OpenText Reports Second Quarter Fiscal Year 2020 Financial Results

OpenText Reports Second Quarter Fiscal Year 2020 Financial Results

Company Profile

Open Text Corp is a Canada-based company engaged in software development sector. The Company provides a platform and suite of software products and services that assist organizations in finding, utilizing, and sharing business information from any device. The Company designs, develops, markets and sells Enterprise Information Management (EIM) software and solutions. Its EIM offerings include Enterprise Content Management (ECM), Business Process Management (BPM), Customer Experience Management (CEM), Business Network, Discovery and Analytics. Its software and services allow organizations to manage the information that flows into, out of, and throughout the enterprise as part of daily operations. Its solutions incorporate collaborative and mobile technologies and are delivered for on-premises deployment, as well as through cloud, hybrid and managed hosted services models.

Second Quarter Fiscal Year 2020 Financial Results

Completes Carbonite Acquisition

Strong Results Include Record Cloud and Annual Recurring Revenues (ARR)

WATERLOO, Ontario, Jan. 30, 2020 /PRNewswire/ --

Second Quarter Highlights

Total Revenues (in millions)			Annual Recurring Revenues (in millions)			Cloud Revenues (in millions)
Reported	Constant Currency		Reported	Constant Currency		Reported	Constant Currency
$771.6	$781.8		$563.8	$570.8		$248.3	$250.2
+4.9%	+6.3%		+6.5%	+7.8%		+13.3%	+14.1%
Annual Recurring Revenues represents 73% of Total Revenues GAAP net income of $107.5 million, up 2.9% Y/Y Adjusted EBITDA of $317.0 million, up 2.8%, margin of 41.1%, down 80 basis points Y/Y GAAP diluted EPS of $0.40, up 2.6% Y/Y Non-GAAP diluted EPS of $0.84, up 5.0%, and $0.86 in constant currency, up 7.5% Y/Y Operating Cash Flows were $860.5 million during the trailing twelve months Declares cash dividend of $0.1746 per common share Open Text Corporation (NASDAQ: OTEX), (TSX: OTEX), "The Information Company," today announced its financial results for the second quarter ended December 31, 2019… "With the addition of Carbonite, we have a strategic market-opportunity to bring Information Management (IM) to all sizes of customers, from the largest of enterprises, governments, mid-size companies, small companies, and consumers. We are excited and energized to write the next chapter for OpenText as our vision expands and advances to Information Management, helping customers to migrate into the cloud and reinvent their businesses processes", said Mark J. Barrenechea, OpenText CEO & CTO. "We are a partner-oriented company with the talent and culture to make an SMB channel wildly successful. With Carbonite this partner opportunity gets significantly stronger and deeper as we leverage OpenText's proven expertise and successful track record of building powerful global partner programs." "Our Q2 results reflect an increasing demand for OpenText products as we delivered strong top-line growth. In constant currency, total revenues grew to $781.8 million, up 6.3% year-over-year, Annual Recurring Revenues (ARR) grew to a record $570.8 million, up 7.8% year-over-year, representing 73% of total revenues, driven by Cloud Services and Subscriptions revenues of $250.2 million, which increased significantly by 14.1% year-over-year," said Barrenechea. "OpenText demonstrated solid operational performance during the second quarter, delivering to our Total Growth Strategy.  We put our capital to work, while maintaining a strong balance sheet with a net leverage ratio of 2.3x, and generated solid operating cash flows of $207.2 million, supported by equally strong A-EBITDA results", said OpenText EVP, CFO, Madhu Ranganathan.  "The Carbonite transaction closed efficiently, financed by our internal cash and existing revolver. The integration has kicked off with strength and we remain on target to complete the Carbonite integration by the end of Fiscal 2021." Integration of Carbonite and Restructuring Plan As OpenText integrates the acquisition, we anticipate a one-time deferred revenue adjustment that will result in a reduction in Carbonite revenue. In addition to this deferred revenue adjustment impact, we expect Carbonite revenue contribution to be down for the next few quarters due to typical integration activities, and then normalize to historical levels thereafter.  OpenText is also announcing a restructuring plan that will impact our global workforce and consolidate certain real estate facilities to further streamline our operations, inclusive of Carbonite.   The anticipated cost is expected to be approximately $26 million to $34 million. These restructuring activities are anticipated to be completed by the end of Fiscal 2021, and once completed, OpenText anticipates annualized cost savings of approximately $37 million to $41 million. We expect any savings realized during the remainder of Fiscal 2020 to be largely offset by one-time Carbonite integration costs. Quarterly Business Highlights Key customer wins in the quarter included PFU Limited, the Ministry of Justice Rhineland-Palatinate, thyssenkrupp AG, the Netherlands Ministry of Economic Affairs and Climate Policy, Lewis Rice, Kodak Alaris, Shinkai Transport Systems, Ltd. and Morneau Shepell OpenText buys Carbonite, Inc., provider of cloud-based subscription data protection, backup, disaster recovery and endpoint security to small and medium-sized businesses and consumers OpenText named a leader in Digital Asset Management for Customer Experience OpenText named a leader in 2019 Gartner Magic Quadrant for Content Services Platforms OpenText expands cloud infrastructure in Japan to support enterprise solutions OpenText delivers a flexible path to the Cloud, enhanced security and compliance visibility into Supply Chain Risk Cybersecurity, Legal, Digital Forensics experts gather at OpenText Enfuse 2019 to discuss security in a zero-trust world OpenText wins excellence in Prevention and Investigation of Cybercrime (EPIC) Innovation Award

Company Website

https://www.opentext.com/