OpenText Earnings 2020-12-31

Balance Sheet	Income Statement	Cash Flow
Assets, Equity	Rev, G Profit, Net Income	Ops, Inv, Fin

otex-20201231

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 December 31, 2020.


☐			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)

______________________


Canada			98-0154400
(State or other jurisdiction of incorporation or organization)			(IRS Employer Identification No.)

275 Frank Tompa Drive,

N2L 0A1

Waterloo,

Ontario

Canada

(Address of principal executive offices)

(Zip code)

Registrant's telephone number, including area code: (519) 888-7111

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 value	OTEX	NASDAQ Global Select Market

Securities registered pursuant to Section 12(g) of the Act:

None

(Title of Class)

______________________________________

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 and posted pursuant to Rule 405 of Regulations S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, 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 February 2, 2021, there were 272,786,642 outstanding Common Shares of the registrant.

OPEN TEXT CORPORATION

TABLE OF CONTENTS


		Page No
Part I Financial Information
Item 1. Financial Statements
	Condensed Consolidated Balance Sheets as of December 31, 2020 (unaudited) and June 30, 2020	3
	Condensed Consolidated Statements of Income (Loss) - Three and Six Months Ended December 31, 2020 and 2019 (unaudited)	4
	Condensed Consolidated Statements of Comprehensive Income (Loss) - Three and Six Months Ended December 31, 2020 and 2019 (unaudited)	5
	Condensed Consolidated Statements of Shareholders' Equity - Three and Six Months Ended December 31, 2020 and 2019 (unaudited)	6
	Condensed Consolidated Statements of Cash Flows - Six Months Ended December 31, 2020 and 2019 (unaudited)	8
	Notes to Condensed Consolidated Financial Statements (unaudited)	9
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations		38
Item 3. Quantitative and Qualitative Disclosures About Market Risk		70
Item 4. Controls and Procedures		71
Part II Other Information
Item 1A. Risk Factors		72
Item 6. Exhibits		73
Signatures		74

OPEN TEXT CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands of U.S. dollars, except share data)


	December 31, 2020		June 30, 2020
ASSETS	(unaudited)
Cash and cash equivalents	$	1,500,561	$	1,692,850
Accounts receivable trade, net of allowance for credit losses of $22,845 as of December 31, 2020 and $20,906 as of June 30, 2020 (note 1 and note 4)	445,841		466,357
Contract assets (note 3)	27,460		29,570
Income taxes recoverable (note 15)	24,517		61,186
Prepaid expenses and other current assets	130,177		136,436
Total current assets	2,128,556		2,386,399
Property and equipment (note 5)	227,434		244,555
Operating lease right of use assets (note 6)	235,142		207,869
Long-term contract assets (note 3)	18,175		15,427
Goodwill (note 7)	4,696,349		4,672,356
Acquired intangible assets (note 8)	1,402,928		1,612,564
Deferred tax assets (note 15)	866,788		911,565
Other assets (note 9)	164,238		154,467
Long-term income taxes recoverable (note 15)	29,488		29,620
Total assets	$	9,769,098	$	10,234,822
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Accounts payable and accrued liabilities (note 10)	$	348,080	$	373,314
Current portion of long-term debt (note 11)	10,000		610,000
Operating lease liabilities (note 6)	59,874		64,071
Deferred revenues (note 3)	798,340		812,218
Income taxes payable (note 15)	320,084		44,630
Total current liabilities	1,536,378		1,904,233
Long-term liabilities:
Accrued liabilities (note 10)	28,334		34,955
Pension liability (note 12)	83,271		73,129
Long-term debt (note 11)	3,581,565		3,584,311
Long-term operating lease liabilities (note 6)	227,265		217,165
Long-term deferred revenues (note 3)	97,083		94,382
Long-term income taxes payable (note 15)	32,794		171,200
Deferred tax liabilities (note 15)	179,161		148,738
Total long-term liabilities	4,229,473		4,323,880
Shareholders’ equity:
Share capital and additional paid-in capital (note 13)
272,588,542 and 271,863,354 Common Shares issued and outstanding at December 31, 2020 and June 30, 2020, respectively; authorized Common Shares: unlimited	1,889,857		1,851,777
Accumulated other comprehensive income (note 20)	66,476		17,825
Retained earnings	2,093,076		2,159,396
Treasury stock, at cost (1,101,370 and 622,297 shares at December 31, 2020 and June 30, 2020, respectively)	(47,555)		(23,608)
Total OpenText shareholders' equity	4,001,854		4,005,390
Non-controlling interests	1,393		1,319
Total shareholders’ equity	4,003,247		4,006,709
Total liabilities and shareholders’ equity	$	9,769,098	$	10,234,822

Guarantees and contingencies (note 14)

Related party transactions (note 24)

Subsequent event (note 25)

See accompanying Notes to Condensed Consolidated Financial Statements

OPEN TEXT CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF INCOME (LOSS)

(In thousands of U.S. dollars, except share and per share data)

(unaudited)


	Three Months Ended December 31,				Six Months Ended December 31,
	2020		2019		2020		2019
Revenues (note 3):
Cloud services and subscriptions	$	350,454	$	248,340	$	691,440	$	485,605
Customer support	334,492		315,508		663,891		627,806
License	107,348		138,095		175,871		215,993
Professional service and other	63,350		69,614		128,455		139,041
Total revenues	855,644		771,557		1,659,657		1,468,445
Cost of revenues:
Cloud services and subscriptions	117,882		103,644		230,506		205,806
Customer support	29,668		29,788		58,862		59,175
License	4,302		3,050		6,791		5,373
Professional service and other	46,619		53,604		93,200		107,942
Amortization of acquired technology-based intangible assets (note 8)	54,091		42,299		112,128		82,597
Total cost of revenues	252,562		232,385		501,487		460,893
Gross profit	603,082		539,172		1,158,170		1,007,552
Operating expenses:
Research and development	100,238		80,283		194,141		161,461
Sales and marketing	147,897		137,310		280,297		265,928
General and administrative	62,765		54,595		118,954		106,130
Depreciation	20,280		20,712		42,283		40,989
Amortization of acquired customer-based intangible assets (note 8)	54,926		51,460		109,919		100,618
Special charges (recoveries) (note 18)	(17,494)		10,072		(4,250)		15,173
Total operating expenses	368,612		354,432		741,344		690,299
Income from operations	234,470		184,740		416,826		317,253
Other income (expense), net (note 22)	5,251		1,972		8,134		(813)
Interest and other related expense, net	(37,595)		(32,376)		(76,684)		(64,586)
Income before income taxes	202,126		154,336		348,276		251,854
Provision for (recovery of) income taxes (note 15)	267,559		46,818		310,303		69,909
Net income (loss) for the period	$	(65,433)	$	107,518	$	37,973	$	181,945
Net (income) loss attributable to non-controlling interests	(44)		(51)		(74)		(77)
Net income (loss) attributable to OpenText	$	(65,477)	$	107,467	$	37,899	$	181,868
Earnings (loss) per share—basic attributable to OpenText (note 23)	$	(0.24)	$	0.40	$	0.14	$	0.67
Earnings (loss) per share—diluted attributable to OpenText (note 23)	$	(0.24)	$	0.40	$	0.14	$	0.67
Weighted average number of Common Shares outstanding—basic (in '000's)	272,433		270,450		272,210		270,232
Weighted average number of Common Shares outstanding—diluted (in '000's)	272,433		271,590		273,019		271,328

See accompanying Notes to Condensed Consolidated Financial Statements

OPEN TEXT CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(In thousands of U.S. dollars)

(unaudited)


	Three Months Ended December 31,				Six Months Ended December 31,
	2020		2019		2020		2019
Net income (loss) for the period	$	(65,433)	$	107,518	$	37,973	$	181,945
Other comprehensive income (loss)—net of tax:
Net foreign currency translation adjustments	26,065		4,875		48,710		(736)
Unrealized gain (loss) on cash flow hedges:
Unrealized gain (loss) - net of tax expense (recovery) effect of $751 and $301 for the three months ended December 31, 2020 and 2019, respectively; $1,056 and $95 for the six months ended December 31, 2020 and 2019, respectively	2,082		833		2,927		261
(Gain) loss reclassified into net income (loss) - net of tax (expense) recovery effect of ($227) and ($26) for the three months ended December 31, 2020 and 2019, respectively; ($283) and ($23) for the six months ended December 31, 2020 and 2019, respectively	(628)		(72)		(784)		(64)
Actuarial gain (loss) relating to defined benefit pension plans:
Actuarial gain (loss) - net of tax expense (recovery) effect of ($441) and $1,308 for the three months ended December 31, 2020 and 2019, respectively; ($1,357) and $59 for the six months ended December 31, 2020 and 2019, respectively	(981)		3,698		(2,686)		614
Amortization of actuarial (gain) loss into net income (loss) - net of tax (expense) recovery effect of $93 and $97 for the three months ended December 31, 2020 and 2019, respectively; $180 and $243 for the six months ended December 31, 2020 and 2019, respectively	243		260		484		491
Total other comprehensive income (loss) net, for the period	26,781		9,594		48,651		566
Total comprehensive income (loss)	(38,652)		117,112		86,624		182,511
Comprehensive (income) loss attributable to non-controlling interests	(44)		(51)		(74)		(77)
Total comprehensive income (loss) attributable to OpenText	$	(38,696)	$	117,061	$	86,550	$	182,434

See accompanying Notes to Condensed Consolidated Financial Statements

OPEN TEXT CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY

(In thousands of U.S. dollars and shares)

(unaudited)


	Three Months Ended December 31, 2020
	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, 2020	272,174	$	1,872,411	(1,394)	$	(58,788)	$	2,213,053	$	39,695	$	1,349	$	4,067,720
Issuance of Common Shares
Under employee stock option plans	213	6,893		—	—		—		—		—		6,893
Under employee stock purchase plans	202	7,260		—	—		—		—		—		7,260
Share-based compensation	—	14,526		—	—		—		—		—		14,526
Issuance of treasury stock	—	(11,233)		293	11,233		—		—		—		—
Dividends declared ($0.2008 per Common Share)	—	—		—	—		(54,500)		—		—		(54,500)
Other comprehensive income - net	—	—		—	—		—		26,781		—		26,781
Net income (loss) for the quarter	—	—		—	—		(65,477)		—		44		(65,433)
Balance as of December 31, 2020	272,589	$	1,889,857	(1,101)	$	(47,555)	$	2,093,076	$	66,476	$	1,393	$	4,003,247


	Three Months Ended December 31, 2019
	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, 2019	270,190	$	1,791,689	(1,103)	$	(41,190)	$	2,141,278	$	15,096	$	1,241	$	3,908,114
Issuance of Common Shares
Under employee stock option plans	231	6,783		—	—		—		—		—		6,783
Under employee stock purchase plans	188	6,532		—	—		—		—		—		6,532
Share-based compensation	—	7,783		—	—		—		—		—		7,783
Issuance of treasury stock	—	(9,124)		256	9,124		—		—		—		—
Dividends declared ($0.1746 per Common Share)	—	—		—	—		(47,092)		—		—		(47,092)
Other comprehensive income - net	—	—		—	—		—		9,594		—		9,594
Net income for the quarter	—	—		—	—		107,467		—		51		107,518
Balance as of December 31, 2019	270,609	$	1,803,663	(847)	$	(32,066)	$	2,201,653	$	24,690	$	1,292	$	3,999,232


	Six Months Ended December 31, 2020
	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, 2020	271,863	$	1,851,777	(622)	$	(23,608)	$	2,159,396	$	17,825	$	1,319	$	4,006,709
Adoption of ASU 2016-13 - cumulative effect, net (note 1)	—	—		—	—		(2,450)		—		—		(2,450)
Issuance of Common Shares
Under employee stock option plans	524	15,498		—	—		—		—		—		15,498
Under employee stock purchase plans	202	7,553		193	6,690		—		—		—		14,243
Share-based compensation	—	26,262		—	—		—		—		—		26,262
Purchase of treasury stock	—	—		(965)	(41,870)		—		—		—		(41,870)
Issuance of treasury stock	—	(11,233)		293	11,233		—		—		—		—
Dividends declared ($0.3754 per Common Share)	—	—		—	—		(101,769)		—		—		(101,769)
Other comprehensive income - net	—	—		—	—		—		48,651		—		48,651
Net income for the period	—	—		—	—		37,899		—		74		37,973
Balance as of December 31, 2020	272,589	$	1,889,857	(1,101)	$	(47,555)	$	2,093,076	$	66,476	$	1,393	$	4,003,247


	Six Months Ended December 31, 2019
	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, 2019	269,834	$	1,774,214	(803)	$	(28,766)	$	2,113,883	$	24,124	$	1,215	$	3,884,670
Issuance of Common Shares
Under employee stock option plans	415	11,359		—	—		—		—		—		11,359
Under employee stock purchase plans	360	12,540		—	—		—		—		—		12,540
Share-based compensation	—	14,674		—	—		—		—		—		14,674
Purchase of treasury stock	—	—		(300)	(12,424)		—		—		—		(12,424)
Issuance of treasury stock	—	(9,124)		256	9,124		—		—		—		—
Dividends declared ($0.3492 per Common Share)	—	—		—	—		(94,098)		—		—		(94,098)
Other comprehensive income - net	—	—		—	—		—		566		—		566
Net income for the period	—	—		—

Price	40.93	EPS	1
Shares	271	P/E	34
MCap	11,102	P/FCF	17
Net Debt	2,353	EBIT	430
TEV	13,455	TEV/EBIT	31
TTM 2019-09-30, in MM, except price, ratios

10-Q	2020-12-31	Filed 2021-02-04
10-Q	2020-09-30	Filed 2020-11-05
10-K	2020-06-30	Filed 2020-08-06
10-Q	2020-03-31	Filed 2020-04-30
10-Q	2019-12-31	Filed 2020-01-30
10-Q	2019-09-30	Filed 2019-10-31
10-K	2019-06-30	Filed 2019-08-01
10-Q	2019-03-31	Filed 2019-05-01
10-Q	2018-12-31	Filed 2019-01-31
10-Q	2018-09-30	Filed 2018-10-31
10-K	2018-06-30	Filed 2018-08-02
10-Q	2018-03-31	Filed 2018-05-09
10-Q	2017-12-31	Filed 2018-01-31
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10-K	2017-06-30	Filed 2017-08-03
10-Q	2017-03-31	Filed 2017-05-08
10-Q	2016-12-31	Filed 2017-02-02
10-Q	2016-09-30	Filed 2016-11-03
10-K	2016-06-30	Filed 2016-07-27
10-Q	2016-03-31	Filed 2016-04-27
10-Q	2015-12-31	Filed 2016-02-09
10-Q	2015-09-30	Filed 2015-10-28
10-K	2015-06-30	Filed 2015-07-29
10-Q	2015-03-31	Filed 2015-04-28
10-Q	2014-12-31	Filed 2015-01-27
10-Q	2014-09-30	Filed 2014-10-23
10-K	2014-06-30	Filed 2014-07-31
10-Q	2014-03-31	Filed 2014-04-24
10-Q	2013-12-31	Filed 2014-01-23
10-Q	2013-09-30	Filed 2013-10-31
10-K	2013-06-30	Filed 2013-08-01
10-Q	2013-03-31	Filed 2013-04-25
10-Q	2012-12-31	Filed 2013-01-25
10-Q	2012-09-30	Filed 2012-11-01
10-K	2012-06-30	Filed 2012-08-10
10-Q	2012-03-31	Filed 2012-05-02
10-Q	2011-12-31	Filed 2012-02-02
10-Q	2011-09-30	Filed 2011-10-27
10-K	2011-06-30	Filed 2011-08-15
10-Q	2011-03-31	Filed 2011-04-28
10-Q	2010-12-31	Filed 2011-02-03
10-K	2010-06-30	Filed 2010-08-20
10-Q	2010-03-31	Filed 2010-04-30
10-Q	2009-12-31	Filed 2010-02-04

8-K	2020-11-05
8-K	2020-09-14
8-K	2020-08-14
8-K	2020-08-06
8-K	2020-04-30
8-K	2020-04-01
8-K	2020-02-18
8-K	2020-02-04
8-K	2020-02-03
8-K	2020-02-03
8-K	2020-01-30
8-K	2019-12-24
8-K	2019-11-10
8-K	2019-10-31
8-K	2019-10-31
8-K	2019-09-04
8-K	2019-08-01
8-K	2019-05-01
8-K	2019-01-31
8-K	2018-10-31
8-K	2018-09-05
8-K	2018-08-02
8-K	2018-07-11
8-K	2018-05-30
8-K	2018-05-09
8-K	2018-01-30

EX-31.1	exhibit311q2-2110xq.htm
EX-31.2	exhibit312q2-2110xq.htm
EX-32.1	exhibit321q2-2110xq.htm
EX-32.2	exhibit322q2-2110xq.htm

OTEX 10Q Quarterly Report

OpenText Earnings 2020-12-31