PR Newswire | Feb 4, 2021 04:02PM EST

02/04 15:01 CST

OpenText Reports Second Quarter Fiscal Year 2021 Financial Results WATERLOO, ON, Feb. 4, 2021

Record Annual Recurring Revenues (ARR), Record Cloud Revenues

WATERLOO, ON, Feb. 4, 2021 /PRNewswire/ --

Second Quarter Highlights

Total Revenues Annual Recurring Revenues Cloud Revenues (in millions) (in millions) (in millions)

ReportedConstantReportedConstant CurrencyReportedConstant Currency Currency

$855.6 $839.4 $684.9 $673.6 $350.5 $346.7

+10.9% +8.8% +21.5% +19.5% +41.1% +39.6%

Annual Recurring Revenues represents 80% of Total Revenues

* Operating Cash Flows of $282.5 million in the quarter, up 36.3% Y/Y * Free Cash Flows of $274.8 million in the quarter, up 46.5% Y/Y * GAAP-based net income (loss) of ($65.5) million, down 160.9% Y/Y, margin of (7.7)% down 2,160 basis points Y/Y, primarily due to one-time IRS settlement charge of $299 million * Adjusted EBITDA of $360.8 million, up 13.8%, margin of 42.2%, up 110 basis points Y/Y * GAAP-based diluted earnings (loss) per share of ($0.24), down 160.0% Y/Y * Non-GAAP diluted earnings per share of $0.95, up 13.1%, and $0.92 in constant currency, up 9.5% Y/Y

Open Text Corporation (NASDAQ: OTEX), (TSX: OTEX), "The Information Company," today announced its financial results for the second quarter ended December 31, 2020.

"OpenText delivered another quarter of strong growth, reflecting the power of our business model and exceptional performance in all of our key metrics," said Mark J. Barrenechea, OpenText CEO & CTO. "Total revenues grew to $855.6 million, up 10.9% year-over-year, and Cloud Services and Subscriptions revenues grew to $350.5 million, up 41.1% year-over-year. Annual Recurring Revenues (ARR) grew to a record $684.9 million, up 21.5% year-over-year, now representing 80% of total revenues."

"Increasing demand for OpenText's Information Management cloud offerings strongly positions us to achieve market share gains through continued alignment with our customers' digital transformation and business needs," said Mr. Barrenechea.

"OpenText demonstrated strong operational excellence in our second quarter, generating free cash flows of $274.8 million, with a record Adjusted EBITDA of $360.8 million", said OpenText EVP, CFO, Madhu Ranganathan. "Our balance sheet and liquidity position of approximately $1.5 billion of cash at the end of the quarter and a 1.6x net leverage ratio, supports our goals to grow, generate cash and pursue our Total Growth strategy."

Financial Highlights for Q2 Fiscal 2021 with Year Over Year Comparisons

Summary of Quarterly Results

% Change Q2 FY'21% Change(In millions, except per share data)Q2 FY'21Q2 FY'20$ Change in CC* in CC* (Y/Y)

Revenues:

Cloud services and subscriptions $350.5 $248.3 $102.1 41.1 %$346.7 39.6 %

Customer support 334.5 315.5 19.0 6.0 %326.9 3.6 %

Total annual recurring revenues** $684.9 $563.8 $121.1 21.5 %$673.6 19.5 %

License 107.3 138.1 (30.7) (22.3) %104.1 (24.6)%

Professional service and other 63.4 69.6 (6.3) (9.0) %61.6 (11.4)%

Total revenues $855.6 $771.6 $84.1 10.9 %$839.4 8.8 %

GAAP-based operating income $234.5 $184.7 $49.7 26.9 %N/A N/A

Non-GAAP-based operating income ^(1)$340.5 $296.4 $44.2 14.9 %$330.9 11.6 %

GAAP-based earnings (loss) per ($0.24)$0.40 ($0.64) (160.0)%N/A N/A share, diluted

Non-GAAP-based EPS, diluted ^(1)(2) $0.95 $0.84 $0.11 13.1 %$0.92 9.5 %

GAAP-based net income (loss) ($65.5)$107.5 ($172.9)(160.9)%N/A N/A attributable to OpenText

Adjusted EBITDA ^(1) $360.8 $317.0 $43.7 13.8 %$351.0 10.7 %

Operating cash flows $282.5 $207.2 $75.2 36.3 %N/A N/A

Free cash flows ^(1) $274.8 $187.6 $87.2 46.5 %N/A N/A

Summary of YTD Results

% Change FY'21 YTD% Change(In millions, except per share data)FY'21 YTDFY'20 YTD$ Change in CC* in CC* (Y/Y)

Revenues:

Cloud services and subscriptions $691.4 $485.6 $205.8 42.4 %$686.9 41.5 %

Customer support 663.9 627.8 36.1 5.7 %654.0 4.2 %

Total annual recurring revenues** $1,355.3$1,113.4$241.9 21.7 %$1,341.020.4 %

License 175.9 216.0 (40.1) (18.6) %171.3 (20.7)%

Professional service and other 128.5 139.0 (10.6) (7.6) %125.2 (10.0)%

Total revenues $1,659.7$1,468.4$191.2 13.0 %$1,637.411.5 %

GAAP-based operating income $416.8 $317.3 $99.6 31.4 %N/A N/A

Non-GAAP-based operating income ^(1)$660.9 $530.3 $130.6 24.6 %$644.8 21.6 %

GAAP-based EPS, diluted $0.14 $0.67 ($0.53) (79.1) %N/A N/A

Non-GAAP-based EPS, diluted ^(1)(2) $1.84 $1.48 $0.36 24.3 %$1.79 20.9 %

GAAP-based net income attributable $37.9 $181.9 ($144.0)(79.2) %N/A N/A to OpenText

Adjusted EBITDA ^(1) $703.1 $571.2 $131.9 23.1 %$686.7 20.2 %

Operating cash flows $516.4 $344.7 $171.7 49.8 %N/A N/A

Free cash flows ^(1) $493.4 $306.5 $186.9 61.0 %N/A N/A

^(1) Please see note 2 "Use of Non-GAAP Financial Measures" below.

Please also see note 14 to the Company's Fiscal 2018 Consolidated^(2) 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.

Note: Individual line items in tables may be adjusted by non-material amounts to enable totals to align to published financial statements.

Constant currency for this purpose is defined as the current period*CC: 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 Program

As part of our quarterly, non-cumulative cash dividend program, the Board declared on February 3, 2021 a cash dividend of $0.2008 per common share. The record date for this dividend is March 5, 2021 and the payment date is March 26, 2021. 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.

Quarterly Business Highlights

* Key customer wins in the quarter included Auto Club Group, Autoriteit Persoonsgegevens, City of San Diego, UK Department for Work and Pensions, Evonik Industries AG, Froneri, Heraeus, McCain Foods, MedPro Group, Nestl, Norwegian Labour and Welfare Administration, Region Skane, Revo Health, SaskPower * OpenText Launches BrightCloud(r) Cloud Service Intelligence * OpenText named a leader in 2020 Gartner Magic Quadrant for Content Services Platforms * Launched OpenText(tm) Cloud Editions 20.4, designed to help customers get to the cloud, accelerate digital transformation, and rethink the future of work * OpenText brings Digital Investigation to the Cloud with Microsoft Azure * OpenText announced $1M USD donation to support food security

Summary of Quarterly Results

% Change % Change Q2 FY'21 Q1 FY'21Q2 FY'20 (Q2 FY'21 vs (Q2 FY'21 vs Q1 FY'21) Q2 FY'20)

Revenue (millions) $855.6 $804.0 $771.6 6.4 % 10.9 %

GAAP-based gross margin 70.5 %69.0 %69.9 %150 bps60 bps

GAAP-based earnings (loss) ($0.24) $0.38 $0.40 (163.2) % (160.0) % per share, diluted

Non-GAAP-based gross margin 77.1 %76.5 %75.5 %60 bps160 bps^(1)

Non-GAAP-based EPS, diluted $0.95 $0.89 $0.84 6.7 % 13.1 % ^(1)(2)

^(^1) Please see note 2 "Use of Non-GAAP Financial Measures" below.

Please also see note 14 to the Company's Fiscal 2018 Consolidated^(2) 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

The public is invited to listen to the earnings conference call today at 5:00 p.m. ET (2:00 p.m. PT) by dialing 1-800-319-4610 (toll-free) or +1-604-638-5340 (international). Please dial-in 10 minutes ahead of time to ensure proper connection. Alternatively, a live webcast of the earnings conference call will be available on the Investor Relations section of the Company's website at http://investors.opentext.com/investor-events-and-presentations.

A replay of the call will be available beginning February 4, 2021 at 7:00 p.m. ET through 11:59 p.m. on February 18, 2021 and can be accessed by dialing 1-855-669-9658 (toll-free) or +1-604-674-8052 (international) and using passcode 5838 followed by the number sign.

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. Additionally, "off-cloud" is a term we use to describe license transactions.

About OpenText

OpenText, The Information Company(tm), enables organizations to gain insight through market leading information management solutions, on-premises or in the cloud. For more information about OpenText (NASDAQ: OTEX, TSX: OTEX) visit opentext.com.

Cautionary Statement Regarding Forward-Looking Statements

Certain statements in this press release, including statements about the focus of Open Text Corporation ("OpenText" or "the Company") in our fiscal year ending June 30, 2021 (Fiscal 2021) on growth, future cloud growth and market share gains, generating substantial long-term value for shareholders, the financial and operational impact of the COVID-19 pandemic, anticipated benefits of our partnerships and next generation product lines, the strength of our operating framework and balance sheet flexibility, continued investments in product innovation, go-to-market and strategic acquisitions, M&A continuing to be our leading growth contributor, our capital allocation strategy, creating value through investments in broader Information Management capabilities, the Company's presence in the cloud and in growth markets, expected growth in our revenue lines, total growth from acquisitions, innovation and organic initiatives, the focus on recurring revenues, improving operational efficiency, expanding cash flow and strengthening the business, adjusted operating income and cash flow, its financial condition, the adjusted operating margin target range, results of operations and earnings, announced acquisitions, ongoing tax matters, the integration of the acquired businesses, declaration of quarterly dividends, potential share repurchases pursuant to its Repurchase Plan, future tax rates, new platform and product offerings, scaling OpenText to new levels in Fiscal 2021 and beyond, and other matters, 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 considered forward-looking statements or information under applicable securities laws. In addition, any information or statements that refer to expectations, beliefs, plans, projections, objectives, performance or other characterizations of future events or circumstances, including any underlying assumptions, are forward-looking, and based on our current expectations, forecasts and projections about the operating environment, economies and markets in which we operate. 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 are inherently subject to significant business, economic, competitive and other uncertainties and contingencies regarding future events and, as such, are subject to change. We can give no assurance that such estimates, beliefs and assumptions will prove to be correct. Such forward-looking statements involve known and unknown risks, uncertainties and other factors and assumptions that may cause the actual results, performance or achievements to differ materially which include, but are not limited to, actual and potential risks and uncertainties relating to the ultimate spread of COVID-19, the severity of the disease and the duration of the COVID-19 pandemic. For additional information with respect to risks and other factors which could occur, see the Company's Annual Report on Form 10-K, Quarterly Reports on Form 10-Q and other securities filings with the Securities and Exchange Commission (SEC) and other securities regulators. Readers are cautioned not to place undue reliance upon any such forward-looking statements, which speak only as of the date made. Unless otherwise required by applicable securities laws, the Company disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

OTEX-F

For more information, please contact:

Harry E. BlountSenior Vice President, Global Head of Investor RelationsOpen Text Corporation415-963-0825investors@opentext.com

Copyright (c)2021 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: http://www.opentext.com/who-we-are/copyright-information.

OPEN TEXT CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEETS

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



December 31, 2020June 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 445,841 466,357 December 31, 2020 and $20,906 as of June 30, 2020

Contract assets 27,460 29,570

Income taxes recoverable 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 227,434 244,555

Operating lease right of use assets 235,142 207,869

Long-term contract assets 18,175 15,427

Goodwill 4,696,349 4,672,356

Acquired intangible assets 1,402,928 1,612,564

Deferred tax assets 866,788 911,565

Other assets 164,238 154,467

Long-term income taxes recoverable 29,488 29,620

Total assets $9,769,098 $10,234,822

LIABILITIES AND SHAREHOLDERS' EQUITY

Current liabilities:

Accounts payable and accrued liabilities $348,080 $373,314

Current portion of long-term debt 10,000 610,000

Operating lease liabilities 59,874 64,071

Deferred revenues 798,340 812,218

Income taxes payable 320,084 44,630

Total current liabilities 1,536,378 1,904,233

Long-term liabilities:

Accrued liabilities 28,334 34,955

Pension liability 83,271 73,129

Long-term debt 3,581,565 3,584,311

Long-term operating lease liabilities 227,265 217,165

Long-term deferred revenues 97,083 94,382

Long-term income taxes payable 32,794 171,200

Deferred tax liabilities 179,161 148,738

Total long-term liabilities 4,229,473 4,323,880

Shareholders' equity:

Share capital and additional paid-in capital

272,588,542 and 271,863,354 Common Shares issued and outstanding at December 31, 2020 1,889,857 1,851,777 and June 30, 2020, respectively; authorized Common Shares: unlimited

Accumulated other comprehensive income 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 (47,555) (23,608) June 30, 2020, respectively)

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

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:

Cloud services and $350,454 $248,340 $ 691,440 $ 485,605 subscriptions

Customer support 334,492 315,508 663,891 627,806

License 107,348 138,095 175,871 215,993

Professional 63,350 69,614 128,455 139,041 service and other

Total revenues 855,644 771,557 1,659,657 1,468,445

Cost of revenues:

Cloud services and 117,882 103,644 230,506 205,806 subscriptions

Customer support 29,668 29,788 58,862 59,175

License 4,302 3,050 6,791 5,373

Professional 46,619 53,604 93,200 107,942 service and other

Amortization of acquired 54,091 42,299 112,128 82,597 technology-based intangible assets

Total cost of 252,562 232,385 501,487 460,893 revenues

Gross profit 603,082 539,172 1,158,170 1,007,552

Operating expenses:

Research and 100,238 80,283 194,141 161,461 development

Sales and marketing147,897 137,310 280,297 265,928

General and 62,765 54,595 118,954 106,130 administrative

Depreciation 20,280 20,712 42,283 40,989

Amortization of acquired 54,926 51,460 109,919 100,618 customer-based intangible assets

Special charges (17,494) 10,072 (4,250) 15,173 (recoveries)

Total operating 368,612 354,432 741,344 690,299 expenses

Income from 234,470 184,740 416,826 317,253 operations

Other income 5,251 1,972 8,134 (813) (expense), net

Interest and other related expense, (37,595) (32,376) (76,684) (64,586) net

Income before 202,126 154,336 348,276 251,854 income taxes

Provision for (recovery of) 267,559 46,818 310,303 69,909 income taxes

Net income (loss) $(65,433) $107,518 $ 37,973 $ 181,945 for the period

Net (income) loss attributable to (44) (51) (74) (77) non-controlling interests

Net income (loss) attributable to $(65,477) $107,467 $ 37,899 $ 181,868 OpenText

Earnings (loss) per share-basic $(0.24) $0.40 $ 0.14 $ 0.67 attributable to OpenText

Earnings (loss) per share-diluted $(0.24) $0.40 $ 0.14 $ 0.67 attributable to OpenText

Weighted average number of Common Shares 272,433 270,450 272,210 270,232 outstanding-basic (in '000's)

Weighted average number of Common Shares 272,433 271,590 273,019 271,328 outstanding-diluted (in '000's)

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 $(65,433) $107,518 $37,973 $181,945 period

Other comprehensive income (loss) -net of tax:

Net foreign currency 26,065 4,875 48,710 (736) translation adjustments

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, 2,082 833 2,927 261 2020 and 2019, respectively; $1,056 and $95 for the six months ended December 31, 2020 and 2019, respectively

(Gain) loss reclassified into net income (loss) - net of tax (expense) recovery effect of ($227) and ($26) for the three months ended December (628) (72) (784) (64) 31, 2020 and 2019, respectively; ($283) and ($23) for the six months ended December 31, 2020 and 2019, respectively

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 (981) 3,698 (2,686) 614 31, 2020 and 2019, respectively; ($1,357) and $59 for the six months ended December 31, 2020 and 2019, respectively

Amortization of actuarial (gain) loss into net income (loss) - net of tax (expense) recovery effect of $93 and $97 for the three months ended 243 260 484 491 December 31, 2020 and 2019, respectively; $180 and $243 for the six months ended December 31, 2020 and 2019, respectively

Total other comprehensive income (loss) 26,781 9,594 48,651 566 net, for the period

Total comprehensive (38,652) 117,112 86,624 182,511 income (loss)

Comprehensive (income) loss attributable to(44) (51) (74) (77) non-controlling interests

Total comprehensive income (loss) $(38,696) $117,061 $86,550 $182,434 attributable to OpenText

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 Accumulated Other Additional Paid in CapitalTreasury Stock Retained Non- Comprehensive ControllingTotal Earnings Interests Shares Amount Shares Amount Income

Balance as of 272,174 $1,872,411 (1,394)$(58,788)$2,213,053$39,695 $1,349 $4,067,720September 30, 2020

Issuance of Common Shares

Under employee 213 6,893 - - - - - 6,893 stock option plans

Under employee stock purchase 202 7,260 - - - - - 7,260 plans

Share-based - 14,526 - - - - - 14,526 compensation

Issuance of - (11,233) 293 11,233 - - - - treasury stock

Dividends declared - - - - (54,500) - - (54,500) ($0.2008 per Common Share)

Other comprehensive - - - - - 26,781 - 26,781 income - net

Net income (loss) - - - - (65,477) - 44 (65,433) for the quarter

Balance as of 272,589 $1,889,857 (1,101)$(47,555)$2,093,076$66,476 $1,393 $4,003,247December 31, 2020





Three Months Ended December 31, 2019

Common Shares and Accumulated Other Additional Paid in Capital Treasury Stock Retained Non- Comprehensive ControllingTotal Earnings Interests Shares Amount Shares Amount Income

Balance as of September 30,270,190 $1,791,689 (1,103)$(41,190)$2,141,278$15,096 $ 1,241 $3,908,1142019

Issuance of Common Shares

Under employee 231 6,783 - - - - - 6,783 stock option plans

Under employee stock 188 6,532 - - - - - 6,532 purchase plans

Share-based - 7,783 - - - - - 7,783 compensation

Issuance of treasury - (9,124) 256 9,124 - - - - stock

Dividends declared - - - - (47,092) - - (47,092) ($0.1746 per Common Share)

Other comprehensive- - - - - 9,594 - 9,594 income - net

Net income for the - - - - 107,467 - 51 107,518 quarter

Balance as of December 31, 270,609 $1,803,663 (847) $(32,066)$2,201,653$24,690 $ 1,292 $3,999,2322019





Six Months Ended December 31, 2020

Common Shares and Accumulated Other Additional Paid in Capital Treasury Stock Retained Non- Comprehensive ControllingTotal Earnings Interests Shares Amount Shares Amount Income

Balance as of271,863 $1,851,777 (622) $(23,608)$2,159,396$17,825 $ 1,319 $4,006,709June 30, 2020

Adoption of ASU 2016-13 -- - - - (2,450) - - (2,450) cumulative effect, net

Issuance of Common Shares

Under employee 524 15,498 - - - - - 15,498 stock option plans

Under employee stock 202 7,553 193 6,690 - - - 14,243 purchase plans

Share-based - 26,262 - - - - - 26,262 compensation

Purchase of treasury - - (965) (41,870) - - - (41,870) stock

Issuance of treasury - (11,233) 293 11,233 - - - - stock

Dividends declared - - - - (101,769) - - (101,769) ($0.3754 per Common Share)

Other comprehensive- - - - - 48,651 - 48,651 income - net

Net income for the - - - - 37,899 - 74 37,973 period

Balance as of December 31, 272,589 $1,889,857 (1,101)$(47,555)$2,093,076$66,476 $ 1,393 $4,003,2472020





Six Months Ended December 31, 2019

Common Shares and Treasury Stock Retained Accumulated OtherNon- Additional Paid in Capital Comprehensive ControllingTotal Earnings Income Interests Shares Amount Shares Amount

Balance as of269,834 $1,774,214 (803) $(28,766)$2,113,883$24,124 $ 1,215 $3,884,670June 30, 2019

Issuance of Common Shares

Under employee 415 11,359 - - - - - 11,359 stock option plans

Under employee stock 360 12,540 - - - - - 12,540 purchase plans

Share-based - 14,674 - - - - - 14,674 compensation

Purchase of treasury - - (300) (12,424) - - - (12,424) stock

Issuance of treasury - (9,124) 256 9,124 - - - - stock

Dividends declared - - - - (94,098) - - (94,098) ($0.3492 per Common Share)

Other comprehensive- - - - - 566 - 566 income - net

Net income for the - - - - 181,868 - 77 181,945 period

Balance as of December 31, 270,609 $1,803,663 (847) $(32,066)$2,201,653$24,690 $ 1,292 $3,999,2322019

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,

2020 2019 2020 2019

Cash flows from operating activities:

Net income (loss) for the$(65,433) $107,518 $37,973 $181,945 period

Adjustments to reconcile net income (loss) to net cash provided by operating activities:

Depreciation and amortization 129,297 114,471 264,330 224,204 of intangible assets

Share-based compensation 14,526 7,783 26,262 14,674 expense

Pension 1,615 1,459 3,120 2,895 expense

Amortization of debt 1,142 1,149 2,254 2,276 issuance costs

Loss on sale and write down380 - 953 - of property and equipment

Deferred taxes81,577 27,924 80,397 34,168

Share in net (income) loss (2,034) (1,266) (8,255) (1,948) of equity investees

Changes in operating assets and liabilities:

Accounts (42,115) (55,833) 32,727 2,598 receivable

Contract (10,355) (10,458) (20,193) (17,659) assets

Prepaid expenses and 11,457 1,111 7,966 (501) other current assets

Income taxes 147,809 (7,944) 168,841 (891)

Accounts payable and 14,891 29,744 (36,538) (33,235) accrued liabilities

Deferred 22,621 (2,924) (18,647) (64,093) revenue

Other assets (2,016) (3,327) (1,467) 2,357

Operating lease assets and (20,907) (2,169) (23,364) (2,105) liabilities, net

Net cash provided by 282,455 207,238 516,359 344,685 operating activities

Cash flows from investing activities:

Additions of property and (7,651) (19,598) (22,956) (38,212) equipment

Purchase of 444 - 444 - XMedius

Purchase of Carbonite, Inc., net of - (1,216,639) - (1,216,639) cash and restricted cash acquired

Purchase of Dynamic (371) (4,149) (371) (4,149) Solutions Group Inc.

Other investing 867 (3,505) (1,370) (5,541) activities

Net cash used in investing (6,711) (1,243,891) (24,253) (1,264,541) activities

Cash flows from financing activities:

Proceeds from issuance of Common Shares from exercise 13,338 12,000 29,177 23,117 of stock options and ESPP

Proceeds from long-term debt- 750,000 - 750,000 and Revolver

Repayment of long-term debt(602,500) (2,500) (605,000) (5,000) and Revolver

Debt issuance - (979) - (979) costs

Purchase of - - (41,870) (12,424) treasury stock

Payments of dividends to (54,500) (47,092) (101,769) (94,098) shareholders

Net cash provided by (used in) (643,662) 711,429 (719,462) 660,616 financing activities

Foreign exchange gain (loss) on cash22,979 3,640 33,771 (4,071) held in foreign currencies

Increase (decrease) in cash, cash equivalents (344,939) (321,584) (193,585) (263,311) and restricted cash during the period

Cash, cash equivalents and restricted1,848,617 1,001,816 1,697,263 943,543 cash at beginning of the period

Cash, cash equivalents and restricted$1,503,678$680,232 $1,503,678$680,232 cash at end of the period

Reconciliation of cash, cash equivalents and restricted cash:December 31, 2020December 31, 2019

Cash and cash equivalents $1,500,561 $675,403

Restricted cash ^(1) 3,117 4,829

Total cash, cash equivalents and restricted cash $1,503,678 $680,232

^(1) Restricted cash is classified under the Prepaid expenses and other currentassets and Other assets line items on the Condensed Consolidated Balance Sheets.

Notes

(1) All dollar amounts in this press release are in U.S. Dollars unless otherwise indicated.

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(2) companies and/or analysts and may differ from period to period. Thus it may be more difficult to compare the Company's financial performance to that of other companies. However, the Company's management compensates for these limitations by providing the relevant disclosure of the items excluded in the calculation of these Non-GAAP financial measures both in its reconciliation to the U.S. GAAP financial measures and its consolidated financial statements, all of which should be considered when evaluating the Company's results.

The Company uses these Non-GAAP financial measures to supplement the information provided in its consolidated financial statements, which are presented in accordance with U.S. GAAP. The presentation of Non-GAAP financial measures are not meant to be a substitute for financial measures presented in accordance with U.S. GAAP, but rather should be evaluated in conjunction with and as a supplement to such U.S. GAAP measures. OpenText strongly encourages investors to review its financial information in its entirety and not to rely on a single financial measure. The Company therefore believes that despite these limitations, it is appropriate to supplement the disclosure of the U.S. GAAP measures with certain Non-GAAP measures defined below.

Non-GAAP-based net income and Non-GAAP-based EPS, 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 (loss) 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 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, 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 (Loss). 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.

The following charts provide unaudited reconciliations of U.S. GAAP-based financial measures to Non-GAAP-based financial measures for the following periods presented.

Reconciliation of selected GAAP-based measures to Non-GAAP-based measures for the three months ended December 31, 2020. (In thousands, except for per share data)

Three Months Ended December 31, 2020

GAAP-based Non-GAAP- GAAP-basedMeasures Non-GAAP- based Measures % of TotalAdjustments Notebased Measures Revenue Measures % of Total Revenue

Cost of revenues

Cloud services and $117,882 $(1,143) (1) $116,739 subscriptions

Customer support29,668 (499) (1) 29,169

Professional service and 46,619 (666) (1) 45,953 other

Amortization of acquired technology-based54,091 (54,091) (2) - intangible assets

GAAP-based gross profit and gross margin (%) / 603,082 70.5% 56,399 (3) 659,481 77.1% Non-GAAP-based gross profit and gross margin (%)

Operating expenses

Research and 100,238 (2,707) (1) 97,531 development

Sales and 147,897 (4,957) (1) 142,940 marketing

General and 62,765 (4,554) (1) 58,211 administrative

Amortization of acquired customer-based 54,926 (54,926) (2) - intangible assets

Special charges (17,494) 17,494 (4) - (recoveries)

GAAP-based income from operations / 234,470 106,049 (5) 340,519 Non-GAAP-based income from operations

Other income 5,251 (5,251) (6) - (expense), net

Provision for (recovery of) 267,559 (225,150) (7) 42,409 income taxes

GAAP-based net income (loss) / Non-GAAP-based (65,477) 325,948 (8) 260,471 net income, attributable to OpenText

GAAP-based earnings (loss) per share / Non-GAAP-based $(0.24) $1.19 (8) $0.95 earnings per share-diluted, attributable to OpenText

Adjustment relates to the exclusion of share-based compensation expense(1) from our Non-GAAP-based operating expenses as this expense is excluded from our internal analysis of operating results.

Adjustment relates to the exclusion of amortization expense from our(2) 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.

Adjustment relates to the exclusion of special charges (recoveries) from our Non-GAAP-based operating expenses as special charges (recoveries) are(4) 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.

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(6) (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.

Adjustment relates to differences between the GAAP-based tax provision rate of approximately 132% 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 adjusted 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.(7) 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. The GAAP-based tax provision rate for the three months ended December 31, 2020 includes an income tax provision charge from the IRS Settlement partially offset by a tax benefit from the release of unrecognized tax benefits due to the conclusion of relevant tax audits.

(8) Reconciliation of GAAP-based net loss to Non-GAAP-based net income:

Three Months Ended December 31, 2020

Per share diluted*

GAAP-based net loss, attributable to $(65,477) $ (0.24) OpenText

Add:

Amortization 109,017 0.40

Share-based compensation 14,526 0.05

Special charges (recoveries) (17,494) (0.06)

Other (income) expense, net (5,251) (0.02)

GAAP-based provision for (recovery of) 267,559 0.98 income taxes

Non-GAAP-based provision for income (42,409) (0.16) taxes

Non-GAAP-based net income, attributable $260,471 $ 0.95 to OpenText

*Weighted average number of Common Shares - diluted (in thousands) used inthe calculation of Non-GAAP-based earnings per share for the three monthsended December 31, 2020 were 273,183.

Reconciliation of Adjusted EBITDA



Three Months Ended December 31, 2020

GAAP-based net loss, attributable to $(65,477) OpenText

Add:

Provision for (recovery of) income taxes267,559

Interest and other related expense, net 37,595

Amortization of acquired 54,091 technology-based intangible assets

Amortization of acquired customer-based 54,926 intangible assets

Depreciation 20,280

Share-based compensation 14,526

Special charges (recoveries) (17,494)

Other (income) expense, net (5,251)

Adjusted EBITDA $360,755



GAAP-based net loss margin (7.7) %

Adjusted EBITDA margin 42.2 %

Reconciliation of Free cash flows



Three Months Ended December 31, 2020

GAAP-based cash flows provided by $ 282,455 operating activities

Add:

Capital expenditures ^(1) (7,651)

Free cash flows $ 274,804



^(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 six months ended December 31, 2020. (In thousands, except for per share data)

Six Months Ended December 31, 2020

GAAP-based Non-GAAP- Non-GAAP- GAAP-basedMeasures based based % of TotalAdjustments Note Measures Measures Revenue Measures % of Total Revenue

Cost of revenues

Cloud services and $230,506 $(1,979) (1) $228,527 subscriptions

Customer support58,862 (941) (1) 57,921

Professional service and 93,200 (1,183) (1) 92,017 other

Amortization of acquired technology-based112,128 (112,128) (2) - intangible assets

GAAP-based gross profit and gross margin (%) / 1,158,17069.8% 116,231 (3) 1,274,40176.8% Non-GAAP-based gross profit and gross margin (%)

Operating expenses

Research and 194,141 (5,049) (1) 189,092 development

Sales and 280,297 (9,014) (1) 271,283 marketing

General and 118,954 (8,096) (1) 110,858 administrative

Amortization of acquired customer-based 109,919 (109,919) (2) - intangible assets

Special charges (4,250) 4,250 (4) - (recoveries)

GAAP-based income from operations / 416,826 244,059 (5) 660,885 Non-GAAP-based income from operations

Other income 8,134 (8,134) (6) - (expense), net

Provision for (recovery of) 310,303 (228,515) (7) 81,788 income taxes

GAAP-based net income / Non-GAAP-based 37,899 464,440 (8) 502,339 net income, attributable to OpenText

GAAP-based earnings per share / Non-GAAP-based $0.14 $1.70 (8) $1.84 earnings per share-diluted, attributable to OpenText

Adjustment relates to the exclusion of share-based compensation expense(1) from our Non-GAAP-based operating expenses as this expense is excluded from our internal analysis of operating results.

Adjustment relates to the exclusion of amortization expense from our(2) 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.

Adjustment relates to the exclusion of special charges (recoveries) from our Non-GAAP-based operating expenses as special charges (recoveries) are(4) 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.

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(6) (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.

Adjustment relates to differences between the GAAP-based tax provision rate of approximately 89% 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 adjusted 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.(7) 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. The GAAP-based tax provision rate for the six months ended December 31, 2020 includes an income tax provision charge from the IRS Settlement partially offset by a tax benefit from the release of unrecognized tax benefits due to the conclusion of relevant tax audits.

(8) Reconciliation of GAAP-based net income to Non-GAAP-based net income:

Six Months Ended December 31, 2020

Per share diluted

GAAP-based net income, attributable to $37,899 $ 0.14 OpenText

Add:

Amortization 222,047 0.81

Share-based compensation 26,262 0.10

Special charges (recoveries) (4,250) (0.02)

Other (income) expense, net (8,134) (0.03)

GAAP-based provision for (recovery of) 310,303 1.14 income taxes

Non-GAAP-based provision for income taxes (81,788) (0.30)

Non-GAAP-based net income, attributable to$502,339 $ 1.84 OpenText

Reconciliation of Adjusted EBITDA



Six Months Ended December 31, 2020

GAAP-based net income, attributable to $37,899 OpenText

Add:

Provision for (recovery of) income taxes 310,303

Interest and other related expense, net 76,684

Amortization of acquired technology-based 112,128 intangible assets

Amortization of acquired customer-based 109,919 intangible assets

Depreciation 42,283

Share-based compensation 26,262

Special charges (recoveries) (4,250)

Other (income) expense, net (8,134)

Adjusted EBITDA $703,094



GAAP-based net income margin 2.3 %

Adjusted EBITDA margin 42.4 %

Reconciliation of Free cash flows



Six Months Ended December 31, 2020

GAAP-based cash flows provided by $ 516,359 operating activities

Add:

Capital expenditures ^(1) (22,956)

Free cash flows $ 493,403

^(1) Defined as "Additions of property and equipment" in the CondensedConsolidated Statements of Cash Flows.

Reconciliation of selected GAAP-based measures to Non-GAAP-based measures for the three months ended September 30, 2020. (In thousands, except for per share data)

Three Months Ended September 30, 2020

GAAP-based Non-GAAP- Non-GAAP- GAAP-basedMeasures based based % of TotalAdjustments Note Measures Measures Revenue Measures % of Total Revenue

Cost of revenues

Cloud services and $112,624 $(836) (1) $111,788 subscriptions

Customer support29,194 (442) (1) 28,752

Professional service and 46,581 (517) (1) 46,064 other

Amortization of acquired technology-based58,037 (58,037) (2) - intangible assets

GAAP-based gross profit and gross margin (%) / 555,088 69.0% 59,832 (3) 614,920 76.5% Non-GAAP-based gross profit and gross margin (%)

Operating expenses

Research and 93,903 (2,342) (1) 91,561 development

Sales and 132,400 (4,057) (1) 128,343 marketing

General and 56,189 (3,542) (1) 52,647 administrative

Amortization of acquired customer-based 54,993 (54,993) (2) - intangible assets

Special charges 13,244 (13,244) (4) - (recoveries)

GAAP-based income from operations / 182,356 138,010 (5) 320,366 Non-GAAP-based income from operations

Other income 2,883 (2,883) (6) - (expense), net

Provision for (recovery of) 42,744 (3,365) (7) 39,379 income taxes

GAAP-based net income / Non-GAAP-based 103,376 138,492 (8) 241,868 net income, attributable to OpenText

GAAP-based earnings per share / Non-GAAP-based $0.38 $0.51 (8) $0.89 earnings per share-diluted, attributable to OpenText

Adjustment relates to the exclusion of share-based compensation expense(1) from our Non-GAAP-based operating expenses as this expense is excluded from our internal analysis of operating results.

Adjustment relates to the exclusion of amortization expense from our(2) 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.

Adjustment relates to the exclusion of special charges (recoveries) from our Non-GAAP-based operating expenses as special charges (recoveries) are(4) 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.

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(6) (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.

Adjustment relates to differences between the GAAP-based tax provision rate of approximately 29% 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 adjusted 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(7) 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 September 30, 2020

Per share diluted

GAAP-based net income, attributable to $103,376 $ 0.38 OpenText

Add:

Amortization 113,030 0.41

Share-based compensation 11,736 0.04

Special charges (recoveries) 13,244 0.05

Other (income) expense, net (2,883) (0.01)

GAAP-based provision for (recovery of) 42,744 0.16 income taxes

Non-GAAP-based provision for income (39,379) (0.14) taxes

Non-GAAP-based net income, attributable$241,868 $ 0.89 to OpenText

Reconciliation of Adjusted EBITDA



Three Months Ended September 30, 2020

GAAP-based net income, attributable to $ 103,376 OpenText

Add:

Provision for (recovery of) income 42,744 taxes

Interest and other related expense, net39,089

Amortization of acquired 58,037 technology-based intangible assets

Amortization of acquired customer-based54,993 intangible assets

Depreciation 22,003

Share-based compensation 11,736

Special charges (recoveries) 13,244

Other (income) expense, net (2,883)

Adjusted EBITDA $ 342,339



GAAP-based net income margin 12.9 %

Adjusted EBITDA margin 42.6 %

Reconciliation of Free cash flows



Three Months Ended September 30, 2020

GAAP-based cash flows provided by $ 233,904 operating activities

Add:

Capital expenditures ^(1) (15,305)

Free cash flows $ 218,599

^(1) Defined as "Additions of property and equipment" in the CondensedConsolidated Statements of Cash Flows.

Reconciliation of selected GAAP-based measures to Non-GAAP-based measures for the three months ended December 31, 2019. (In thousands, except for per share data)

Three Months Ended December 31, 2019

GAAP-basedGAAP-based Non-GAAP- Non-GAAP- Measures Adjustments Notebased based Measures Measures % of Total % of Total Revenue Measures Revenue

Cost of revenues

Cloud services and $103,644 $(371) (1) $103,273 subscriptions

Customer support29,788 (297) (1) 29,491

Professional service and 53,604 (346) (1) 53,258 other

Amortization of acquired technology-based42,299 (42,299) (2) - intangible assets

GAAP-based gross profit and gross margin (%) / 539,172 69.9 %43,313 (3) 582,485 75.5% Non-GAAP-based gross profit and gross margin (%)

Operating expenses

Research and 80,283 (1,255) (1) 79,028 development

Sales and 137,310 (2,383) (1) 134,927 marketing

General and 54,595 (3,131) (1) 51,464 administrative

Amortization of acquired customer-based 51,460 (51,460) (2) - intangible assets

Special charges 10,072 (10,072) (4) - (recoveries)

GAAP-based income from operations / 184,740 111,614 (5) 296,354 Non-GAAP-based income from operations

Other income 1,972 (1,972) (6) - (expense), net

Provision for (recovery of) 46,818 (9,861) (7) 36,957 income taxes

GAAP-based net income / Non-GAAP-based 107,467 119,503 (8) 226,970 net income, attributable to OpenText

GAAP-based earnings per share / Non-GAAP-based $0.40 $0.44 (8) $0.84 earnings per share-diluted, attributable to OpenText

Adjustment relates to the exclusion of share-based compensation expense(1) from our Non-GAAP-based operating expenses as this expense is excluded from our internal analysis of operating results.

Adjustment relates to the exclusion of amortization expense from our(2) 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.

Adjustment relates to the exclusion of special charges (recoveries) from our Non-GAAP-based operating expenses as special charges (recoveries) are(4) 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.

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(6) (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.

Adjustment relates to differences between the GAAP-based tax provision rate of approximately 30% 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 adjusted 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(7) 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, 2019

Per share diluted

GAAP-based net income, attributable to $107,467 $ 0.40 OpenText

Add:

Amortization 93,759 0.35

Share-based compensation 7,783 0.03

Special charges (recoveries) 10,072 0.04

Other (income) expense, net (1,972) (0.01)

GAAP-based provision for (recovery of) 46,818 0.17 income taxes

Non-GAAP-based provision for income (36,957) (0.14) taxes

Non-GAAP-based net income, attributable $226,970 $ 0.84 to OpenText

Reconciliation of Adjusted EBITDA



Three Months Ended December 31, 2019

GAAP-based net income, attributable to $ 107,467 OpenText

Add:

Provision for (recovery of) income taxes46,818

Interest and other related expense, net 32,376

Amortization of acquired 42,299 technology-based intangible assets

Amortization of acquired customer-based 51,460 intangible assets

Depreciation 20,712

Share-based compensation 7,783

Special charges (recoveries) 10,072

Other (income) expense, net (1,972)

Adjusted EBITDA $ 317,015



GAAP-based net income margin 13.9 %

Adjusted EBITDA margin 41.1 %

Reconciliation of Free cash flows



Three Months Ended December 31, 2019

GAAP-based cash flows provided by $ 207,238 operating activities

Add:

Capital expenditures ^(1) (19,598)

Free cash flows $ 187,640

^(1) Defined as "Additions of property and equipment" in the CondensedConsolidated Statements of Cash Flows.

Reconciliation of selected GAAP-based measures to Non-GAAP-based measures for the six months ended December 31, 2019. (In thousands, except for per share data)

Six Months Ended December 31, 2019

GAAP-basedGAAP-based Non-GAAP- Non-GAAP- Measures Adjustments Notebased based Measures Measures % of Total % of Total Revenue Measures Revenue

Cost of revenues

Cloud services and $205,806 $ (754) (1) $205,052 subscriptions

Customer support59,175 (613) (1) 58,562

Professional service and 107,942 (589) (1) 107,353 other

Amortization of acquired technology-based82,597 (82,597) (2) - intangible assets

GAAP-based gross profit and gross margin (%) / 1,007,55268.6 %84,553 (3) 1,092,10574.4 % Non-GAAP-based gross profit and gross margin (%)

Operating expenses

Research and 161,461 (2,476) (1) 158,985 development

Sales and 265,928 (4,499) (1) 261,429 marketing

General and 106,130 (5,743) (1) 100,387 administrative

Amortization of acquired customer-based 100,618 (100,618) (2) - intangible assets

Special charges 15,173 (15,173) (4) - (recoveries)

GAAP-based income from operations / 317,253 213,062 (5) 530,315 Non-GAAP-based income from operations

Other income (813) 813 (6) - (expense), net

Provision for (recovery of) 69,909 (4,707) (7) 65,202 income taxes

GAAP-based net income / Non-GAAP-based 181,868 218,582 (8) 400,450 net income, attributable to OpenText

GAAP-based earnings per share / Non-GAAP-based $0.67 $ 0.81 (8) $1.48 earnings per share-diluted, attributable to OpenText

Adjustment relates to the exclusion of share-based compensation expense(1) from our Non-GAAP-based operating expenses as this expense is excluded from our internal analysis of operating results.

Adjustment relates to the exclusion of amortization expense from our(2) 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.

Adjustment relates to the exclusion of special charges (recoveries) from our Non-GAAP-based operating expenses as special charges (recoveries) are(4) 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.

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(6) (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.

Adjustment relates to differences between the GAAP-based tax provision rate of approximately 28% 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 adjusted 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(7) 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, 2019

Per share diluted

GAAP-based net income, attributable to $181,868 $ 0.67 OpenText

Add:

Amortization 183,215 0.68

Share-based compensation 14,674 0.05

Special charges (recoveries) 15,173 0.06

Other (income) expense, net 813 -

GAAP-based provision for (recovery of) 69,909 0.26 income taxes

Non-GAAP-based provision for income taxes (65,202) (0.24)

Non-GAAP-based net income, attributable to$400,450 $ 1.48 OpenText

Reconciliation of Adjusted EBITDA



Six Months Ended December 31, 2019

GAAP-based net income, attributable to $181,868 OpenText

Add:

Provision for (recovery of) income taxes 69,909

Interest and other related expense, net 64,586

Amortization of acquired technology-based 82,597 intangible assets

Amortization of acquired customer-based 100,618 intangible assets

Depreciation 40,989

Share-based compensation 14,674

Special charges (recoveries) 15,173

Other (income) expense, net 813

Adjusted EBITDA $571,227



GAAP-based net income margin 12.4 %

Adjusted EBITDA margin 38.9 %

Reconciliation of Free cash flows



Six Months Ended December 31, 2019

GAAP-based cash flows provided by $ 344,685 operating activities

Add:

Capital expenditures ^(1) (38,212)

Free cash flows $ 306,473

^(1) Defined as "Additions of property and equipment" in the CondensedConsolidated Statements of Cash Flows.

The following tables provide a composition of our major currencies for(3) revenue and expenses, expressed as a percentage, for the three and six months ended December 31, 2020 and 2019:



Three Months Ended December 31, 2020Three Months Ended December 31, 2019

Currencies% of Revenue % of Expenses* % of Revenue % of Expenses*

EURO 24 % 14 % 25 % 15 %

GBP 5 % 5 % 5 % 6 %

CAD 3 % 10 % 3 % 10 %

USD 60 % 54 % 58 % 51 %

Other 8 % 17 % 9 % 18 %

Total 100 % 100 % 100 % 100 %





Six Months Ended December 31, 2020 Six Months Ended December 31, 2019

Currencies% of Revenue % of Expenses* % of Revenue % of Expenses*

EURO 23 % 14 % 23 % 14 %

GBP 5 % 5 % 5 % 6 %

CAD 3 % 10 % 3 % 10 %

USD 61 % 55 % 59 % 52 %

Other 8 % 16 % 10 % 18 %

Total 100 % 100 % 100 % 100 %

*Expenses include all cost of revenues and operating expenses included withinthe Condensed Consolidated Statements of Income (Loss), except for amortizationof intangible assets, share-based compensation and special charges(recoveries).

View original content: http://www.prnewswire.com/news-releases/opentext-reports-second-quarter-fiscal-year-2021-financial-results-301222693.html

SOURCE Open Text Corporation