Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Commission file number: 0-27544 ______________________________________ OPEN TEXT CORPORATION Washington, DC 20549 ______________________ FORM 10-K ______________________ ☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended June 30, 2023. OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to (Exact name of Regi ...

OpenText Corporation (NASDAQ:OTEX) Q3 2023 Earnings Conference Call May 4, 2023 5:00 PM ET Company Participants Harry Blount – Senior Vice President-Investor Relations Mark J. Barrenechea – Chief Executive Officer and Chief Technology Officer Madhu Ranganathan – Executive Vice President and Chief Financial Officer Conference Call Participants Raimo Lenschow – Barclays Daniel Chan – TD Cowen Thanos Moschopoulos – BMO Capital Markets Paul Treiber – RBC Capital Markets Stephanie Price – CIBC Adhir Kadve – Eigh ...

Financial Performance - Total revenue for Q3 Fiscal 2023 was $1,244.7 million, an increase of 41.1% compared to the same period last year, and up 44.9% after adjusting for foreign exchange impacts [232]. - Total annual recurring revenue reached $1,011.3 million, up 37.7% year-over-year, and up 41.1% after adjusting for foreign exchange impacts [232]. - Cloud services and subscriptions revenue was $435.4 million, reflecting an 8.3% increase compared to the same period last year, and up 10.4% after adjusting for foreign exchange impacts [232]. - GAAP-based net income attributable to OpenText was $57.6 million, down from $74.7 million in the same period last fiscal year; Non-GAAP-based net income was $197.8 million, up from $190.8 million [238]. - Adjusted EBITDA was $365.1 million, compared to $284.5 million in the same period last fiscal year [238]. - The company reported a GAAP-based EPS of $0.21 for the three months ended March 31, 2023, down from $0.28 in the same period of 2022 [257]. - Non-GAAP-based earnings per share for the three months ended March 31, 2023, was $0.73, compared to a GAAP-based earnings per share of $0.21 [345]. - For the nine months ended March 31, 2023, GAAP-based net income attributable to OpenText was $199.1 million, with an Adjusted EBITDA of $1,010.1 million [364]. Acquisition and Integration - The integration of Micro Focus is expected to enhance the company's operational capabilities and market presence [221]. - Total revenues increased by $362.4 million in Q3 Fiscal 2023, primarily due to Micro Focus Acquisition, contributing $374.4 million to total revenues [253]. - The Micro Focus Acquisition was completed for a total consideration of $6.2 billion, including cash and repayment of outstanding indebtedness [236]. - Customer support revenues increased by $243.4 million or 73.2% for the three months ended March 31, 2023, primarily driven by the Micro Focus Acquisition [272]. - Professional service and other revenues increased by $26.4 million or 39.4% for the three months ended March 31, 2023, compared to the same period in the prior fiscal year, driven by the Micro Focus Acquisition [288]. - Research and development expenses increased by $93.0 million during the three months ended March 31, 2023, primarily due to the Micro Focus Acquisition, with payroll-related benefits rising by $63.6 million [296]. - General and administrative expenses increased by $38.9 million for the three months ended March 31, 2023, primarily due to the Micro Focus Acquisition, with payroll and payroll-related benefits increasing by $22.8 million [303]. Workforce and Restructuring - Approximately 25,550 employees were reported as of March 31, 2023, with 10,600 joining through the Micro Focus acquisition [231]. - A restructuring plan post-Micro Focus Acquisition is expected to reduce the combined workforce by approximately 8%, or 2,000 employees, with an estimated cost of $135 million to $150 million [247]. - The company’s research and development labor resources increased by 4,153 employees, from 4,391 at March 31, 2022, to 8,544 at March 31, 2023 [298]. - Sales and marketing labor resources increased by 2,316 employees, from 2,770 at March 31, 2022 to 5,086 at March 31, 2023 [302]. Revenue Streams and Growth - Annual recurring revenues are a key focus, with significant contributions from cloud services and subscriptions [232]. - Cloud services renewal rate increased to 95% from 93% year-over-year, excluding the impact of acquisitions [260]. - License revenues increased by $59.1 million or 73.3% for the three months ended March 31, 2023, with a gross margin percentage increase to 97% [279][281]. - Customer support renewal rate improved to 95% for the quarter ended March 31, 2023, compared to 94% in the prior year [269]. - Total cost of revenues for the three months ended March 31, 2023, was $369.7 million, an increase of $95.5 million or 34.9% compared to $274.2 million in the same period of 2022 [257]. Expenses and Margins - GAAP-based gross margin was 70.3%, up from 68.9% in the same period last fiscal year; Non-GAAP-based gross margin was 75.8%, up from 74.5% [238]. - Total operating expenses for the three months ended March 31, 2023, were $810.96 million, an increase of $334.52 million compared to the same period in the prior fiscal year [294]. - Overall gross margin percentage on Customer support revenues decreased to 88% from 90% [274]. - Cost of professional service and other revenues rose by $21.8 million during the same period, primarily due to a $22.1 million increase in labor-related costs [289]. Cash Flow and Financing - Operating cash flow for the nine months ended March 31, 2023, was $663.9 million, down 9.0% from $729.9 million in the same period last fiscal year [238]. - Cash used in investing activities surged to $5.6 billion for the nine months ended March 31, 2023, primarily due to the Micro Focus acquisition, compared to $933.0 million in the same period of the previous year [380]. - Cash flows provided by financing activities increased by $4.4 billion during the nine months ended March 31, 2023, compared to the prior year, reflecting significant financing activities [382]. - As of March 31, 2023, total cash, cash equivalents, and restricted cash amounted to $1.4 billion, a decrease of $296.2 million from $1.7 billion as of June 30, 2022 [372]. Tax and Regulatory Changes - The effective tax rate for the three months ended March 31, 2023 was (27.5)%, compared to 35.5% for the same period in 2022 [324]. - The effective tax rate for the nine months ended March 31, 2023, was 26.5%, a decrease from 29.6% for the same period in 2022 [327]. - The provision from the Tax Cuts and Jobs Act of 2017 requiring capitalization and amortization of research and development costs will be effective starting Fiscal 2023 [328]. - The Inflation Reduction Act introduced a 15% corporate alternative minimum tax for large corporations, effective for Fiscal 2024, which the Company is currently evaluating [329].

Financial Data and Key Metrics Changes - OpenText achieved overall constant currency revenue growth of 7.8% in Q2, with cloud revenue growth of 16% and an adjusted EBITDA margin of 37.7% [8][15][24] - The company reported adjusted EBITDA of $341 million, representing 38% of revenue, compared to $344 million or 39.2% in the previous year [24][50] - Free cash flow for the quarter was $163 million, with adjusted EPS of $0.89 or $0.94 in constant currency [15][50] Business Line Data and Key Metrics Changes - The enterprise cloud bookings grew by 12%, with trailing 12-month cloud bookings reaching $511 million, up 25% year-over-year [15][51] - The company reported a 95% renewal rate for off-cloud services in Q2, with expectations to improve Micro Focus's renewal rates to match this by the end of fiscal 2025 [12][21] - In the content services space, OpenText plans to leverage new capabilities to incorporate voice, video, and imaging workloads [39] Market Data and Key Metrics Changes - International markets, particularly APAC, saw key cloud wins, with strong growth in sectors such as government, healthcare, and banking [25] - The total addressable market (TAM) for OpenText is projected to exceed $200 billion, driven by six key markets including content services, business networks, and cybersecurity [1][61] Company Strategy and Development Direction - OpenText is focused on digital transformation through four key areas: total enterprise reinvention, a new workforce, new digital paradigms, and new digital requirements [10][36] - The company aims to deliver $6 billion in annual revenues, with a $2 billion cloud revenue business and over $2 billion in adjusted EBITDA dollars [9][17] - OpenText is committed to integrating Micro Focus to enhance customer engagement and improve renewal rates, with a focus on operational efficiencies and cost reductions [21][27] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to navigate current economic challenges, including inflation and supply chain constraints, emphasizing the increasing demand for digitalization [16][42] - The outlook for fiscal 2023 includes total revenues projected to increase by 28% to 30%, with Micro Focus contributing between $870 million to $920 million [17][44] - Management highlighted the importance of innovation and customer engagement in driving future growth, particularly in the cloud segment [12][40] Other Important Information - The company plans to execute a $400 million cost reduction plan, which includes a workforce reduction of approximately 8% or 2,000 employees [53][104] - OpenText's capital allocation strategy includes a commitment to pay down debt by a minimum of $150 million per quarter [45][55] - The company expects to maintain a dividend program, with plans to grow dividends as free cash flows increase [45] Q&A Session Summary Question: How does the product fit and revenue synergy opportunity compare to previous acquisitions? - Management stated that this acquisition represents the largest expansion of information management, enhancing capabilities across various industries [76] Question: What are the key factors for the acquisition's success? - Management emphasized the importance of customer engagement, renewal rates, and accelerated product innovation as critical success factors [77][78] Question: How does the fiscal 2023 guidance reflect macroeconomic conditions? - Management clarified that the organic growth trajectory remains strong, with Micro Focus's integration being a significant factor in the guidance [80][81] Question: What is the timeline for improving Micro Focus's renewal rates? - Management indicated that renewal rates are currently in the low 80s, with a goal to improve them to match OpenText's mid-90s rates over time [132] Question: How will R&D be prioritized post-acquisition? - Management highlighted a focus on accelerating cloud capabilities and integrating new technologies to enhance product offerings [138]

| --- | --- | |---------------------------|-------| | | | | | | | | | | | | | | | | Investor Presentation | | | February 2, 2023 | | | NASDAQ: OTEX \| TSX: OTEX | | Safe Harbor and IP Statement These forward-looking statements involve known and unknown risks and uncertainties, such as those relating to: all statements regarding the expected future financial position, results of operations, cash flows, dividends, financing plans, business strategy, budgets, capital expenditures, competitive positions, growth ...

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, DC 20549 ______________________ FORM 10-Q ______________________ ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 OPEN TEXT CORPORATION (Exact name of Registrant as specified in its charter) ______________________ Canada 98-0154400 (State or other jurisdiction of incorporation or organization) (IRS Employer Identification No.) 275 Frank Tompa Drive, Waterloo, Ontario Canada N2L 0A1 (Addres ...

Open Text Corporation (NASDAQ:OTEX) Q1 2023 Earnings Conference Call November 3, 2022 5:00 PM ET Company Participants Harry Blount - Senior Vice President, Investor Relations Mark Barrenechea - Chief Executive Officer and Chief Technology Officer Madhu Ranganathan - Executive Vice President and Chief Financial Officer Conference Call Participants George Kurosawa - Citi Stephanie Price - CIBC Paul Treiber - RBC Capital Markets Richard Tse - National Bank Financial Thanos Moschopoulos - BMO Capital Markets Da ...

[Part I Financial Information](index=3&type=section&id=Part%20I%20Financial%20Information) This section provides a comprehensive overview of the company's financial performance, condition, and related disclosures for the period [Financial Statements](index=3&type=section&id=Item%201.%20Financial%20Statements) This section presents the unaudited condensed consolidated financial statements for the three months ended September 30, 2022, including balance sheets, income statements, and cash flow statements, along with detailed notes [Condensed Consolidated Balance Sheets](index=3&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) As of September 30, 2022, total assets were **$10.08 billion**, total liabilities **$6.23 billion**, and total shareholders' equity **$3.85 billion** Condensed Consolidated Balance Sheets (in thousands) | | September 30, 2022 (in thousands) | June 30, 2022 (in thousands) | | :--- | :--- | :--- | | **Total current assets** | $2,244,054 | $2,285,367 | | **Total assets** | **$10,077,088** | **$10,178,973** | | **Total current liabilities** | $1,577,524 | $1,468,258 | | **Total liabilities** | $6,226,947 | $6,146,713 | | **Total shareholders' equity** | $3,850,141 | $4,032,260 | | **Total liabilities and shareholders' equity** | **$10,077,088** | **$10,178,973** | [Condensed Consolidated Statements of Income](index=4&type=section&id=Condensed%20Consolidated%20Statements%20of%20Income) Total revenues increased to **$852.0 million**, but the company reported a net loss of **$116.9 million** due to significant 'Other income (expense), net' for the quarter Condensed Consolidated Statements of Income (in thousands) | Metric | Three Months Ended Sep 30, 2022 (in thousands) | Three Months Ended Sep 30, 2021 (in thousands) | | :--- | :--- | :--- | | **Total revenues** | $852,036 | $832,308 | | **Gross profit** | $593,688 | $574,185 | | **Income from operations** | $146,353 | $182,689 | | **Net income (loss) attributable to OpenText** | **$(116,929)** | **$131,915** | | **Earnings (loss) per share—diluted** | **$(0.43)** | **$0.48** | - The significant swing from net income to net loss was primarily caused by the "Other income (expense), net" line item, which was an expense of **$189.2 million** in Q1 2023 versus an income of **$29.8 million** in Q1 2022[13](index=13&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Net cash provided by operating activities decreased to **$132.0 million**, with cash and cash equivalents increasing by **$10.4 million** for the period Condensed Consolidated Statements of Cash Flows (in thousands) | Cash Flow Activity | Three Months Ended Sep 30, 2022 (in thousands) | Three Months Ended Sep 30, 2021 (in thousands) | | :--- | :--- | :--- | | **Net cash provided by operating activities** | $131,959 | $189,669 | | **Net cash used in investing activities** | $(36,324) | $(26,416) | | **Net cash used in financing activities** | $(57,161) | $(26,054) | | **Increase in cash, cash equivalents and restricted cash** | $10,372 | $127,922 | [Notes to Condensed Consolidated Financial Statements](index=9&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) Key disclosures include the proposed **$6.0 billion** Micro Focus acquisition, a **$181.5 million** unrealized derivative loss, and a potential **$470 million** tax dispute with the CRA - On August 25, 2022, the company announced an agreement for an all-cash offer to acquire Micro Focus International PLC for approximately **$6.0 billion**, with the deal expected to close in the first quarter of calendar 2023[28](index=28&type=chunk)[163](index=163&type=chunk) - The company entered into derivative transactions to mitigate foreign currency risks associated with the Micro Focus acquisition, resulting in an unrealized loss of **$181.5 million** for the quarter, which was recognized in "Other income (expense), net"[150](index=150&type=chunk)[152](index=152&type=chunk)[178](index=178&type=chunk) - The company is contesting reassessments from the Canada Revenue Agency (CRA) regarding transfer pricing and asset valuation. An unsuccessful defense could lead to an income tax expense reducing deferred tax assets by up to approximately **$470 million**[125](index=125&type=chunk)[129](index=129&type=chunk)[130](index=130&type=chunk) Revenue by Geography (in thousands) | Revenue by Geography | Three Months Ended Sep 30, 2022 (in thousands) | Three Months Ended Sep 30, 2021 (in thousands) | | :--- | :--- | :--- | | Americas | $557,788 | $519,692 | | EMEA | $228,353 | $244,597 | | Asia Pacific | $65,895 | $68,019 | | **Total revenues** | **$852,036** | **$832,308** | [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=39&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses the company's Q1 FY23 performance, highlighting revenue growth, the GAAP net loss due to derivative losses, the 'Total Growth' strategy, liquidity, and debt facilities for the Micro Focus acquisition [Executive Overview](index=41&type=section&id=EXECUTIVE%20OVERVIEW) Total revenue grew **2.4%** to **$852.0 million**, with annual recurring revenues up **4.4%** to **$722.0 million**, but a GAAP net loss of **$116.9 million** was reported Key Financial Metrics (in millions) | Metric | Q1 FY2023 (in millions) | YoY Change | | :--- | :--- | :--- | | Total Revenue | $852.0M | +2.4% | | Annual Recurring Revenue | $722.0M | +4.4% | | Cloud Services & Subscriptions Revenue | $404.7M | +13.5% | | GAAP Net Income (Loss) | $(116.9)M | N/A (vs. $131.9M income) | | Adjusted EBITDA | $304.0M | -6.0% | | Operating Cash Flow | $132.0M | -30.4% | - The company's "Total Growth" strategy focuses on organic initiatives, innovation, and acquisitions to increase recurring revenues, expand margins, and drive overall cash flow generation[207](index=207&type=chunk) [Results of Operations](index=44&type=section&id=RESULTS%20OF%20OPERATIONS) Total revenue growth was driven by a **13.5%** increase in Cloud services and subscriptions, offset by decreases in Customer support and License revenue, leading to a GAAP net loss - Cloud services and subscriptions revenues increased by **13.5%** (**16.9%** in constant currency), primarily driven by incremental revenues from acquisitions[222](index=222&type=chunk) - Customer support revenues decreased by **5.3%** but increased by **0.5%** after factoring in a **$19.5 million** unfavorable impact from foreign exchange rate changes[228](index=228&type=chunk) - Sales and marketing expenses increased by **$20.9 million**, and Research and development expenses increased by **$10.0 million** compared to the prior-year period, partly due to recent acquisitions[242](index=242&type=chunk)[246](index=246&type=chunk) Reconciliation of GAAP to Non-GAAP EPS (per share) | Reconciliation of GAAP to Non-GAAP EPS | Three Months Ended Sep 30, 2022 (per share) | | :--- | :--- | | GAAP-based earnings (loss) per share - diluted | $(0.43) | | Adjustments (Amortization, SBC, etc.) | $1.20 | | **Non-GAAP-based earnings per share - diluted** | **$0.77** | [Liquidity and Capital Resources](index=58&type=section&id=LIQUIDITY%20AND%20CAPITAL%20RESOURCES) The company maintained **$1.70 billion** in cash, with operating cash flow at **$132.0 million**, and secured **$4.585 billion** in new debt for the Micro Focus acquisition - Operating cash flow decreased by **$57.7 million** to **$132.0 million** compared to the same period last year[291](index=291&type=chunk)[295](index=295&type=chunk) - To finance the Micro Focus acquisition, the company secured a **$2.585 billion** Acquisition Term Loan and a **$2.0 billion** Bridge Loan[339](index=339&type=chunk)[345](index=345&type=chunk) - The company declared and paid cash dividends of **$0.24299 per share**, totaling **$64.7 million** for the quarter[300](index=300&type=chunk) Contractual Obligations (in thousands) | Contractual Obligations | Total (in thousands) | Next 9 Months (in thousands) | 1-3 Years (in thousands) | 3-5 Years (in thousands) | Beyond 5 Years (in thousands) | | :--- | :--- | :--- | :--- | :--- | :--- | | Long-term debt obligations | $5,336,028 | $134,121 | $1,289,157 | $263,500 | $3,649,250 | | Operating lease obligations | $281,067 | $50,268 | $103,186 | $62,269 | $65,344 | | Purchase obligations | $93,168 | $36,137 | $44,352 | $12,679 | $0 | [Quantitative and Qualitative Disclosures About Market Risk](index=69&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company faces significant interest rate risk on its **$955.0 million** Term Loan B and foreign currency risk from derivatives, with **$515.5 million** cash held in foreign currencies - The company has significant exposure to interest rate risk on its **$955.0 million** Term Loan B, where a **1%** rate increase would raise annual interest payments by approximately **$9.6 million**[378](index=378&type=chunk) - Derivative transactions for the Micro Focus acquisition create substantial foreign currency risk. A **one-cent** change in the British Pound to U.S. dollar forward exchange rate would cause a **$22.7 million** change in the mark-to-market valuation of outstanding forward contracts[386](index=386&type=chunk) - The company holds a significant portion of its cash in foreign currencies, with a total of **$515.5 million** in U.S. dollar equivalent as of September 30, 2022, exposing it to translation risk[390](index=390&type=chunk) [Controls and Procedures](index=71&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that disclosure controls and procedures were effective as of September 30, 2022, with no material changes to internal control over financial reporting during the quarter - Management, including the CEO and CFO, concluded that the company's disclosure controls and procedures were effective as of September 30, 2022[391](index=391&type=chunk) - No material changes to internal control over financial reporting were identified during the fiscal quarter ended September 30, 2022[392](index=392&type=chunk) [Part II Other Information](index=72&type=section&id=Part%20II%20Other%20Information) This section details additional information, primarily focusing on the significant risks associated with the proposed Micro Focus acquisition [Risk Factors](index=72&type=section&id=Item%201A.%20Risk%20Factors) Key risks for the Micro Focus acquisition include potential failure to complete, inability to realize synergies, integration challenges, substantial new debt, and significant transaction costs - There is a risk that the Micro Focus acquisition may not be consummated or that the company may fail to realize the anticipated benefits and synergies due to complex integration challenges[396](index=396&type=chunk)[398](index=398&type=chunk) - The incurrence of substantial indebtedness to finance the acquisition could adversely impact liquidity, limit flexibility in responding to business opportunities, and increase vulnerability to adverse economic conditions[402](index=402&type=chunk)[405](index=405&type=chunk) - The company has incurred and will continue to incur significant transaction costs, including fees for financing and mark-to-market losses on derivatives, which could adversely affect results of operations[408](index=408&type=chunk)

| --- | --- | --- | |-------|---------------------------|-------| | | | | | | | | | | | | | | | | | | | | | | Investor Presentation | | | | August 4, 2022 | | | | | | | | | | | | NASDAQ: OTEX \| TSX: OTEX | | Safe Harbor and IP Statement This presentation contains forward-looking statements. These forward-looking statements are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 and other applicable securities laws of the United States and Canada. All statemen ...

Open Text Corporation (NASDAQ:OTEX) Q4 2022 Earnings Conference Call August 4, 2022 5:00 PM ET Company Participants Harry Blount – Senior Vice President-Investor Relations Mark Barrenechea – Vice Chair, Chief Executive Officer and Chief Technology Officer Madhu Ranganathan – Executive Vice President and Chief Financial Officer Conference Call Participants Stephanie Price – CIBC World Markets Raimo Lenschow – Barclays Richard Tse – National Bank Financial Thanos Moschopoulos – BMO Capital Markets Paul Treibe ...