PR Newswire | Nov 4, 2021 04:02PM EDT

11/04 15:01 CDT

OpenText Reports First Quarter Fiscal Year 2022 Financial ResultsOrganic Growth Powers Record Q1 Total Revenues, Annual Recurring Revenues (ARR) and Cloud Revenues WATERLOO, ON, Nov. 4, 2021

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

First Quarter Highlights

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

ReportedConstant ReportedConstant ReportedConstant Currency Currency Currency

$832.3 $819.7 $691.8 $681.6 $356.6 $353.2

+3.5% +2.0% +3.2% +1.7% +4.6% +3.6%

Annual Recurring Revenues represent 83% of Total Revenues

* Q1 results reflective of our cloud-first strategy and continued investments in talent, innovation, go-to-market and digital projects to drive organic growth * Operating cash flows were $189.7 million and free cash flows were $163.0 million * GAAP-based net income of $131.9 million, up 27.6% Y/Y, margin of 15.8%, up 290 basis points Y/Y * Adjusted EBITDA of $323.4 million, margin of 38.9% * GAAP-based diluted EPS of $0.48, up 26.3% Y/Y * Non-GAAP diluted EPS of $0.83, down 6.7% Y/Y

Open Text Corporation (NASDAQ: OTEX), (TSX: OTEX), today announced its financial results for the first quarter ended September 30, 2021.

"Organic growth powered our record first quarter revenues as we continued delivering Information Management in the Cloud at scale," said Mark J. Barrenechea, OpenText CEO & CTO. "In Q1, we delivered $832.3 million in total revenues, up 3.5% year-over-year which was led by our Cloud revenues of $356.6 million, up 4.6% year-over-year. Annual Recurring Revenues (ARR) of $691.8 million increased 3.2% year-over-year and accounted for 83% of our total revenues."

"OpenText is leading our customers on their path to digitalization as they shift their work from productivity to creativity. Organizations across the globe trust the OpenText Cloud to deliver greater flexibility, agility and scale to meet the challenges of today's distributed work environment," said Mr. Barrenechea. "The OpenText Cloud uniquely positions us to win customers and take leadership in each of our markets as we empower businesses of all sizes to master modern work, power modern experiences, digitize supply chains, strengthen cyber resilience and build the API economy."

"Our Q1 results continue to demonstrate the strength of the OpenText business model, delivering strong operational performance, generating $323.4 million of adjusted EBITDA and $163.0 million in free cash flows," said Madhu Ranganathan, OpenText EVP, CFO. "With approximately $1.7 billion of cash as of September 30, 2021, and a net leverage ratio of 1.4x, our balance sheet and liquidity position remain strong. We are confident in our ability to further improve operations, supporting exceptional customer experiences and providing ample opportunity for OpenText to focus on our organic growth initiatives."

Financial Highlights for Q1 Fiscal 2022 with Year Over Year Comparisons

Summary of Quarterly Results

(In millions, except Q1 Q1 $ % Change Q1 FY'22% Changeper share data) FY'22 FY'21 Change in CC* in CC*

Revenues:

Cloud services and $356.6$341.0$15.6 4.6 % $353.2 3.6 % subscriptions

Customer support 335.2 329.4 5.8 1.8 % 328.5 (0.3)%

Total annual recurring$691.8$670.4$21.4 3.2 % $681.6 1.7 % revenues**

License 73.5 68.5 5.0 7.3 % 72.5 5.8 %

Professional service 67.0 65.1 1.8 2.8 % 65.6 0.8 % and other

Total revenues $832.3$804.0$28.3 3.5 % $819.7 2.0 %

GAAP-based operating $182.7$182.4$0.3 0.2 % N/A N/A income

Non-GAAP-based $302.0$320.4($18.3)(5.7) % $299.9 (6.4)% operating income ^(1)

GAAP-based net income attributable to $131.9$103.4$28.5 27.6 % N/A N/A OpenText

GAAP-based EPS, $0.48 $0.38 $0.10 26.3 % N/A N/A diluted

Non-GAAP-based EPS, $0.83 $0.89 ($0.06)(6.7) % $0.83 (6.7)% diluted ^(1)(2)

Adjusted EBITDA ^(1) $323.4$342.3($19.0)(5.5) % $321.0 (6.2)%

Operating cash flows $189.7$233.9($44.2)(18.9)% N/A N/A

Free cash flows ^(1) $163.0$218.6($55.6)(25.5)% N/A N/A

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

^(2) Please also see note 14 to the Company's Fiscal 2018 ConsolidatedFinancial Statements on Form 10-K. Reflective of the amount of net tax benefitarising from the internal reorganization assumed to be allocable to the currentperiod based on the forecasted utilization period.

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

*CC: Constant currency for this purpose is defined as the current periodreported revenues/expenses/earnings represented at the prior comparativeperiod's foreign exchange rate.

**Annual recurring revenue is defined as the sum of Cloud services andsubscriptions revenue and Customer support revenue.

Quarterly Business Highlights

* Key customer wins in the quarter included AIA Philippines, BDO, Brenntag, CNA Financial, Etihad Water & Electricity, Fennoa, Graybar, Homebase, JCB, Kaiser Permanente, LX Hausys, Mary Washington Healthcare, Mastercard, MicroChannel, PepsiCo, Solenis, U.S. Army Criminal Investigation Division, U.S. Defense Health Agency and Wells Fargo * OpenText World to be held November 16-18 * OpenText powers modern work with the Content Cloud * OpenText named a leader in 2021 Gartner Magic Quadrant for Content Services Platforms for seventeenth consecutive year * OpenText named a leader in IDC MarketScape for Multi-Enterprise Supply Chain Commerce Network for second consecutive year * OpenText offers new MDR solutions to enhance cyber resilience & compliance * OpenText integrates N-central Into Webroot Business Endpoint Protection * OpenText adds cyber resilience in the Netherlands data center * OpenText showcases latest Experience Platform innovations at Google Cloud Next '21 * OpenText survey shows increase in demand for ethically sourced goods * Independent survey highlights need for advanced analytics and machine learning to accelerate investigations * OpenText launches virtual summit for business leaders to share best practices on digitizing supply chains to minimize disruption * OpenText and Lakehead University partner to create internships for Indigenous students

Dividend Program

As part of our quarterly, non-cumulative cash dividend program, the Board declared on November 3, 2021, a cash dividend of $0.2209 per common share. The record date for this dividend is December 3, 2021 and the payment date is December 22, 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.

Share Repurchase Plan/Normal Course Issuer Bid

The Company also announced today the renewal of its share repurchase plan and that it intends to purchase in open market transactions, from time to time over the next 12 months, if considered advisable, up to an aggregate of $350,000,000 of its common shares on the NASDAQ Global Select Market, the Toronto Stock Exchange (the "TSX") and/or other exchanges and alternative trading systems in Canada and/or the United States, if eligible, subject to applicable law and stock exchange rules (the "Repurchase Plan"). The price that OpenText will pay for common shares in open market transactions will be the market price at the time of purchase or such other price as may be permitted by applicable law or stock exchange rules.

The Company's determination to renew the Repurchase Plan reflects its confidence in its operational execution and expanding cash flows, with the Repurchase Plan being additive to the Company's overall strategic capital allocation, complementing its ongoing M&A activity and dividend program. The Repurchase Plan will be effected in accordance with Rule 10b-18 under the U.S. Securities Exchange Act of 1934. Purchases made under the Repurchase Plan may commence on November 12, 2021 and will expire on November 11, 2022, and will be subject to a limit of 13,638,008 shares (representing 5% of the Company's issued and outstanding common shares as of October 31, 2021). All common shares purchased by OpenText pursuant to the Repurchase Plan will be cancelled.

Normal Course Issuer Bid

The Company has renewed its normal course issuer bid (the "NCIB") in order to provide it with a means to execute purchases over the TSX as part of the overall Repurchase Plan.

The TSX has approved the Company's notice of intention to commence the NCIB pursuant to which the Company may purchase common shares over the TSX for the period commencing November 12, 2021 until November 11, 2022 in accordance with the TSX's normal course issuer bid rules, including that such purchases are to be made at prevailing market prices or as otherwise permitted. Under the rules of the TSX, the maximum number of shares that may be purchased in this period is 13,638,008 (representing 5% of the Company's issued and outstanding common shares as of October 31, 2021), and the maximum number of shares that may be purchased on a single day is 112,590 common shares, which is 25% of 450,361 (the average daily trading volume for the common shares on the TSX for the six months ended October 31, 2021), subject to certain exceptions for block purchases, subject in any case to the volume and other limitations under Rule 10b-18.

Previously, on November 5, 2020, the Board authorized a share repurchase plan, pursuant to which we have been authorized to purchase in open market transactions, from time to time over the 12 month period commencing November 12, 2020, up to an aggregate of $350 million of our common shares (subject to a limit of 13,618,774 shares, being 5% of the Company's issued and outstanding common shares as of November 4, 2020) on the NASDAQ Global Select Market, the TSX and/or other exchanges and alternative trading systems in Canada and/or the United States, if eligible, subject to applicable law and stock exchange rules (the "Prior Repurchase Plan"). As of the date hereof, the Company has purchased a total of 2,500,000 common shares pursuant to the Prior Repurchase Plan.

As part of the Prior Repurchase Plan, the TSX approved a previous normal course issuer bid to purchase up to 13,618,774 common shares, which commenced on November 12, 2020 and will expire on November 11, 2021 (the "Previous NCIB"). Pursuant to the Previous NCIB, the Company has purchased 1,433,781 common shares on the open markets in Canada at an average purchase price of C$57.56 per share. Of those purchases on Canadian markets, 412,589 common shares were purchased on the TSX at an average purchase price of C$57.42 per share.

Shelf Renewal

The Company also announced today that it is filing a renewed preliminary short form base shelf prospectus with the securities regulatory authorities in each of the provinces of Canada. A final shelf prospectus, once a receipt has been issued by the Canadian securities regulatory authorities, will allow offers and sales, from time to time, of an aggregate of up to $2.0 billion of equity and debt securities, or any combination thereof, during the 25-month period that the shelf prospectus remains effective. The Company expects to file a corresponding automatic shelf registration statement on Form S-3 with the U.S. Securities and Exchange Commission (the "SEC") concurrently with the filing of the final shelf prospectus in Canada. The specific terms of any future offering will be established in a prospectus supplement to the shelf prospectus, which supplement will be filed with the applicable Canadian securities regulatory authorities and the SEC.

Summary of Quarterly Results

% Change % Change Q1 FY'22Q4 FY'21Q1 FY'21 (Q1 FY'22 vs (Q1 FY'22 vs Q4 FY'21) Q1 FY'21)

Revenue $832.3 $893.5 $804.0 (6.9) % 3.5 % (millions)

GAAP-based gross69.0 %69.6 %69.0 %(60) bps- bpsmargin

Non-GAAP-based gross margin ^ 75.7 %75.8 %76.5 %(10) bps(80) bps(1)

GAAP-based EPS, $0.48 $0.66 $0.38 (27.3) % 26.3 % diluted

Non-GAAP-based EPS, diluted ^ $0.83 $0.80 $0.89 3.7 % (6.7) % (1)(2)

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

^(2) Please also see note 14 to the Company's Fiscal 2018 ConsolidatedFinancial Statements on Form 10-K. Reflective of the amount of net tax benefitarising from the internal reorganization assumed to be allocable to the currentperiod 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 November 4, 2021 at 7:00 p.m. ET through 11:59 p.m. on November 18, 2021 and can be accessed by dialing 1-855-669-9658 (toll-free) or +1-604-674-8052 (international) and using passcode 7814 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, powered by OpenText Cloud Editions. 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, 2022 (Fiscal 2022) on growth, future cloud growth and market share gains, future organic growth initiatives and deployment of capital, 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 2022 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)



September 30, 2021June 30, 2021

ASSETS (unaudited)

Cash and cash equivalents $1,735,265 $ 1,607,306

Accounts receivable trade, net of allowance for credit losses of $18,643 as of 370,968 438,547 September 30, 2021 and $22,151 as of June 30, 2021

Contract assets 24,312 25,344

Income taxes recoverable 12,756 32,312

Prepaid expenses and other current assets 107,486 98,551

Total current assets 2,250,787 2,202,060

Property and equipment 223,359 233,595

Operating lease right of use assets 223,885 234,532

Long-term contract assets 19,550 19,222

Goodwill 4,686,907 4,691,673

Acquired intangible assets 1,080,692 1,187,260

Deferred tax assets 767,182 796,738

Other assets 231,181 208,894

Long-term income taxes recoverable 35,821 35,362

Total assets $9,519,364 $ 9,609,336

LIABILITIES AND SHAREHOLDERS' EQUITY

Current liabilities:

Accounts payable and accrued liabilities $299,370 $ 423,592

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

Operating lease liabilities 58,033 58,315

Deferred revenues 814,989 852,629

Income taxes payable 15,615 17,368

Total current liabilities 1,198,007 1,361,904

Long-term liabilities:

Accrued liabilities 26,876 28,830

Pension liability 75,022 74,511

Long-term debt 3,577,520 3,578,859

Long-term operating lease liabilities 211,277 224,453

Long-term deferred revenues 95,930 98,989

Long-term income taxes payable 33,799 34,113

Deferred tax liabilities 92,418 108,224

Total long-term liabilities 4,112,842 4,147,979

Shareholders' equity:

Share capital and additional paid-in capital

272,533,754 and 271,540,755 Common Shares issued and outstanding at September 30, 1,991,719 1,947,764 2021 and June 30, 2021, respectively; authorized Common Shares: unlimited

Accumulated other comprehensive income 53,886 66,238

Retained earnings 2,225,363 2,153,326

Treasury stock, at cost (1,426,212 and 1,567,664 shares at September 30, 2021 and (63,477) (69,386) June 30, 2021, respectively)

Total OpenText shareholders' equity 4,207,491 4,097,942

Non-controlling interests 1,024 1,511

Total shareholders' equity 4,208,515 4,099,453

Total liabilities and shareholders' equity $9,519,364 $ 9,609,336

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



Three Months Ended September 30,

2021 2020

Revenues:

Cloud services and subscriptions $ 356,589 $ 340,986

Customer support 335,237 329,399

License 73,529 68,523

Professional service and other 66,953 65,105

Total revenues 832,308 804,013

Cost of revenues:

Cloud services and subscriptions 119,779 112,624

Customer support 29,483 29,194

License 3,969 2,489

Professional service and other 51,725 46,581

Amortization of acquired technology-based 53,167 58,037 intangible assets

Total cost of revenues 258,123 248,925

Gross profit 574,185 555,088

Operating expenses:

Research and development 100,165 93,903

Sales and marketing 146,240 132,400

General and administrative 71,477 56,189

Depreciation 21,386 22,003

Amortization of acquired customer-based 51,884 54,993 intangible assets

Special charges (recoveries) 344 13,244

Total operating expenses 391,496 372,732

Income from operations 182,689 182,356

Other income (expense), net 29,782 2,883

Interest and other related expense, net (37,055) (39,089)

Income before income taxes 175,416 146,150

Provision for (recovery of) income taxes 43,450 42,744

Net income for the period $ 131,966 $ 103,406

Net (income) loss attributable to (51) (30) non-controlling interests

Net income attributable to OpenText $ 131,915 $ 103,376

Earnings per share-basic attributable to $ 0.48 $ 0.38 OpenText

Earnings per share-diluted attributable to $ 0.48 $ 0.38 OpenText

Weighted average number of Common Shares 272,044 271,986 outstanding-basic (in '000's)

Weighted average number of Common Shares 273,232 272,847 outstanding-diluted (in '000's)

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



Three Months Ended September 30,

2021 2020

Net income for the period $131,966 $103,406

Other comprehensive income (loss)-net of tax:

Net foreign currency translation adjustments(10,092) 22,645

Unrealized gain (loss) on cash flow hedges:

Unrealized gain (loss) - net of tax expense (recovery) effect of ($391) and $305 for the(1,086) 845 three months ended September 30, 2021 and 2020, respectively

(Gain) loss reclassified into net income - net of tax (expense) recovery effect of (287) (156) ($103) and ($56) for the three months ended September 30, 2021 and 2020, respectively

Actuarial gain (loss) relating to defined benefit pension plans:

Actuarial gain (loss) - net of tax expense (recovery) effect of ($232) and ($916) for (1,049) (1,705) the three months ended September 30, 2021 and 2020, respectively

Amortization of actuarial (gain) loss into net income - net of tax (expense) recovery effect of $68 and $87 for the three months 162 241 ended September 30, 2021 and 2020, respectively

Total other comprehensive income (loss) net,(12,352) 21,870 for the period

Total comprehensive income 119,614 125,276

Comprehensive (income) loss attributable to (51) (30) non-controlling interests

Total comprehensive income attributable to $119,563 $125,246 OpenText

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



Three Months Ended September 30, 2021

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

Balance as of 271,541 $1,947,764 (1,568)$(69,386)$2,153,326$66,238 $ 1,511$4,099,453June 30, 2021

Issuance of Common Shares

Under employee stock796 27,299 - - - - - 27,299 option plans

Under employee stock197 8,489 - - - - - 8,489 purchase plans

Share-based - 13,934 - - - - - 13,934 compensation

Issuance of treasury- (5,909) 142 5,909 - - - - stock

Dividends declared - - - - (59,878) - - (59,878) ($0.2209 per Common Share)

Other comprehensive - - - - - (12,352) - (12,352) income (loss) - net

Distribution to non-controlling - 142 - - - - (538) (396) interest

Net income for the - - - - 131,915 - 51 131,966 period

Balance as of 272,534 $1,991,719 (1,426)$(63,477)$2,225,363$53,886 $ 1,024$4,208,515September 30, 2021





Three Months Ended September 30, 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 311 8,605 - - - - - 8,605 stock option plans

Under employee stock - 293 193 6,690 - - - 6,983 purchase plans

Share-based - 11,736 - - - - - 11,736 compensation

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

Dividends declared - - - - (47,269) - - (47,269) ($0.1746 per Common Share)

Other comprehensive- - - - - 21,870 - 21,870 income (loss) - net

Net income for the - - - - 103,376 - 30 103,406 period

Balance as of September 30,272,174 $1,872,411 (1,394)$(58,788)$2,213,053$39,695 $ 1,349 $4,067,7202020

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



Three Months Ended September 30,

2021 2020

Cash flows from operating activities:

Net income for the period $131,966 $103,406

Adjustments to reconcile net income to net cash provided by operating activities:

Depreciation and amortization of intangible assets126,437 135,033

Share-based compensation expense 13,934 11,736

Pension expense 1,486 1,505

Amortization of debt issuance costs 1,161 1,112

Loss on sale and write down of property and 27 573 equipment

Deferred taxes 14,682 (1,180)

Share in net (income) loss of equity investees (29,315) (6,221)

Changes in operating assets and liabilities:

Accounts receivable 76,526 74,842

Contract assets (7,248) (9,838)

Prepaid expenses and other current assets (9,811) (3,491)

Income taxes 16,761 21,032

Accounts payable and accrued liabilities (114,334) (51,429)

Deferred revenue (38,516) (41,268)

Other assets 7,542 549

Operating lease assets and liabilities, net (1,629) (2,457)

Net cash provided by operating activities 189,669 233,904

Cash flows from investing activities:

Additions of property and equipment (26,712) (15,305)

Other investing activities 296 (2,237)

Net cash used in investing activities (26,416) (17,542)

Cash flows from financing activities:

Proceeds from issuance of Common Shares from 36,720 15,839 exercise of stock options and ESPP

Repayment of long-term debt and Revolver (2,500) (2,500)

Purchase of treasury stock - (41,870)

Distribution to non-controlling interest (396) -

Payments of dividends to shareholders (59,878) (47,269)

Net cash provided by (used in) financing (26,054) (75,800) activities

Foreign exchange gain (loss) on cash held in (9,277) 10,792 foreign currencies

Increase (decrease) in cash, cash equivalents and 127,922 151,354 restricted cash during the period

Cash, cash equivalents and restricted cash at 1,609,800 1,697,263 beginning of the period

Cash, cash equivalents and restricted cash at end $1,737,722$1,848,617of the period

Reconciliation of cash, cash equivalents and September September restricted cash: 30, 2021 30, 2020

Cash and cash equivalents $1,735,265$1,845,582

Restricted cash ^(1) 2,457 3,035

Total cash, cash equivalents and restricted cash $1,737,722$1,848,617



^(1) Restricted cash is classified under the Prepaid expenses and other current assets 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 unlessotherwise indicated.

(2) Use of Non-GAAP Financial Measures: In addition to reporting financialresults in accordance with U.S. GAAP, the Company provides certain financialmeasures that are not in accordance with U.S. GAAP (Non-GAAP). These Non-GAAPfinancial measures have certain limitations in that they do not have astandardized meaning and thus the Company's definition may be different fromsimilar Non-GAAP financial measures used by other companies and/or analysts andmay differ from period to period. Thus it may be more difficult to compare theCompany's financial performance to that of other companies. However, theCompany's management compensates for these limitations by providing therelevant disclosure of the items excluded in the calculation of these Non-GAAPfinancial measures both in its reconciliation to the U.S. GAAP financialmeasures and its consolidated financial statements, all of which should beconsidered when evaluating the Company's results.

The Company uses these Non-GAAP financial measures to supplement theinformation provided in its consolidated financial statements, which arepresented in accordance with U.S. GAAP. The presentation of Non-GAAP financialmeasures is not meant to be a substitute for financial measures presented inaccordance with U.S. GAAP, but rather should be evaluated in conjunction withand as a supplement to such U.S. GAAP measures. OpenText strongly encouragesinvestors to review its financial information in its entirety and not to relyon a single financial measure. The Company therefore believes that despitethese limitations, it is appropriate to supplement the disclosure of theU.S. GAAP measures with certain Non-GAAP measures defined below.

Non-GAAP-based net income and Non-GAAP-based EPS, attributable to OpenText, areconsistently calculated as GAAP-based net income or earnings per share,attributable to OpenText, on a diluted basis, excluding the effects of theamortization of acquired intangible assets, other income (expense), share-basedcompensation, and special charges (recoveries), all net of tax and any taxbenefits/expense items unrelated to current period income, as further describedin the tables below. Non-GAAP-based gross profit is the arithmetical sum ofGAAP-based gross profit and the amortization of acquired technology-basedintangible assets and share-based compensation within cost of sales.Non-GAAP-based gross margin is calculated as Non-GAAP-based gross profitexpressed as a percentage of total revenue. Non-GAAP-based income fromoperations is calculated as GAAP-based income from operations, excluding theamortization of acquired intangible assets, special charges (recoveries), andshare-based compensation expense.

Adjusted earnings before interest, taxes, depreciation and amortization(Adjusted EBITDA) is consistently calculated as GAAP-based net income,attributable to OpenText, excluding interest income (expense), provision forincome 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 expressedas a percentage of total revenue.

The Company's management believes that the presentation of the above definedNon-GAAP financial measures provides useful information to investors becausethey portray the financial results of the Company before the impact of certainnon-operational charges. The use of the term "non-operational charge" isdefined for this purpose as an expense that does not impact the ongoingoperating decisions taken by the Company's management. These items are excludedbased upon the way the Company's management evaluates the performance of theCompany's business for use in the Company's internal reports and are notexcluded in the sense that they may be used under U.S. GAAP.

The Company does not acquire businesses on a predictable cycle, and thereforebelieves that the presentation of Non-GAAP measures, which in certain casesadjust for the impact of amortization of intangible assets and the related taxeffects that are primarily related to acquisitions, will provide readers offinancial statements with a more consistent basis for comparison acrossaccounting periods and be more useful in helping readers understand theCompany's operating results and underlying operational trends. Additionally,the Company has engaged in various restructuring activities over the pastseveral years, primarily due to acquisitions and most recently in response tothe COVID-19 pandemic, that have resulted in costs associated with reductionsin headcount, consolidation of leased facilities and related costs, all whichare recorded under the Company's "Special charges (recoveries)" caption on theConsolidated Statements of Income. Each restructuring activity is a discreteevent based on a unique set of business objectives or circumstances, and eachdiffers in terms of its operational implementation, business impact and scope,and the size of each restructuring plan can vary significantly from period toperiod. Therefore, the Company believes that the exclusion of these specialcharges (recoveries) will also better aid readers of financial statements inthe understanding and comparability of the Company's operating results andunderlying operational trends.

In summary, the Company believes the provision of supplemental Non-GAAPmeasures allow investors to evaluate the operational and financial performanceof the Company's core business using the same evaluation measures thatmanagement uses, and is therefore a useful indication of OpenText's performanceor expected performance of future operations and facilitates period-to-periodcomparison of operating performance (although prior performance is notnecessarily indicative of future performance). As a result, the Companyconsiders it appropriate and reasonable to provide, in addition to U.S. GAAPmeasures, supplementary Non-GAAP financial measures that exclude certain itemsfrom the presentation of its financial results.

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

Reconciliation of selected GAAP-based measures to Non-GAAP-based measures for the three months ended September 30, 2021 (In thousands, except for per share data)

Three Months Ended September 30, 2021

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

Cost of revenues

Cloud services and $119,779 $(907) (1) $118,872 subscriptions

Customer support29,483 (721) (1) 28,762

Professional service and 51,725 (721) (1) 51,004 other

Amortization of acquired technology-based53,167 (53,167) (2) - intangible assets

GAAP-based gross profit and gross margin (%) / 574,185 69.0% 55,516 (3) 629,701 75.7% Non-GAAP-based gross profit and gross margin (%)

Operating expenses

Research and 100,165 (2,934) (1) 97,231 development

Sales and 146,240 (4,610) (1) 141,630 marketing

General and 71,477 (4,041) (1) 67,436 administrative

Amortization of acquired customer-based 51,884 (51,884) (2) - intangible assets

Special charges 344 (344) (4) - (recoveries)

GAAP-based income from operations / 182,689 119,329 (5) 302,018 Non-GAAP-based income from operations

Other income 29,782 (29,782) (6) - (expense), net

Provision for (recovery of) 43,450 (6,355) (7) 37,095 income taxes

GAAP-based net income / Non-GAAP-based 131,915 95,902 (8) 227,817 net income, attributable to OpenText

GAAP-based earnings per share / Non-GAAP-based $0.48 $0.35 (8) $0.83 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 recovery rate of approximately 25% 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, 2021

Per share diluted

GAAP-based net income, attributable to $131,915 $ 0.48 OpenText

Add:

Amortization 105,051 0.38

Share-based compensation 13,934 0.05

Special charges (recoveries) 344 -

Other (income) expense, net (29,782) (0.11)

GAAP-based provision for (recovery of) 43,450 0.17 income taxes

Non-GAAP-based provision for income taxes (37,095) (0.14)

Non-GAAP-based net income, attributable to $227,817 $ 0.83 OpenText

Reconciliation of Adjusted EBITDA



Three Months Ended September 30, 2021

GAAP-based net income, attributable to OpenText$ 131,915

Add:

Provision for (recovery of) income taxes 43,450

Interest and other related expense, net 37,055

Amortization of acquired technology-based 53,167 intangible assets

Amortization of acquired customer-based 51,884 intangible assets

Depreciation 21,386

Share-based compensation 13,934

Special charges (recoveries) 344

Other (income) expense, net (29,782)

Adjusted EBITDA $ 323,353



GAAP-based net income margin 15.8%

Adjusted EBITDA margin 38.9%

Reconciliation of Free cash flows



Three Months Ended September 30, 2021

GAAP-based cash flows provided by operating activities$ 189,669

Add:

Capital expenditures ^(1) (26,712)

Free cash flows $ 162,957



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

Reconciliation of selected GAAP-based measures to Non-GAAP-based measures for the three months ended June 30, 2021 (In thousands, except for per share data)

Three Months Ended June 30, 2021

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

Cost of revenues

Cloud services and $127,583 $(935) (1) $126,648 subscriptions

Customer support32,938 (505) (1) 32,433

Professional service and 53,662 (698) (1) 52,964 other

Amortization of acquired technology-based53,215 (53,215) (2) - intangible assets

GAAP-based gross profit and gross margin (%) / 621,814 69.6% 55,353 (3) 677,167 75.8% Non-GAAP-based gross profit and gross margin (%)

Operating expenses

Research and 117,235 (2,664) (1) 114,571 development

Sales and 183,237 (4,718) (1) 178,519 marketing

General and 73,019 (3,830) (1) 69,189 administrative

Amortization of acquired customer-based 52,469 (52,469) (2) - intangible assets

Special charges 3,152 (3,152) (4) - (recoveries)

GAAP-based income from operations / 171,681 122,186 (5) 293,867 Non-GAAP-based income from operations

Other income 45,017 (45,017) (6) - (expense), net

Provision for (recovery of) (2,215) 38,099 (7) 35,884 income taxes

GAAP-based net income / Non-GAAP-based 181,283 39,070 (8) 220,353 net income, attributable to OpenText

GAAP-based earnings per share / Non-GAAP-based $0.66 $0.14 (8) $0.80 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 recovery rate of approximately 1% 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 June 30, 2021

Per share diluted

GAAP-based net income, attributable to $181,283 $ 0.66 OpenText

Add:

Amortization 105,684 0.39

Share-based compensation 13,350 0.05

Special charges (recoveries) 3,152 0.01

Other (income) expense, net (45,017) (0.16)

GAAP-based provision for (recovery of) income (2,215) (0.02) taxes

Non-GAAP-based provision for income taxes (35,884) (0.13)

Non-GAAP-based net income, attributable to $220,353 $ 0.80 OpenText

Reconciliation of Adjusted EBITDA



Three Months Ended June 30, 2021

GAAP-based net income, attributable to OpenText $ 181,283

Add:

Provision for (recovery of) income taxes (2,215)

Interest and other related expense, net 37,550

Amortization of acquired technology-based 53,215 intangible assets

Amortization of acquired customer-based 52,469 intangible assets

Depreciation 21,021

Share-based compensation 13,350

Special charges (recoveries) 3,152

Other (income) expense, net (45,017)

Adjusted EBITDA $ 314,808



GAAP-based net income margin 20.3%

Adjusted EBITDA margin 35.2%

Reconciliation of Free cash flows



Three Months Ended June 30, 2021

GAAP-based cash flows provided by operating activities$ 296,189

Add:

Capital expenditures ^(1) (27,408)

Free cash flows $ 268,781



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

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

Three Months Ended September 30, 2020

GAAP-based Non-GAAP- GAAP- Measures Non-GAAP- based based Adjustments Notebased Measures % of Total 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 taxes (39,379) (0.14)

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

Reconciliation of Adjusted EBITDA



Three Months Ended September 30, 2020

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

Add:

Provision for (recovery of) income taxes 42,744

Interest and other related expense, net 39,089

Amortization of acquired technology-based 58,037 intangible assets

Amortization of acquired customer-based 54,993 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 operating activities$ 233,904

Add:

Capital expenditures ^(1) (15,305)

Free cash flows $ 218,599



^(1) Defined as "Additions of property and equipment" in the Condensed Consolidated 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 months ended September 30, 2021 and 2020:

Three Months Ended September 30,Three Months Ended September 30, 2021 2020

Currencies% of Revenue % of Expenses^(1)% of Revenue % of Expenses^(1)

EURO 23 % 13 % 22 % 13 %

GBP 5 % 6 % 5 % 5 %

CAD 3 % 14 % 3 % 9 %

USD 61 % 52 % 63 % 56 %

Other 8 % 15 % 7 % 17 %

Total 100 % 100 % 100 % 100 %

Expenses include all cost of revenues and operating expenses included^ within the Condensed Consolidated Statements of Income, except for(1) amortization of intangible assets, share-based compensation and special charges (recoveries).

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SOURCE Open Text Corporation