OpenText(OTEX) - 2024 Q4 - Annual Results

Revenue Growth and Performance - Total annual revenues reached $5.8 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 $1.8 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 $5,769,577 thousand, up from $4,484,980 thousand in 2023[26] - Cloud services and subscriptions revenue grew to $1,820,524 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 $2.0 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 $4,191,028 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 $1,970.20 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 $3,412,866 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 $2.0 billion in the quarter[8] - Long-term debt reduced to $6,356,943 thousand in 2024, down from $8,562,096 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 $967.69 million minus capital expenditures of $159.30 million[61] - Free cash flow for Q1 2024 was $348.160 million, derived from operating cash flows of $384.697 million minus capital expenditures of $36.537 million[68] - Free cash flow for Q2 2023 was $91.241 million, derived from operating cash flows of $115.301 million minus capital expenditures of $24.060 million[74] - Free cash flows for the year ended June 30, 2023 were $655,373, calculated by subtracting capital expenditures of $123,832 from GAAP-based cash flows provided by operating activities of $779,205[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 $1.05 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 $150 million at an average price of $29.57 per share[10] - Dividends declared in 2024 amounted to $271,486K, compared to $261,464K in 2023 and $237,655K in 2022[30] - Common shares repurchased in 2024 amounted to $152,333K, compared to $176,987K 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 $2.275 billion[8] - Proceeds from AMC Divestiture were $2.23 billion in Q2 2024[32] - Repayment of long-term debt and Revolver was $2.01 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 $1,137.25 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-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 $257.049 million, with a diluted EPS of $0.94[65] - Non-GAAP-based net income for Q2 2023 was $245.837 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, compared to GAAP-based net income of $150,379[77] Quarterly Performance - Q4 FY'24 revenue was $1,362.1 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 $248,274 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, 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 $257.049 million[65] - GAAP-based net loss for Q2 2023 was $48.734 million, while Non-GAAP-based net income was $245.837 million[71] Operational Expenses and Adjustments - Research and development expenses increased to $893,932 thousand in 2024, up from $680,587 thousand in 2023[26] - Share-based compensation adjustments totaled $140.08 million for the year ended June 30, 2024[55][58] - Amortization adjustments totaled $676.33 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) 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 $641,522 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 $906,888 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 $391,352 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 $14,205,707 thousand as of June 30, 2024, from $17,089,200 thousand in 2023[23] - Total current liabilities decreased to $2,800,494 thousand in 2024, down from $3,219,614 thousand in 2023[23] - Shareholders' equity as of June 30, 2024, stood at $4,199,681K, up from $4,022,104K in 2023 and $4,032,260K in 2022[30] - Accumulated other comprehensive loss as of June 30, 2024, was $69,619K, compared to $53,559K in 2023 and $7,659K in 2022[30] - Non-controlling interests as of June 30, 2024, were $1,523K, up from $1,329K in 2023 and $1,142K 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 $40,798K in 2023 and $78,724K in 2022[28] - Total comprehensive income for 2024 was $449,224K, a significant increase from $104,666K in 2023 and $323,362K 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]