OpenText(US:OTEX)2023-11-02 21:19Financial Performance - Total revenue for Q1 Fiscal 2024 was $1.4 billion, up 67.3% year-over-year, with a 65.4% increase after adjusting for foreign exchange impacts[210]. - Annual recurring revenue reached $1.1 billion, reflecting a 59.1% increase compared to the same period last year, or 57.5% after foreign exchange adjustments[210]. - Cloud services and subscriptions revenue was $451.0 million, an 11.5% increase year-over-year, or 10.9% after factoring in foreign exchange[210]. - GAAP gross margin improved to 71.4% from 69.7% in the prior year, while non-GAAP gross margin increased to 77.3% from 75.2%[210]. - GAAP net income attributable to OpenText was $80.9 million, a significant recovery from a net loss of $(116.9) million in the same period last year[210]. - Non-GAAP net income attributable to OpenText was $274.3 million, up from $206.8 million year-over-year[210]. - GAAP earnings per share (EPS) was $0.30, compared to a loss of $(0.43) in the same period last year[210]. - Non-GAAP EPS increased to $1.01 from $0.77 year-over-year[210]. - Adjusted EBITDA for the quarter was $494.8 million, compared to $304.0 million in the same period last year[210]. Revenue Contributions - The acquisition of Micro Focus on January 31, 2023, was completed for a total purchase price of $6.2 billion, significantly contributing to revenue growth[214]. - Total revenues for the three months ended September 30, 2023, increased by $573.4 million to $1.425 billion, primarily due to the Micro Focus acquisition, which contributed $562.9 million[225]. - Cloud services and subscriptions revenues reached $451.0 million, an increase of $46.4 million compared to the previous year, while customer support revenues rose to $697.7 million, up by $380.4 million[228]. - Customer support revenues surged by $380.4 million or 119.9% year-over-year, totaling $697.7 million, primarily driven by the Micro Focus Acquisition[239]. - License revenues rose by $110.5 million or 176.6% year-over-year, amounting to $173.0 million, also significantly influenced by the Micro Focus Acquisition[243]. - Professional service and other revenues increased by $36.2 million or 53.6% year-over-year, totaling $103.7 million, driven by the Micro Focus Acquisition[249]. Cost and Expenses - Operating cash flow decreased to $47.1 million, down 64.3% from $132.0 million in the prior year[210]. - The company invested $234.4 million in R&D, representing 16.4% of total revenue, aligning with its target for the fiscal year[217]. - Sales and marketing expenses rose by $104.6 million to $271.8 million, accounting for 19.1% of total revenues, a slight decrease from 20% in the previous year[256][257]. - General and administrative expenses increased by $53.1 million to $131.2 million, maintaining a stable percentage of 9% of total revenues[258][259]. - Total operating expenses reached $805.5 million, an increase of $358.2 million compared to the prior year[252]. Tax and Income - The effective tax rate for the three months ended September 30, 2023, was 11.3%, compared to (40.4)% in the same period of 2022[273]. - The company reported a provision for income taxes of $10,352,000 under GAAP, while the Non-GAAP-based provision was $44,665,000[290]. Cash Flow and Liquidity - Cash provided by operating activities decreased by $84.8 million to $47.1 million for the three months ended September 30, 2023, compared to $131.9 million in the same period of the prior year[304]. - As of September 30, 2023, cash and cash equivalents were $919.9 million, a decrease of $311.8 million from $1.2 billion as of June 30, 2023[303]. - Days sales outstanding (DSO) increased to 43 days in the first quarter of Fiscal 2024, compared to 40 days in the first quarter of Fiscal 2023, impacting cash flows by $15.8 million per day[309]. Debt and Financing - The Company issued $900 million in aggregate principal amount of 4.125% Senior Notes due 2030, with interest payable semi-annually[323]. - The Company issued $850 million in aggregate principal amount of 3.875% Senior Notes due 2029, with interest payable semi-annually[329]. - The Company issued $900 million in aggregate principal amount of 3.875% Senior Notes due 2028, with interest payable semi-annually[335]. - The company amended its revolving credit facility to increase total commitments from $450 million to $750 million, maturing on October 31, 2024[354]. - As of September 30, 2023, the company had long-term debt obligations totaling $11,967.3 million, with payments due of $478.1 million between October 1, 2023 and June 30, 2024[376]. Legal and Regulatory Matters - The company is contesting the CRA's reassessments and believes they are without merit, having filed a notice of appeal with the Tax Court of Canada[386]. - Realtime Data LLC filed a lawsuit against Carbonite alleging patent infringement related to cloud storage services[392]. - On August 2, 2023, the U.S. Court of Appeals for the Federal Circuit affirmed the invalidity of the patents asserted against Carbonite[392].