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OpenText(OTEX) - 2024 Q4 - Annual Results
OTEXOpenText(OTEX)2024-08-01 20:14

Revenue Growth and Performance - Total annual revenues reached 5.8billion,representinga295.8 billion, representing a 29% year-over-year growth[1][2] - Annual Recurring Revenues (ARR) grew to 4.5 billion, up 25.4% year-over-year[1][3] - Cloud revenues increased to 1.8billion,up7.11.8 billion, up 7.1% year-over-year[1][3] - OpenText's FY'24 revenue increased by 28.6% to 5,769.6 million compared to FY'23[16] - Total revenues for the year ended June 30, 2024, increased to 5,769,577thousand,upfrom5,769,577 thousand, up from 4,484,980 thousand in 2023[26] - Cloud services and subscriptions revenue grew to 1,820,524thousandin2024,upfrom1,820,524 thousand in 2024, up from 1,700,433 thousand in 2023[26] - Revenue composition by currency for the year ended June 30, 2024: USD 59%, EURO 22%, GBP 5%, CAD 3%, Other 11%[83] Profitability and Margins - Adjusted EBITDA for the fiscal year was 2.0billion,withamarginof34.12.0 billion, with a margin of 34.1%[3][6] - GAAP-based gross margin for FY'24 improved to 72.6%, up 200 basis points from FY'23[16] - Non-GAAP-based diluted EPS for FY'24 was 4.17, a 26.7% increase from FY'23[16] - Gross profit for the year ended June 30, 2024, was 4,191,028thousand,comparedto4,191,028 thousand, compared to 3,168,393 thousand in 2023[26] - Non-GAAP-based gross margin for the year ended June 30, 2024 was 77.3%, compared to GAAP-based gross margin of 72.6%[55] - Adjusted EBITDA for the year ended June 30, 2024 was 1,970.20million,representinganAdjustedEBITDAmarginof34.11,970.20 million, representing an Adjusted EBITDA margin of 34.1%[60] - GAAP-based gross profit margin for Q2 2023 was 71.4%, while Non-GAAP-based gross profit margin was 76.9%[69] - GAAP-based gross profit for the year ended June 30, 2023 was 3,168,393 with a gross margin of 70.6%, while Non-GAAP-based gross profit was 3,412,866withagrossmarginof76.13,412,866 with a gross margin of 76.1%[75] Cash Flow and Financial Health - Free cash flows for the fiscal year were 808 million, up 23.3% year-over-year[3][6] - The consolidated Net Leverage Ratio improved to 2.3x as of June 30, 2024[4] - OpenText reduced its debt by 2.0billioninthequarter[8]−Long−termdebtreducedto2.0 billion in the quarter[8] - Long-term debt reduced to 6,356,943 thousand in 2024, down from 8,562,096thousandin2023[23]−FreecashflowsfortheyearendedJune30,2024were8,562,096 thousand in 2023[23] - Free cash flows for the year ended June 30, 2024 were 808.40 million, calculated from GAAP-based cash flows from operating activities of 967.69millionminuscapitalexpendituresof967.69 million minus capital expenditures of 159.30 million[61] - Free cash flow for Q1 2024 was 348.160million,derivedfromoperatingcashflowsof348.160 million, derived from operating cash flows of 384.697 million minus capital expenditures of 36.537million[68]−FreecashflowforQ22023was36.537 million[68] - Free cash flow for Q2 2023 was 91.241 million, derived from operating cash flows of 115.301millionminuscapitalexpendituresof115.301 million minus capital expenditures of 24.060 million[74] - Free cash flows for the year ended June 30, 2023 were 655,373,calculatedbysubtractingcapitalexpendituresof655,373, calculated by subtracting capital expenditures of 123,832 from GAAP-based cash flows provided by operating activities of 779,205[81]ShareRepurchaseandDividends−Thecompanyannouncedanew779,205[81] Share Repurchase and Dividends - The company announced a new 300 million share repurchase program[1][2] - The annualized dividend was increased by 5% to 1.05pershare[1][2]−OpenText′sFiscal2025RepurchasePlanallowsforthepurchaseofupto1.05 per share[1][2] - OpenText's Fiscal 2025 Repurchase Plan allows for the purchase of up to 300 million of common shares, with a maximum of 21,179,064 shares, representing 10% of the company's public float[11] - Under the Fiscal 2024 Repurchase Plan, OpenText purchased and cancelled 5,073,913 common shares for approximately 150millionatanaveragepriceof150 million at an average price of 29.57 per share[10] - Dividends declared in 2024 amounted to 271,486K,comparedto271,486K, compared to 261,464K in 2023 and 237,655Kin2022[30]−Commonsharesrepurchasedin2024amountedto237,655K in 2022[30] - Common shares repurchased in 2024 amounted to 152,333K, compared to 176,987Kin2023[30]DivestituresandDebtReduction−ThecompanycompletedthedivestitureofitsAMCbusinessfor176,987K in 2023[30] Divestitures and Debt Reduction - The company completed the divestiture of its AMC business for 2.275 billion[3] - OpenText completed the divestiture of its Application Modernization and Connectivity (AMC) business to Rocket Software for 2.275billion[8]−ProceedsfromAMCDivestiturewere2.275 billion[8] - Proceeds from AMC Divestiture were 2.23 billion in Q2 2024[32] - Repayment of long-term debt and Revolver was 2.01billioninQ22024[32]Non−GAAPFinancialMeasures−Thecompanyexcludesamortizationofacquiredintangibleassets,share−basedcompensation,andspecialcharges(recoveries)fromNon−GAAPmeasurestoprovideamoreconsistentbasisforcomparisonacrossaccountingperiods[44]−Thecompany′sNon−GAAP−basedtaxrateforthethreemonthsendedJune30,2024,wasapproximately142.01 billion in Q2 2024[32] Non-GAAP Financial Measures - The company excludes amortization of acquired intangible assets, share-based compensation, and special charges (recoveries) from Non-GAAP measures to provide a more consistent basis for comparison across accounting periods[44] - The company's Non-GAAP-based tax rate for the three months ended June 30, 2024, was approximately 14%, compared to a GAAP-based tax provision rate of approximately 49%[50] - The company's Non-GAAP measures exclude items such as amortization, share-based compensation, special charges (recoveries), and other income (expense) to better reflect ongoing business and operating results[48] - The company's management believes that Non-GAAP financial measures provide useful information to investors by portraying financial results before the impact of certain non-operational charges[44] - GAAP-based net income for the year ended June 30, 2024 was 465.09 million, while Non-GAAP-based net income was 1,137.25million[55][58]−Non−GAAP−basednetincomeforthethreemonthsendedJune30,2024,was1,137.25 million[55][58] - Non-GAAP-based net income for the three months ended June 30, 2024, was 267,427, with diluted earnings per share of 0.98[48]−Non−GAAP−basedincomefromoperationsforthethreemonthsendedJune30,2024,was0.98[48] - Non-GAAP-based income from operations for the three months ended June 30, 2024, was 413,475[48] - Non-GAAP-based net income for Q1 2024 was 257.049million,withadilutedEPSof257.049 million, with a diluted EPS of 0.94[65] - Non-GAAP-based net income for Q2 2023 was 245.837million,withadilutedEPSof245.837 million, with a diluted EPS of 0.91[71] - Non-GAAP-based net income attributable to OpenText for the year ended June 30, 2023 was 890,700,comparedtoGAAP−basednetincomeof890,700, compared to GAAP-based net income of 150,379[77] Quarterly Performance - Q4 FY'24 revenue was 1,362.1million,a5.91,362.1 million, a 5.9% decrease from Q3 FY'24 and an 8.6% decrease from Q4 FY'23[17] - GAAP-based diluted EPS for Q4 FY'24 was 0.91, a 152.8% increase from Q3 FY'24 and a 605.6% increase from Q4 FY'23[17] - Net income for the three months ended June 30, 2024, was 248,274thousand,comparedtoanetlossof248,274 thousand, compared to a net loss of 48,685 thousand in 2023[24] - GAAP-based net income for the three months ended June 30, 2024, was 248,229,withanetincomemarginof18.2248,229, with a net income margin of 18.2%[53] - GAAP-based net income for Q1 2024 was 98.285 million, while Non-GAAP-based net income was 257.049million[65]−GAAP−basednetlossforQ22023was257.049 million[65] - GAAP-based net loss for Q2 2023 was 48.734 million, while Non-GAAP-based net income was 245.837million[71]OperationalExpensesandAdjustments−Researchanddevelopmentexpensesincreasedto245.837 million[71] Operational Expenses and Adjustments - Research and development expenses increased to 893,932 thousand in 2024, up from 680,587thousandin2023[26]−Share−basedcompensationadjustmentstotaled680,587 thousand in 2023[26] - Share-based compensation adjustments totaled 140.08 million for the year ended June 30, 2024[55][58] - Amortization adjustments totaled 676.33millionfortheyearendedJune30,2024[58]−Specialcharges(recoveries)adjustmentstotaled676.33 million for the year ended June 30, 2024[58] - Special charges (recoveries) adjustments totaled 135.31 million for the year ended June 30, 2024[55][58] - Other income (expense) adjustments totaled (358.39)millionfortheyearendedJune30,2024[55][58]−ResearchanddevelopmentexpensesfortheyearendedJune30,2023were(358.39) million for the year ended June 30, 2024[55][58] - Research and development expenses for the year ended June 30, 2023 were 680,587 on a GAAP basis and 641,522onaNon−GAAPbasis[75]−SalesandmarketingexpensesfortheyearendedJune30,2023were641,522 on a Non-GAAP basis[75] - Sales and marketing expenses for the year ended June 30, 2023 were 948,598 on a GAAP basis and 906,888onaNon−GAAPbasis[75]−GeneralandadministrativeexpensesfortheyearendedJune30,2023were906,888 on a Non-GAAP basis[75] - General and administrative expenses for the year ended June 30, 2023 were 419,590 on a GAAP basis and 391,352onaNon−GAAPbasis[75]−Amortizationofacquiredtechnology−basedintangibleassetsfortheyearendedJune30,2023was391,352 on a Non-GAAP basis[75] - Amortization of acquired technology-based intangible assets for the year ended June 30, 2023 was 223,184, which was excluded from Non-GAAP-based operating expenses[75] Balance Sheet and Equity - Total assets decreased to 14,205,707thousandasofJune30,2024,from14,205,707 thousand as of June 30, 2024, from 17,089,200 thousand in 2023[23] - Total current liabilities decreased to 2,800,494thousandin2024,downfrom2,800,494 thousand in 2024, down from 3,219,614 thousand in 2023[23] - Shareholders' equity as of June 30, 2024, stood at 4,199,681K,upfrom4,199,681K, up from 4,022,104K in 2023 and 4,032,260Kin2022[30]−AccumulatedothercomprehensivelossasofJune30,2024,was4,032,260K in 2022[30] - Accumulated other comprehensive loss as of June 30, 2024, was 69,619K, compared to 53,559Kin2023and53,559K in 2023 and 7,659K in 2022[30] - Non-controlling interests as of June 30, 2024, were 1,523K,upfrom1,523K, up from 1,329K in 2023 and 1,142Kin2022[30]ForeignCurrencyandComprehensiveIncome−Netforeigncurrencytranslationadjustmentsresultedinalossof1,142K in 2022[30] Foreign Currency and Comprehensive Income - Net foreign currency translation adjustments resulted in a loss of 15,646K in 2024, compared to losses of 40,798Kin2023and40,798K in 2023 and 78,724K in 2022[28] - Total comprehensive income for 2024 was 449,224K,asignificantincreasefrom449,224K, a significant increase from 104,666K in 2023 and 323,362Kin2022[28]ExpenseComposition−ExpensecompositionbycurrencyfortheyearendedJune30,2024:USD50323,362K in 2022[28] Expense Composition - Expense composition by currency for the year ended June 30, 2024: USD 50%, EURO 12%, GBP 7%, CAD 10%, Other 21%[84] Cloud and Government Solutions - Enterprise cloud bookings for the fiscal year were 701 million, up 32.9% year-over-year[3] - OpenText's cloud for government solution achieved FedRAMP authorization, enhancing its offerings for government clients[8]