
For more information, please contact:
United States:
Greg Secord
Vice President, Investor Relations
Open Text Corporation
San Francisco: 415-963-0825
[email protected]
Canada:
Sonya Mehan
Senior Manager, Investor Relations
Open Text Corporation
Waterloo: 519-888-7111 ext. 2446
[email protected]
Copyright ©2014 Open Text Corporation. OpenText is a trademark or registered trademark of Open Text SA and/or Open Text ULC. The list of trademarks is not exhaustive of other trademarks, registered trademarks, product names, company names, brands and service names mentioned herein are property of Open Text SA or other respective owners. All rights reserved. For more information, visit: http://www.opentext.com/2/global/site-copyright.html_SKU.
| OPEN TEXT CORPORATION CONDENSED CONSOLIDATED BALANCE SHEETS (In thousands of U.S. dollars, except share data) |
|||||
| December 31, 2013 |
June 30, 2013 |
||||
| (Unaudited) |
|||||
| ASSETS |
|||||
| Cash and cash equivalents |
$ |
515,354 |
$ |
470,445 |
|
| Accounts receivable trade, net of allowance for doubtful accounts of $3,937 as of December 31, 2013 and $4,871 as of June 30, 2013 |
173,347 |
174,927 |
|||
| Income taxes recoverable |
14,048 |
17,173 |
|||
| Prepaid expenses and other current assets |
48,348 |
43,464 |
|||
| Deferred tax assets |
10,671 |
11,082 |
|||
| Total current assets |
761,768 |
717,091 |
|||
| Property and equipment |
96,737 |
88,364 |
|||
| Goodwill |
1,267,317 |
1,246,872 |
|||
| Acquired intangible assets |
324,185 |
363,615 |
|||
| Deferred tax assets |
133,502 |
135,695 |
|||
| Other assets |
26,648 |
25,082 |
|||
| Deferred charges |
60,005 |
67,633 |
|||
| Long-term income taxes recoverable |
10,560 |
10,465 |
|||
| Total assets |
$ |
2,680,722 |
$ |
2,654,817 |
|
| LIABILITIES AND SHAREHOLDERS' EQUITY |
|||||
| Current liabilities: |
|||||
| Accounts payable and accrued liabilities |
$ |
188,896 |
$ |
188,443 |
|
| Current portion of long-term debt |
54,994 |
51,742 |
|||
| Deferred revenues |
246,738 |
282,387 |
|||
| Income taxes payable |
6,494 |
4,184 |
|||
| Deferred tax liabilities |
1,150 |
1,127 |
|||
| Total current liabilities |
498,272 |
527,883 |
|||
| Long-term liabilities: |
|||||
| Accrued liabilities |
19,344 |
17,849 |
|||
| Deferred credits |
18,401 |
11,608 |
|||
| Pension liability |
25,062 |
24,509 |
|||
| Long-term debt |
491,250 |
513,750 |
|||
| Deferred revenues |
13,014 |
11,830 |
|||
| Long-term income taxes payable |
146,848 |
140,508 |
|||
| Deferred tax liabilities |
62,245 |
69,672 |
|||
| Total long-term liabilities |
776,164 |
789,726 |
|||
| Shareholders' equity: |
|||||
| Share capital |
|||||
| 59,159,544 and 59,028,886 Common Shares issued and outstanding at December 31, 2013 and June 30, 2013, respectively; Authorized Common Shares: unlimited |
656,901 |
651,642 |
|||
| Additional paid-in capital |
105,281 |
101,865 |
|||
| Accumulated other comprehensive income |
42,677 |
39,890 |
|||
| Retained earnings |
621,547 |
572,885 |
|||
| Treasury stock, at cost (416,707 shares at December 31, 2013 and 610,878 at June 30, 2013, respectively) |
(20,120) |
(29,074) |
|||
| Total shareholders' equity |
1,406,286 |
1,337,208 |
|||
| Total liabilities and shareholders' equity |
$ |
2,680,722 |
$ |
2,654,817 |
|
| OPEN TEXT CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF INCOME (In thousands of U.S. dollars, except share and per share data) (unaudited) |
||||||||||||
| Three Months Ended |
Six Months Ended |
|||||||||||
| 2013 |
2012 |
2013 |
2012 |
|||||||||
| Revenues: |
||||||||||||
| License |
$ |
81,164 |
$ |
76,125 |
$ |
136,470 |
$ |
131,781 |
||||
| Cloud services |
42,131 |
44,842 |
83,778 |
88,715 |
||||||||
| Customer support |
174,425 |
164,658 |
342,865 |
326,754 |
||||||||
| Professional service and other |
65,787 |
66,555 |
124,854 |
131,124 |
||||||||
| Total revenues |
363,507 |
352,180 |
687,967 |
678,374 |
||||||||
| Cost of revenues: |
||||||||||||
| License |
3,304 |
5,331 |
6,340 |
9,499 |
||||||||
| Cloud services |
15,963 |
17,946 |
30,228 |
35,928 |
||||||||
| Customer support |
24,409 |
28,277 |
46,579 |
54,100 |
||||||||
| Professional service and other |
51,245 |
49,242 |
96,680 |
99,294 |
||||||||
| Amortization of acquired technology-based intangible assets |
13,035 |
23,191 |
34,565 |
46,973 |
||||||||
| Total cost of revenues |
107,956 |
123,987 |
214,392 |
245,794 |
||||||||
| Gross profit |
255,551 |
228,193 |
473,575 |
432,580 |
||||||||
| Operating expenses: |
||||||||||||
| Research and development |
41,917 |
38,718 |
82,133 |
78,624 |
||||||||
| Sales and marketing |
81,290 |
67,977 |
150,703 |
132,492 |
||||||||
| General and administrative |
32,815 |
28,742 |
61,701 |
55,706 |
||||||||
| Depreciation |
6,898 |
6,105 |
13,356 |
12,214 |
||||||||
| Amortization of acquired customer-based intangible assets |
12,432 |
17,147 |
29,709 |
34,399 |
||||||||
| Special charges |
6,268 |
2,269 |
9,999 |
11,823 |
||||||||
| Total operating expenses |
181,620 |
160,958 |
347,601 |
325,258 |
||||||||
| Income from operations |
73,931 |
67,235 |
125,974 |
107,322 |
||||||||
| Other income (expense), net |
(740) |
1,541 |
1,186 |
1,470 |
||||||||
| Interest and other related expense, net |
(3,040) |
(4,515) |
(7,425) |
(8,883) |
||||||||
| Income before income taxes |
70,151 |
64,261 |
119,735 |
99,909 |
||||||||
| Provision for income taxes |
16,651 |
3,153 |
35,605 |
19,372 |
||||||||
| Net income for the period |
$ |
53,500 |
$ |
61,108 |
$ |
84,130 |
$ |
80,537 |
||||
| Earnings per share—basic |
$ |
0.90 |
$ |
1.04 |
$ |
1.42 |
$ |
1.38 |
||||
| Earnings per share—diluted |
$ |
0.90 |
$ |
1.04 |
$ |
1.41 |
$ |
1.37 |
||||
| Weighted average number of Common Shares outstanding—basic |
59,136 |
58,503 |
59,100 |
58,473 |
||||||||
| Weighted average number of Common Shares outstanding—diluted |
59,593 |
58,983 |
59,475 |
58,961 |
||||||||
| Dividends declared per Common Share |
$ |
0.30 |
$ |
— |
$ |
0.60 |
$ |
— |
||||
| OPEN TEXT CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (In thousands of U.S. dollars) (unaudited) |
|||||||||||
| Three Months Ended |
Six Months Ended |
||||||||||
| 2013 |
2012 |
2013 |
2012 |
||||||||
| Net income for the period |
$ |
53,500 |
$ |
61,108 |
$ |
84,130 |
$ |
80,537 |
|||
| Other comprehensive income—net of tax: |
|||||||||||
| Net foreign currency translation adjustments |
113 |
(989) |
354 |
(1,465) |
|||||||
| Unrealized gain (loss) on cash flow hedges |
|||||||||||
| Unrealized gain (loss) |
(1,433) |
(495) |
87 |
2,005 |
|||||||
| (Gain) loss reclassified into net income |
589 |
(958) |
1,173 |
(1,514) |
|||||||
| Actuarial gain (loss) relating to defined benefit pension plans |
|||||||||||
| Actuarial gain (loss) |
944 |
(695) |
1,027 |
(876) |
|||||||
| Amortization of actuarial loss into net income |
73 |
75 |
146 |
147 |
|||||||
| Total other comprehensive income (loss), net, for the period |
286 |
(3,062) |
2,787 |
(1,703) |
|||||||
| Total comprehensive income |
$ |
53,786 |
$ |
58,046 |
$ |
86,917 |
$ |
78,834 |
|||
| OPEN TEXT CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands of U.S. dollars) (unaudited) |
|||||||||||
| Three Months Ended |
Six Months Ended |
||||||||||
| 2013 |
2012 |
2013 |
2012 |
||||||||
| Cash flows from operating activities: |
|||||||||||
| Net income for the period |
$ |
53,500 |
$ |
61,108 |
$ |
84,130 |
$ |
80,537 |
|||
| Adjustments to reconcile net income to net cash provided by operating activities: |
|||||||||||
| Depreciation and amortization of intangible assets |
32,365 |
46,443 |
77,630 |
93,586 |
|||||||
| Share-based compensation expense |
6,677 |
3,174 |
11,289 |
6,276 |
|||||||
| Excess tax benefits on share-based compensation expense |
(1,008) |
(259) |
(1,081) |
(611) |
|||||||
| Pension expense |
309 |
228 |
539 |
470 |
|||||||
| Amortization of debt issuance costs |
519 |
535 |
1,044 |
1,072 |
|||||||
| Amortization of deferred charges and credits |
2,967 |
2,929 |
5,934 |
5,858 |
|||||||
| Loss on sale and write down of property and equipment |
(6) |
22 |
15 |
24 |
|||||||
| Deferred taxes |
(1,329) |
(2,013) |
(3,198) |
(1,152) |
|||||||
| Changes in operating assets and liabilities: |
|||||||||||
| Accounts receivable |
(19,602) |
964 |
9,176 |
20,406 |
|||||||
| Prepaid expenses and other current assets |
(729) |
(1,640) |
(4,161) |
1,384 |
|||||||
| Income taxes |
(5,093) |
(18,261) |
2,409 |
(13,888) |
|||||||
| Deferred charges and credits |
5,788 |
— |
8,488 |
(436) |
|||||||
| Accounts payable and accrued liabilities |
7,375 |
(365) |
(10,595) |
(20,620) |
|||||||
| Deferred revenue |
(21,574) |
(18,668) |
(40,134) |
(36,738) |
|||||||
| Other assets |
716 |
497 |
(686) |
289 |
|||||||
| Net cash provided by operating activities |
60,875 |
74,694 |
140,799 |
136,457 |
|||||||
| Cash flows from investing activities: |
|||||||||||
| Additions of property and equipment |
(11,913) |
(4,879) |
(20,228) |
(9,917) |
|||||||
| Purchase of patents |
(192) |
— |
(192) |
— |
|||||||
| Purchase of EasyLink Services International Corporation, net of cash acquired |
— |
— |
— |
(315,331) |
|||||||
| Purchase of System Solutions Australia Pty Limited (MessageManager), net of cash acquired |
— |
(516) |
— |
(516) |
|||||||
| Purchase of Cordys Holding B.V., net of cash acquired |
— |
— |
(30,588) |
— |
|||||||
| Purchase consideration for prior period acquisitions |
(221) |
(214) |
(443) |
(431) |
|||||||
| Other investing activities |
526 |
— |
(974) |
— |
|||||||
| Net cash used in investing activities |
(11,800) |
(5,609) |
(52,425) |
(326,195) |
|||||||
| Cash flows from financing activities: |
|||||||||||
| Excess tax benefits on share-based compensation expense |
1,008 |
259 |
1,081 |
611 |
|||||||
| Proceeds from issuance of Common Shares |
3,606 |
2,409 |
5,429 |
6,402 |
|||||||
| Repayment of long-term debt |
(11,419) |
(7,671) |
(19,087) |
(15,338) |
|||||||
| Debt issuance costs |
(273) |
— |
(273) |
— |
|||||||
| Payments of dividends to shareholders |
(17,747) |
— |
(35,468) |
— |
|||||||
| Net cash used in financing activities |
(24,825) |
(5,003) |
(48,318) |
(8,325) |
|||||||
| Foreign exchange gain on cash held in foreign currencies |
(43) |
941 |
4,853 |
5,574 |
|||||||
| Increase (decrease) in cash and cash equivalents during the period |
24,207 |
65,023 |
44,909 |
(192,489) |
|||||||
| Cash and cash equivalents at beginning of the period |
491,147 |
302,235 |
470,445 |
559,747 |
|||||||
| Cash and cash equivalents at end of the period |
$ |
515,354 |
$ |
367,258 |
$ |
515,354 |
$ |
367,258 |
|||
| Notes |
|
| (1) |
All dollar amounts in this press release are in U.S. Dollars unless otherwise indicated. |
| (2) |
Use of Non-GAAP Financial Measures: In addition to reporting financial results in accordance with U.S. GAAP, the Company provides certain financial measures that are not in accordance with U.S. GAAP (non-GAAP).These non-GAAP financial measures have certain limitations in that they do not have a standardized meaning and thus the Company's definition may be different from similar non-GAAP financial measures used by other companies and/or analysts and may differ from period to period. Thus it may be more difficult to compare the Company's financial performance to that of other companies. However, the Company's management compensates for these limitations by providing the relevant disclosure of the items excluded in the calculation of these non-GAAP financial measures both in its reconciliation to the U.S. GAAP financial measures and its consolidated financial statements, all of which should be considered when evaluating the Company's results. |
| The Company uses these non-GAAP financial measures to supplement the information provided in its consolidated financial statements, which are presented in accordance with U.S. GAAP. The presentation of non-GAAP financial measures are not meant to be a substitute for financial measures presented in accordance with U.S. GAAP, but rather should be evaluated in conjunction with and as a supplement to such U.S. GAAP measures. OpenText strongly encourages investors to review its financial information in its entirety and not to rely on a single financial measure. The Company therefore believes that despite these limitations, it is appropriate to supplement the disclosure of the U.S. GAAP measures with certain non-GAAP measures defined below. |
|
| Non-GAAP-based net income and non-GAAP-based EPS are calculated as net income or net income per share on a diluted basis, excluding, the amortization of acquired intangible assets, other income (expense), share-based compensation, and special charges, all net of tax. Non-GAAP-based gross profit is the arithmetical sum of GAAP-based gross profit and the amortization of acquired technology-based intangible assets. Non-GAAP-based gross margin is calculated as non-GAAP-based gross profit expressed as a percentage of revenue. Non-GAAP-based income from operations is calculated as income from operations, excluding, the amortization of acquired intangible assets, special charges, and share-based compensation. Non-GAAP-based operating margin is calculated as non-GAAP-based income from operations expressed as a percentage of revenue. |
|
| The Company's management believes that the presentation, of the above defined non-GAAP financial measures, provides useful information to investors because they portray the financial results of the Company before the impact of certain non-operational charges. The use of the term "non-operational charge" is defined for this purpose as an expense that does not impact the ongoing operating decisions taken by the Company's management and is based upon the way the Company's management evaluates the performance of the Company's business for use in the Company's internal reports. In the course of such evaluation and for the purpose of making operating decisions, the Company's management excludes certain items from its analysis, including amortization of acquired intangible assets, special charges, share-based compensation, other income (expense), and the taxation impact of these items. These items are excluded based upon the manner in which management evaluates the business of the Company and are not excluded in the sense that they may be used under U.S. GAAP. |
|
| The Company believes the provision of supplemental non-GAAP measures allow investors to evaluate the operational and financial performance of the Company's core business using the same evaluation measures that management uses, and is therefore a useful indication of OpenText's performance or expected performance of future operations and facilitates period-to-period comparison of operating performance (although prior performance is not necessarily indicative of future performance). As a result, the Company considers it appropriate and reasonable to provide, in addition to U.S. GAAP measures, supplementary non-GAAP financial measures that exclude certain items from the presentation of its financial results in this press release. |
|
| The following charts provide (unaudited) reconciliations of U.S. GAAP-based financial measures to non-U.S. GAAP-based financial measures for the following periods presented: |
| Reconciliation of selected GAAP-based measures to Non-GAAP-based measures for the three months ended 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 (%) / |
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 |
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 |
53,500 |
40,501 |
(8) |
94,001 |
||||||||||
| GAAP-based earnings per share / |
$ |
0.90 |
$ |
0.68 |
(8) |
$ |
1.58 |
|||||||
| (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 dollar, and gross margin stated as a percentage of revenue. |
| (4) |
Adjustment relates to the exclusion of Special charges 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 dollar, 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 |
|||||
| Per share diluted |
|||||
| Non-GAAP-based net income |
$ |
94,001 |
$ |
1.58 |
|
| Less: |
|||||
| Amortization |
25,467 |
0.43 |
|||
| Share-based compensation |
6,677 |
0.11 |
|||
| Special charges |
6,268 |
0.11 |
|||
| Other (income) expense, net |
740 |
0.01 |
|||
| GAAP-based provision for (recovery of) income taxes |
16,651 |
0.28 |
|||
| Non-GAAP-based provision for income taxes |
(15,302) |
(0.26) |
|||
| GAAP-based net income |
$ |
53,500 |
$ |
0.90 |
|
| 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 |
||||||||||||||
| 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 (%) / |
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 |
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 |
84,130 |
91,405 |
(8) |
175,535 |
||||||||||
| GAAP-based earnings per share / |
$ |
1.41 |
$ |
1.54 |
(8) |
$ |
2.95 |
|||||||
| (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 dollar, and gross margin stated as a percentage of revenue. |
| (4) |
Adjustment relates to the exclusion of Special charges 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 dollar, 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 |
|||||
| Per share diluted |
|||||
| Non-GAAP-based net income |
$ |
175,535 |
$ |
2.95 |
|
| Less: |
|||||
| Amortization |
64,274 |
1.08 |
|||
| Share-based compensation |
11,289 |
0.19 |
|||
| Special charges |
9,999 |
0.17 |
|||
| Other (income) expense, net |
(1,186) |
(0.02) |
|||
| GAAP-based provision for (recovery of) income taxes |
35,605 |
0.60 |
|||
| Non-GAAP-based provision for income taxes |
(28,576) |
(0.48) |
|||
| GAAP-based net income |
$ |
84,130 |
$ |
1.41 |
|
| Reconciliation of selected GAAP-based measures to Non-GAAP-based measures for the three months ended September 30, 2013. (In thousands except for per share amounts) |
||||||||||||||
| Three Months Ended |
||||||||||||||
| 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 |
$ |
14,265 |
$ |
(38) |
(1) |
$ |
14,227 |
|||||||
| Customer support |
22,170 |
(97) |
(1) |
22,073 |
||||||||||
| Professional service and other |
45,435 |
(170) |
(1) |
45,265 |
||||||||||
| Amortization of acquired technology-based intangible assets |
21,530 |
(21,530) |
(2) |
— |
||||||||||
| GAAP-based gross profit and gross margin (%) / |
218,024 |
67.2% |
21,835 |
(3) |
239,859 |
73.9% |
||||||||
| Operating expenses |
||||||||||||||
| Research and development |
40,216 |
(728) |
(1) |
39,488 |
||||||||||
| Sales and marketing |
69,413 |
(2,353) |
(1) |
67,060 |
||||||||||
| General and administrative |
28,886 |
(1,226) |
(1) |
27,660 |
||||||||||
| Amortization of acquired customer-based intangible assets |
17,277 |
(17,277) |
(2) |
— |
||||||||||
| Special charges |
3,731 |
(3,731) |
(4) |
— |
||||||||||
| GAAP-based income from operations and operating margin (%) / Non-GAAP-based income from operations and operating margin (%) |
52,043 |
16.0% |
47,150 |
(5) |
99,193 |
30.6% |
||||||||
| Other income (expense), net |
1,926 |
(1,926) |
(6) |
— |
||||||||||
| Provision for (recovery of) income taxes |
18,954 |
(5,681) |
(7) |
13,273 |
||||||||||
| GAAP-based net income / Non-GAAP-based net income |
30,630 |
50,905 |
(8) |
81,535 |
||||||||||
| GAAP-based earnings per share / |
$ |
0.52 |
$ |
0.85 |
(8) |
$ |
1.37 |
|||||||
| (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 dollar, and gross margin stated as a percentage of revenue. |
| (4) |
Adjustment relates to the exclusion of Special charges 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 dollar, and operating margin stated as a percentage of revenue. |
| (6) |
Adjustment relates to the exclusion of Other income (expense) from our Non-GAAP-based operating expenses as Other income (expense) relates primarily to the transactional impact of foreign exchange and is generally not indicative or related to continuing operations and is therefore excluded from our internal analysis of operating results. |
| (7) |
Adjustment relates to differences between the GAAP-based tax recovery of approximately 38% 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 |
|||||
| Per share diluted |
|||||
| Non-GAAP-based net income |
$ |
81,535 |
$ |
1.37 |
|
| Less: |
|||||
| Amortization |
38,807 |
0.65 |
|||
| Share-based compensation |
4,612 |
0.08 |
|||
| Special charges |
3,731 |
0.06 |
|||
| Other (income) expense, net |
(1,926) |
(0.03) |
|||
| GAAP-based provision for (recovery of) income taxes |
18,954 |
0.32 |
|||
| Non-GAAP-based provision for income taxes |
(13,273) |
(0.23) |
|||
| GAAP-based net income |
$ |
30,630 |
$ |
0.52 |
|
| Reconciliation of selected GAAP-based measures to Non GAAP-based measures for the three months ended December 31, 2012. (In thousands except for per share amounts) |
||||||||||||||
| Three Months Ended |
||||||||||||||
| 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 |
$ |
17,946 |
$ |
(30) |
(1) |
$ |
17,916 |
|||||||
| Customer support |
$ |
28,277 |
$ |
(107) |
(1) |
$ |
28,170 |
|||||||
| Professional service and other |
49,242 |
(188) |
(1) |
49,054 |
||||||||||
| Amortization of acquired technology-based intangible assets |
23,191 |
(23,191) |
(2) |
— |
||||||||||
| GAAP-based gross profit and gross margin (%) / |
228,193 |
64.8% |
23,516 |
(3) |
251,709 |
71.5% |
||||||||
| Operating expenses |
||||||||||||||
| Research and development |
38,718 |
(331) |
(1) |
38,387 |
||||||||||
| Sales and marketing |
67,977 |
(1,653) |
(1) |
66,324 |
||||||||||
| General and administrative |
28,742 |
(865) |
(1) |
27,877 |
||||||||||
| Amortization of acquired customer-based intangible assets |
17,147 |
(17,147) |
(2) |
— |
||||||||||
| Special charges |
2,269 |
(2,269) |
(4) |
— |
||||||||||
| GAAP-based income from operations and operating margin (%) / Non-GAAP-based income from operations and operating margin (%) |
67,235 |
19.1% |
45,781 |
(5) |
113,016 |
32.1% |
||||||||
| Other income (expense), net |
1,541 |
(1,541) |
(6) |
— |
||||||||||
| Provision for (recovery of) income taxes |
3,153 |
12,037 |
(7) |
15,190 |
||||||||||
| GAAP-based net income / Non-GAAP-based net income |
61,108 |
32,203 |
(8) |
93,311 |
||||||||||
| GAAP-based earnings per share / |
$ |
1.04 |
$ |
0.54 |
(8) |
$ |
1.58 |
|||||||
| (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 dollar, and gross margin stated as a percentage of revenue. |
| (4) |
Adjustment relates to the exclusion of Special charges 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 dollar, 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 5% 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 |
|||||
| Per share diluted |
|||||
| Non-GAAP-based net income |
$ |
93,311 |
$ |
1.58 |
|
| Less: |
|||||
| Amortization |
40,338 |
0.68 |
|||
| Share-based compensation |
3,174 |
0.05 |
|||
| Special charges |
2,269 |
0.04 |
|||
| Other (income) expense, net |
(1,541) |
(0.03) |
|||
| GAAP-based provision for (recovery of) income taxes |
3,153 |
0.05 |
|||
| Non-GAAP-based provision for income taxes |
(15,190) |
(0.25) |
|||
| GAAP-based net income |
$ |
61,108 |
$ |
1.04 |
|
| Reconciliation of selected GAAP-based measures to Non GAAP-based measures for the six months ended December 31, 2012. (In thousands except for per share amounts) |
||||||||||||||
| Six Months Ended |
||||||||||||||
| 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 |
$ |
35,928 |
$ |
(30) |
(1) |
$ |
35,898 |
|||||||
| Customer support |
$ |
54,100 |
$ |
(145) |
(1) |
$ |
53,955 |
|||||||
| Professional service and other |
99,294 |
(365) |
(1) |
98,929 |
||||||||||
| Amortization of acquired technology-based intangible assets |
46,973 |
(46,973) |
(2) |
— |
||||||||||
| GAAP-based gross profit and gross margin (%) / |
432,580 |
63.8% |
47,513 |
(3) |
480,093 |
70.8% |
||||||||
| Operating expenses |
||||||||||||||
| Research and development |
78,624 |
(669) |
(1) |
77,955 |
||||||||||
| Sales and marketing |
132,492 |
(3,319) |
(1) |
129,173 |
||||||||||
| General and administrative |
55,706 |
(1,748) |
(1) |
53,958 |
||||||||||
| Amortization of acquired customer-based intangible assets |
34,399 |
(34,399) |
(2) |
— |
||||||||||
| Special charges |
11,823 |
(11,823) |
(4) |
— |
||||||||||
| GAAP-based income from operations and operating margin (%) / Non-GAAP-based income from operations and operating margin (%) |
107,322 |
15.8% |
99,471 |
(5) |
206,793 |
30.5% |
||||||||
| Other income (expense), net |
1,470 |
(1,470) |
(6) |
— |
||||||||||
| Provision for (recovery of) income taxes |
19,372 |
8,335 |
(7) |
27,707 |
||||||||||
| GAAP-based net income / Non-GAAP-based net income |
80,537 |
89,666 |
(8) |
170,203 |
||||||||||
| GAAP-based earnings per share / |
$ |
1.37 |
$ |
1.52 |
(8) |
$ |
2.89 |
|||||||
| (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 dollar, and gross margin stated as a percentage of revenue. |
| (4) |
Adjustment relates to the exclusion of Special charges 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 dollar, 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 19% 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 |
|||||
| Per share diluted |
|||||
| Non-GAAP-based net income |
$ |
170,203 |
$ |
2.89 |
|
| Less: |
|||||
| Amortization |
81,372 |
1.38 |
|||
| Share-based compensation |
6,276 |
0.11 |
|||
| Special charges |
11,823 |
0.20 |
|||
| Other (income) expense, net |
(1,470) |
(0.02) |
|||
| GAAP-based provision for (recovery of) income taxes |
19,372 |
0.33 |
|||
| Non-GAAP-based provision for income taxes |
(27,707) |
(0.48) |
|||
| GAAP-based net income |
$ |
80,537 |
$ |
1.37 |
|
| (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, 2013 and 2012: |
| Three Months Ended |
Three Months Ended |
|||||||
| Currencies
|
% of Revenue
|
% of Expenses*
|
% of Revenue
|
% of Expenses*
|
||||
| EURO |
29% |
19% |
26% |
16% |
||||
| GBP |
8% |
9% |
8% |
8% |
||||
| CAD |
6% |
17% |
6% |
19% |
||||
| USD |
46% |
40% |
48% |
43% |
||||
| Other |
11% |
15% |
12% |
14% |
||||
| Total |
100% |
100% |
100% |
100% |
||||
| Six Months Ended |
Six Months Ended |
|||||||
| Currencies
|
% of Revenue
|
% of Expenses*
|
% of Revenue
|
% of Expenses*
|
||||
| EURO |
28% |
18% |
25% |
16% |
||||
| GBP |
8% |
9% |
8% |
8% |
||||
| CAD |
6% |
17% |
6% |
18% |
||||
| USD |
48% |
41% |
49% |
44% |
||||
| Other |
10% |
15% |
12% |
14% |
||||
| Total |
100% |
100% |
100% |
100% |
||||
| * |
Expenses include all cost of revenues and operating expenses included within the Consolidated Statements of Income, except for amortization of intangible assets, share-based compensation and Special charges. |
SOURCE: Open Text Corporation
http://www.opentext.com
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