OPEN TEXT CORP [OTEX] Filings

10-Q 1 otex-20220331.htm 10-Q otex-20220331

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 March 31, 2022.


☐			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

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 May 2, 2022, there were 270,483,039 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 March 31, 2022 (unaudited) and June 30, 2021	3
	Condensed Consolidated Statements of Income - Three and Nine Months Ended March 31, 2022 and 2021 (unaudited)	4
	Condensed Consolidated Statements of Comprehensive Income - Three and Nine Months Ended March 31, 2022 and 2021 (unaudited)	5
	Condensed Consolidated Statements of Shareholders' Equity - Three and Nine Months Ended March 31, 2022 and 2021 (unaudited)	6
	Condensed Consolidated Statements of Cash Flows - Nine Months Ended March 31, 2022 and 2021 (unaudited)	8
	Notes to Condensed Consolidated Financial Statements (unaudited)	10
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	39
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	74
Item 4.	Controls and Procedures	75
Part II Other Information
Item 1A.	Risk Factors	75
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	77
Item 6.	Exhibits	78
Signatures		79

Part I - Financial Information

Item 1. Financial Statements

OPEN TEXT CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEETS

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


	March 31, 2022		June 30, 2021
ASSETS	(unaudited)
Cash and cash equivalents	$	1,633,702	$	1,607,306
Accounts receivable trade, net of allowance for credit losses of $16,439 as of March 31, 2022 and $22,151 as of June 30, 2021 (note 4)	429,877		438,547
Contract assets (note 3)	25,481		25,344
Income taxes recoverable (note 15)	20,781		32,312
Prepaid expenses and other current assets (note 9)	122,616		98,551
Total current assets	2,232,457		2,202,060
Property and equipment (note 5)	227,830		233,595
Operating lease right of use assets (note 6)	217,684		234,532
Long-term contract assets (note 3)	20,049		19,222
Goodwill (note 7)	5,265,189		4,691,673
Acquired intangible assets (note 8)	1,181,266		1,187,260
Deferred tax assets (note 15)	717,345		796,738
Other assets (note 9)	257,301		208,894
Long-term income taxes recoverable (note 15)	43,518		35,362
Total assets	$	10,162,639	$	9,609,336
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Accounts payable and accrued liabilities (note 10)	$	404,545	$	423,592
Current portion of long-term debt (note 11)	10,000		10,000
Operating lease liabilities (note 6)	59,182		58,315
Deferred revenues (note 3)	936,750		852,629
Income taxes payable (note 15)	7,483		17,368
Total current liabilities	1,417,960		1,361,904
Long-term liabilities:
Accrued liabilities (note 10)	16,631		28,830
Pension liability (note 12)	76,364		74,511
Long-term debt (note 11)	4,210,582		3,578,859
Long-term operating lease liabilities (note 6)	203,101		224,453
Long-term deferred revenues (note 3)	90,736		98,989
Long-term income taxes payable (note 15)	35,206		34,113
Deferred tax liabilities (note 15)	56,208		108,224
Total long-term liabilities	4,688,828		4,147,979
Shareholders’ equity:
Share capital and additional paid-in capital (note 13)
270,231,166 and 271,540,755 Common Shares issued and outstanding at March 31, 2022 and June 30, 2021, respectively; authorized Common Shares: unlimited	2,010,146		1,947,764
Accumulated other comprehensive income (note 20)	17,266		66,238
Retained earnings	2,151,369		2,153,326
Treasury stock, at cost (2,776,420 and 1,567,664 shares at March 31, 2022 and June 30, 2021, respectively)	(124,033)		(69,386)
Total OpenText shareholders' equity	4,054,748		4,097,942
Non-controlling interests	1,103		1,511
Total shareholders’ equity	4,055,851		4,099,453
Total liabilities and shareholders’ equity	$	10,162,639	$	9,609,336

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

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

(unaudited)


	Three Months Ended March 31,				Nine Months Ended March 31,
	2022		2021		2022		2021
Revenues (note 3):
Cloud services and subscriptions	$	401,947	$	355,845	$	1,123,422	$	1,047,285
Customer support	332,514		335,915		1,002,626		999,806
License	80,641		76,299		263,663		252,170
Professional service and other	67,181		64,872		201,679		193,327
Total revenues	882,283		832,931		2,591,390		2,492,588
Cost of revenues:
Cloud services and subscriptions	136,020		123,729		377,928		354,235
Customer support	31,763		30,953		90,914		89,815
License	3,196		2,810		10,906		9,601
Professional service and other	56,693		50,321		161,459		143,521
Amortization of acquired technology-based intangible assets (note 8)	46,564		53,453		152,333		165,581
Total cost of revenues	274,236		261,266		793,540		762,753
Gross profit	608,047		571,665		1,797,850		1,729,835
Operating expenses:
Research and development	117,730		110,071		321,517		304,212
Sales and marketing	180,955		158,687		491,133		438,984
General and administrative	88,137		71,548		231,127		190,502
Depreciation	22,370		21,961		65,535		64,244
Amortization of acquired customer-based intangible assets (note 8)	56,215		54,156		160,764		164,075
Special charges (recoveries) (note 18)	11,031		2,846		20,592		(1,404)
Total operating expenses	476,438		419,269		1,290,668		1,160,613
Income from operations	131,609		152,396		507,182		569,222
Other income (expense), net (note 22)	24,392		8,283		29,137		16,417
Interest and other related expense, net	(40,238)		(37,333)		(117,538)		(114,017)
Income before income taxes	115,763		123,346		418,781		471,622
Provision for income taxes (note 15)	41,041		31,818		123,757		342,121
Net income for the period	$	74,722	$	91,528	$	295,024	$	129,501
Net (income) loss attributable to non-controlling interests	(41)		(38)		(130)		(112)
Net income attributable to OpenText	$	74,681	$	91,490	$	294,894	$	129,389
Earnings per share—basic attributable to OpenText (note 23)	$	0.28	$	0.34	$	1.09	$	0.47
Earnings per share—diluted attributable to OpenText (note 23)	$	0.28	$	0.33	$	1.08	$	0.47
Weighted average number of Common Shares outstanding—basic (in '000's)	270,693		272,832		271,623		272,414
Weighted average number of Common Shares outstanding—diluted (in '000's)	271,211		273,924		272,439		273,312

See accompanying Notes to Condensed Consolidated Financial Statements

OPEN TEXT CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(In thousands of U.S. dollars)

(unaudited)


	Three Months Ended March 31,				Nine Months Ended March 31,
	2022		2021		2022		2021
Net income for the period	$	74,722	$	91,528	$	295,024	$	129,501
Other comprehensive income (loss)—net of tax:
Net foreign currency translation adjustments	(13,073)		(12,568)		(44,512)		36,142
Unrealized gain (loss) on cash flow hedges:
Unrealized gain (loss) - net of tax expense (recovery) effect of $233 and $246 for the three months ended March 31, 2022 and 2021, respectively; ($158) and $1,302 for the nine months ended March 31, 2022 and 2021, respectively	648		681		(334)		3,608
(Gain) loss reclassified into net income - net of tax (expense) recovery effect of $79 and ($399) for the three months ended March 31, 2022 and 2021, respectively; ($24) and ($682) for the nine months ended March 31, 2022 and 2021, respectively	219		(1,108)		(86)		(1,892)
Actuarial gain (loss) relating to defined benefit pension plans:
Actuarial gain (loss) - net of tax expense (recovery) effect of ($579) and $944 for the three months ended March 31, 2022 and 2021, respectively; ($811) and ($413) for the nine months ended March 31, 2022 and 2021, respectively	(2,033)		344		(4,517)		(2,342)
Amortization of actuarial (gain) loss into net income - net of tax (expense) recovery effect of $66 and $95 for the three months ended March 31, 2022 and 2021, respectively; $134 and $275 for the nine months ended March 31, 2022 and 2021, respectively	156		249		477		733
Total other comprehensive income (loss) net, for the period	(14,083)		(12,402)		(48,972)		36,249
Total comprehensive income	60,639		79,126		246,052		165,750
Comprehensive (income) loss attributable to non-controlling interests	(41)		(38)		(130)		(112)
Total comprehensive income attributable to OpenText	$	60,598	$	79,088	$	245,922	$	165,638

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 March 31, 2022
	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, 2021	271,006	$	1,990,913	(1,476)	$	(67,966)	$	2,174,467	$	31,349	$	1,062	$	4,129,825
Issuance of Common Shares
Under employee stock option plans	53	1,863		—	—		—		—		—		1,863
Under employee stock purchase plans	172	7,003		—	—		—		—		—		7,003
Share-based compensation	—	16,748		—	—		—		—		—		16,748
Purchase of treasury stock	—	—		(1,300)	(56,067)		—		—		—		(56,067)
Repurchase of Common Shares	(1,000)	(6,381)		—	—		(38,702)		—		—		(45,083)
Dividends declared ($0.2209 per Common Share)	—	—		—	—		(59,077)		—		—		(59,077)
Other comprehensive income (loss) - net	—	—		—	—		—		(14,083)		—		(14,083)
Net income for the period	—	—		—	—		74,681		—		41		74,722
Balance as of March 31, 2022	270,231	$	2,010,146	(2,776)	$	(124,033)	$	2,151,369	$	17,266	$	1,103	$	4,055,851


	Three Months Ended March 31, 2021
	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, 2020	272,589	$	1,889,857	(1,101)	$	(47,555)	$	2,093,076	$	66,476	$	1,393	$	4,003,247
Issuance of Common Shares
Under employee stock option plans	219	8,270		—	—		—		—		—		8,270
Under employee stock purchase plans	165	6,421		—	—		—		—		—		6,421
Share-based compensation	—	12,357		—	—		—		—		—		12,357
Purchase of treasury stock	—	—		(490)	(22,977)		—		—		—		(22,977)
Issuance of treasury stock	—	(1,146)		23	1,146		—		—		—		—
Dividends declared ($0.2008 per Common Share)	—	—		—	—		(54,519)		—		—		(54,519)
Other comprehensive income (loss) - net	—	—		—	—		—		(12,402)		—		(12,402)
Net income for the period	—	—		—	—		91,490		—		38		91,528
Balance as of March 31, 2021	272,973	$	1,915,759	(1,568)	$	(69,386)	$	2,130,047	$	54,074	$	1,431	$	4,031,925

OPEN TEXT CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY

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

(unaudited)


	Nine Months Ended March 31, 2022
	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, 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 plans	905	31,128		—	—		—		—		—		31,128
Under employee stock purchase plans	595	24,913		—	—		—		—		—		24,913
Share-based compensation	—	45,091		—	—		—		—		—		45,091
Purchase of treasury stock	—	—		(1,700)	(75,660)		—		—		—		(75,660)
Issuance of treasury stock	—	(21,013)		492	21,013		—		—		—		—
Repurchase of Common Shares	(2,810)	(17,879)		—	—		(118,238)		—		—		(136,117)
Dividends declared ($0.6627 per Common Share)	—	—		—	—		(178,613)		—		—		(178,613)
Other comprehensive income (loss) - net	—	—		—	—		—		(48,972)		—		(48,972)
Distribution to non-controlling interest	—	142		—	—		—		—		(538)		(396)
Net income for the period	—	—		—	—		294,894		—		130		295,024
Balance as of March 31, 2022	270,231	$	2,010,146	(2,776)	$	(124,033)	$	2,151,369	$	17,266	$	1,103	$	4,055,851


	Nine Months Ended March 31, 2021
	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	—	—		—	—		(2,450)		—		—		(2,450)
Issuance of Common Shares
Under employee stock option plans	743	23,768		—	—		—		—		—		23,768
Under employee stock purchase plans	367	13,974		193	6,690		—		—		—		20,664
Share-based compensation	—	38,619		—	—		—		—		—		38,619
Purchase of treasury stock	—	—		(1,455)	(64,847)		—		—		—		(64,847)
Issuance of treasury stock	—	(12,379)		316	12,379		—		—		—		—
Dividends declared ($0.5762 per Common Share)	—	—		—	—		(156,288)		—		—		(156,288)
Other comprehensive income (loss) - net	—	—		—	—		—		36,249		—		36,249
Net income for the period	—	—		—	—		129,389		—		112		129,501
Balance as of March 31, 2021	272,973	$	1,915,759	(1,568)	$	(69,386)	$	2,130,047	$	54,074	$	1,431	$	4,031,925

See accompanying Notes to Condensed Consolidated Financial Statements

OPEN TEXT CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands of U.S. dollars)

(unaudited)


	Nine Months Ended March 31,
	2022		2021
Cash flows from operating activities:
Net income for the period	$	295,024	$	129,501
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization of intangible assets	378,632		393,900
Share-based compensation expense	45,091		38,619
Pension expense	4,883		4,670
Amortization of debt issuance costs	3,936		3,395
Loss on extinguishment of debt	27,413		—
Loss on sale and write down of property and equipment	96		1,979
Deferred taxes	43,332		80,844
Share in net (income) loss of equity investees	(59,103)		(20,020)
Changes in operating assets and liabilities:
Accounts receivable	68,428		87,072
Contract assets	(27,208)		(29,035)
Prepaid expenses and other current assets	(15,722)		(2,528)
Income taxes	(11,235)		(117,594)
Accounts payable and accrued liabilities	(65,738)		(27,327)
Deferred revenue	25,642		62,600
Other assets	16,527		765
Operating lease assets and liabilities, net	(128)		(26,910)
Net cash provided by operating activities	729,870		579,931
Cash flows from investing activities:
Additions of property and equipment	(54,937)		(36,267)
Purchase of Zix Corporation, net of cash acquired	(856,175)		—
Purchase of Bricata Inc.	(17,927)		—
Purchase of XMedius	—		444
Purchase of Dynamic Solutions Group Inc.	—		(371)
Other investing activities	(3,922)		(2,018)
Net cash used in investing activities	(932,961)		(38,212)
Cash flows from financing activities:
Proceeds from issuance of Common Shares from exercise of stock options and ESPP	56,476		45,780
Proceeds from long-term debt and Revolver	1,500,000		—
Repayment of long-term debt and Revolver	(857,500)		(607,500)
Debt extinguishment costs (note 22)	(24,969)		—
Debt issuance costs	(17,159)		—
Repurchase of Common Shares	(136,117)		—
Purchase of treasury stock	(75,660)		(64,847)
Distribution to non-controlling interest	(396)		—
Payments of dividends to shareholders	(178,613)		(156,288)
Net cash provided by (used in) financing activities	266,062		(782,855)
Foreign exchange gain (loss) on cash held in foreign currencies	(36,920)		22,553
Increase (decrease) in cash, cash equivalents and restricted cash during the period	26,051		(218,583)
Cash, cash equivalents and restricted cash at beginning of the period	1,609,800		1,697,263
Cash, cash equivalents and restricted cash at end of the period	$	1,635,851	$	1,478,680

OPEN TEXT CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands of U.S. dollars)

(unaudited)


Reconciliation of cash, cash equivalents and restricted cash:	March 31, 2022		March 31, 2021
Cash and cash equivalents	$	1,633,702	$	1,475,626
Restricted cash (1)	2,149		3,054
Total cash, cash equivalents and restricted cash	$	1,635,851	$	1,478,680

(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

OPEN TEXT CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

For the Three and Nine Months Ended March 31, 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 March 31, 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 the three months ended March 31, 2022, the liquidation of GXS Singapore was completed.

Throughout this Quarterly Report on Form 10-Q: (i) the term “Fiscal 2022” means our fiscal year beginning on July 1, 2021 and ending June 30, 2022; (ii) the term “Fiscal 2021” means our fiscal year beginning on July 1, 2020 and ended June 30, 2021; (iii) the term “Fiscal 2020” means our fiscal year beginning on July 1, 2019 and ended June 30, 2020; (iv) the term “Fiscal 2019” means our fiscal year beginning on July 1, 2018 and ended June 30, 2019; (v) the term “Fiscal 2018” means our fiscal year beginning on July 1, 2017 and ended June 30, 2018; (vi) the term “Fiscal 2017” means our fiscal year beginning on July 1, 2016 and ended June 30, 2017; (vii) the term “Fiscal 2016” means our fiscal year beginning on July 1, 2015 and ended June 30, 2016; (viii) the term “Fiscal 2015” means our fiscal year beginning on July 1, 2014 and ended June 30, 2015; (ix) the term “Fiscal 2014” means our fiscal year beginning on July 1, 2013 and ended June 30, 2014; (x) the term “Fiscal 2013” means our fiscal year beginning on July 1, 2012 and ended June 30, 2013; and (xi) the term “Fiscal 2012” means our fiscal year beginning on July 1, 2011 and ended June 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, and (x) the valuation of pension obligations.

In March 2020, COVID-19 was characterized as a pandemic by the World Health Organization. The spread of COVID-19 continues to impact the global economy. As the impacts of the pandemic continue to evolve, estimates and assumptions about future events and their effects cannot be determined with certainty and therefore require increased judgment. As of March 31, 2022, we have recorded certain estimates resulting from the pandemic, particularly with respect to the COVID-19 Restructuring Plan (as defined herein) and allowance for credit losses, based on management's estimates and assumptions utilizing the most currently available information. Such estimates may be subject to change particularly given the unprecedented nature of the COVID-19 pandemic. We will continue to monitor the potential impact of COVID-19 on our financial statements and related disclosures, including the need for additional estimates going forward, which could include costs related to potential items such as special charges (recoveries), restructurings, asset impairments and other non-recurring costs. Please see note 18 “Special Charges (Recoveries)” and “Risk Factors” included within Part II, Item 1A of this Quarterly Report on Form 10-Q and Part I, Item 1A, “Risk Factors” in our Annual Report on Form 10-K for Fiscal 2021.

NOTE 2—RECENT ACCOUNTING PRONOUNCEMENTS

Accounting Pronouncements Adopted in Fiscal 2022

During Fiscal 2022, we have adopted the following Accounting Standards Update (ASU) that did not have a material impact to our reported financial position, results of operations or cash flows:

•ASU 2019-12 “Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes”

Business Combinations

In October 2021, the Financial Accounting Standards Board (FASB) issued ASU 2021-08 “Business Combinations (Topic 805): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers.” This standard requires contract assets and contract liabilities acquired in a business combination to be recognized and measured as if the acquirer had originated the original contract in accordance with Accounting Standards Codification (ASC) Topic 606. Previously, contract assets and contract liabilities were measured at fair value.

The standard is effective for us in our fiscal year ending June 30, 2024, with early adoption permitted. We elected to early adopt the ASU during our second quarter of Fiscal 2022. Early adoption required retrospective adoption to business combinations completed on or after July 1, 2021 and prospective adoption to business combinations occurring on or after the date of adoption. There was no retrospective impact of early adoption as we did not have acquisitions during our first quarter of Fiscal 2022. Acquisitions disclosed in note 19 “Acquisitions” are in accordance with ASU 2021-08. The adoption will not have a material impact to our reported financial position, results of operations or cash flows.

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 March 31,		Nine Months Ended March 31,
	2022	2021	2022	2021
Total Revenues by Geography:
Americas (1)	$