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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
______________________
FORM 10-Q
______________________
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2022.
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from                      to                     
Commission file number: 0-27544
______________________________________
OPEN TEXT CORPORATION
(Exact name of Registrant as specified in its charter)
______________________
Canada98-0154400
(State or other jurisdiction of incorporation or organization)(IRS Employer Identification No.)
275 Frank Tompa Drive,N2L 0A1
Waterloo, OntarioCanada
(Address of principal executive offices)(Zip code)
Registrant's telephone number, including area code: (519888-7111

Securities registered pursuant to Section 12(b) of the Act:
Title of each class 
Trading Symbol(s)Name of each exchange on which registered
Common stock without par valueOTEXNASDAQ Global Select Market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  ☒    No  ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes  ☒    No  ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer  ☒  Accelerated filer  ☐ Non-accelerated filer  ☐ Smaller reporting company  Emerging growth company  
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.      ☐   
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes     No  ☒
At November 1, 2022, there were 270,235,234 outstanding Common Shares of the registrant.
1

OPEN TEXT CORPORATION
TABLE OF CONTENTS

2

Part I - Financial Information
Item 1. Financial Statements
OPEN TEXT CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands of U.S. dollars, except share data)
September 30, 2022June 30, 2022
ASSETS(unaudited)
Cash and cash equivalents$1,704,385 $1,693,741 
Accounts receivable trade, net of allowance for credit losses of $15,410 as of September 30, 2022 and $16,473 as of June 30, 2022 (Note 4)
378,143 426,652 
Contract assets (Note 3)
27,802 26,167 
Income taxes recoverable (Note 15)
8,856 18,255 
Prepaid expenses and other current assets (Note 9)
124,868 120,552 
Total current assets2,244,054 2,285,367 
Property and equipment (Note 5)
251,151 244,709 
Operating lease right of use assets (Note 6)
201,374 198,132 
Long-term contract assets (Note 3)
18,544 19,719 
Goodwill (Note 7)
5,226,814 5,244,653 
Acquired intangible assets (Note 8)
974,589 1,075,208 
Deferred tax assets (Note 15)
814,471 810,154 
Other assets (Note 9)
299,608 256,987 
Long-term income taxes recoverable (Note 15)
46,483 44,044 
Total assets$10,077,088 $10,178,973 
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Accounts payable and accrued liabilities (Note 10)
$601,074 $448,607 
Current portion of long-term debt (Note 11)
10,000 10,000 
Operating lease liabilities (Note 6)
58,969 56,380 
Deferred revenues (Note 3)
848,789 902,202 
Income taxes payable (Note 15)
58,692 51,069 
Total current liabilities1,577,524 1,468,258 
Long-term liabilities:
Accrued liabilities (Note 10)
20,119 18,208 
Pension liability (Note 12)
53,202 60,951 
Long-term debt (Note 11)
4,208,547 4,209,567 
Long-term operating lease liabilities (Note 6)
197,328 198,695 
Long-term deferred revenues (Note 3)
85,514 91,144 
Long-term income taxes payable (Note 15)
42,087 34,003 
Deferred tax liabilities (Note 15)
42,626 65,887 
Total long-term liabilities4,649,423 4,678,455 
Shareholders’ equity:
Share capital and additional paid-in capital (Note 13)
269,880,769 and 269,522,639 Common Shares issued and outstanding at September 30, 2022 and June 30, 2022, respectively; authorized Common Shares: unlimited
2,067,881 2,038,674 
Accumulated other comprehensive income (loss) (Note 20)
(42,576)(7,659)
Retained earnings1,978,442 2,160,069 
Treasury stock, at cost (3,586,014 and 3,706,420 shares at September 30, 2022 and June 30, 2022, respectively)
(154,792)(159,966)
Total OpenText shareholders' equity3,848,955 4,031,118 
Non-controlling interests1,186 1,142 
Total shareholders’ equity3,850,141 4,032,260 
Total liabilities and shareholders’ equity$10,077,088 $10,178,973 
Guarantees and contingencies (Note 14)
Related party transactions (Note 24)
Subsequent event (Note 25)
See accompanying Notes to Condensed Consolidated Financial Statements
3

OPEN TEXT CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(In thousands of U.S. dollars, except share and per share data)
(unaudited)

Three Months Ended September 30,
20222021
Revenues (Note 3):
Cloud services and subscriptions$404,651 $356,589 
Customer support317,351 335,237 
License62,548 73,529 
Professional service and other67,486 66,953 
Total revenues852,036 832,308 
Cost of revenues:
Cloud services and subscriptions131,799 119,779 
Customer support27,354 29,483 
License2,758 3,969 
Professional service and other53,800 51,725 
Amortization of acquired technology-based intangible assets (Note 8)
42,637 53,167 
Total cost of revenues258,348 258,123 
Gross profit593,688 574,185 
Operating expenses:
Research and development110,198 100,165 
Sales and marketing167,170 146,240 
General and administrative78,074 71,477 
Depreciation23,174 21,386 
Amortization of acquired customer-based intangible assets (Note 8)
54,438 51,884 
Special charges (recoveries) (Note 18)
14,281 344 
Total operating expenses447,335 391,496 
Income from operations146,353 182,689 
Other income (expense), net (Note 22)
(189,231)29,782 
Interest and other related expense, net(40,382)(37,055)
Income (loss) before income taxes(83,260)175,416 
Provision for income taxes (Note 15)
33,625 43,450 
Net income (loss) for the period$(116,885)$131,966 
Net (income) loss attributable to non-controlling interests(44)(51)
Net income (loss) attributable to OpenText$(116,929)$131,915 
Earnings (loss) per share—basic attributable to OpenText (Note 23)
$(0.43)$0.48 
Earnings (loss) per share—diluted attributable to OpenText (Note 23)
$(0.43)$0.48 
Weighted average number of Common Shares outstanding—basic (in '000's)269,804 272,044 
Weighted average number of Common Shares outstanding—diluted (in '000's)269,804 273,232 

See accompanying Notes to Condensed Consolidated Financial Statements
4

OPEN TEXT CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(In thousands of U.S. dollars)
(unaudited)

 Three Months Ended September 30,
 20222021
Net income (loss) for the period$(116,885)$131,966 
Other comprehensive income (loss)—net of tax:
Net foreign currency translation adjustments(36,366)(10,092)
Unrealized gain (loss) on cash flow hedges:
Unrealized gain (loss) - net of tax expense (recovery) effect of ($1,206) and $(391) for the three months ended September 30, 2022 and 2021, respectively
(3,340)(1,086)
(Gain) loss reclassified into net income - net of tax (expense) recovery effect of $212 and $(103) for the three months ended September 30, 2022 and 2021, respectively
588 (287)
Actuarial gain (loss) relating to defined benefit pension plans:
Actuarial gain (loss) - net of tax expense (recovery) effect of $1,104 and $(232) for the three months ended September 30, 2022 and 2021, respectively
4,164 (1,049)
Amortization of actuarial (gain) loss into net income - net of tax (expense) recovery effect of $26 and $68 for the three months ended September 30, 2022 and 2021, respectively
37 162 
Total other comprehensive income (loss) net, for the period(34,917)(12,352)
Total comprehensive income (loss)(151,802)119,614 
Comprehensive (income) loss attributable to non-controlling interests
(44)(51)
Total comprehensive income (loss) attributable to OpenText$(151,846)$119,563 

See accompanying Notes to Condensed Consolidated Financial Statements

5

OPEN TEXT CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
(In thousands of U.S. dollars and shares)
(unaudited)

Three Months Ended September 30, 2022
Common Shares and Additional Paid in CapitalTreasury StockRetained
Earnings
Accumulated  Other
Comprehensive
Income
Non-Controlling InterestsTotal
SharesAmountSharesAmount
Balance as of June 30, 2022
269,523 $2,038,674 (3,706)$(159,966)$2,160,069 $(7,659)$1,142 $4,032,260 
Issuance of Common Shares
Under employee stock option plans72 1,994 — — — — — 1,994 
Under employee stock purchase plans286 9,179 — — — — — 9,179 
Share-based compensation— 23,208 — — — — — 23,208 
Issuance of treasury stock— (5,174)120 5,174 — — — — 
Dividends declared
($0.24299 per Common Share)
— — — — (64,698)— — (64,698)
Other comprehensive income (loss) - net— — — — — (34,917)— (34,917)
Net income (loss) for the period— — — — (116,929)— 44 (116,885)
Balance as of September 30, 2022
269,881 $2,067,881 (3,586)$(154,792)$1,978,442 $(42,576)$1,186 $3,850,141 

Three Months Ended September 30, 2021
Common Shares and Additional Paid in CapitalTreasury StockRetained
Earnings
Accumulated  Other
Comprehensive
Income
Non-Controlling InterestsTotal
SharesAmountSharesAmount
Balance as of June 30, 2021
271,541 $1,947,764 (1,568)$(69,386)$2,153,326 $66,238 $1,511 $4,099,453 
Issuance of Common Shares
Under employee stock option plans796 27,299 — — — — — 27,299 
Under employee stock purchase plans197 8,489 — — — — — 8,489 
Share-based compensation— 13,934 — — — — — 13,934 
Issuance of treasury stock— (5,909)142 5,909 — — —  
Dividends declared
($0.2209 per Common Share)
— — — — (59,878)— — (59,878)
Other comprehensive income (loss) - net— — — — — (12,352)— (12,352)
Distribution to non-controlling interest— 142 — — — — (538)(396)
Net income (loss) for the period— — — — 131,915 — 51 131,966 
Balance as of September 30, 2021
272,534 $1,991,719 (1,426)$(63,477)$2,225,363 $53,886 $1,024 $4,208,515 







6

OPEN TEXT CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands of U.S. dollars)
(unaudited)
Three Months Ended September 30,
 20222021
Cash flows from operating activities:
Net income (loss) for the period$(116,885)$131,966 
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation and amortization of intangible assets120,249 126,437 
Share-based compensation expense23,208 13,934 
Pension expense1,387 1,486 
Amortization of debt issuance costs1,480 1,161 
Write-off of right of use assets2,827  
Loss on sale and write down of property and equipment 27 
Deferred taxes(20,667)14,682 
Share in net (income) loss of equity investees6,534 (29,315)
Unrealized (gain) loss on financial instruments181,461  
Changes in operating assets and liabilities:
Accounts receivable59,494 76,526 
Contract assets(9,054)(7,248)
Prepaid expenses and other current assets(2,934)(9,811)
Income taxes15,834 16,761 
Accounts payable and accrued liabilities(27,179)(114,334)
Deferred revenue(53,779)(38,516)
Other assets(47,749)7,542 
Operating lease assets and liabilities, net(2,268)(1,629)
Net cash provided by operating activities131,959 189,669 
Cash flows from investing activities:
Additions of property and equipment(36,324)(26,712)
Other investing activities 296 
Net cash used in investing activities(36,324)(26,416)
Cash flows from financing activities:
Proceeds from issuance of Common Shares
from exercise of stock options and ESPP
10,037 36,720 
Repayment of long-term debt and Revolver(2,500)(2,500)
Distribution to non-controlling interest (396)
Payments of dividends to shareholders(64,698)(59,878)
Net cash used in financing activities(57,161)(26,054)
Foreign exchange gain (loss) on cash held in foreign currencies(28,102)(9,277)
Increase in cash, cash equivalents and restricted cash during the period10,372 127,922 
Cash, cash equivalents and restricted cash at beginning of the period1,695,911 1,609,800 
Cash, cash equivalents and restricted cash at end of the period$1,706,283 $1,737,722 







7

OPEN TEXT CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands of U.S. dollars)
(unaudited)

Reconciliation of cash, cash equivalents and restricted cash:September 30, 2022September 30, 2021
Cash and cash equivalents$1,704,385 $1,735,265 
Restricted cash (1)
1,898 2,457 
Total cash, cash equivalents and restricted cash$1,706,283 $1,737,722 
_________________________________
(1)Restricted cash is classified under the Prepaid expenses and other current assets and Other assets line items on the Condensed Consolidated Balance Sheets (Note 9).

Supplemental cash flow disclosures (Note 6 and Note 21)

See accompanying Notes to Condensed Consolidated Financial Statements
8

OPEN TEXT CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
For the Three Months Ended September 30, 2022
(Tabular amounts in thousands of U.S. dollars, except share and per share data)
(unaudited)
NOTE 1—BASIS OF PRESENTATION
The accompanying Condensed Consolidated Financial Statements include the accounts of Open Text Corporation and our subsidiaries, collectively referred to as “OpenText” or the “Company.” We wholly own all of our subsidiaries with the exception of Open Text South Africa Proprietary Ltd. (OT South Africa), which as of September 30, 2022, was 70% owned by OpenText. All intercompany balances and transactions have been eliminated.
Previously, our ownership in EC1 Pte. Ltd. (GXS Singapore) was 81%. During the first quarter of Fiscal 2022 (as defined below), we made a final cash distribution of $0.4 million to the non-controlling interest holder in GXS Singapore as part of the process to liquidate the subsidiary. During Fiscal 2022, the liquidation of GXS Singapore was completed.
The following Fiscal Year terms are used throughout this Quarterly Report on Form 10-Q:
Fiscal YearBeginning DateEnding Date
Fiscal 2024
July 1, 2023June 30, 2024
Fiscal 2023
July 1, 2022June 30, 2023
Fiscal 2022
July 1, 2021June 30, 2022
Fiscal 2021
July 1, 2020June 30, 2021
Fiscal 2020
July 1, 2019June 30, 2020
Fiscal 2019
July 1, 2018June 30, 2019
Fiscal 2018
July 1, 2017June 30, 2018
Fiscal 2017
July 1, 2016June 30, 2017
Fiscal 2016
July 1, 2015June 30, 2016
Fiscal 2015
July 1, 2014June 30, 2015
Fiscal 2014
July 1, 2013June 30, 2014
Fiscal 2013
July 1, 2012June 30, 2013
Fiscal 2012
July 1, 2011June 30, 2012

These Condensed Consolidated Financial Statements are expressed in U.S. dollars and are prepared in accordance with United States generally accepted accounting principles (U.S. GAAP). The information furnished reflects all adjustments necessary for a fair presentation of the results for the periods presented.
Use of estimates
The preparation of financial statements in conformity with U.S. GAAP requires us to make certain estimates, judgments and assumptions that affect the amounts reported in the Condensed Consolidated Financial Statements. These estimates, judgments and assumptions are evaluated on an ongoing basis. We base our estimates on historical experience and on various other assumptions that we believe are reasonable at that time, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from those estimates. In particular, key estimates, judgments and assumptions include those related to: (i) revenue recognition, (ii) accounting for income taxes, (iii) testing of goodwill for impairment, (iv) the valuation of acquired intangible assets, (v) the valuation of long-lived assets, (vi) the recognition of contingencies, (vii) restructuring accruals, (viii) acquisition accruals and pre-acquisition contingencies, (ix) the valuation of stock options granted and obligations related to share-based payments, including the valuation of our long-term incentive plans, (x) the valuation of pension obligations, and (xi) the valuation of derivative instruments.
9

Proposed Acquisition of Micro Focus
On August 25, 2022, we announced an agreement on the terms of an all-cash offer (through our wholly-owned subsidiary), to acquire the entire issued and to be issued share capital of Micro Focus International PLC (Micro Focus), for a total purchase price of approximately $6.0 billion, inclusive of Micro Focus’ cash and debt. The all-cash consideration for the proposed acquisition of Micro Focus (Micro Focus Acquisition) is expected to be funded by new debt, cash on hand and a draw on our Revolver (defined below). Concurrent with the announcement of the Micro Focus Acquisition, the Company entered into the Acquisition Term Loan and Bridge Loan (each as defined below) as well as certain derivative transactions. These derivative transactions were marked-to-market during the three months ended September 30, 2022, with the resulting unrealized gains (losses) on these derivatives recognized in Other Income (Expense) within our Condensed Consolidated Statements of Income. The Micro Focus Acquisition is expected to close in the first quarter of calendar 2023, subject to the satisfaction (or, where applicable, waiver) of certain conditions. On October 18, 2022 the shareholders of Micro Focus approved the all-cash offer. The following Notes include details related to the Micro Focus Acquisition: Note 9 “Prepaid Expenses and Other Assets,” Note 10 “Accounts Payable and Accrued Liabilities,” Note 11 “Long-Term Debt,” Note 16 “Fair Value Measurement,” Note 17 “Derivative Instruments and Hedging Activities,” Note 19 “Acquisitions” and Note 22 “Other Income (Expense), Net.”
NOTE 2—RECENT ACCOUNTING PRONOUNCEMENTS
Accounting Pronouncements Adopted in Fiscal 2023
During the three months ended September 30, 2022, there have been no new Accounting Standards Updates (ASU) or changes in accounting pronouncements that have had a material impact to our reported financial position, results of operations or cash flows.
10

NOTE 3—REVENUES
Disaggregation of Revenue
We have four revenue streams: cloud services and subscriptions, customer support, license, and professional service and other. The following tables disaggregate our revenue by significant geographic area, based on the location of our direct end customer, by type of performance obligation and timing of revenue recognition for the periods indicated:
Three Months Ended September 30,
20222021
Total Revenues by Geography:
Americas (1)
$557,788 $519,692 
EMEA (2)
228,353 244,597 
Asia Pacific (3)
65,895 68,019 
Total revenues$852,036 $832,308 
Total Revenues by Type of Performance Obligation:
Recurring revenues (4)
Cloud services and subscriptions revenue
$404,651 $356,589 
Customer support revenue
317,351 335,237 
Total recurring revenues
$722,002 $691,826 
License revenue (perpetual, term and subscriptions) 62,548 73,529 
Professional service and other revenue67,486 66,953 
Total revenues$852,036 $832,308 
Total Revenues by Timing of Revenue Recognition:
Point in time $62,548 $73,529 
Over time (including professional service and other revenue)789,488 758,779 
Total revenues$852,036 $832,308 
___________________________
(1)Americas consists of countries in North, Central and South America.
(2)EMEA primarily consists of countries in Europe, the Middle East and Africa.
(3)Asia Pacific primarily consists of Japan, Australia, China, Korea, Philippines, Singapore, India and New Zealand.
(4)Recurring revenue is defined as the sum of Cloud services and subscriptions revenue and Customer support revenue.
Contract Balances
A contract asset, net of allowance for credit losses, will be recorded if we have recognized revenue but do not have an unconditional right to the related consideration from the customer. For example, this will be the case if implementation services offered in a cloud arrangement are identified as a separate performance obligation and are provided to a customer prior to us being able to bill the customer. In addition, a contract asset may arise in relation to subscription licenses if the license revenue that is recognized upfront exceeds the amount that we are able to invoice the customer at that time. Contract assets are reclassified to accounts receivable when the rights become unconditional.
The balance for our contract assets and contract liabilities (i.e. deferred revenues) for the periods indicated below were as follows:
As of September 30, 2022
As of June 30, 2022
Short-term contract assets $27,802 $26,167 
Long-term contract assets
$18,544 $19,719 
Short-term deferred revenues$848,789 $902,202 
Long-term deferred revenues$85,514 $91,144 
The difference in the opening and closing balances of our contract assets and deferred revenues primarily results from the timing difference between our performance and the customer’s payments. We fulfill our obligations under a contract with a customer by transferring products and services in exchange for consideration from the customer. During the three months ended September 30, 2022, we reclassified $8.9 million (three months ended September 30, 2021—$8.1 million) of contract assets to
11

receivables as a result of the right to the transaction consideration becoming unconditional. During the three months ended September 30, 2022 and 2021, respectively, there was no significant impairment loss recognized related to contract assets.
We recognize deferred revenue when we have received consideration or an amount of consideration is due from the customer for future obligations to transfer products or services. Our deferred revenues primarily relate to cloud services and customer support agreements which have been paid for by customers prior to the performance of those services. The amount of revenue that was recognized during the three months ended September 30, 2022 that was included in the deferred revenue balances at June 30, 2022 was $373 million (three months ended September 30, 2021—$359 million).
Incremental Costs of Obtaining a Contract with a Customer
Incremental costs of obtaining a contract include only those costs that we incur to obtain a contract that we would not have incurred if the contract had not been obtained, such as sales commissions. The following table summarizes the changes in total capitalized costs to obtain a contract, since June 30, 2022:
Capitalized costs to obtain a contract as of June 30, 2022
$82,562 
New capitalized costs incurred6,148 
Amortization of capitalized costs(7,578)
Impact of foreign exchange rate changes(1,885)
Capitalized costs to obtain a contract as of September 30, 2022
$79,247 
During the three months ended September 30, 2022 and 2021, respectively, there was no significant impairment loss recognized related to capitalized costs to obtain a contract. Refer to Note 9 “Prepaid Expenses and Other Assets” for additional information on incremental costs of obtaining a contract.
Transaction Price Allocated to the Remaining Performance Obligations
As of September 30, 2022, approximately $1.5 billion of revenue is expected to be recognized from remaining performance obligations on existing contracts. We expect to recognize approximately 46% of this amount over the next 12 months and the remaining balance substantially over the next three years thereafter. We apply the practical expedient and do not disclose performance obligations that have original expected durations of one year or less.
NOTE 4—ALLOWANCE FOR CREDIT LOSSES
The following illustrates the activity in our allowance for credit losses on accounts receivable, since June 30, 2022:
Balance as of June 30, 2022
$16,473 
Credit loss expense (recovery)847 
Write-off / adjustments(1,910)
Balance as of September 30, 2022
$15,410 
Included in accounts receivable are unbilled receivables in the amount of $51.0 million as of September 30, 2022 (June 30, 2022—$47.9 million).
As of September 30, 2022, we have an allowance for credit losses of $0.5 million for contract assets (June 30, 2022—$0.7 million). For additional information on contract assets please see Note 3 “Revenues.”
12

NOTE 5—PROPERTY AND EQUIPMENT
 As of September 30, 2022
 CostAccumulated
Depreciation
Net
Furniture, equipment and other$51,418 $(39,485)$11,933 
Computer hardware340,407 (231,133)109,274 
Computer software150,126 (120,043)30,083 
Capitalized software development costs154,785 (105,584)49,201 
Leasehold improvements103,442 (84,754)18,688 
Land and buildings48,839 (16,867)31,972 
Total$849,017 $(597,866)$251,151 
 
 As of June 30, 2022
 CostAccumulated
Depreciation
Net
Furniture, equipment and other$52,381 $(39,643)$12,738 
Computer hardware332,462 (226,341)106,121 
Computer software142,094 (117,026)25,068 
Capitalized software development costs149,053 (101,874)47,179 
Leasehold improvements107,739 (86,514)21,225 
Land and buildings49,011 (16,633)32,378 
Total$832,740 $(588,031)$244,709 
NOTE 6—LEASES
We enter into operating leases, both domestically and internationally, for certain facilities, automobiles, data centers and equipment for use in the ordinary course of business. The duration of the majority of these leases generally ranges from 1 to 10 years, some of which include options to extend for an additional 3 to 5 years after the initial term. Additionally, the land upon which our headquarters in Waterloo, Ontario, Canada is located is leased from the University of Waterloo for a period of 49 years beginning in December 2005, with an option to renew for an additional term of 49 years. Leases with an initial term of 12 months or less are not recorded on our Condensed Consolidated Balance Sheets and we do not have any material finance leases.
Lease Costs and Other Information
The following illustrates the various components of operating lease costs for the period indicated:
Three Months Ended September 30,
20222021
Operating lease cost$14,311 $15,391 
Short-term lease cost387 119 
Variable lease cost579 588 
Sublease income(2,912)(1,889)
Total lease cost$12,365 $14,209 
The weighted average remaining lease term and discount rate for the periods indicated below were as follows:
As of September 30, 2022As of June 30, 2022
Weighted-average remaining lease term5.87 years6.13 years
Weighted-average discount rate3.29 %2.95 %
13

Supplemental Cash Flow Information
The following table presents supplemental information relating to cash flows arising from lease transactions. Cash payments made for variable lease costs and short-term leases are not included in the measurement of operating lease liabilities, and, as such, are excluded from the amounts below:
Three Months Ended September 30,
20222021
Cash paid for amounts included in the measurement of operating lease liabilities$17,740 $17,452 
Right of use assets obtained in exchange for new operating lease liabilities$22,467 $4,231 
Maturity of Lease Liabilities
The following table presents the future minimum lease payments under our operating leases liabilities as of September 30, 2022:
Fiscal years ending June 30,
2023 (nine months ended)
$50,268 
2024
57,665 
2025
45,521 
2026
32,557 
2027
29,712 
Thereafter65,344 
Total lease payments$281,067 
Less: Imputed interest(24,770)
Total$256,297 
Reported as:
Current operating lease liabilities$58,969 
Non-current operating lease liabilities197,328 
Total$256,297 
Operating lease maturity amounts included in the table above do not include sublease income expected to be received under our various sublease agreements with third parties. Under the agreements initiated with third parties, we expect to receive sublease income of $9.0 million over the remainder of Fiscal 2023 and $47.1 million thereafter.
NOTE 7—GOODWILL
Goodwill is recorded when the consideration paid for an acquisition of a business exceeds the fair value of identifiable net tangible and intangible assets. The following table summarizes the changes in goodwill since June 30, 2022:
Balance as of June 30, 2022
$5,244,653 
Acquisition of Zix Corporation (Note 19)
640 
Impact of foreign exchange rate changes(18,479)
Balance as of September 30, 2022
$5,226,814 

14

NOTE 8—ACQUIRED INTANGIBLE ASSETS
As of September 30, 2022
CostAccumulated AmortizationNet
Technology assets$876,153 $(659,743)$216,410 
Customer assets1,526,612 (768,433)758,179 
Total$2,402,765 $(1,428,176)$974,589 
As of June 30, 2022
CostAccumulated AmortizationNet
Technology assets$999,032 $(738,710)$260,322 
Customer assets1,595,219 (780,333)814,886 
Total$2,594,251 $(1,519,043)$1,075,208 
Where applicable, the above balances as of September 30, 2022 have been reduced to reflect the impact of intangible assets where the gross cost has become fully amortized during the three months ended September 30, 2022. The impact of this resulted in a reduction of $119 million to technology assets and $64 million to customer assets.
The weighted average amortization periods for acquired technology and customer intangible assets are approximately six years and eight years, respectively.
The following table shows the estimated future amortization expense for the fiscal years indicated. This calculation assumes no future adjustments to acquired intangible assets:
Fiscal years ending June 30,
2023 (nine months ended)
$248,645 
2024265,700 
2025155,966 
2026112,780 
202743,443 
2028 and Thereafter
148,055 
Total$974,589 
 
15

NOTE 9—PREPAID EXPENSES AND OTHER ASSETS
Prepaid expenses and other current assets:
As of September 30, 2022As of June 30, 2022
Deposits and restricted cash$1,674 $6,300 
Capitalized costs to obtain a contract26,906 27,077 
Short-term prepaid expenses and other current assets96,288 87,175 
Total$124,868 $120,552 
Other assets:
As of September 30, 2022As of June 30, 2022
Deposits and restricted cash$10,590 $6,462 
Capitalized costs to obtain a contract52,341 55,484 
Deferred debt issuance costs47,010  
Investments166,672 173,205 
Long-term prepaid expenses and other long-term assets22,995 21,836 
Total$299,608 $256,987 
Deposits and restricted cash primarily relate to security deposits provided to landlords in accordance with facility lease agreements and cash restricted per the terms of certain contractual-based agreements.
Capitalized costs to obtain a contract relate to incremental costs of obtaining a contract, such as sales commissions, which are eligible for capitalization on contracts to the extent that such costs are expected to be recovered (see Note 3 “Revenues”).
Deferred debt issuance costs represents fees incurred related to the Acquisition Term Loan and Bridge Loan (each as defined below). See Note 11 “Long-Term Debt.”
Investments relate to certain investment funds in which we are a limited partner. Our interests in each of these investees range from 4% to below 20%. These investments are accounted for using the equity method. Our share of net income or losses based on our interest in these investments, which approximates fair value and is subject to volatility based on market trends and business conditions, is recorded as a component of Other income (expense), net in our Condensed Consolidated Statements of Income (see Note 22 “Other Income (Expense), Net”). During the three months ended September 30, 2022, our share of income (loss) from these investments was $(6.5) million (three months ended September 30, 2021—$29.3 million).
Prepaid expenses and other assets, both short-term and long-term, include advance payments on licenses that are being amortized over the applicable terms of the licenses and other miscellaneous assets.
16

NOTE 10—ACCOUNTS PAYABLE AND ACCRUED LIABILITIES
Accounts payable and accrued liabilities:
 
As of September 30, 2022As of June 30, 2022
Accounts payable—trade$101,544 $113,978 
Accrued salaries, incentives and commissions128,102 193,421 
Accrued liabilities93,295 81,564 
Accrued sales and other tax liabilities14,525 20,423 
Derivative liability (1)
181,461  
Deferred debt issuance costs (2)
47,010  
Accrued interest on Senior Notes28,751 31,813 
Amounts payable in respect of restructuring and other special charges4,679 3,589 
Asset retirement obligations1,707 3,819 
Total$601,074 $448,607 
______________________________
(1)Represents the liability related to the unrealized losses on our derivatives not designated as hedges related to the proposed Micro Focus Acquisition (see Note 17 “Derivative Instruments and Hedging Activities”).
(2)Represents deferred debt issuance costs related to the Acquisition Term Loan and Bridge Loan related to the proposed Micro Focus Acquisition (see Note 11 “Long-Term Debt”).
Long-term accrued liabilities: 
As of September 30, 2022As of June 30, 2022
Amounts payable in respect of restructuring and other special charges$5,803 $5,702 
Other accrued liabilities516 563 
Asset retirement obligations13,800 11,943 
Total$20,119 $18,208 
Asset retirement obligations
We are required to return certain of our leased facilities to their original state at the conclusion of our lease. As of September 30, 2022, the present value of this obligation was $15.5 million (June 30, 2022—$15.8 million), with an undiscounted value of $16.2 million (June 30, 2022—$16.4 million).
17

NOTE 11—LONG-TERM DEBT
As of September 30, 2022As of June 30, 2022
Total debt
Senior Notes 2031$650,000 $650,000 
Senior Notes 2030900,000 900,000 
Senior Notes 2029850,000 850,000 
Senior Notes 2028900,000 900,000 
Senior Notes 2026  
Term Loan B955,000 957,500 
Revolver  
Acquisition Term Loan  
Bridge Loan  
Total principal payments due4,255,000 4,257,500 
Debt issuance costs (1)
(36,453)(37,933)
Total amount outstanding4,218,547 4,219,567