Open Text Corporation (NASDAQ: OTEX), (TSX: OTEX), today announced its financial results for the first quarter ended September 30, 2022.

"OpenText demonstrated outstanding execution and delivered record Q1 revenues and enterprise cloud bookings, up 37% Y/Y, amidst a dynamic macro environment," said Mark J. Barrenechea, OpenText CEO & CTO. "Total revenues of $852 million grew 2.4% year-over-year or 7.1% in constant currency. Cloud revenues of $405 million grew 13.5% year-over-year or 16.9% in constant currency, driven by increased cloud consumption. Annual recurring revenues of $722 million grew 4.4% year-over-year or 8.9% in constant currency, representing 85% of total revenues and achieving seven consecutive quarters of cloud and ARR organic growth in constant currency."

"OpenText empowers organizations to drive cloud-based digital transformations, helping customers excel in a world of rapid change," added Mr. Barrenechea. "On August 25, 2022, we announced our intention to acquire Micro Focus International plc, and on October 18, Micro Focus shareholders approved the offer - an important milestone in our path towards completing the acquisition. With the planned acquisition of Micro Focus, OpenText will be one of the world's largest software and cloud businesses with a $170 billion market opportunity. We remain on track to close the Micro Focus acquisition in the first calendar quarter of 2023."

"We are pleased with our first fiscal quarter performance where we continued to lead with operational excellence in a dynamic environment," said Madhu Ranganathan, OpenText EVP, CFO. "With approximately $1.7 billion in cash as of September 30, 2022, our balance sheet and liquidity position remain solid. OpenText's strong momentum reflects continued execution of OpenText strategic priorities and positions us well for the upcoming integration of Micro Focus."   

Financial Highlights for Q1 Fiscal 2023 with Year Over Year Comparisons

Summary of Quarterly Results

(In millions, except per share data)

Q1 FY'23

Q1 FY'22

$ Change 

% Change 

 

Q1 FY'23
in CC*

% Change
in CC*

 

Revenues:

        

Cloud services and subscriptions

$404.7

$356.6

$48.1

13.5 %

 

$416.8

16.9 %

 

Customer support

317.4

335.2

($17.9)

(5.3) %

 

336.9

0.5 %

 

Total annual recurring revenues**

$722.0

$691.8

$30.2

4.4 %

 

$753.6

8.9 %

 

License

62.5

73.5

($11.0)

(14.9) %

 

66.4

(9.7) %

 

Professional service and other

67.5

67.0

$0.5

0.8 %

 

71.8

7.2 %

 

Total revenues

$852.0

$832.3

$19.7

2.4 %

 

$891.8

7.1 %

 

GAAP-based operating income

$146.4

$182.7

($36.3)

(19.9) %

 

N/A

N/A

 

Non-GAAP-based operating income (1)

$280.9

$302.0

($21.1)

(7.0) %

 

$296.4

(1.9) %

 

GAAP-based net income (loss) attributable to OpenText

($116.9)

$131.9

($248.8)

(188.6) %

 

N/A

N/A

 

GAAP-based EPS, diluted

($0.43)

$0.48

($0.91)

(189.6) %

 

N/A

N/A

 

Non-GAAP-based EPS, diluted (1)(2)

$0.77

$0.83

($0.06)

(7.2) %

 

$0.83

— %

 

Adjusted EBITDA (1)

$304.0

$323.4

($19.3)

(6.0) %

 

$319.7

(1.1) %

 

Operating cash flows

$132.0

$189.7

($57.7)

(30.4) %

 

N/A

N/A

 

Free cash flows (1)

$95.6

$163.0

($67.3)

(41.3) %

 

N/A

N/A

 

Dividend

As part of our quarterly, non-cumulative cash dividend program, the Board declared on November 2, 2022, a cash dividend of $0.24299 per common share. The record date for this dividend is December 2, 2022 and the payment date is December 22, 2022. 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

  • OpenText announced its intention to acquire Micro Focus International plc and fund the all-cash offer with existing cash, new debt and a draw on our existing revolving credit facility
  • Micro Focus shareholders approved all cash offer by OpenText
  • Key customer wins in the quarter include: Al Ahli Bank of Kuwait, Alcatel Lucent, Auto Club Group of Michigan, The City of Calgary, Close Brothers Group,  DataExpert, Engie, Fifth Third Bank, Industry Data Exchange Association, KMD Nexus,  Penn Mutual, People's Education Press, Sutter Health, Serious Fraud Office, University of Winchester and Water Board Hoogheemraadschap
  • OpenText kicked off OpenText World introducing Cloud Editions 22.4 and Project Titanium
  • OpenText unveiled new integrations and innovations with Google Cloud at OpenText World 2022
  • OpenText announced 2030 Pledge Zero-in with ambitious ESG targets and programs

Summary of Quarterly Results

 

Q1 FY'23

Q4 FY'22

Q1 FY'22

% Change
(Q1 FY'23 vs
Q4 FY'22)

 

% Change
(Q1 FY'23 vs
Q1 FY'22)

 

Revenue (millions)

$852.0

$902.5

$832.3

(5.6) %

 

2.4 %

 

GAAP-based gross margin

69.7 %

70.2 %

69.0 %

(50)

bps

70

bps

Non-GAAP-based gross margin (1)

75.2 %

75.9 %

75.7 %

(70)

bps

(50)

bps

GAAP-based EPS, diluted

($0.43)

$0.38

$0.48

(213.2) %

 

(189.6) %

 

Non-GAAP-based EPS, diluted (1)(2)

$0.77

$0.80

$0.83

(3.8) %

 

(7.2) %

 

Conference Call Information

OpenText posted an investor presentation on its Investor Relations website at http://investors.opentext.com and invites the public 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.

A replay of the call will be available beginning November 3, 2022 at 7:00 p.m. ET through 11:59 p.m. on November 17, 2022 and can be accessed by dialing 1-855-669-9658 (toll-free) or +1-604-674-8052 (international) and using passcode 9454 followed by the number sign.

About OpenText

OpenText, The Information Company™, 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.

For more information, please contact:
Harry E. Blount
Senior Vice President, Global Head of Investor Relations
Open Text Corporation
415-963-0825
[email protected]