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Cision Canada
30-04-2025
- Business
- Cision Canada
OpenText Reports Third Quarter Fiscal Year 2025 Financial Results
Announces Expansion and Final Phase of Business Optimization Plan "On the strength of our operating model, OpenText delivered solid Q3 Cloud revenues, A-EBITDA margin and free cash flows, however, total revenues fell short of our expectations given demand volatility," said Mark J. Barrenechea, OpenText CEO & CTO. "While every organization is managing significant uncertainty, we continue to prove the criticality of OpenText products and the resiliency of our business model, as we support customers in all industries across this dynamic environment." "We are incredibly proud to have expanded many customer relationships during the quarter, and we launched with great anticipation our new Titanium X platform (CE 25.2) that will allow customers to work in SaaS and hybrid environments, while making smarter decisions with OpenText Aviator AI," said Barrenechea. "In addition, we announced the significant final phase of our Business Optimization Plan that commenced last summer. This work is important in continuously improve our A-EBITDA margin, and allow us to reinvest for the long-term in our Aviator AI platform, Content, Security and Cloud growth products." Mark J. Barrenechea, OpenText CEO & CTO "I am excited to have joined such an extraordinary Canadian company. There is no other Canadian software company with the breadth, depth and clear winning position particularly in AI, Content, Security and Cloud, as OpenText. We have the operational focus to generate strong long-term margin and earnings growth, while leveraging our significant cash flow generation capability to reinvest in top priority products and investor returns. The bottom line results this quarter are a great example of our resilience and consistency. It's an exceptional time for investors to participate in the earnings growth engine we're building at OpenText." Chadwick Westlake, OpenText EVP, CFO WATERLOO, ON, April 30, 2025 /CNW/ -- Open Text Corporation (NASDAQ: OTEX), (TSX: OTEX), today announced its financial results for the third quarter ended March 31, 2025. Third Quarter Financial Highlights Y/Y Summary of Quarterly Results (In millions, except per share data) Q3 FY'25 Q3 FY'24 $ Change % Change Q3 FY'25 in CC* % Change in CC* Revenues: Cloud services and subscriptions $463 $455 $8 1.8 % $468 3.0 % Customer support $567 $691 ($124) (17.9) % $578 (16.4) % Total annual recurring revenues** $1,030 $1,146 ($116) (10.1) % $1,046 (8.7) % License $138 $200 ($62) (30.9) % $141 (29.6) % Professional service and other $86 $101 ($15) (14.7) % $88 (12.6) % Total revenues $1,254 $1,447 ($193) (13.3) % $1,275 (11.9) % GAAP-based operating income $209 $227 ($18) (7.9) % N/A N/A Non-GAAP-based operating income (1) $363 $432 ($69) (15.9) % $366 (15.3) % GAAP-based net income attributable to OpenText $93 $98 ($5) (5.6) % N/A N/A Non-GAAP-based net income attributable to OpenText (1) $216 $257 ($41) (16.0) % $218 (15.1) % GAAP-based EPS, diluted $0.35 $0.36 ($0.01) (2.8) % N/A N/A Non-GAAP-based EPS, diluted (1)(2) $0.82 $0.94 ($0.12) (12.8) % $0.83 (11.7) % Adjusted EBITDA (1) $395 $464 ($68) (14.8) % $398 (14.2) % Operating cash flows $402 $385 $18 4.6 % N/A N/A Free cash flows (1) $374 $348 $26 7.4 % N/A N/A Summary of YTD Results (In millions, except per share data) FY'25 YTD FY'24 YTD $ Change % Change FY'25 YTD in CC* % Change in CC* Revenues: Cloud services and subscriptions $1,382 $1,356 $26 1.9 % $1,387 2.3 % Customer support $1,753 $2,085 ($331) (15.9) % $1,761 (15.5) % Total annual recurring revenues** $3,135 $3,441 ($305) (8.9) % $3,148 (8.5) % License $453 $663 ($210) (31.6) % $455 (31.3) % Professional service and other $269 $304 ($35) (11.5) % $270 (11.3) % Total revenues $3,858 $4,407 ($550) (12.5) % $3,873 (12.1) % GAAP-based operating income $711 $694 $17 2.5 % N/A N/A Non-GAAP-based operating income (1) $1,244 $1,425 ($181) (12.7) % $1,241 (13.0) % GAAP-based net income attributable to OpenText $407 $217 $190 87.7 % N/A N/A Non-GAAP-based net income attributable to OpenText (1) $758 $870 ($112) (12.9) % $756 (13.1) % GAAP-based EPS, diluted $1.53 $0.80 $0.73 91.3 % N/A N/A Non-GAAP-based EPS, diluted (1)(2) $2.85 $3.19 ($0.34) (10.7) % $2.85 (10.8) % Adjusted EBITDA (1) $1,341 $1,525 ($184) (12.1) % $1,337 (12.3) % Operating cash flows $672 $782 ($110) (14.1) % N/A N/A Free cash flows (1) $563 $663 ($100) (15.0) % N/A N/A (1) Please see Note 2 "Use of Non-GAAP Financial Measures" to the condensed consolidated financial statements below. (2) For periods prior to Fiscal 2025, this is reflective of the amount of net tax benefit arising from the internal reorganization assumed to be allocable to the period based on the forecasted utilization period. Please also see Note 14 to the Company's Fiscal 2018 Consolidated Financial Statements on Form 10-K. Note: Items in tables may not add due to rounding. Percentages presented are calculated based on the underlying amounts. *CC: Constant currency for this purpose is defined as the current period reported revenues/expenses/earnings represented at the prior comparative period's foreign exchange rate. **Annual recurring revenue is defined as the sum of Cloud services and subscriptions revenue and Customer support revenue. Expansion of the Business Optimization Plan On April 29, 2025, the Board approved an expansion of our previously announced Business Optimization Plan to complete strategic initiatives, integration and simplification following the Micro Focus acquisition, AMC divestiture and other growth and innovation plans including the deployment of AI and automation. We expect up to approximately $200 million of additional costs to be incurred to complete this final phase of the Business Optimization Plan, bringing the combined plan up to approximately $260 million. This expansion includes costs associated with workforce reduction due to automation, centralization and simplification, and corresponding facility costs related to a reduction of our real estate footprint globally. On an overall basis, the expansion is expected to result in a total net reduction of approximately 2,000 positions, an increase of approximately 1,600 positions from the previously announced plan. The expanded Business Optimization Plan along with other savings initiatives, when fully implemented, is expected to generate total annualized savings of approximately $490 million to $550 million, an increase of $340 million to $400 million on an annualized basis. Of this, approximately 50% will be realized in Fiscal 2026, with the remaining annualized benefit to be realized in Fiscal 2027. Dividend As part of our quarterly, non-cumulative cash dividend program, the Board declared on April 29, 2025, a cash dividend of $0.2625 per common share. The record date for this dividend is June 6, 2025 and the payment date is June 20, 2025. OpenText believes strongly in returning value to its shareholders and intends to maintain its dividend program. Any future declarations of dividends and the establishment of future record and payment dates are all subject to the final determination and discretion of the Board of Directors. OpenText announced that in the third quarter of Fiscal 2025, it repurchased $115 million of common shares for cancellation under its share repurchase plan (the Fiscal 2025 Repurchase Plan). As of the end of the third quarter of Fiscal 2025, $266 million of common shares have been repurchased for cancellation under the Fiscal 2025 Repurchase Plan. During the fiscal quarter, OpenText also announced that it increased the authorized limit of the Fiscal 2025 Repurchase Plan by $150 million to $450 million and established an automatic share purchase plan (ASPP) with its broker to facilitate repurchases of common shares. Under the Fiscal 2025 Repurchase Plan, for the period commencing August 7, 2024 until August 6, 2025, OpenText intends to purchase for cancellation in open market transactions, from time to time, up to $450 million of its issued and outstanding common shares, subject to a maximum of 21,179,064 common shares. Quarterly Business Highlights Key customer wins in the quarter include: ABN AMRO Bank, Alps Alpine North America, Avatel Telecom, Converge ICT Solutions, Criteo Technology, Fidelity National Financial, Froneri International, Japan Tobacco International (Spain), Kubus IT GbR, Leonardo UK, Pikeville Medical Center, Quantum Health, Sky Italia, SMA Solar Technology, United States Air Force. OpenText announced availability of Cloud Editions 25.2, formerly known as Titanium X, which brings together a comprehensive set of enterprise capabilities for process automation, data, security and AI. OpenText held customer summits in London and Munich, empowering businesses with the latest breakthroughs in information management and AI that are driving massive growth and productivity enhancements for the world's largest organizations. OpenText launched next generation OpenText Cybersecurity Cloud with AI-powered threat detection and response capabilities. OpenText strengthened consumer Cybersecurity portfolio delivering multiple layers of security in a single, unified platform. (1) Please see Note 2 "Use of Non-GAAP Financial Measures" to the condensed consolidated financial statements below. (2) Please also see Note 14 to the Company's Fiscal 2018 Consolidated Financial Statements on Form 10-K. Reflective of the amount of net tax benefit arising from the internal reorganization assumed to be allocable to the current period based on the forecasted utilization period. Conference Call Information OpenText posted an investor presentation on its Investor Relations website and invites the public to listen to the earnings conference call webcast tomorrow on Thursday, May 1, 2025 at 8:30 a.m. ET (5:30 a.m. PT) from the Investor Relations section of the Company's website at To join the webcast instantly, use this webcast link. A webcast replay will be available shortly following completion of the live call. Please see below note (2) for a reconciliation of U.S. GAAP-based financial measures used in this press release to Non-GAAP-based financial measures. Copyright ©2025 Open Text. OpenText is a trademark or registered trademark of Open Text. 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. All rights reserved. For more information, visit: About OpenText OpenText is the leading Information Management software and services company in the world. We help organizations solve complex global problems with a comprehensive suite of Business Clouds, Business AI, and Business Technology. For more information about OpenText (NASDAQ/TSX: OTEX), please visit us at OTEX-F Cautionary Statement Regarding Forward-Looking Statements Certain statements in this press release, including statements about Open Text Corporation ("OpenText" or "the Company") on growth, profitability and future of Information Management, including delivering long term margin and earnings growth, reinvestment in growth products, margin improvement and efficiency; achieving total revenue growth, competitive advantage through innovation, and operational excellence through delivering upper quartile margins, free cash flow, earnings and capital return; customer benefits from products; A-EBITDA expansion; executing the Company's capital allocation strategy, including expected return to shareholders; level of performance through the fiscal year; new bookings, demand, scale and revenue growth; expansion and execution of Business Optimization Plan and other savings initiatives, including timing, costs, savings, associated benefits thereof and potential adjustments of amounts thereto; innovation fueled by cloud, AI and security technologies; executing on targets and aspirations; future acquisitions or divestitures and associated strategy; future revenues, operating expenses, margins, free cash flows, interest expense and capital expenditures; net leverage and savings targets and timing thereof; market share of our products; innovation road map; intention to maintain a dividend program, including any targeted annualized dividend; expected size and timing of the Fiscal 2025 Repurchase Plan, including execution thereof; future tax rates; renewal rates; new platform and product offerings, including reinvestment therein and associated benefits to customers; internal automation and AI leverage, including our AI strategy, vision and growth; strategy to build shareholder value; and other matters, which may contain words such as "anticipates", "expects", "intends", "plans", "believes", "seeks", "estimates", "may", "could", "would", "might", "will" and variations of these words or similar expressions are intended to identify forward-looking statements or information under applicable securities laws (forward-looking statements). 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 statements, and are based on our current expectations, forecasts and projections about the operating environment, economies and markets in which we operate. Forward-looking statements reflect our current estimates, beliefs and assumptions, which are based on management's perception of historic trends, current conditions and expected future developments, as well as other factors it believes are appropriate in the circumstances, such as certain assumptions about the economy, as well as market, financial and operational assumptions. Management's estimates, beliefs and assumptions, including statements regarding future targets and aspirations, are inherently subject to significant business, economic, competitive and other uncertainties and contingencies regarding future events and, as such, are subject to change and are not considered guidance. We can give no assurance that such estimates, beliefs and assumptions will prove to be correct. Future declarations of dividends are also subject to the final determination and discretion of the Board of Directors, and an annualized dividend has not been approved or declared by the Board. Forward-looking statements involve known and unknown risks and uncertainties such as those relating to: all statements regarding the expected future financial position, results of operations, revenues, expenses, margins, cash flows, dividends, share buybacks, financing plans, business strategy, budgets, capital expenditures, competitive positions, growth opportunities, plans and objectives of management, including any anticipated synergy benefits; incurring unanticipated costs, delays or difficulties; and our ability to develop, protect and maintain our intellectual property and proprietary technology and to operate without infringing on the proprietary rights of others. We rely on a combination of copyright, patent, trademark and trade secret laws, non-disclosure agreements and other contractual provisions to establish and maintain our proprietary rights, which are important to our success. From time to time, we may also enforce our intellectual property rights through litigation in line with our strategic and business objectives. The actual results that OpenText achieves may differ materially from any forward-looking statements. 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. Further, readers should note that we may announce information using our website, press releases, securities law filings, public conference calls, webcasts and the social media channels identified on the Investors section of our website ( Such social media channels may include the Company's or our CEO's blog, X, formerly known as Twitter, account or LinkedIn account. The information posted through such channels may be material. Accordingly, readers should monitor such channels in addition to our other forms of communication. OPEN TEXT CORPORATION (In thousands of U.S. dollars, except share and per share data) (unaudited) Three Months Ended March 31, Nine Months Ended March 31, 2025 2024 2025 2024 Revenues: Cloud services and subscriptions $ 462,614 $ 454,528 $ 1,381,944 $ 1,355,633 Customer support 567,379 691,441 1,753,464 2,084,916 License 138,363 200,363 453,099 662,627 Professional service and other 86,007 100,799 269,361 304,252 Total revenues 1,254,363 1,447,131 3,857,868 4,407,428 Cost of revenues: Cloud services and subscriptions 174,186 186,400 521,731 537,960 Customer support 61,733 74,639 186,963 223,027 License 7,504 6,769 20,497 16,591 Professional service and other 65,487 75,455 200,443 230,836 Amortization of acquired technology-based intangible assets 47,199 48,094 141,646 195,702 Total cost of revenues 356,109 391,357 1,071,280 1,204,116 Gross profit 898,254 1,055,774 2,786,588 3,203,312 Operating expenses: Research and development 197,333 226,521 568,753 665,608 Sales and marketing 260,102 303,750 779,913 871,384 General and administrative 115,718 145,924 321,804 450,399 Depreciation 32,474 32,109 96,524 99,615 Amortization of acquired customer-based intangible assets 79,683 100,841 242,235 334,958 Special charges (recoveries) 3,854 19,561 66,228 87,521 Total operating expenses 689,164 828,706 2,075,457 2,509,485 Income from operations 209,090 227,068 711,131 693,827 Other income (expense), net (26,578) 9,950 6,382 (38,664) Interest and other related expense, net (78,816) (132,663) (246,713) (413,719) Income before income taxes 103,696 104,355 470,800 241,444 Provision for income taxes 10,842 6,028 63,618 24,434 Net income for the period $ 92,854 $ 98,327 $ 407,182 $ 217,010 Net (income) attributable to non-controlling interests (49) (42) (147) (149) Net income attributable to OpenText $ 92,805 $ 98,285 $ 407,035 $ 216,861 Earnings per share—basic attributable to OpenText $ 0.35 $ 0.36 $ 1.54 $ 0.80 Earnings per share—diluted attributable to OpenText $ 0.35 $ 0.36 $ 1.53 $ 0.80 Weighted average number of Common Shares outstanding—basic (in '000's) 262,841 272,272 265,132 271,671 OPEN TEXT CORPORATION (In thousands of U.S. dollars) (unaudited) Three Months Ended March 31, Nine Months Ended March 31, 2025 2024 2025 2024 Net income for the period $ 92,854 $ 98,327 $ 407,182 $ 217,010 Other comprehensive income (loss)—net of tax: Net foreign currency translation adjustments (1,511) 11,765 (5,534) (18,614) Unrealized gain (loss) on cash flow hedges: Unrealized gain (loss)—net of tax (1) (46) (1,634) (3,580) (1,953) (Gain) loss reclassified into net income—net of tax (2) 1,371 118 2,643 455 Unrealized gain (loss) on available-for-sale financial assets: Unrealized gain (loss)—net of tax (3) (395) 90 289 319 Actuarial gain (loss) relating to defined benefit pension plans: Actuarial gain (loss)—net of tax (4) — — (1,045) (110) Amortization of actuarial (gain) loss into net income—net of tax (5) 513 115 999 417 Total other comprehensive income (loss), net for the period (68) 10,454 (6,228) (19,486) Total comprehensive income 92,786 108,781 400,954 197,524 Comprehensive income attributable to non - controlling interests (49) (42) (147) (149) Total comprehensive income attributable to OpenText $ 92,737 $ 108,739 $ 400,807 $ 197,375 ______________________________ (1) Net of tax expense (recovery) of $(17) and $(589) for the three months ended March 31, 2025 and 2024, respectively; $(1,291) and $(704) for the nine months ended March 31, 2025 and 2024, respectively. (2) Net of tax expense (recovery) of $494 and $42 for the three months ended March 31, 2025 and 2024, respectively; $952 and $163 for the nine months ended March 31, 2025 and 2024, respectively. (3) Net of tax expense (recovery) of $91 and $24 for the three months ended March 31, 2025 and 2024, respectively; $316 and $84 for the nine months ended March 31, 2025 and 2024, respectively. (4) Net of tax expense (recovery) of $— and $— for the three months ended March 31, 2025 and 2024, respectively; $(43) and $110 for the nine months ended March 31, 2025 and 2024, respectively. (5) Net of tax expense (recovery) of $83 and $50 for the three months ended March 31, 2025 and 2024, respectively; $267 and $175 for the nine months ended March 31, 2025 and 2024, respectively. OPEN TEXT CORPORATION (In thousands of U.S. dollars and shares) (unaudited) Three Months Ended March 31, 2025 Common Shares and Additional Paid in Capital Treasury Stock Retained Earnings Accumulated Other Comprehensive Income Non- Controlling Interests Total Shares Amount Shares Amount Balance as of December 31, 2024 263,728 $ 2,275,583 (4,226) $ (144,432) $ 2,174,514 $ (75,779) $ 1,621 $ 4,231,507 Issuance of Common Shares Under employee stock option plans — 3 — — — — — 3 Under employee stock purchase plans 273 6,551 — — — — — 6,551 Share-based compensation — 23,000 — — — — — 23,000 Purchase of treasury stock — — (297) (7,564) — — — (7,564) Issuance of treasury stock — (73,720) 2,010 74,322 (425) — — 177 Repurchase of Common Shares (4,351) (31,405) — — (115,412) — — (146,817) Dividends declared ($0.2625 per Common Share) — — — — (69,235) — — (69,235) Other comprehensive income (loss) - net — — — — — (68) — (68) Net income for the period — — — — 92,805 — 49 92,854 Balance as of March 31, 2025 259,650 $ 2,200,012 (2,513) $ (77,674) $ 2,082,247 $ (75,847) $ 1,670 $ 4,130,408 Three Months Ended March 31, 2024 Common Shares and Additional Paid in Capital Treasury Stock Retained Earnings Accumulated Other Comprehensive Income Non- Controlling Interests Total Shares Amount Shares Amount Balance as of December 31, 2023 271,855 $ 2,261,856 (4,400) $ (179,089) $ 2,029,643 $ (83,499) $ 1,436 $ 4,030,347 Issuance of Common Shares Under employee stock option plans 517 17,315 — — — — — 17,315 Under employee stock purchase plans 190 6,698 — — — — — 6,698 Share-based compensation — 35,947 — — — — — 35,947 Issuance of treasury stock — (45,058) 1,023 45,483 (425) — — — Dividends declared ($0.25 per Common Share) — — — — (68,443) — — (68,443) Other comprehensive income (loss) - net — — — — — 10,454 — 10,454 Net income for the period — — — — 98,285 — 42 98,327 Balance as of March 31, 2024 272,562 $ 2,276,758 (3,377) $ (133,606) $ 2,059,060 $ (73,045) $ 1,478 $ 4,130,645 OPEN TEXT CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY (In thousands of U.S. dollars and shares) (unaudited) Nine Months Ended March 31, 2025 Common Shares and Additional Paid in Capital Treasury Stock Retained Earnings Accumulated Other Comprehensive Income Non- Controlling Interests Total Shares Amount Shares Amount Balance as of June 30, 2024 267,801 $ 2,271,886 (3,136) $ (123,268) $ 2,119,159 $ (69,619) $ 1,523 $ 4,199,681 Issuance of Common Shares Under employee stock option plans 70 1,883 — — — — — 1,883 Under employee stock purchase plans 992 25,722 — — — — — 25,722 Share-based compensation — 82,801 — — — — — 82,801 Purchase of treasury stock — — (2,484) (72,587) — — — (72,587) Issuance of treasury stock — (115,556) 3,107 118,181 (1,127) — — 1,498 Repurchase of Common Shares (9,213) (66,724) — — (233,668) — — (300,392) Dividends declared ($0.7875 per Common Share) — — — — (209,152) — — (209,152) Other comprehensive income (loss) - net — — — — — (6,228) — (6,228) Net income for the period — — — — 407,035 — 147 407,182 Balance as of March 31, 2025 259,650 $ 2,200,012 (2,513) $ (77,674) $ 2,082,247 $ (75,847) $ 1,670 $ 4,130,408 Nine Months Ended March 31, 2024 Common Shares and Additional Paid in Capital Treasury Stock Retained Earnings Accumulated Other Comprehensive Income Non- Controlling Interests Total Shares Amount Shares Amount Balance as of June 30, 2023 270,903 $ 2,176,947 (3,536) $ (151,597) $ 2,048,984 $ (53,559) $ 1,329 $ 4,022,104 Issuance of Common Shares Under employee stock option plans 942 31,318 — — — — — 31,318 Under employee stock purchase plans 717 23,709 — — — — — 23,709 Share-based compensation — 112,944 — — — — — 112,944 Purchase of treasury stock — — (1,400) (53,085) — — — (53,085) Issuance of treasury stock — (68,160) 1,559 71,076 (2,916) — — — Dividends declared ($0.75 per Common Share) — — — — (203,869) — — (203,869) Other comprehensive income (loss) - net — — — — — (19,486) — (19,486) Net income for the period — — — — 216,861 — 149 217,010 Balance as of March 31, 2024 272,562 $ 2,276,758 (3,377) $ (133,606) $ 2,059,060 $ (73,045) $ 1,478 $ 4,130,645 OPEN TEXT CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands of U.S. dollars) (unaudited) Three Months Ended March 31, Nine Months Ended March 31, 2025 2024 2025 2024 Cash flows from operating activities: Net income for the period $ 92,854 $ 98,327 $ 407,182 $ 217,010 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization of intangible assets 159,356 181,044 480,405 630,275 Share-based compensation expense 23,000 36,042 82,919 113,312 Pension expense 3,381 3,196 10,194 9,579 Amortization of debt discount and issuance costs 5,539 6,766 16,334 19,587 Write-off of right of use assets 46 4,278 1,431 15,241 Adjustment to gain on AMC Divestiture — — 4,175 — Loss on extinguishment of debt — 10,803 — 10,803 Loss on sale and write down of property and equipment, net 289 (162) 728 1,715 Deferred taxes (38,794) (72,144) (91,771) (249,174) Share in net (income) loss of equity investees (1,644) 835 (3,637) 19,013 Changes in derivative instruments 9,836 (16,671) (10,778) 3,551 Changes in operating assets and liabilities: Accounts receivable 70,030 111,772 111,909 51,487 Contract assets (36,155) (24,859) (96,101) (71,486) Prepaid expenses and other current assets (17,401) 728 37,177 4,717 Income taxes 12,578 16,943 (184,149) 75,676 Accounts payable and accrued liabilities 46,802 (24,731) (81,308) (72,887) Deferred revenue 82,367 56,840 10,960 14,338 Other assets (6,146) 650 (7,582) 5,868 Operating lease assets and liabilities, net (3,697) (4,960) (15,661) (16,154) Net cash provided by operating activities 402,241 384,697 672,427 782,471 Cash flows from investing activities: Additions of property and equipment (28,412) (36,537) (108,997) (119,316) Purchase of Micro Focus, net of cash acquired — — — (9,272) Settlement of derivative instruments (10,380) — (10,380) — Adjustment to proceeds from AMC Divestiture — — (11,686) — Proceeds from interest on derivative instruments 2,647 2,490 5,166 4,456 Other investing activities 582 6,315 6,474 (468) Net cash used in investing activities (35,563) (27,732) (119,423) (124,600) Cash flows from financing activities: Proceeds from issuance of Common Shares from exercise of stock options and ESPP 8,185 27,770 25,925 57,027 Repayment of long-term debt and Revolver (8,962) (186,463) (26,888) (559,389) Net change in transition services agreement obligation (37,215) — (15,277) — Debt issuance costs — — (1,066) (2,792) Repurchase of Common Shares (114,563) — (267,969) — Purchase of treasury stock (5,136) — (70,159) (53,085) Payments of dividends to shareholders (67,961) (67,293) (205,335) (200,672) Other financing activities — (1,447) — (1,447) Net cash used in financing activities (225,652) (227,433) (560,769) (760,358) Foreign exchange gain (loss) on cash held in foreign currencies 14,660 (7,521) 4,866 (3,982) Increase (decrease) in cash, cash equivalents and restricted cash during the period 155,686 122,011 (2,899) (106,469) Cash, cash equivalents and restricted cash at beginning of the period 1,124,208 1,005,472 1,282,793 1,233,952 Cash, cash equivalents and restricted cash at end of the period $ 1,279,894 $ 1,127,483 $ 1,279,894 $ 1,127,483 (1) Restricted cash is classified under the Prepaid expenses and other current assets and Other assets line items on the Condensed Consolidated Balance Sheets. (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 condensed 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 condensed consolidated financial statements, which are presented in accordance with U.S. GAAP. The presentation of Non-GAAP financial measures is 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, attributable to OpenText, are consistently calculated as GAAP-based net income (loss) or earnings (loss) per share, attributable to OpenText, on a diluted basis, excluding the effects of the amortization of acquired intangible assets, other income (expense), share-based compensation, and special charges (recoveries), all net of tax and any tax benefits/expense items unrelated to current period income, as further described in the tables below. Non-GAAP-based gross profit is the arithmetical sum of GAAP-based gross profit and the amortization of acquired technology-based intangible assets and share-based compensation within cost of sales. Non-GAAP-based gross margin is calculated as Non-GAAP-based gross profit expressed as a percentage of total revenue. Non-GAAP-based income from operations is calculated as GAAP-based income from operations, excluding the amortization of acquired intangible assets, special charges (recoveries), and share-based compensation expense. Adjusted earnings before interest, taxes, depreciation and amortization (Adjusted EBITDA) is consistently calculated as GAAP-based net income (loss), attributable to OpenText, excluding interest income (expense), provision for (recovery of) income taxes, depreciation and amortization of acquired intangible assets, other income (expense), share-based compensation and special charges (recoveries). Adjusted EBITDA margin is calculated as adjusted EBITDA expressed as a percentage of total 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. These items are excluded based upon the way the Company's management evaluates the performance of the Company's business for use in the Company's internal reports and are not excluded in the sense that they may be used under U.S. GAAP. The Company does not acquire businesses on a predictable cycle, and therefore believes that the presentation of Non-GAAP measures, which in certain cases adjust for the impact of amortization of intangible assets and the related tax effects that are primarily related to acquisitions, will provide readers of financial statements with a more consistent basis for comparison across accounting periods and be more useful in helping readers understand the Company's operating results and underlying operational trends. Additionally, the Company has engaged in various restructuring activities over the past several years, primarily due to acquisitions and in response to our return to office planning, that have resulted in costs associated with reductions in headcount, consolidation of leased facilities and related costs, all which are recorded under the Company's "Special charges (recoveries)" caption on the Condensed Consolidated Statements of Income. Each restructuring activity is a discrete event based on a unique set of business objectives or circumstances, and each differs in terms of its operational implementation, business impact and scope, and the size of each restructuring plan can vary significantly from period to period. Therefore, the Company believes that the exclusion of these special charges (recoveries) will also better aid readers of financial statements in the understanding and comparability of the Company's operating results and underlying operational trends. In summary, 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. Information reconciling certain forward-looking GAAP measures to non-GAAP measures related to F'25 targets and F'27 aspirations, including A-EBITDA is not available without unreasonable effort due to high variability, complexity and uncertainty with respect to forecasting and quantifying certain amounts that are necessary for such reconciliations. The following charts provide unaudited reconciliations of U.S. GAAP-based financial measures to Non-GAAP-based financial measures for the following periods presented. The Micro Focus Acquisition significantly impacts period-over-period comparability. (1) Adjustment relates to the exclusion of share-based compensation expense from our Non-GAAP-based operating expenses as this expense is excluded from our internal analysis of operating results. (2) Adjustment relates to the exclusion of amortization expense from our Non-GAAP-based operating expenses as the timing and frequency of amortization expense is dependent on our acquisitions and is hence excluded from our internal analysis of operating results. (3) GAAP-based and Non-GAAP-based gross profit stated in dollars and gross margin stated as a percentage of total revenue. (4) Adjustment relates to the exclusion of special charges (recoveries) from our Non-GAAP-based operating expenses as special charges (recoveries) are generally incurred in the periods relevant to an acquisition and include certain charges or recoveries that are not indicative or related to continuing operations and are therefore excluded from our internal analysis of operating results. (5) GAAP-based and Non-GAAP-based income from operations stated in dollars. (6) Adjustment relates to the exclusion of other income (expense) from our Non-GAAP-based operating expenses as other income (expense) generally relates to the transactional impact of foreign exchange and is generally not indicative or related to continuing operations and is therefore excluded from our internal analysis of operating results. Other income (expense) also includes our share of income (losses) from our holdings in 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 of our ongoing business and operating results. (7) Adjustment relates to differences between the GAAP-based tax provision rate of approximately 10% 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. Reconciliation of Free cash flows Three Months Ended March 31, 2025 GAAP-based cash flows provided by operating activities $ 402,241 Add: Capital expenditures (1) $ (28,412) Free cash flows $ 373,829 (1) Defined as "Additions of property and equipment" in the Condensed Consolidated Statements of Cash Flows. Reconciliation of selected GAAP-based measures to Non-GAAP-based measures for the nine months ended March 31, 2025 (In thousands, except for per share data) Nine Months Ended March 31, 2025 GAAP-based Measures GAAP-based Measures % of Total Revenue Adjustments Note Non-GAAP- based Measures Non-GAAP- based Measures % of Total Revenue Cost of revenues Cloud services and subscriptions $ 521,731 $ (6,828) (1) $ 514,903 Customer support 186,963 (3,293) (1) 183,670 Professional service and other 200,443 (3,509) (1) 196,934 Amortization of acquired technology-based intangible assets 141,646 (141,646) (2) — GAAP-based gross profit and gross margin (%) / Non-GAAP-based gross profit and gross margin (%) 2,786,588 72.2 % 155,276 (3) 2,941,864 76.3 % Operating expenses Research and development 568,753 (20,560) (1) 548,193 Sales and marketing 779,913 (27,380) (1) 752,533 General and administrative 321,804 (21,349) (1) 300,455 Amortization of acquired customer-based intangible assets 242,235 (242,235) (2) — Special charges (recoveries) 66,228 (66,228) (4) — GAAP-based income from operations / Non-GAAP-based income from operations 711,131 533,028 (5) 1,244,159 Other income (expense), net 6,382 (6,382) (6) — Provision for income taxes 63,618 175,768 (7) 239,386 GAAP-based net income / Non-GAAP-based net income, attributable to OpenText 407,035 350,878 (8) 757,913 GAAP-based earnings per share / Non-GAAP-based earnings per share-diluted, attributable to OpenText $ 1.53 $ 1.32 (8) $ 2.85 (1) Adjustment relates to the exclusion of share-based compensation expense from our Non-GAAP-based operating expenses as this expense is excluded from our internal analysis of operating results. (2) Adjustment relates to the exclusion of amortization expense from our Non-GAAP-based operating expenses as the timing and frequency of amortization expense is dependent on our acquisitions and is hence excluded from our internal analysis of operating results. (3) GAAP-based and Non-GAAP-based gross profit stated in dollars and gross margin stated as a percentage of total revenue. (4) Adjustment relates to the exclusion of special charges (recoveries) from our Non-GAAP-based operating expenses as special charges (recoveries) are generally incurred in the periods relevant to an acquisition and include certain charges or recoveries that are not indicative or related to continuing operations and are therefore excluded from our internal analysis of operating results. (5) GAAP-based and Non-GAAP-based income from operations stated in dollars. (6) Adjustment relates to the exclusion of other income (expense) from our Non-GAAP-based operating expenses as other income (expense) generally relates to the transactional impact of foreign exchange and is generally not indicative or related to continuing operations and is therefore excluded from our internal analysis of operating results. Other income (expense) also includes our share of income (losses) from our holdings in 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 of our ongoing business and operating results. (7) Adjustment relates to differences between the GAAP-based tax provision rate of approximately 14% 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. Reconciliation of Adjusted EBITDA Nine Months Ended March 31, 2025 GAAP-based net income, attributable to OpenText $ 407,035 Add: Provision for income taxes 63,618 Interest and other related expense, net 246,713 Amortization of acquired technology-based intangible assets 141,646 Amortization of acquired customer-based intangible assets 242,235 Depreciation 96,524 Share-based compensation 82,919 Special charges (recoveries) 66,228 Other (income) expense, net (6,382) Adjusted EBITDA $ 1,340,536 GAAP-based net income margin 10.6 % Adjusted EBITDA margin 34.7 % Reconciliation of Free cash flows Nine Months Ended March 31, 2025 GAAP-based cash flows provided by operating activities $ 672,427 Add: Capital expenditures (1) (108,997) Free cash flows $ 563,430 (1) Defined as "Additions of property and equipment" in the Condensed Consolidated Statements of Cash Flows. Reconciliation of selected GAAP-based measures to Non-GAAP-based measures for the three months ended December 31, 2024 (In thousands, except for per share data) Three Months Ended December 31, 2024 GAAP-based Measures GAAP-based Measures % of Total Revenue Adjustments Note Non-GAAP- based Measures Non-GAAP- based Measures % of Total Revenue Cost of revenues Cloud services and subscriptions $ 172,288 $ (2,796) (1) $ 169,492 Customer support 62,656 (1,139) (1) 61,517 Professional service and other 68,041 (1,273) (1) 66,768 Amortization of acquired technology-based intangible assets 47,203 (47,203) (2) — GAAP-based gross profit and gross margin (%) /Non-GAAP-based gross profit and gross margin (%) 977,976 73.3 % 52,411 (3) 1,030,387 77.2 % Operating expenses Research and development 180,727 (7,656) (1) 173,071 Sales and marketing 273,929 (11,223) (1) 262,706 General and administrative 99,356 (6,274) (1) 93,082 Amortization of acquired customer-based intangible assets 81,048 (81,048) (2) — Special charges (recoveries) 15,238 (15,238) (4) — GAAP-based income from operations / Non-GAAP-based income from operations 295,799 173,850 (5) 469,649 Other income (expense), net 68,615 (68,615) (6) — Provision for income taxes 50,893 41,755 (7) 92,648 GAAP-based net income / Non-GAAP-based net income, attributable to OpenText 229,862 63,480 (8) 293,342 GAAP-based earnings per share / Non-GAAP-based earnings per share-diluted, attributable to OpenText $ 0.87 $ 0.24 (8) $ 1.11 (1) Adjustment relates to the exclusion of share-based compensation expense from our Non-GAAP-based operating expenses as this expense is excluded from our internal analysis of operating results. (2) Adjustment relates to the exclusion of amortization expense from our Non-GAAP-based operating expenses as the timing and frequency of amortization expense is dependent on our acquisitions and is hence excluded from our internal analysis of operating results. (3) GAAP-based and Non-GAAP-based gross profit stated in dollars and gross margin stated as a percentage of total revenue. (4) Adjustment relates to the exclusion of special charges (recoveries) from our Non-GAAP-based operating expenses as special charges (recoveries) are generally incurred in the periods relevant to an acquisition and include certain charges or recoveries that are not indicative or related to continuing operations and are therefore excluded from our internal analysis of operating results. (5) GAAP-based and Non-GAAP-based income from operations stated in dollars. (6) Adjustment relates to the exclusion of other income (expense) from our Non-GAAP-based operating expenses as other income (expense) generally relates to the transactional impact of foreign exchange and is generally not indicative or related to continuing operations and is therefore excluded from our internal analysis of operating results. Other income (expense) also includes our share of income (losses) from our holdings in 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 of our ongoing business and operating results. (7) Adjustment relates to differences between the GAAP-based tax provision rate of approximately 18% 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. Reconciliation of Adjusted EBITDA Three Months Ended December 31, 2024 GAAP-based net income, attributable to OpenText $ 229,862 Add (deduct): Provision for income taxes 50,893 Interest and other related expense, net 83,615 Amortization of acquired technology-based intangible assets 47,203 Amortization of acquired customer-based intangible assets 81,048 Depreciation 31,879 Share-based compensation 30,361 Special charges (recoveries) 15,238 Other (income) expense, net (68,615) Adjusted EBITDA $ 501,484 GAAP-based net income margin 17.2 % Adjusted EBITDA margin 37.6 % Reconciliation of Free cash flows Three Months Ended December 31, 2024 GAAP-based cash flows provided by operating activities $ 347,992 Add: Capital expenditures (1) (41,269) Free cash flows $ 306,723 (1) Defined as "Additions of property and equipment" in the Condensed Consolidated Statements of Cash Flows. Reconciliation of selected GAAP-based measures to Non-GAAP-based measures for the three months ended March 31, 2024 (In thousands, except for per share data) Three Months Ended March 31, 2024 GAAP-based Measures GAAP-based Measures % of Total Revenue Adjustments Note Non-GAAP- based Measures Non-GAAP- based Measures % of Total Revenue Cost of revenues Cloud services and subscriptions $ 186,400 $ (3,292) (1) $ 183,108 Customer support 74,639 (1,149) (1) 73,490 Professional service and other 75,455 (1,458) (1) 73,997 Amortization of acquired technology-based intangible assets 48,094 (48,094) (2) — GAAP-based gross profit and gross margin (%) /Non-GAAP-based gross profit and gross margin (%) 1,055,774 73.0 % 53,993 (3) 1,109,767 76.7 % Operating expenses Research and development 226,521 (10,799) (1) 215,722 Sales and marketing 303,750 (12,260) (1) 291,490 General and administrative 145,924 (7,084) (1) 138,840 Amortization of acquired customer-based intangible assets 100,841 (100,841) (2) — Special charges (recoveries) 19,561 (19,561) (4) — GAAP-based income from operations / Non-GAAP-based income from operations 227,068 204,538 (5) 431,606 Other income (expense), net 9,950 (9,950) (6) — Provision for income taxes 6,028 35,824 (7) 41,852 GAAP-based net income / Non-GAAP-based net income, attributable to OpenText 98,285 158,764 (8) 257,049 GAAP-based earnings per share / Non-GAAP-based earnings per share-diluted, attributable to OpenText $ 0.36 $ 0.58 (8) $ 0.94 (1) Adjustment relates to the exclusion of share-based compensation expense from our Non-GAAP-based operating expenses as this expense is excluded from our internal analysis of operating results. (2) Adjustment relates to the exclusion of amortization expense from our Non-GAAP-based operating expenses as the timing and frequency of amortization expense is dependent on our acquisitions and is hence excluded from our internal analysis of operating results. (3) GAAP-based and Non-GAAP-based gross profit stated in dollars and gross margin stated as a percentage of total revenue. (4) Adjustment relates to the exclusion of special charges (recoveries) from our Non-GAAP-based operating expenses as special charges (recoveries) are generally incurred in the periods relevant to an acquisition and include certain charges or recoveries that are not indicative or related to continuing operations and are therefore excluded from our internal analysis of operating results. (5) GAAP-based and Non-GAAP-based income from operations stated in dollars. (6) Adjustment relates to the exclusion of other income (expense) from our Non-GAAP-based operating expenses as other income (expense) generally relates to the transactional impact of foreign exchange and is generally not indicative or related to continuing operations and is therefore excluded from our internal analysis of operating results. Other income (expense) also includes our share of income (losses) from our holdings in 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 of our ongoing business and operating results. (7) Adjustment relates to differences between the GAAP-based tax provision rate of approximately 6% 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 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. Reconciliation of Adjusted EBITDA Three Months Ended March 31, 2024 GAAP-based net income, attributable to OpenText $ 98,285 Add (deduct): Provision for income taxes 6,028 Interest and other related expense, net 132,663 Amortization of acquired technology-based intangible assets 48,094 Amortization of acquired customer-based intangible assets 100,841 Depreciation 32,109 Share-based compensation 36,042 Special charges (recoveries) 19,561 Other (income) expense, net (9,950) Adjusted EBITDA $ 463,673 GAAP-based net income margin 6.8 % Adjusted EBITDA margin 32.0 % Reconciliation of Free cash flows Three Months Ended March 31, 2024 GAAP-based cash flows provided by operating activities $ 384,697 Add: Capital expenditures (1) (36,537) Free cash flows $ 348,160 (1) Defined as "Additions of property and equipment" in the Condensed Consolidated Statements of Cash Flows. Reconciliation of selected GAAP-based measures to Non-GAAP-based measures for the nine months ended March 31, 2024 (In thousands, except for per share data) Nine Months Ended March 31, 2024 GAAP-based Measures GAAP-based Measures % of Total Revenue Adjustments Note Non-GAAP- based Measures Non-GAAP- based Measures % of Total Revenue Cost of revenues Cloud services and subscriptions $ 537,960 $ (9,892) (1) $ 528,068 Customer support 223,027 (3,335) (1) 219,692 Professional service and other 230,836 (5,096) (1) 225,740 Amortization of acquired technology-based intangible assets 195,702 (195,702) (2) — GAAP-based gross profit and gross margin (%) / Non-GAAP-based gross profit and gross margin (%) 3,203,312 72.7 % 214,025 (3) 3,417,337 77.5 % Operating expenses Research and development 665,608 (35,300) (1) 630,307 Sales and marketing 871,384 (37,294) (1) 834,091 General and administrative 450,399 (22,395) (1) 428,004 Amortization of acquired customer-based intangible assets 334,958 (334,958) (2) — Special charges (recoveries) 87,521 (87,521) (4) — GAAP-based income from operations / Non-GAAP-based income from operations 693,827 731,493 (5) 1,425,320 Other income (expense), net (38,664) 38,664 (6) — Provision for income taxes 24,434 117,191 (7) 141,625 GAAP-based net income / Non-GAAP-based net income, attributable to OpenText 216,861 652,966 (8) 869,827 GAAP-based earnings per share / Non-GAAP-based earnings per share-diluted, attributable to OpenText $ 0.80 $ 2.39 (8) $ 3.19 (1) Adjustment relates to the exclusion of share-based compensation expense from our Non-GAAP-based operating expenses as this expense is excluded from our internal analysis of operating results. (2) Adjustment relates to the exclusion of amortization expense from our Non-GAAP-based operating expenses as the timing and frequency of amortization expense is dependent on our acquisitions and is hence excluded from our internal analysis of operating results. (3) GAAP-based and Non-GAAP-based gross profit stated in dollars and gross margin stated as a percentage of total revenue. (4) Adjustment relates to the exclusion of special charges (recoveries) from our Non-GAAP-based operating expenses as special charges (recoveries) are generally incurred in the periods relevant to an acquisition and include certain charges or recoveries that are not indicative or related to continuing operations and are therefore excluded from our internal analysis of operating results. (5) GAAP-based and Non-GAAP-based income from operations stated in dollars. (6) Adjustment relates to the exclusion of other income (expense) from our Non-GAAP-based operating expenses as other income (expense) generally relates to the transactional impact of foreign exchange and is generally not indicative or related to continuing operations and is therefore excluded from our internal analysis of operating results. Other income (expense) also includes our share of income (losses) from our holdings in 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 of our ongoing business and operating results. (7) Adjustment relates to differences between the GAAP-based tax provision rate of approximately 10% 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 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. Reconciliation of Adjusted EBITDA Nine Months Ended March 31, 2024 GAAP-based net income, attributable to OpenText $ 216,861 Add: Provision for income taxes 24,434 Interest and other related expense, net 413,719 Amortization of acquired technology-based intangible assets 195,702 Amortization of acquired customer-based intangible assets 334,958 Depreciation 99,615 Share-based compensation 113,312 Special charges (recoveries) 87,521 Other (income) expense, net 38,664 Adjusted EBITDA $ 1,524,786 GAAP-based net income margin 4.9 % Adjusted EBITDA margin 34.6 % Reconciliation of Free cash flows Nine Months Ended March 31, 2024 GAAP-based cash flows provided by operating activities $ 782,471 Add: Capital expenditures (1) (119,316) Free cash flows $ 663,155 (1) Defined as "Additions of property and equipment" in the Condensed Consolidated Statements of Cash Flows. (3) The following tables provide a composition of our major currencies for revenue and expenses, expressed as a percentage, for the three and nine months ended March 31, 2025 and 2024: Three Months Ended March 31, 2025 Three Months Ended March 31, 2024 Currencies % of Revenue % of Expenses (1) % of Revenue % of Expenses (1) EURO 23 % 12 % 22 % 12 % GBP 5 % 6 % 5 % 7 % CAD 3 % 11 % 3 % 10 % USD 58 % 48 % 59 % 50 % Other 11 % 23 % 11 % 21 % Total 100 % 100 % 100 % 100 % Nine Months Ended March 31, 2025 Nine Months Ended March 31, 2024 Currencies % of Revenue % of Expenses (1) % of Revenue % of Expenses (1) EURO 23 % 12 % 22 % 12 % GBP 5 % 6 % 5 % 7 % CAD 3 % 11 % 3 % 10 % USD 58 % 48 % 59 % 51 % Other 11 % 23 % 11 % 20 % Total 100 % 100 % 100 % 100 % (1) Expenses include all cost of revenues and operating expenses included within the Condensed Consolidated Statements of Income, except for amortization of intangible assets, share-based compensation and special charges (recoveries).
Forbes
28-03-2025
- Business
- Forbes
OpenText - A Rare Deep Value Software Stock With Growth Potential
By Praveen Chawla OpenText Corporation, a Canada based enterprise information management software company, has faced significant challenges in recent years following a large acquisition. The stock has experienced a substantial decline, with a 41% drop over the past three years and a 33% decrease in the last year alone, currently trading at $26.09 per share. Despite this, it offers an attractive forward dividend yield of 4.05%, supported by an annual dividend payout ratio of $0.26. OpenText's valuation is notably low, with a forward price-to-earnings (P/E) ratio of 6.38, suggesting potential undervaluation compared to industry peers. The company's financials show revenue decline due to divestments, but strong adjusted EBITDA margins remain. OpenText is focusing on growth areas like cloud computing and artificial intelligence (AI), with initiatives such as the Titanium X platform launch expected to drive AI-related revenue. However, high debt levels and slow organic growth posed challenges. The company has now addressed the debt issue through a divestiture and has made good progress in reducing debt. OpenText is a global leader in information management, operating in a $200 billion total addressable market. The company is active in six key markets: content management, IT operations management, application development and modernization, business network, cybersecurity, and AI analytics. OpenText is approaching $6 billion in revenue for fiscal 2026, with cloud bookings growth exceeding 15% annually and an adjusted EBITDA of 30%. Analysts anticipate earnings growth and increased free cash flow, but concerns about underperformance and investor confidence remain. Overall, OpenText presents a mixed picture for investors, balancing potential undervaluation and growth prospects against significant business challenges. Open Text Corp 12 Month Price Targets Chart OpenText offers a comprehensive suite of enterprise software products that span various aspects of information management and digital business processes. At the core of their offerings is the Enterprise Content Management (ECM) suite, which includes the Content Suite Platform, Extended ECM, and Documentum. For business-to-business integration, OpenText provides the Trading Grid as part of its Business Network solutions. The company also offers Customer Experience Management tools and Digital Process Automation solutions like AppWorks. In the realm of legal technology, OpenText's Discovery suite, featuring Axcelerate, supports eDiscovery and investigations. The company has significantly bolstered its security offerings with products such as EnCase Forensic Security Suite, Carbonite, Webroot, NetIQ, ArcSight, Voltage, and Fortify. For organizations looking to leverage artificial intelligence and analytics, OpenText provides the Magellan Product Suite. Additional key products include information management tools like Archive Center and RightFax, as well as web content management solutions. This diverse product portfolio positions OpenText as a one-stop shop for enterprises seeking comprehensive information management and digital transformation solutions. Over its history OpenText has been an highly acquisitive company to build out its software stack. The acquisitions started in 2003 with IXOS Software AG; some recent acquisitions included Micro Focus in 2023 and Application Modernization and Connectivity (AMC) business in 2024. These acquisitions highlight OpenText's significant acquisitions and a recent major divestment, showcasing the company's strategic evolution in the enterprise information management space. It also demonstrates the company's considerable experience in integrating acqusitions. OpenText's $5.8 billion acquisition of UK based MicroFocus in 2023 was driven by a multifaceted strategy aimed at significantly expanding its market presence and enhancing its product portfolio. This move expanded OpenText's total addressable market (TAM) to $170 billion and added approximately $2.7 billion in annual revenue, making it one of the world's largest software and cloud businesses. The acquisition brought valuable software solutions in areas such as identity access, security, IT operations management, and networking, complementing OpenText's existing offerings and accelerating its digital transformation capabilities through enhanced cloud and AI technologies. OpenText also /gained access to MicroFocus's prestigious customer base, strengthening its global reach and cybersecurity offerings. The company projected annual cost savings of $400 million through operational synergies and expected the acquisition to immediately boost its adjusted EBITDA and free cash flow. Ultimately, this strategic move positioned OpenText as a more comprehensive and competitive player in the information management and enterprise software space, while achieving significant operational and financial synergies. Company Strategy The company's future business strategy focuses more on organic growth, primarily driven by cloud services. Cloud revenue is projected to comprise 40% of total revenue, with customer support at 40% and license/professional services at 20%. OpenText continues to offer on-premises options for customers while investing heavily in cloud development. This dual approach allows the company to cater to a wide range of customer needs. Open Text Operating Revenue by Business Segment In early 2023, OpenText acquired Micro Focus for approximately $6 billion. As part of its strategic realignment, the company has divested the Mainframe, Application Modernization and Connectivity (AMC) business for $2.275 billion. Following this divestiture, OpenText will retain IT operations management, application development and modernization, cybersecurity, and AI analytics from Micro Focus. This strategic move is designed to optimize OpenText's portfolio and focus on high-growth areas. Artificial intelligence (AI) is seen as a significant growth opportunity for OpenText, driving cloud bookings growth. The company has launched an AI product called Aviator, which is available across all business pillars. OpenText is leveraging its large installed base and existing customer relationships to drive AI adoption, positioning itself for further expansion in this area. Financially, OpenText plans to use the proceeds from the AMC divestiture to reduce debt, aiming to bring its net leverage ratio below 3x. Once leverage covenants allow, the company intends to implement a share buyback program. OpenText has increased its annual cloud bookings growth guidance to 25-30% and expects 7-9% revenue growth in fiscal 2026. This strategic financial management is designed to enhance shareholder value while supporting ongoing business growth. The near term Revenue and Operating Income trend appears to be encouraging, with double digit % growth over the last 3 years, and it appears that the company is coming out of a funk following a period of major acquisitions and divestment. Open Text Price Revenue and Operating Income Chart Guru Holdings of OpenText Ray Dalio's Bridgewater, Brandes Investment, Grantham, Greenblatt and Royce have holdings in Open Text. Most of the gurus are value investors while Ray Dalio (Trades, Portfolio) is more of a "macro" investor. Open Text Guru Trades Chart Jarislowsky, Fraser Ltd (JFL Global) is one of the largest institutional shareholders of OpenText Corporation. They own about 7.14% of the outstanding shares. JFL Global which is based in Montreal is a long term investor and emphasizes quality business's with sustainable competitive advantage. Mackenzie Financial Corporation a Toronto based deep value investor holds 2.07% of the outstanding stock. Conclusion OpenText is still in a period of transition after its transformative acquisition of Microfocus and divestment of AMC. It's basically now transitioning from being an acquirer towards an emphasis on organic growth focused on cloud and Software as a Service (Saas). OpenText's has a large TAM to aim for and a long runway for growth. It also has a very large and sticky legacy business which brings in reliable cash flows from lucrative and renewing customer support services. The company's FCF yield is nearly 10%. Open Text Cash and Debt Chart Given the deleveraging following the AMC divestment the company's balance sheet is now in better shape (with debt/equity of 1.58) and the company is poised to return cash to the company via stock buybacks. I expect the stock should offer steady growth in the years ahead. OpenText is a rare undervalued stock and an established dividend payer, a rarity in the software industry.
Yahoo
28-03-2025
- Business
- Yahoo
OpenText - A Rare Deep Value Software Stock
OpenText Corporation (NASDAQ: OTEX), (TSX:OTEX) a Canada based enterprise information management software company, has faced significant challenges in recent years following a large acqusition. The stock has experienced a substantial decline, with a 41% drop over the past three years and a 33% decrease in the last year alone, currently trading at $26.09 per share. Despite this, it offers an attractive forward dividend yield of 4.05%, supported by an annual dividend payout ratio of $0.26. OpenText's valuation is notably low, with a forward price-to-earnings (P/E) ratio of 6.38, suggesting potential undervaluation compared to industry peers. The company's financials show revenue decline due to divestments, but strong adjusted EBITDA margins remain. OpenText is focusing on growth areas like cloud computing and artificial intelligence (AI), with initiatives such as the Titanium X platform launch expected to drive AI-related revenue. However, high debt levels and slow organic growth posed challenges. The company has now addressed the debt issue through a divestiture and has made good progress in reducing debt. OpenText is a global leader in information management, operating in a $200 billion total addressable market. The company is active in six key markets: content management, IT operations management, application development and modernization, business network, cybersecurity, and AI analytics. OpenText is approaching $6 billion in revenue for fiscal 2026, with cloud bookings growth exceeding 15% annually and an adjusted EBITDA of 30%. Analysts anticipate earnings growth and increased free cash flow, but concerns about underperformance and investor confidence remain. Overall, OpenText presents a mixed picture for investors, balancing potential undervaluation and growth prospects against significant business challenges. OpenText offers a comprehensive suite of enterprise software products that span various aspects of information management and digital business processes. At the core of their offerings is the Enterprise Content Management (ECM) suite, which includes the Content Suite Platform, Extended ECM, and Documentum. For business-to-business integration, OpenText provides the Trading Grid as part of its Business Network solutions. The company also offers Customer Experience Management tools and Digital Process Automation solutions like AppWorks. In the realm of legal technology, OpenText's Discovery suite, featuring Axcelerate, supports eDiscovery and investigations. The company has significantly bolstered its security offerings with products such as EnCase Forensic Security Suite, Carbonite, Webroot, NetIQ, ArcSight, Voltage, and Fortify. For organizations looking to leverage artificial intelligence and analytics, OpenText provides the Magellan Product Suite. Additional key products include information management tools like Archive Center and RightFax, as well as web content management solutions. This diverse product portfolio positions OpenText as a one-stop shop for enterprises seeking comprehensive information management and digital transformation solutions. Over its history OpenText has been an highly acquisitive company to build out its software stack. Here's a table listing OpenText's key acquisitions and divestment, sorted by date: Date Type Company/Business Value Description 2003 Acquisition IXOS Software AG - Added content and email archiving capabilities 2004 Acquisition Artesia - Added digital asset management capabilities 2006 Acquisition Hummingbird Ltd. $489 million Expanded ECM offerings 2008 Acquisition Captaris Inc. $131 million Added document capture and fax solutions 2009 Acquisition Vignette Corporation $321 million Enhanced web content management and social media capabilities 2012 Acquisition EasyLink $232 million Expanded cloud-based offerings 2014 Acquisition GXS Inc. $1.06 billion Added B2B integration and cloud-based fax services 2014 Acquisition Actuate - Expanded analytics capabilities 2015 Acquisition Daegis $13.5 million Enhanced eDiscovery solutions 2016 Acquisition Dell EMC's Enterprise Content Division (including Documentum) $1.62 billion Strengthened position in Content Services 2017 Acquisition Covisint $103 million Integrated into OpenText Business Network 2017 Acquisition Guidance Software $240 million Enhanced digital investigation capabilities 2018 Acquisition Liaison Technologies $310 million Integrated into OpenText ALLOY Platform 2019 Acquisition Carbonite Inc. (including Webroot and Mozy) $1.45 billion Enhanced cyber resilience offerings 2020 Acquisition Xmedius $75 million Expanded secure information exchange capabilities 2021 Acquisition Zix Corp $860 million Strengthened cloud security offerings 2021 Acquisition Bricata - Added Network Detection & Response technology 2023 Acquisition Micro Focus $5.8 billion Added AI & Analytics, Application Delivery & Management, and IT Operations Management capabilities 2024 Divestment Application Modernization and Connectivity (AMC) business $2.275 billion Sold to Rocket Software to focus on Cloud and AI opportunities in Information Management The table above highlights OpenText's significant acquisitions and a recent major divestment, showcasing the company's strategic evolution in the enterprise information management space. It also demonstrates the company's considerable experience in integrating acqusitions. OpenText's $5.8 billion acquisition of UK based MicroFocus in 2023 was driven by a multifaceted strategy aimed at significantly expanding its market presence and enhancing its product portfolio. This move expanded OpenText's total addressable market (TAM) to $170 billion and added approximately $2.7 billion in annual revenue, making it one of the world's largest software and cloud businesses. The acquisition brought valuable software solutions in areas such as identity access, security, IT operations management, and networking, complementing OpenText's existing offerings and accelerating its digital transformation capabilities through enhanced cloud and AI technologies. OpenText also /gained access to MicroFocus's prestigious customer base, strengthening its global reach and cybersecurity offerings. The company projected annual cost savings of $400 million through operational synergies and expected the acquisition to immediately boost its adjusted EBITDA and free cash flow. Ultimately, this strategic move positioned OpenText as a more comprehensive and competitive player in the information management and enterprise software space, while achieving significant operational and financial synergies. The company's future business strategy focuses more on organic growth, primarily driven by cloud services. Cloud revenue is projected to comprise 40% of total revenue, with customer support at 40% and license/professional services at 20%. OpenText continues to offer on-premises options for customers while investing heavily in cloud development. This dual approach allows the company to cater to a wide range of customer needs. In early 2023, OpenText acquired Micro Focus for approximately $6 billion. As part of its strategic realignment, the company has divested the Mainframe, Application Modernization and Connectivity (AMC) business for $2.275 billion. Following this divestiture, OpenText will retain IT operations management, application development and modernization, cybersecurity, and AI analytics from Micro Focus. This strategic move is designed to optimize OpenText's portfolio and focus on high-growth areas. Artificial intelligence (AI) is seen as a significant growth opportunity for OpenText, driving cloud bookings growth. The company has launched an AI product called Aviator, which is available across all business pillars. OpenText is leveraging its large installed base and existing customer relationships to drive AI adoption, positioning itself for further expansion in this area. Financially, OpenText plans to use the proceeds from the AMC divestiture to reduce debt, aiming to bring its net leverage ratio below 3x. Once leverage covenants allow, the company intends to implement a share buyback program. OpenText has increased its annual cloud bookings growth guidance to 25-30% and expects 7-9% revenue growth in fiscal 2026. This strategic financial management is designed to enhance shareholder value while supporting ongoing business growth. The near term Revenue and Operating Income trend appears to be encouraging, with double digit % growth over the last 3 years, and it appears that the company is coming out of a funk following a period of major acquisitions and divestment. TSX:OTEX Data by GuruFocus Warning! GuruFocus has detected 4 Warning Signs with OTEX. The following Guru's hold OpenText stock in their portfolio. Brandes, Grantham, Greenblatt and Royce are value investors whie Ray Dalio (Trades, Portfolio) is more of a "macro" investor. Guru Portfolio Date Current Shares % of Shares outstanding % of Total Assets Managed Comment Brandes Investment Partners, LP (Trades, Portfolio) 2024-12-31 4,504,139 1.710 1.43% Add 29.17% Jeremy Grantham (Trades, Portfolio) 2024-12-31 1,297,772 0.490 0.12% Add 84.26% Ray Dalio (Trades, Portfolio) 2024-12-31 174,047 0.070 0.02% Add 361.34% Joel Greenblatt (Trades, Portfolio) 2024-12-31 48,059 0.020 0.01% Reduce -5.28% Chuck Royce (Trades, Portfolio) 2024-12-31 32,519 0.010 0.01% Reduce -69.24% Jarislowsky, Fraser Ltd (JFL Global) is one of the largest institutional shareholders of OpenText Corporation. They own about 7.14% of the outstanding shares. JFL Global which is based in Montreal is a long term investor and emphasizes quality business's with sustainable competitive advantage. Mackenzie Financial Corporation a Toronto based deep value investor holds 2.07% of the outstanding stock. OpenText is still in a period of transition after its transformative acquisition of Microfocus and divestment of AMC. It's basically now transitioning from being an acquirer towards an emphasis on organic growth focused on cloud and Software as a Service (Saas). OpenText's has a large TAM to aim for and a long runway for growth. It also has a very large and sticky legacy business which brings in reliable cash flows from lucrative and renewing customer support services. The company's FCF yield is nearly 10%. Given the deleveraging following the AMC divestment the company's balance sheet is now in better shape (with debt/equity of 1.58) and the company is poised to return cash to the company via stock buybacks. I expect the stock should offer steady growth in the years ahead. OpenText is a rare undervalued stock and an established dividend payer, a rarity in the software industry. This article first appeared on GuruFocus. Sign in to access your portfolio
Yahoo
07-02-2025
- Business
- Yahoo
Open Text Corp (OTEX) Q1 2025 Earnings Call Highlights: Exceeding Expectations Amidst Challenges
Revenue: $1.27 billion in Q1, within the range of $1.25 billion to $1.3 billion. Adjusted EBITDA: 35% in Q1, reflecting operational efficiency. Adjusted EPS: $0.93, exceeding expectations. Cloud Revenue: $457 million, up 1.3% year over year. Cloud Bookings: $133.5 million, up 10.3% year over year. ARR (Annual Recurring Revenue): $1.052 billion, down 1.1% when adjusted for divestiture. GAAP Net Income: $84.4 million, with a 32% diluted EPS. GAAP Gross Margin: 71.7%, up from 71.4% year over year. Non-GAAP Gross Margin: 75.8%, reflecting investments in AI and cloud infrastructure. Operating Cash Flow: Negative $77.8 million, impacted by onetime tax payment. Free Cash Flow: Negative $117.1 million in Q1. Net Renewal Rate (NRR): 94% for the cloud business. Share Buyback: 7.72 million shares repurchased at an average price of $30.43. Fiscal '25 Revenue Target: $5.3 billion to $5.4 billion. Fiscal '25 Free Cash Flow Target: $575 million to $625 million. Warning! GuruFocus has detected 3 Warning Signs with OTEX. Release Date: February 06, 2025 For the complete transcript of the earnings call, please refer to the full earnings call transcript. Open Text Corp (NASDAQ:OTEX) exceeded expectations in adjusted EBITA and adjusted EPS for Q1 fiscal 2025. The company reported a 35% year-over-year growth in adjusted EBITA, showcasing sustained efficiency gains. Open Text Corp (NASDAQ:OTEX) achieved its largest Q1 of enterprise cloud bookings in history, up 10% year-over-year. The company reaffirmed its fiscal 2025 targets, projecting total revenues of $5.3 billion to $5.4 billion. Open Text Corp (NASDAQ:OTEX) is making strong investments in its enterprise and SMB go-to-market strategies, enhancing customer success and strategic partnerships. Q1 total revenue of $1.269 billion was down 11% year-over-year, or down 1.8% when adjusted for the AMC divestiture. The company reported negative $77.8 million in operating cash flows and negative $117.1 million in free cash flows for the quarter. Q2 is expected to be a tougher year-over-year comparison due to the large AMC contribution and license revenue from IP rights in the previous year. Cloud revenue growth was subdued in Q1, with only a 1.3% increase, reflecting typical seasonality. The company faces challenges in the developer segment, requiring further work to drive growth in this area. Q: Can you provide insights into the current demand environment and any shifts in deal activity? A: Mark Barrenechea, CEO, stated that the demand environment is stable despite global volatility. The company anticipates a stronger second half due to the upcoming release of Titanium X, their largest software and cloud release. They are also seeing increased demand for their new SMB platform and security offerings. Q: What gives you confidence in achieving your second-half targets? A: Barrenechea highlighted several factors: the on-track delivery of Titanium X, full sales force capacity, a 20% year-over-year increase in pipeline for the second half, and the internal deployment of AI tools to enhance sales efficiency. Q: How is Project Athena progressing, and what are the early results? A: Barrenechea explained that Project Athena is focused on developer productivity, with early feedback being positive. The project aims to generate applications on top of Open Text's API services, with the first production apps expected by April 2025. Q: Can you discuss the impact of AI and Microsoft Copilot on customer adoption patterns? A: Barrenechea noted that AI is becoming a standard feature, akin to a search button, with 15 aviators and over 100 agents integrated into Titanium X. The company is making steady progress in embedding AI across its offerings, which is expected to support bookings and cloud revenue growth. Q: What are the key drivers for cloud revenue growth in fiscal 2025? A: Barrenechea identified three main drivers: customer adoption of SaaS capabilities in Titanium X, revenue contributions from AI and aviators, and product-specific growth, particularly in security with XTR as a service. For the complete transcript of the earnings call, please refer to the full earnings call transcript. This article first appeared on GuruFocus. Sign in to access your portfolio
Associated Press
06-02-2025
- Business
- Associated Press
OpenText Reports Second Quarter Fiscal Year 2025 Financial Results
Total Revenues of $1.335B, 16 Consecutive Quarters of Cloud Organic Growth Delivers Net Income Margin of 17%, Robust Adjusted EBITDA Margin of 37.6% GAAP EPS of $0.87, Non-GAAP EPS of $1.11 Operating Cash Flows of $348M and Free Cash Flows of $307M Fiscal 2025 Second Quarter Highlights Total Revenues (in millions) Annual Recurring Revenues (in millions) Cloud Revenues (in millions) $1,335 $1,053 $462 (13.1) % (8.1) % +2.7 % Annual Recurring Revenues represent 79% of Total Revenues 'OpenText's Q2 results demonstrate the strength of our operating model, delivering $501 million of adjusted EBITDA, and 37.6% adjusted EBITDA margin, and generating $307 million of Free Cash Flows (FCF). The Company's top priorities remain total growth, competitive advantage, margin expansion and FCF, while producing upper quartile capital returns,' said Mark J. Barrenechea, OpenText CEO & CTO. Mr. Barrenechea added: 'By helping customers adapt to the new world of multi-cloud, we are making their businesses more resilient and future-ready. Our next generation platform Titanium X (Cloud Editions 25.2) is on target for Q4 delivery. With Titanium X as our foundation, we are empowering organizations to seamlessly integrate cloud, security, and AI, helping them adapt and thrive in this dynamic ecosystem.' Mark J. Barrenechea, OpenText CEO & CTO 'OpenText generated solid adjusted EBITDA margin this quarter, reflecting our continued focus on operational discipline, efficiency and margin expansion,' said Madhu Ranganathan, OpenText President, CFO & Corporate Development. 'Our initiatives to drive efficiencies across the business and our execution in the second half of fiscal 2025 will put us in a position to deliver a strong fiscal 2026.' Madhu Ranganathan, OpenText President & CFO WATERLOO, ON, Feb. 6, 2025 /CNW/ -- Open Text Corporation (NASDAQ: OTEX), (TSX: OTEX), today announced its financial results for the second quarter ended December 31, 2024. Second Quarter Financial Highlights Y/Y Total revenues of $1.335 billion, down 13.1% Y/Y or down 4.9% when adjusted for the AMC divestiture Annual recurring revenues (ARR) of $1.053 billion, down 8.1% Y/Y or down 0.8% when adjusted for the AMC divestiture Cloud revenues of $462 million, up 2.7% Y/Y Quarterly enterprise cloud bookings(1) of $250 million, up 6.1% Y/Y Operating cash flows of $348 million and free cash flows(2) of $307 million GAAP-based net income of $230 million, up 510.1% Y/Y Adjusted EBITDA(2) of $501 million, margin of 37.6% GAAP-based diluted earnings per share (EPS) of $0.87, Non-GAAP-based diluted EPS(2) of $1.11 Returned $134 million of capital to shareholders consisting of $68 million of dividends and $66 million of share repurchases Financial Highlights for Q2 Fiscal 2025 with Year Over Year Comparisons Summary of Quarterly Results (In millions, except per share data) Q2 FY'25 Q2 FY'24 $ Change % Change Q2 FY'25 in CC* % Change in CC* Revenues: Cloud services and subscriptions $462 $450 $12 2.7 % $460 2.2 % Customer support $591 $696 ($105) (15.1) % $585 (15.9) % Total annual recurring revenues** $1,053 $1,146 ($93) (8.1) % $1,045 (8.8) % License $189 $289 ($100) (34.7) % $188 (34.9) % Professional service and other $93 $100 ($7) (7.1) % $91 (8.6) % Total revenues $1,335 $1,535 ($200) (13.1) % $1,325 (13.7) % GAAP-based operating income $296 $254 $42 16.5 % N/A N/A Non-GAAP-based operating income (1) $470 $533 ($63) (11.9) % $465 (12.8) % GAAP-based net income attributable to OpenText $230 $38 $192 510.1 % N/A N/A GAAP-based EPS, diluted $0.87 $0.14 $0.73 521.4 % N/A N/A Non-GAAP-based EPS, diluted (1)(2) $1.11 $1.24 ($0.13) (10.5) % $1.09 (12.1) % Adjusted EBITDA (1) $501 $566 ($65) (11.4) % $497 (12.3) % Operating cash flows $348 $351 ($3) (0.8) % N/A N/A Free cash flows (1) $307 $305 $1 0.4 % N/A N/A Summary of YTD Results (In millions, except per share data) FY'25 YTD FY'24 YTD $ Change % Change FY'25 YTD in CC* % Change in CC* Revenues: Cloud services and subscriptions $919 $901 $18 2.0 % $919 1.9 % Customer support $1,186 $1,393 ($207) (14.9) % $1,183 (15.1) % Total annual recurring revenues** $2,105 $2,295 ($189) (8.2) % $2,102 (8.4) % License $315 $462 ($148) (31.9) % $314 (32.0) % Professional service and other $183 $203 ($20) (9.9) % $182 (10.6) % Total revenues $2,604 $2,960 ($357) (12.1) % $2,598 (12.2) % GAAP-based operating income $502 $467 $35 7.6 % N/A N/A Non-GAAP-based operating income (1) $881 $994 ($112) (11.3) % $875 (11.9) % GAAP-based net income attributable to OpenText $314 $119 $196 165.0 % N/A N/A GAAP-based EPS, diluted $1.18 $0.44 $0.74 168.2 % N/A N/A Non-GAAP-based EPS, diluted (1)(2) $2.03 $2.25 ($0.22) (9.8) % $2.02 (10.4) % Adjusted EBITDA (1) $945 $1,061 ($116) (10.9) % $939 (11.5) % Operating cash flows $270 $398 ($128) (32.1) % N/A N/A Free cash flows (1) $190 $315 ($125) (39.8) % N/A N/A (1) Please see Note 2 'Use of Non-GAAP Financial Measures' to the condensed consolidated financial statements below. (2) For periods prior to Fiscal 2025, this is reflective of the amount of net tax benefit arising from the internal reorganization assumed to be allocable to the period based on the forecasted utilization period. Please also see Note 14 to the Company's Fiscal 2018 Consolidated Financial Statements on Form 10-K. Note: Items in tables may not add due to rounding. Percentages presented are calculated based on the underlying amounts. *CC: Constant currency for this purpose is defined as the current period reported revenues/expenses/earnings represented at the prior comparative period's foreign exchange rate. **Annual recurring revenue is defined as the sum of Cloud services and subscriptions revenue and Customer support revenue. Dividend As part of our quarterly, non-cumulative cash dividend program, the Board declared on February 5, 2025, a cash dividend of $0.2625 per common share. The record date for this dividend is March 7, 2025 and the payment date is March 21, 2025. OpenText believes strongly in returning value to its shareholders and intends to maintain its dividend program. Any future declarations of dividends and the establishment of future record and payment dates are all subject to the final determination and discretion of the Board of Directors. Share Repurchase OpenText also announced that in the second quarter of Fiscal 2025, it repurchased $66 million of common shares for cancellation under its share repurchase plan (the Fiscal 2025 Repurchase Plan). In Fiscal 2025, $151 million of common shares have been repurchased for cancellation. Under the Fiscal 2025 Repurchase Plan, for the period commencing August 7, 2024 until August 6, 2025, OpenText intends to purchase for cancellation in open market transactions, from time to time, up to $300 million of its issued and outstanding common shares, subject to a maximum of 21,179,064 common shares. Quarterly Business Highlights Key customer wins in the quarter include: Aeven, Anglian Water Services, BASF Catalysts, Bosch, Cencor, Domcura MLP, Ergon, Frost Bank, GWC Qatar, H3C, Linde, MAN Energy Solutions, Mott MacDonald, Sky Italia, ST Microelectronics, Tucson Medical Center, University Health System, Wandera OpenText World 2024 unites industry leaders to tackle AI and information management, elevate human potential with robust AI masterclasses OpenText launches new Partner Enterprise Learning Subscription OpenText expands partner ecosystem access across full OpenText product suite OpenText makes multi-cloud work with Cloud Editions 24.4 OpenText partners with Secure Code Warrior to deliver comprehensive application security and customized developer risk management Summary of Quarterly Results Q2 FY'25 Q1 FY'25 Q2 FY'24 % Change (Q2 FY'25 vs Q1 FY'25) % Change (Q2 FY'25 vs Q2 FY'24) Revenue (millions) $1,335 $1,269 $1,535 5.2 % (13.1) % GAAP-based gross margin 73.3 % 71.7 % 73.6 % 160 bps (30) bps Non-GAAP-based gross margin (1) 77.2 % 75.8 % 78.6 % 140 bps (140) bps GAAP-based EPS, diluted $0.87 $0.32 $0.14 171.9 % 521.4 % Non-GAAP-based EPS, diluted (1)(2) $1.11 $0.93 $1.24 19.4 % (10.5) % (1) Please see Note 2 'Use of Non-GAAP Financial Measures' to the condensed consolidated financial statements below. (2) Please also see Note 14 to the Company's Fiscal 2018 Consolidated Financial Statements on Form 10-K. Reflective of the amount of net tax benefit arising from the internal reorganization assumed to be allocable to the current period based on the forecasted utilization period. Conference Call Information OpenText posted an investor presentation on its Investor Relations website and invites the public to listen to the earnings conference call webcast today at 5:00 p.m. ET (2:00 p.m. PT) from the Investor Relations section of the Company's website at To join the webcast instantly, use this webcast link. A webcast replay will be available shortly following completion of the live call. Please see below note (2) for a reconciliation of U.S. GAAP-based financial measures used in this press release to Non-GAAP-based financial measures. Cautionary Statement Regarding Forward-Looking Statements Certain statements in this press release, including statements about Open Text Corporation ('OpenText' or 'the Company') on growth, profitability and future of Information Management, including achieving total growth, competitive advantage, margin expansion and free cash flow, and delivering upper quartile capital returns; customer benefits from products; timing of next generation platform; focus on operational discipline, efficiency and margin expansion; executing the Company's capital allocation strategy, including expected return to shareholders; achieving Fiscal 2025 financial targets; level of performance through the fiscal year; cloud bookings, demand, scale and revenue growth; future organic growth initiatives and deployment of capital; innovation fueled by cloud, AI and security technologies; future revenues, operating expenses, margins, free cash flows, interest expense and capital expenditures; market share of our products; innovation road map; intention to maintain a dividend program, including any targeted annualized dividend; expected size and timing of the Fiscal 2025 Repurchase Plan, including execution thereof; future tax rates; renewal rates; new platform and product offerings, including OpenText AI products, and associated benefits to customers; internal automation and AI leverage, including our AI strategy, vision and growth; strategy to build shareholder value; and other matters, which may contain words such as 'anticipates', 'expects', 'intends', 'plans', 'believes', 'seeks', 'estimates', 'may', 'could', 'would', 'might', 'will' and variations of these words or similar expressions are intended to identify forward-looking statements or information under applicable securities laws (forward-looking statements). 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 statements, and are based on our current expectations, forecasts and projections about the operating environment, economies and markets in which we operate. Forward-looking statements reflect our current estimates, beliefs and assumptions, which are based on management's perception of historic trends, current conditions and expected future developments, as well as other factors it believes are appropriate in the circumstances, such as certain assumptions about the economy, as well as market, financial and operational assumptions. Management's estimates, beliefs and assumptions, including statements regarding future targets and aspirations, are inherently subject to significant business, economic, competitive and other uncertainties and contingencies regarding future events and, as such, are subject to change and are not considered guidance. We can give no assurance that such estimates, beliefs and assumptions will prove to be correct. Future declarations of dividends are also subject to the final determination and discretion of the Board of Directors, and an annualized dividend has not been approved or declared by the Board. Forward-looking statements involve known and unknown risks and uncertainties such as those relating to: all statements regarding the expected future financial position, results of operations, revenues, expenses, margins, cash flows, dividends, share buybacks, financing plans, business strategy, budgets, capital expenditures, competitive positions, growth opportunities, plans and objectives of management, including any anticipated synergy benefits; incurring unanticipated costs, delays or difficulties; and our ability to develop, protect and maintain our intellectual property and proprietary technology and to operate without infringing on the proprietary rights of others. We rely on a combination of copyright, patent, trademark and trade secret laws, non-disclosure agreements and other contractual provisions to establish and maintain our proprietary rights, which are important to our success. From time to time, we may also enforce our intellectual property rights through litigation in line with our strategic and business objectives. The actual results that OpenText achieves may differ materially from any forward-looking statements. 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. Further, readers should note that we may announce information using our website, press releases, securities law filings, public conference calls, webcasts and the social media channels identified on the Investors section of our website ( Such social media channels may include the Company's or our CEO's blog, X, formerly known as Twitter, account or LinkedIn account. The information posted through such channels may be material. Accordingly, readers should monitor such channels in addition to our other forms of communication. OTEX-F Copyright ©2025 Open Text. OpenText is a trademark or registered trademark of Open Text. 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. All rights reserved. For more information, visit: About OpenText OpenText is the leading Information Management software and services company in the world. We help organizations solve complex global problems with a comprehensive suite of Business Clouds, Business AI, and Business Technology. For more information about OpenText (NASDAQ/TSX: OTEX), please visit us at OPEN TEXT CORPORATION CONDENSED CONSOLIDATED BALANCE SHEETS (In thousands of U.S. dollars, except share data) December 31, 2024 June 30, 2024 ASSETS (unaudited) Cash and cash equivalents $ 1,122,192 $ 1,280,662 Accounts receivable trade, net of allowance for credit losses of $14,641 as of December 31, 2024 and $12,108 as of June 30, 2024 639,611 626,189 Contract assets 68,487 66,450 Income taxes recoverable 68,004 61,113 Prepaid expenses and other current assets 186,763 242,911 Total current assets 2,085,057 2,277,325 Property and equipment, net of accumulated depreciation of $779,868 as of December 31, 2024 and $751,174 as of June 30, 2024 355,877 367,740 Operating lease right of use assets 211,079 219,774 Long-term contract assets 39,208 38,684 Goodwill 7,483,404 7,488,367 Acquired intangible assets 2,229,087 2,486,264 Deferred tax assets 982,567 932,657 Other assets 296,382 298,281 Long-term income taxes recoverable 49,052 96,615 Total assets $ 13,731,713 $ 14,205,707 LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Accounts payable and accrued liabilities $ 772,641 $ 931,116 Current portion of long-term debt 35,850 35,850 Operating lease liabilities 74,699 76,446 Deferred revenues 1,452,734 1,521,416 Income taxes payable 65,145 235,666 Total current liabilities 2,401,069 2,800,494 Long-term liabilities: Accrued liabilities 38,974 46,483 Pension liability, net 126,909 127,255 Long-term debt 6,348,814 6,356,943 Long-term operating lease liabilities 200,815 218,174 Long-term deferred revenues 159,987 162,401 Long-term income taxes payable 82,310 145,644 Deferred tax liabilities 141,328 148,632 Total long-term liabilities 7,099,137 7,205,532 Shareholders' equity: Share capital and additional paid-in capital 263,727,502 and 267,800,517 Common Shares issued and outstanding at December 31, 2024 and June 30, 2024, respectively; authorized Common Shares: unlimited 2,275,583 2,271,886 Accumulated other comprehensive income (loss) (75,779) (69,619) Retained earnings 2,174,514 2,119,159 Treasury stock, at cost (4,225,850 and 3,135,980 shares at December 31, 2024 and June 30, 2024, respectively) (144,432) (123,268) Total OpenText shareholders' equity 4,229,886 4,198,158 Non-controlling interests 1,621 1,523 Total shareholders' equity 4,231,507 4,199,681 Total liabilities and shareholders' equity $ 13,731,713 $ 14,205,707 OPEN TEXT CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF INCOME (In thousands of U.S. dollars, except share and per share data) (unaudited) Three Months Ended December 31, Six Months Ended December 31, 2024 2023 2024 2023 Revenues: Cloud services and subscriptions $ 462,306 $ 450,091 $ 919,330 $ 901,105 Customer support 590,595 695,762 1,186,085 1,393,475 License 188,923 289,238 314,736 462,264 Professional service and other 92,676 99,777 183,354 203,453 Total revenues 1,334,500 1,534,868 2,603,505 2,960,297 Cost of revenues: Cloud services and subscriptions 172,288 180,148 347,545 351,560 Customer support 62,656 73,374 125,230 148,388 License 6,336 5,983 12,993 9,822 Professional service and other 68,041 75,459 134,956 155,381 Amortization of acquired technology-based intangible assets 47,203 70,784 94,447 147,608 Total cost of revenues 356,524 405,748 715,171 812,759 Gross profit 977,976 1,129,120 1,888,334 2,147,538 Operating expenses: Research and development 180,727 212,855 371,420 439,086 Sales and marketing 273,929 287,628 519,811 567,635 General and administrative 99,356 173,264 206,086 304,475 Depreciation 31,879 33,415 64,050 67,506 Amortization of acquired customer-based intangible assets 81,048 113,925 162,552 234,117 Special charges (recoveries) 15,238 54,166 62,374 67,960 Total operating expenses 682,177 875,253 1,386,293 1,680,779 Income from operations 295,799 253,867 502,041 466,759 Other income (expense), net 68,615 (68,784) 32,960 (48,614) Interest and other related expense, net (83,615) (139,292) (167,897) (281,056) Income before income taxes 280,799 45,791 367,104 137,089 Provision for income taxes 50,893 8,054 52,776 18,406 Net income for the period $ 229,906 $ 37,737 $ 314,328 $ 118,683 Net (income) attributable to non-controlling interests (44) (62) (98) (107) Net income attributable to OpenText $ 229,862 $ 37,675 $ 314,230 $ 118,576 Earnings per share—basic attributable to OpenText $ 0.87 $ 0.14 $ 1.18 $ 0.44 Earnings per share—diluted attributable to OpenText $ 0.87 $ 0.14 $ 1.18 $ 0.44 Weighted average number of Common Shares outstanding—basic (in '000's) 265,099 271,568 266,252 271,373 Weighted average number of Common Shares outstanding—diluted (in '000's) 265,193 272,141 266,505 272,019 OPEN TEXT CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (In thousands of U.S. dollars) (unaudited) Three Months Ended December 31, Six Months Ended December 31, 2024 2023 2024 2023 Net income for the period $ 229,906 $ 37,737 $ 314,328 $ 118,683 Other comprehensive income (loss)—net of tax: Net foreign currency translation adjustments 1,167 (15,796) (4,023) (30,379) Unrealized gain (loss) on cash flow hedges: Unrealized gain (loss) - net of tax (1) (4,188) 1,522 (3,534) (319) (Gain) loss reclassified into net income - net of tax (2) 1,010 328 1,272 337 Unrealized gain (loss) on available-for-sale financial assets: Unrealized gain (loss) - net of tax (3) 436 450 684 229 Actuarial gain (loss) relating to defined benefit pension plans: Actuarial gain (loss) - net of tax (4) — (91) (1,045) (110) Amortization of actuarial (gain) loss into net income - net of tax (5) 252 113 486 302 Total other comprehensive loss net, for the period (1,323) (13,474) (6,160) (29,940) Total comprehensive income 228,583 24,263 308,168 88,743 Comprehensive income attributable to non-controlling interests (44) (62) (98) (107) Total comprehensive income attributable to OpenText $ 228,539 $ 24,201 $ 308,070 $ 88,636 ______________________________ (1) Net of tax expense (recovery) of $(1,510) and $549 for the three months ended December 31, 2024 and 2023, respectively; $(1,274) and $(115) for the six months ended December 31, 2024 and 2023, respectively. (2) Net of tax expense (recovery) of $364 and $118 for the three months ended December 31, 2024 and 2023, respectively; $458 and $121 for the six months ended December 31, 2024 and 2023, respectively. (3) Net of tax expense (recovery) of $18 and $119 for the three months ended December 31, 2024 and 2023, respectively; $225 and $60 for the six months ended December 31, 2024 and 2023, respectively. (4) Net of tax expense (recovery) of $— and $91 for the three months ended December 31, 2024 and 2023, respectively; $(43) and $110 for the six months ended December 31, 2024 and 2023, respectively. (5) Net of tax expense (recovery) of $92 and $50 for the three months ended December 31, 2024 and 2023, respectively; $184 and $125 for the six months ended December 31, 2024 and 2023, respectively. OPEN TEXT CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY (In thousands of U.S. dollars and shares) (unaudited) Three Months Ended December 31, 2024 Common Shares and Additional Paid in Capital Treasury Stock Retained Earnings Accumulated Other Comprehensive Income Non- Controlling Interests Total Shares Amount Shares Amount Balance as of September 30, 2024 265,546 $ 2,290,191 (3,900) $ (145,646) $ 2,065,221 $ (74,456) $ 1,577 $ 4,136,887 Issuance of Common Shares Under employee stock option plans 65 1,739 — — — — — 1,739 Under employee stock purchase plans 330 9,308 — — — — — 9,308 Share-based compensation — 30,355 — — — — — 30,355 Purchase of treasury stock — — (1,363) (40,013) — — — (40,013) Issuance of treasury stock — (39,906) 1,037 41,227 — — — 1,321 Repurchase of Common Shares (2,213) (16,104) — — (50,990) — — (67,094) Dividends declared ($0.2625 per Common Share) — — — — (69,579) — — (69,579) Other comprehensive income (loss) - net — — — — — (1,323) — (1,323) Net income for the period — — — — 229,862 — 44 229,906 Balance as of December 31, 2024 263,728 $ 2,275,583 (4,226) $ (144,432) $ 2,174,514 $ (75,779) $ 1,621 $ 4,231,507 Three Months Ended December 31, 2023 Common Shares and Additional Paid in Capital Treasury Stock Retained Earnings Accumulated Other Comprehensive Income Non- Controlling Interests Total Shares Amount Shares Amount Balance as of September 30, 2023 271,228 $ 2,216,921 (4,753) $ (196,119) $ 2,062,107 $ (70,025) $ 1,374 $ 4,014,258 Issuance of Common Shares Under employee stock option plans 340 11,111 — — — — — 11,111 Under employee stock purchase plans 287 8,370 — — — — — 8,370 Share-based compensation — 39,993 — — — — — 39,993 Issuance of treasury stock — (14,539) 353 17,030 (2,491) — — — Dividends declared ($0.25 per Common Share) — — — — (67,648) — — (67,648) Other comprehensive income (loss) - net — — — — — (13,474) — (13,474) Net income for the period — — — — 37,675 — 62 37,737 Balance as of December 31, 2023 271,855 $ 2,261,856 (4,400) $ (179,089) $ 2,029,643 $ (83,499) $ 1,436 $ 4,030,347 OPEN TEXT CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY (In thousands of U.S. dollars and shares) (unaudited) Six Months Ended December 31, 2024 Common Shares and Additional Paid in Capital Treasury Stock Retained Earnings Accumulated Other Comprehensive Income Non- Controlling Interests Total Shares Amount Shares Amount Balance as of June 30, 2024 267,801 $ 2,271,886 (3,136) $ (123,268) $ 2,119,159 $ (69,619) $ 1,523 $ 4,199,681 Issuance of Common Shares Under employee stock option plans 70 1,880 — — — — — 1,880 Under employee stock purchase plans 719 19,171 — — — — — 19,171 Share-based compensation — 59,801 — — — — — 59,801 Purchase of treasury stock — — (2,187) (65,023) — — — (65,023) Issuance of treasury stock — (41,836) 1,097 43,859 (702) — — 1,321 Repurchase of Common Shares (4,862) (35,319) — — (118,256) — — (153,575) Dividends declared ($0.525 per Common Share) — — — — (139,917) — — (139,917) Other comprehensive income (loss) - net — — — — — (6,160) — (6,160) Net income for the period — — — — 314,230 — 98 314,328 Balance as of December 31, 2024 263,728 $ 2,275,583 (4,226) $ (144,432) $ 2,174,514 $ (75,779) $ 1,621 $ 4,231,507 Six Months Ended December 31, 2023 Common Shares and Additional Paid in Capital Treasury Stock Retained Earnings Accumulated Other Comprehensive Income Non- Controlling Interests Total Shares Amount Shares Amount Balance as of June 30, 2023 270,903 $ 2,176,947 (3,536) $ (151,597) $ 2,048,984 $ (53,559) $ 1,329 $ 4,022,104 Issuance of Common Shares Under employee stock option plans 425 14,003 — — — — — 14,003 Under employee stock purchase plans 527 17,011 — — — — — 17,011 Share-based compensation — 76,997 — — — — — 76,997 Purchase of treasury stock — — (1,400) (53,085) — — — (53,085) Issuance of treasury stock — (23,102) 536 25,593 (2,491) — — — Dividends declared ($0.50 per Common Share) — — — — (135,426) — — (135,426) Other comprehensive income (loss) - net — — — — — (29,940) — (29,940) Net income for the period — — — — 118,576 — 107 118,683 Balance as of December 31, 2023 271,855 $ 2,261,856 (4,400) $ (179,089) $ 2,029,643 $ (83,499) $ 1,436 $ 4,030,347 OPEN TEXT CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands of U.S. dollars) (unaudited) Three Months Ended December 31, Six Months Ended December 31, 2024 2023 2024 2023 Cash flows from operating activities: Net income for the period $ 229,906 $ 37,737 $ 314,328 $ 118,683 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization of intangible assets 160,130 218,124 321,049 449,231 Share-based compensation expense 30,361 40,175 59,919 77,270 Pension expense 3,350 3,212 6,813 6,383 Amortization of debt discount and issuance costs 5,499 7,325 10,795 12,821 Write-off of right of use assets 1,385 6,248 1,385 10,963 Adjustment to gain on AMC Divestiture 4,175 — 4,175 — Loss on sale and write down of property and equipment, net 437 1,419 439 1,877 Deferred taxes (10,827) (88,400) (52,977) (177,030) Share in net (income) loss of equity investees (1,538) 8,482 (1,993) 18,178 Changes in financial instruments (45,549) 38,117 (20,614) 20,222 Changes in operating assets and liabilities: Accounts receivable (15,728) (91,589) 41,879 (60,285) Contract assets (26,097) (24,061) (59,946) (46,627) Prepaid expenses and other current assets 32,427 (15,337) 54,578 3,989 Income taxes (3,218) 29,136 (196,727) 58,733 Accounts payable and accrued liabilities (20,590) 76,058 (128,110) (48,156) Deferred revenue 5,124 107,974 (71,407) (42,502) Other assets 3,306 1,114 (1,436) 5,218 Operating lease assets and liabilities, net (4,561) (5,081) (11,964) (11,194) Net cash provided by operating activities 347,992 350,653 270,186 397,774 Cash flows from investing activities: Additions of property and equipment (41,269) (45,240) (80,585) (82,779) Purchase of Micro Focus, net of cash acquired — — — (9,272) Adjustment to proceeds from AMC Divestiture (11,686) — (11,686) — Proceeds from net investment hedge derivative contracts — — 2,519 1,966 Other investing activities 5,535 (1,229) 5,892 (6,783) Net cash used in investing activities (47,420) (46,469) (83,860) (96,868) Cash flows from financing activities: Proceeds from issuance of Common Shares from exercise of stock options and ESPP 8,291 17,804 17,740 29,257 Repayment of long-term debt and Revolver (8,963) (186,463) (17,926) (372,926) Net change in transition services agreement obligation 26,233 — 21,938 — Debt issuance costs (1,066) (831) (1,066) (2,792) Repurchase of Common Shares (66,003) — (153,406) — Purchase of treasury stock (40,023) — (65,023) (53,085) Payments of dividends to shareholders (68,313) (66,414) (137,374) (133,379) Net cash used in financing activities (149,844) (235,904) (335,117) (532,925) Foreign exchange gain (loss) on cash held in foreign currencies (28,930) 15,042 (9,794) 3,539 Increase (decrease) in cash, cash equivalents and restricted cash during the period 121,798 83,322 (158,585) (228,480) Cash, cash equivalents and restricted cash at beginning of the period 1,002,410 922,150 1,282,793 1,233,952 Cash, cash equivalents and restricted cash at end of the period $ 1,124,208 $ 1,005,472 $ 1,124,208 $ 1,005,472 OPEN TEXT CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands of U.S. dollars) (unaudited) Reconciliation of cash, cash equivalents and restricted cash: December 31, 2024 December 31, 2023 Cash and cash equivalents $ 1,122,192 $ 1,003,134 Restricted cash (1) 2,016 2,338 Total cash, cash equivalents and restricted cash $ 1,124,208 $ 1,005,472 (1) Restricted cash is classified under the Prepaid expenses and other current assets and Other assets line items on the Consolidated Balance Sheets. 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 condensed 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 condensed consolidated financial statements, which are presented in accordance with U.S. GAAP. The presentation of Non-GAAP financial measures is 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, attributable to OpenText, are consistently calculated as GAAP-based net income (loss) or earnings (loss) per share, attributable to OpenText, on a diluted basis, excluding the effects of the amortization of acquired intangible assets, other income (expense), share-based compensation, and special charges (recoveries), all net of tax and any tax benefits/expense items unrelated to current period income, as further described in the tables below. Non-GAAP-based gross profit is the arithmetical sum of GAAP-based gross profit and the amortization of acquired technology-based intangible assets and share-based compensation within cost of sales. Non-GAAP-based gross margin is calculated as Non-GAAP-based gross profit expressed as a percentage of total revenue. Non-GAAP-based income from operations is calculated as GAAP-based income from operations, excluding the amortization of acquired intangible assets, special charges (recoveries), and share-based compensation expense. Adjusted earnings before interest, taxes, depreciation and amortization (Adjusted EBITDA) is consistently calculated as GAAP-based net income (loss), attributable to OpenText, excluding interest income (expense), provision for (recovery of) income taxes, depreciation and amortization of acquired intangible assets, other income (expense), share-based compensation and special charges (recoveries). Adjusted EBITDA margin is calculated as adjusted EBITDA expressed as a percentage of total 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. These items are excluded based upon the way the Company's management evaluates the performance of the Company's business for use in the Company's internal reports and are not excluded in the sense that they may be used under U.S. GAAP. The Company does not acquire businesses on a predictable cycle, and therefore believes that the presentation of Non-GAAP measures, which in certain cases adjust for the impact of amortization of intangible assets and the related tax effects that are primarily related to acquisitions, will provide readers of financial statements with a more consistent basis for comparison across accounting periods and be more useful in helping readers understand the Company's operating results and underlying operational trends. Additionally, the Company has engaged in various restructuring activities over the past several years, primarily due to acquisitions and in response to our return to office planning, that have resulted in costs associated with reductions in headcount, consolidation of leased facilities and related costs, all which are recorded under the Company's 'Special charges (recoveries)' caption on the Consolidated Statements of Income. Each restructuring activity is a discrete event based on a unique set of business objectives or circumstances, and each differs in terms of its operational implementation, business impact and scope, and the size of each restructuring plan can vary significantly from period to period. Therefore, the Company believes that the exclusion of these special charges (recoveries) will also better aid readers of financial statements in the understanding and comparability of the Company's operating results and underlying operational trends. In summary, 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. Information reconciling certain forward-looking GAAP measures to non-GAAP measures related to F'25 targets and F'27 aspirations, including A-EBITDA is not available without unreasonable effort due to high variability, complexity and uncertainty with respect to forecasting and quantifying certain amounts that are necessary for such reconciliations. The following charts provide unaudited reconciliations of U.S. GAAP-based financial measures to Non-GAAP-based financial measures for the following periods presented. The Micro Focus Acquisition significantly impacts period-over-period comparability. Reconciliation of selected GAAP-based measures to Non-GAAP-based measures for the three months ended December 31, 2024 (In thousands, except for per share data) Three Months Ended December 31, 2024 GAAP-based Measures GAAP-based Measures % of Total Revenue Adjustments Note Non-GAAP- based Measures Non-GAAP- based Measures % of Total Revenue Cost of revenues Cloud services and subscriptions $ 172,288 $ (2,796) (1) $ 169,492 Customer support 62,656 (1,139) (1) 61,517 Professional service and other 68,041 (1,273) (1) 66,768 Amortization of acquired technology-based intangible assets 47,203 (47,203) (2) — GAAP-based gross profit and gross margin (%) / Non-GAAP-based gross profit and gross margin (%) 977,976 73.3 % 52,411 (3) 1,030,387 77.2 % Operating expenses Research and development 180,727 (7,656) (1) 173,071 Sales and marketing 273,929 (11,223) (1) 262,706 General and administrative 99,356 (6,274) (1) 93,082 Amortization of acquired customer-based intangible assets 81,048 (81,048) (2) — Special charges (recoveries) 15,238 (15,238) (4) — GAAP-based income from operations / Non-GAAP-based income from operations 295,799 173,850 (5) 469,649 Other income (expense), net 68,615 (68,615) (6) — Provision for income taxes 50,893 41,755 (7) 92,648 GAAP-based net income / Non-GAAP-based net income, attributable to OpenText 229,862 63,480 (8) 293,342 GAAP-based earnings per share / Non-GAAP-based earnings per share-diluted, attributable to OpenText $ 0.87 $ 0.24 (8) $ 1.11 (1) Adjustment relates to the exclusion of share-based compensation expense from our Non-GAAP-based operating expenses as this expense is excluded from our internal analysis of operating results. (2) Adjustment relates to the exclusion of amortization expense from our Non-GAAP-based operating expenses as the timing and frequency of amortization expense is dependent on our acquisitions and is hence excluded from our internal analysis of operating results. (3) GAAP-based and Non-GAAP-based gross profit stated in dollars and gross margin stated as a percentage of total revenue. (4) Adjustment relates to the exclusion of special charges (recoveries) from our Non-GAAP-based operating expenses as special charges (recoveries) are generally incurred in the periods relevant to an acquisition and include certain charges or recoveries that are not indicative or related to continuing operations and are therefore excluded from our internal analysis of operating results. (5) GAAP-based and Non-GAAP-based income from operations stated in dollars. (6) Adjustment relates to the exclusion of other income (expense) from our Non-GAAP-based operating expenses as other income (expense) generally relates to the transactional impact of foreign exchange and is generally not indicative or related to continuing operations and is therefore excluded from our internal analysis of operating results. Other income (expense) also includes our share of income (losses) from our holdings in 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 of our ongoing business and operating results. (7) Adjustment relates to differences between the GAAP-based tax provision rate of approximately 18% 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. (8) Reconciliation of GAAP-based income to Non-GAAP-based net income: Three Months Ended December 31, 2024 Per share diluted GAAP-based net income, attributable to OpenText $ 229,862 $ 0.87 Add (deduct): Amortization 128,251 0.49 Share-based compensation 30,361 0.11 Special charges (recoveries) 15,238 0.06 Other (income) expense, net (68,615) (0.26) GAAP-based provision for income taxes 50,893 0.19 Non-GAAP-based provision for income taxes (92,648) (0.35) Non-GAAP-based net income, attributable to OpenText $ 293,342 $ 1.11 Reconciliation of Adjusted EBITDA Three Months Ended December 31, 2024 GAAP-based net income, attributable to OpenText $ 229,862 Add: Provision for income taxes 50,893 Interest and other related expense, net 83,615 Amortization of acquired technology-based intangible assets 47,203 Amortization of acquired customer-based intangible assets 81,048 Depreciation 31,879 Share-based compensation 30,361 Special charges (recoveries) 15,238 Other (income) expense, net (68,615) Adjusted EBITDA $ 501,484 GAAP-based net income margin 17.2 % Adjusted EBITDA margin 37.6 % Reconciliation of Free cash flows Three Months Ended December 31, 2024 GAAP-based cash flows provided by operating activities $ 347,992 Add: Capital expenditures (1) $ (41,269) Free cash flows $ 306,723 (1) Defined as 'Additions of property and equipment' in the Consolidated Statements of Cash Flows. Reconciliation of selected GAAP-based measures to Non-GAAP-based measures for the six months ended December 31, 2024 (In thousands, except for per share data) Six Months Ended December 31, 2024 GAAP-based Measures GAAP-based Measures % of Total Revenue Adjustments Note Non-GAAP- based Measures Non-GAAP- based Measures % of Total Revenue Cost of revenues Cloud services and subscriptions $ 347,545 $ (4,982) (1) $ 342,563 Customer support 125,230 (2,481) (1) 122,749 Professional service and other 134,956 (2,587) (1) 132,369 Amortization of acquired technology-based intangible assets 94,447 (94,447) (2) — GAAP-based gross profit and gross margin (%) / Non-GAAP-based gross profit and gross margin (%) 1,888,334 72.5 % 104,497 (3) 1,992,831 76.5 % Operating expenses Research and development 371,420 (15,823) (1) 355,597 Sales and marketing 519,811 (20,538) (1) 499,273 General and administrative 206,086 (13,508) (1) 192,578 Amortization of acquired customer-based intangible assets 162,552 (162,552) (2) — Special charges (recoveries) 62,374 (62,374) (4) — GAAP-based income from operations / Non-GAAP-based income from operations 502,041 379,292 (5) 881,333 Other income (expense), net 32,960 (32,960) (6) — Provision for income taxes 52,776 118,448 (7) 171,224 GAAP-based net income / Non-GAAP-based net income, attributable to OpenText 314,230 227,884 (8) 542,114 GAAP-based earnings per share / Non-GAAP-based earnings per share-diluted, attributable to OpenText $ 1.18 $ 0.85 (8) $ 2.03 (1) Adjustment relates to the exclusion of share-based compensation expense from our Non-GAAP-based operating expenses as this expense is excluded from our internal analysis of operating results. (2) Adjustment relates to the exclusion of amortization expense from our Non-GAAP-based operating expenses as the timing and frequency of amortization expense is dependent on our acquisitions and is hence excluded from our internal analysis of operating results. (3) GAAP-based and Non-GAAP-based gross profit stated in dollars and gross margin stated as a percentage of total revenue. (4) Adjustment relates to the exclusion of special charges (recoveries) from our Non-GAAP-based operating expenses as special charges (recoveries) are generally incurred in the periods relevant to an acquisition and include certain charges or recoveries that are not indicative or related to continuing operations and are therefore excluded from our internal analysis of operating results. (5) GAAP-based and Non-GAAP-based income from operations stated in dollars. (6) Adjustment relates to the exclusion of other income (expense) from our Non-GAAP-based operating expenses as other income (expense) generally relates to the transactional impact of foreign exchange and is generally not indicative or related to continuing operations and is therefore excluded from our internal analysis of operating results. Other income (expense) also includes our share of income (losses) from our holdings in 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 of our ongoing business and operating results. (7) Adjustment relates to differences between the GAAP-based tax provision rate of approximately 14% 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. (8) Reconciliation of GAAP-based net income to Non-GAAP-based net income: Six Months Ended December 31, 2024 Per share diluted GAAP-based net income, attributable to OpenText $ 314,230 $ 1.18 Add (deduct): Amortization 256,999 0.96 Share-based compensation 59,919 0.22 Special charges (recoveries) 62,374 0.23 Other (income) expense, net (32,960) (0.12) GAAP-based provision for income taxes 52,776 0.20 Non-GAAP-based provision for income taxes (171,224) (0.64) Non-GAAP-based net income, attributable to OpenText $ 542,114 $ 2.03 Reconciliation of Adjusted EBITDA Six Months Ended December 31, 2024 GAAP-based net income, attributable to OpenText $ 314,230 Add: Provision for income taxes 52,776 Interest and other related expense, net 167,897 Amortization of acquired technology-based intangible assets 94,447 Amortization of acquired customer-based intangible assets 162,552 Depreciation 64,050 Share-based compensation 59,919 Special charges (recoveries) 62,374 Other (income) expense, net (32,960) Adjusted EBITDA $ 945,285 GAAP-based net income margin 12.1 % Adjusted EBITDA margin 36.3 % Reconciliation of Free cash flows Six Months Ended December 31, 2024 GAAP-based cash flows provided by operating activities $ 270,186 Add: Capital expenditures (1) (80,585) Free cash flows $ 189,601 (1) Defined as 'Additions of property and equipment' in the Consolidated Statements of Cash Flows. Reconciliation of selected GAAP-based measures to Non-GAAP-based measures for the three months ended September 30, 2024 (In thousands, except for per share data) Three Months Ended September 30, 2024 GAAP-based Measures GAAP-based Measures % of Total Revenue Adjustments Note Non-GAAP- based Measures Non-GAAP- based Measures % of Total Revenue Cost of revenues Cloud services and subscriptions $ 175,257 $ (2,186) (1) $ 173,071 Customer support 62,574 (1,342) (1) 61,232 Professional service and other 66,915 (1,314) (1) 65,601 Amortization of acquired technology-based intangible assets 47,244 (47,244) (2) — GAAP-based gross profit and gross margin (%) /Non-GAAP-based gross profit and gross margin (%) 910,358 71.7 % 52,086 (3) 962,444 75.8 % Operating expenses Research and development 190,693 (8,167) (1) 182,526 Sales and marketing 245,882 (9,315) (1) 236,567 General and administrative 106,730 (7,234) (1) 99,496 Amortization of acquired customer-based intangible assets 81,504 (81,504) (2) — Special charges (recoveries) 47,136 (47,136) (4) — GAAP-based income from operations / Non-GAAP-based income from operations 206,242 205,442 (5) 411,684 Other income (expense), net (35,655) 35,655 (6) — Provision for income taxes 1,883 76,693 (7) 78,576 GAAP-based net income / Non-GAAP-based net income, attributable to OpenText 84,368 164,404 (8) 248,772 GAAP-based earnings per share / Non-GAAP-based earnings per share-diluted, attributable to OpenText $ 0.32 $ 0.61 (8) $ 0.93 (1) Adjustment relates to the exclusion of share-based compensation expense from our Non-GAAP-based operating expenses as this expense is excluded from our internal analysis of operating results. (2) Adjustment relates to the exclusion of amortization expense from our Non-GAAP-based operating expenses as the timing and frequency of amortization expense is dependent on our acquisitions and is hence excluded from our internal analysis of operating results. (3) GAAP-based and Non-GAAP-based gross profit stated in dollars and gross margin stated as a percentage of total revenue. (4) Adjustment relates to the exclusion of special charges (recoveries) from our Non-GAAP-based operating expenses as special charges (recoveries) are generally incurred in the periods relevant to an acquisition and include certain charges or recoveries that are not indicative or related to continuing operations and are therefore excluded from our internal analysis of operating results. (5) GAAP-based and Non-GAAP-based income from operations stated in dollars. (6) Adjustment relates to the exclusion of other income (expense) from our Non-GAAP-based operating expenses as other income (expense) generally relates to the transactional impact of foreign exchange and is generally not indicative or related to continuing operations and is therefore excluded from our internal analysis of operating results. Other income (expense) also includes our share of income (losses) from our holdings in 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 of our ongoing business and operating results. (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. (8) Reconciliation of GAAP-based net income to Non-GAAP-based net income: Three Months Ended September 30, 2024 Per share diluted GAAP-based net income, attributable to OpenText $ 84,368 $ 0.32 Add (deduct): Amortization 128,748 0.47 Share-based compensation 29,558 0.11 Special charges (recoveries) 47,136 0.18 Other (income) expense, net 35,655 0.13 GAAP-based provision for income taxes 1,883 0.01 Non-GAAP-based provision for income taxes (78,576) (0.29) Non-GAAP-based net income, attributable to OpenText $ 248,772 $ 0.93 Reconciliation of Adjusted EBITDA Three Months Ended September 30, 2024 GAAP-based net income, attributable to OpenText $ 84,368 Add (deduct): Provision for income taxes 1,883 Interest and other related expense, net 84,282 Amortization of acquired technology-based intangible assets 47,244 Amortization of acquired customer-based intangible assets 81,504 Depreciation 32,171 Share-based compensation 29,558 Special charges (recoveries) 47,136 Other (income) expense, net 35,655 Adjusted EBITDA $ 443,801 GAAP-based net income margin 6.6 % Adjusted EBITDA margin 35.0 % Reconciliation of Free cash flows Three Months Ended September 30, 2024 GAAP-based cash flows provided by operating activities $ (77,806) Add: Capital expenditures (1) (39,316) Free cash flows $ (117,122) (1) Defined as 'Additions of property and equipment' in the Consolidated Statements of Cash Flows. Reconciliation of selected GAAP-based measures to Non-GAAP-based measures for the three months ended December 31, 2023 (In thousands, except for per share data) Three Months Ended December 31, 2023 GAAP-based Measures GAAP-based Measures % of Total Revenue Adjustments Note Non-GAAP- based Measures Non-GAAP- based Measures % of Total Revenue Cost of revenues Cloud services and subscriptions $ 180,148 $ (3,609) (1) $ 176,539 Customer support 73,374 (1,128) (1) 72,246 Professional service and other 75,459 (1,756) (1) 73,703 Amortization of acquired technology-based intangible assets 70,784 (70,784) (2) — GAAP-based gross profit and gross margin (%) /Non-GAAP-based gross profit and gross margin (%) 1,129,120 73.6 % 77,277 (3) 1,206,397 78.6 % Operating expenses Research and development 212,855 (12,767) (1) 200,088 Sales and marketing 287,628 (13,227) (1) 274,401 General and administrative 173,264 (7,688) (1) 165,576 Amortization of acquired customer-based intangible assets 113,925 (113,925) (2) — Special charges (recoveries) 54,166 (54,166) (4) — GAAP-based income from operations / Non-GAAP-based income from operations 253,867 279,050 (5) 532,917 Other income (expense), net (68,784) 68,784 (6) — Provision for income taxes 8,054 47,054 (7) 55,108 GAAP-based net income / Non-GAAP-based net income, attributable to OpenText 37,675 300,780 (8) 338,455 GAAP-based earnings per share / Non-GAAP-based earnings per share-diluted, attributable to OpenText $ 0.14 $ 1.10 (8) $ 1.24 (1) Adjustment relates to the exclusion of share-based compensation expense from our Non-GAAP-based operating expenses as this expense is excluded from our internal analysis of operating results. (2) Adjustment relates to the exclusion of amortization expense from our Non-GAAP-based operating expenses as the timing and frequency of amortization expense is dependent on our acquisitions and is hence excluded from our internal analysis of operating results. (3) GAAP-based and Non-GAAP-based gross profit stated in dollars and gross margin stated as a percentage of total revenue. (4) Adjustment relates to the exclusion of special charges (recoveries) from our Non-GAAP-based operating expenses as special charges (recoveries) are generally incurred in the periods relevant to an acquisition and include certain charges or recoveries that are not indicative or related to continuing operations and are therefore excluded from our internal analysis of operating results. (5) GAAP-based and Non-GAAP-based income from operations stated in dollars. (6) Adjustment relates to the exclusion of other income (expense) from our Non-GAAP-based operating expenses as other income (expense) generally relates to the transactional impact of foreign exchange and is generally not indicative or related to continuing operations and is therefore excluded from our internal analysis of operating results. Other income (expense) also includes our share of income (losses) from our holdings in 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 of our ongoing business and operating results. (7) Adjustment relates to differences between the GAAP-based tax provision rate of approximately 18% 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 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. (8) Reconciliation of GAAP-based net income to Non-GAAP-based net income: Three Months Ended December 31, 2023 Per share diluted GAAP-based net income, attributable to OpenText $ 37,675 $ 0.14 Add (deduct): Amortization 184,709 0.68 Share-based compensation 40,175 0.15 Special charges (recoveries) 54,166 0.20 Other (income) expense, net 68,784 0.24 GAAP-based provision for income taxes 8,054 0.03 Non-GAAP-based provision for income taxes (55,108) (0.20) Non-GAAP-based net income, attributable to OpenText $ 338,455 $ 1.24 Reconciliation of Adjusted EBITDA Three Months Ended December 31, 2023 GAAP-based net income, attributable to OpenText $ 37,675 Add (deduct): Provision for income taxes 8,054 Interest and other related expense, net 139,292 Amortization of acquired technology-based intangible assets 70,784 Amortization of acquired customer-based intangible assets 113,925 Depreciation 33,415 Share-based compensation 40,175 Special charges (recoveries) 54,166 Other (income) expense, net 68,784 Adjusted EBITDA $ 566,270 GAAP-based net income margin 2.5 % Adjusted EBITDA margin 36.9 % Reconciliation of Free cash flows Three Months Ended December 31, 2023 GAAP-based cash flows provided by operating activities $ 350,653 Add: Capital expenditures (1) (45,240) Free cash flows $ 305,413 (1) Defined as 'Additions of property and equipment' in the Consolidated Statements of Cash Flows. Reconciliation of selected GAAP-based measures to Non-GAAP-based measures for the six months ended December 31, 2023 (In thousands, except for per share data) Six Months Ended December 31, 2023 GAAP-based Measures GAAP-based Measures % of Total Revenue Adjustments Note Non-GAAP- based Measures Non-GAAP- based Measures % of Total Revenue Cost of revenues Cloud services and subscriptions $ 351,560 $ (6,600) (1) $ 344,960 Customer support 148,388 (2,186) (1) 146,202 Professional service and other 155,381 (3,638) (1) 151,743 Amortization of acquired technology-based intangible assets 147,608 (147,608) (2) — GAAP-based gross profit and gross margin (%) / Non-GAAP-based gross profit and gross margin (%) 2,147,538 72.5 % 160,032 (3) 2,307,570 78.0 % Operating expenses Research and development 439,086 (24,501) (1) 414,585 Sales and marketing 567,635 (25,034) (1) 542,601 General and administrative 304,475 (15,311) (1) 289,164 Amortization of acquired customer-based intangible assets 234,117 (234,117) (2) — Special charges (recoveries) 67,960 (67,960) (4) — GAAP-based income from operations / Non-GAAP-based income from operations 466,759 526,955 (5) 993,714 Other income (expense), net (48,614) 48,614 (6) — Provision for income taxes 18,406 81,367 (7) 99,773 GAAP-based net income / Non-GAAP-based net income, attributable to OpenText 118,576 494,202 (8) 612,778 GAAP-based earnings per share / Non-GAAP-based earnings per share-diluted, attributable to OpenText $ 0.44 $ 1.81 (8) $ 2.25 (1) Adjustment relates to the exclusion of share-based compensation expense from our Non-GAAP-based operating expenses as this expense is excluded from our internal analysis of operating results. (2) Adjustment relates to the exclusion of amortization expense from our Non-GAAP-based operating expenses as the timing and frequency of amortization expense is dependent on our acquisitions and is hence excluded from our internal analysis of operating results. (3) GAAP-based and Non-GAAP-based gross profit stated in dollars and gross margin stated as a percentage of total revenue. (4) Adjustment relates to the exclusion of special charges (recoveries) from our Non-GAAP-based operating expenses as special charges (recoveries) are generally incurred in the periods relevant to an acquisition and include certain charges or recoveries that are not indicative or related to continuing operations and are therefore excluded from our internal analysis of operating results. (5) GAAP-based and Non-GAAP-based income from operations stated in dollars. (6) Adjustment relates to the exclusion of other income (expense) from our Non-GAAP-based operating expenses as other income (expense) generally relates to the transactional impact of foreign exchange and is generally not indicative or related to continuing operations and is therefore excluded from our internal analysis of operating results. Other income (expense) also includes our share of income (losses) from our holdings in 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 of our ongoing business and operating results. (7) Adjustment relates to differences between the GAAP-based tax provision rate of approximately 13% 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 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. (8) Reconciliation of GAAP-based net income to Non-GAAP-based net income: Six Months Ended December 31, 2023 Per share diluted GAAP-based net income, attributable to OpenText $ 118,576 $ 0.44 Add (deduct): Amortization 381,725 1.40 Share-based compensation 77,270 0.29 Special charges (recoveries) 67,960 0.25 Other (income) expense, net 48,614 0.16 GAAP-based provision for income taxes 18,406 0.07 Non-GAAP-based provision for income taxes (99,773) (0.36) Non-GAAP-based net income, attributable to OpenText $ 612,778 $ 2.25 Reconciliation of Adjusted EBITDA Six Months Ended December 31, 2023 GAAP-based net income, attributable to OpenText $ 118,576 Add: Provision for income taxes 18,406 Interest and other related expense, net 281,056 Amortization of acquired technology-based intangible assets 147,608 Amortization of acquired customer-based intangible assets 234,117 Depreciation 67,506 Share-based compensation 77,270 Special charges (recoveries) 67,960 Other (income) expense, net 48,614 Adjusted EBITDA $ 1,061,113 GAAP-based net income margin 4.0 % Adjusted EBITDA margin 35.8 % Reconciliation of Free cash flows Six Months Ended December 31, 2023 GAAP-based cash flows provided by operating activities $ 397,774 Add: Capital expenditures (1) (82,779) Free cash flows $ 314,995 (1) Defined as 'Additions of property and equipment' in the Consolidated Statements of Cash Flows. (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, 2024 and 2023: Three Months Ended December 31, 2024 Three Months Ended December 31, 2023 Currencies % of Revenue % of Expenses(1) % of Revenue % of Expenses(1) EURO 23 % 13 % 23 % 12 % GBP 5 % 7 % 4 % 7 % CAD 3 % 10 % 3 % 9 % USD 58 % 46 % 59 % 51 % Other 11 % 24 % 11 % 21 % Total 100 % 100 % 100 % 100 % Six Months Ended December 31, 2024 Six Months Ended December 31, 2023 Currencies % of Revenue % of Expenses(1) % of Revenue % of Expenses(1) EURO 23 % 12 % 22 % 11 % GBP 5 % 7 % 5 % 8 % CAD 3 % 10 % 3 % 10 % USD 59 % 48 % 59 % 51 % Other 10 % 23 % 11 % 20 % Total 100 % 100 % 100 % 100 % (1) 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 (recoveries). 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