OpenText Reports Second Quarter Fiscal Year 2023 Financial Results
Open Text Corporation (OTEX) reported strong Q2 results for fiscal 2023, with total revenues of $897 million, up 2.4% year-over-year. Cloud revenues soared to $409 million, marking a 12.0% increase, while Annual Recurring Revenues (ARR) reached $725 million, up 3.6%. The company achieved operating cash flows of $195 million and a significant net income of $258 million, showing a remarkable 192.7% increase. OpenText also completed its acquisition of Micro Focus and expects to enhance its offerings significantly. The cash flow profile remains robust, with committed plans for a $400 million cost savings initiative.
- Total revenues increased by 2.4% year-over-year to $897 million.
- Cloud revenues grew by 12.0% year-over-year, reaching $409 million.
- Annual Recurring Revenues rose by 3.6% year-over-year to $725 million.
- GAAP-based net income surged by 192.7% to $258 million.
- Operating cash flows totaled $195 million for the quarter.
- Operating income decreased by 4.3% compared to the previous year.
- Free cash flows decreased by 20.9% year-over-year.
Record Q2 Revenues Powered by Cloud Revenue Growth and Continued Strong Cloud Bookings
Eight Consecutive Quarters of Cloud Organic Growth
Fiscal 2023 Second Quarter Highlights
Total Revenues (in millions) | Annual Recurring Revenues (in millions) | Cloud Revenues (in millions) | |||||
Reported | Constant | Reported | Constant | Reported | Constant | ||
+2.4 % | +7.8 % | +3.6 % | +8.7 % | +12.0 % | +16.0 % | ||
Annual Recurring Revenues represent | |||||||
- Total revenues of
$897 million 2.4% Y/Y or up7.8% in constant currency - Annual recurring revenues (ARR) of
$725 million 3.6% Y/Y or up8.7% in constant currency - Cloud revenues of
$409 million 12.0% Y/Y or up16.0% in constant currency - Eight consecutive quarters of cloud organic and ARR organic growth in constant currency
- Strong quarterly enterprise cloud bookings(1) of
$144.7 million 12% Y/Y - Operating cash flows of
$195 million $163 million - TTM operating cash flows(2) of
$903 million $778 million - GAAP-based net income of
$258 million 192.7% Y/Y, margin of28.8% , up 1,870 basis points Y/Y, including$172 million - Adjusted EBITDA(3) of
$341 million 38.0% and TTM Adjusted EBITDA(2)(3) of$1,243 million 35.2% - GAAP-based diluted earnings per share (EPS) of
$0.96 $0.89 - Completed offering of
$1 billion $3.58 5 billion - Closed acquisition of Micro Focus on
January 31, 2023
"
"Customers are looking to gain the Information Advantage and we are excited to expand our offerings with Micro Focus products to include Cybersecurity, Application Automation and Modernization, AI & Analytics, and Digital Operations Management," added
"We enter 2023 with tremendous momentum and an expanded Information Management market," said
(1) | Enterprise cloud bookings is defined as the total value from cloud services and subscription contracts, entered into in the period that are new, committed and incremental to our existing contracts, excluding the impact of Carbonite and Zix. |
(2) | TTM is calculated as Q3FY'22, plus Q4FY'22, plus year-to-date FY'23 included within our current and historical filings on Forms 10-Q and 10-K. |
(3) | Please see Note 2 "Use of Non-GAAP Financial Measures" to the consolidated financial statements below. |
Financial Highlights for Q2 Fiscal 2023 with Year Over Year Comparisons
Summary of Quarterly Results | ||||||||
(In millions, except per share data) | Q2 FY'23 | Q2 FY'22 | $ Change | % Change | Q2 FY'23 | % Change | ||
Revenues: | ||||||||
Cloud services and subscriptions | 12.0 % | 16.0 % | ||||||
Customer support | 316.5 | 334.9 | (18.4) | (5.5) % | 337.8 | 0.9 % | ||
Total annual recurring revenues** | 3.6 % | 8.7 % | ||||||
License | 108.0 | 109.5 | (1.5) | (1.4) % | 114.8 | 4.8 % | ||
Professional service and other | 64.3 | 67.5 | (3.2) | (4.8) % | 69.2 | 2.5 % | ||
Total revenues | 2.4 % | 7.8 % | ||||||
GAAP-based operating income | ( | (4.3) % | N/A | N/A | ||||
Non-GAAP-based operating income (1) | ( | (1.1) % | 3.5 % | |||||
GAAP-based net income attributable to | 192.7 % | N/A | N/A | |||||
GAAP-based EPS, diluted | 200.0 % | N/A | N/A | |||||
Non-GAAP-based EPS, diluted (1)(2) | $— | — % | 5.6 % | |||||
Adjusted EBITDA (1) | ( | (0.8) % | 3.7 % | |||||
Operating cash flows | ( | (9.9) % | N/A | N/A | ||||
Free cash flows (1) | ( | (20.9) % | N/A | N/A | ||||
Summary of YTD Results | ||||||||
(In millions, except per share data) | FY'23 YTD | FY'22 YTD | $ Change | % Change | FY'23 | % Change | ||
Revenues: | ||||||||
Cloud services and subscriptions | 12.7 % | 16.4 % | ||||||
Customer support | 633.9 | 670.1 | (36.3) | (5.4) % | 674.6 | 0.7 % | ||
Total annual recurring revenues** | 4.0 % | 8.8 % | ||||||
License | 170.5 | 183.0 | (12.5) | (6.8) % | 181.2 | (1.0) % | ||
Professional service and other | 131.8 | 134.5 | (2.7) | (2.0) % | 141.0 | 4.8 % | ||
Total revenues | 2.4 % | 7.5 % | ||||||
GAAP-based operating income | ( | (11.9) % | N/A | N/A | ||||
Non-GAAP-based operating income (1) | ( | (4.0) % | 0.9 % | |||||
GAAP-based net income attributable to | ( | (35.7) % | N/A | N/A | ||||
GAAP-based EPS, diluted | ( | (35.8) % | N/A | N/A | ||||
Non-GAAP-based EPS, diluted (1)(2) | ( | (3.5) % | 2.3 % | |||||
Adjusted EBITDA (1) | ( | (3.3) % | 1.3 % | |||||
Operating cash flows | ( | (19.5) % | N/A | N/A | ||||
Free cash flows (1) | ( | (29.9) % | N/A | N/A | ||||
(1) Please see Note 2 "Use of Non-GAAP Financial Measures" to the consolidated financial statements below. |
(2) Please also see Note 14 to the Company's Fiscal 2018 Consolidated Financial Statements on Form 10-K. Reflective of the amount of net tax benefit arising from the internal reorganization assumed to be allocable to the current period based on the forecasted utilization period. |
Note: Individual line items in tables may be adjusted by non-material amounts to enable totals to align to published financial statements. |
*CC: Constant currency for this purpose is defined as the current period reported revenues/expenses/earnings represented at the prior comparative period's foreign exchange rate. |
**Annual recurring revenue is defined as the sum of Cloud services and subscriptions revenue and Customer support revenue. |
Dividend
As part of our quarterly, non-cumulative cash dividend program, the Board declared on
Quarterly Business Highlights
OpenText buys Micro Focus International plcOpenText completed Notes Offering and Term Loan amendment as part of Micro Focus acquisition financing- Key customer wins in the quarter include: AMD,
Baltimore City Council , Barnardo's, DataExpert, Lear Corporation,Los Alamos National Laboratory of theU.S. Department of Energy, Marks & Spencer , Matmut,Nebraska Furniture Mart , NIB Holdings Limited, Royal Bank of Canada,RR Donnelley , Transport forLondon and U.S. Defense Health Agency OpenText to ring theNasdaq Stock Market opening bell inOttawa onFebruary 3, 2023 OpenText has partnered with Allstate Identity Protection to offer identity protection services to Webroot customersOpenText achieves FedRAMP "In Process" designation for its OpenText Cloud for Government offeringOpenText next level Managed Detection and Response offerings recognized in the 2022 MITRE Engenuity ATT&CK Evaluations for Managed Services
Summary of Quarterly Results | |||||||
Q2 FY'23 | Q1 FY'23 | Q2 FY'22 | % Change | % Change | |||
Revenue (millions) | 5.3 % | 2.4 % | |||||
GAAP-based gross margin | 70.8 % | 69.7 % | 70.2 % | 110 | bps | 60 | bps |
Non-GAAP-based gross margin (1) | 76.0 % | 75.2 % | 76.4 % | 80 | bps | (40) | bps |
GAAP-based earnings (loss) per share, diluted | ( | (323.3) % | 200.0 % | ||||
Non-GAAP-based EPS, diluted (1)(2) | 15.6 % | — % |
(1) Please see Note 2 "Use of Non-GAAP Financial Measures" to the consolidated financial statements below. |
(2) Please also see Note 14 to the Company's Fiscal 2018 Consolidated Financial Statements on Form 10-K. Reflective of the amount of net tax benefit arising from the internal reorganization assumed to be allocable to the current period based on the forecasted utilization period. |
Conference Call Information
A replay of the call will be available beginning
Please see below note (2) for a reconciliation of U.S. GAAP-based financial measures used in this press release to Non-GAAP-based financial measures.
About
Cautionary Statement Regarding Forward-Looking Statements
Certain statements in this press release, including statements about the focus of
OTEX - F
For more information, please contact:
Senior Vice President, Global Head of Investor Relations
415-963-0825
investors@opentext.com
Copyright ©2023 Open Text.
CONSOLIDATED BALANCE SHEETS | |||
(In thousands of | |||
ASSETS | (unaudited) | ||
Cash and cash equivalents | $ 2,820,927 | $ 1,693,741 | |
Accounts receivable trade, net of allowance for credit losses of | 470,794 | 426,652 | |
Contract assets | 25,613 | 26,167 | |
Income taxes recoverable | 10,300 | 18,255 | |
Prepaid expenses and other current assets | 131,172 | 120,552 | |
Total current assets | 3,458,806 | 2,285,367 | |
Property and equipment | 250,706 | 244,709 | |
Operating lease right of use assets | 194,415 | 198,132 | |
Long-term contract assets | 18,603 | 19,719 | |
5,250,136 | 5,244,653 | ||
Acquired intangible assets | 883,748 | 1,075,208 | |
Deferred tax assets | 811,142 | 810,154 | |
Other assets | 303,559 | 256,987 | |
Long-term income taxes recoverable | 47,091 | 44,044 | |
Total assets | $ 11,218,206 | $ 10,178,973 | |
LIABILITIES AND SHAREHOLDERS' EQUITY | |||
Current liabilities: | |||
Accounts payable and accrued liabilities | $ 459,360 | $ 448,607 | |
Current portion of long-term debt | 10,000 | 10,000 | |
Operating lease liabilities | 58,299 | 56,380 | |
Deferred revenues | 879,226 | 902,202 | |
Income taxes payable | 87,549 | 51,069 | |
Total current liabilities | 1,494,434 | 1,468,258 | |
Long-term liabilities: | |||
Accrued liabilities | 18,705 | 18,208 | |
Pension liability | 57,349 | 60,951 | |
Long-term debt | 5,193,158 | 4,209,567 | |
Long-term operating lease liabilities | 188,809 | 198,695 | |
Long-term deferred revenues | 84,681 | 91,144 | |
Long-term income taxes payable | 40,878 | 34,003 | |
Deferred tax liabilities | 18,808 | 65,887 | |
Total long-term liabilities | 5,602,388 | 4,678,455 | |
Shareholders' equity: | |||
Share capital and additional paid-in capital | |||
270,235,234 and 269,522,639 Common Shares issued and outstanding at | 2,092,079 | 2,038,674 | |
Accumulated other comprehensive income (loss) | (1,028) | (7,659) | |
Retained earnings | 2,171,236 | 2,160,069 | |
(142,126) | (159,966) | ||
Total | 4,120,161 | 4,031,118 | |
Non-controlling interests | 1,223 | 1,142 | |
Total shareholders' equity | 4,121,384 | 4,032,260 | |
Total liabilities and shareholders' equity | $ 11,218,206 | $ 10,178,973 | |
CONSOLIDATED STATEMENTS OF INCOME | |||||||
(In thousands of | |||||||
(unaudited) | |||||||
Three Months Ended | Six Months Ended | ||||||
2022 | 2021 | 2022 | 2021 | ||||
Revenues: | |||||||
Cloud services and subscriptions | $ 408,674 | $ 364,886 | $ 813,325 | $ 721,475 | |||
Customer support | 316,508 | 334,875 | 633,859 | 670,112 | |||
License | 107,960 | 109,493 | 170,508 | 183,022 | |||
Professional service and other | 64,298 | 67,545 | 131,784 | 134,498 | |||
Total revenues | 897,440 | 876,799 | 1,749,476 | 1,709,107 | |||
Cost of revenues: | |||||||
Cloud services and subscriptions | 134,314 | 122,129 | 266,113 | 241,908 | |||
Customer support | 28,589 | 29,668 | 55,943 | 59,151 | |||
License | 3,863 | 3,741 | 6,621 | 7,710 | |||
Professional service and other | 54,064 | 53,041 | 107,864 | 104,766 | |||
Amortization of acquired technology-based intangible assets | 40,863 | 52,602 | 83,500 | 105,769 | |||
Total cost of revenues | 261,693 | 261,181 | 520,041 | 519,304 | |||
Gross profit | 635,747 | 615,618 | 1,229,435 | 1,189,803 | |||
Operating expenses: | |||||||
Research and development | 109,700 | 103,622 | 219,898 | 203,787 | |||
Sales and marketing | 177,171 | 163,938 | 344,341 | 310,178 | |||
General and administrative | 77,603 | 71,513 | 155,677 | 142,990 | |||
Depreciation | 22,858 | 21,779 | 46,032 | 43,165 | |||
Amortization of acquired customer-based intangible assets | 53,446 | 52,665 | 107,884 | 104,549 | |||
Special charges (recoveries) | 10,306 | 9,217 | 24,587 | 9,561 | |||
Total operating expenses | 451,084 | 422,734 | 898,419 | 814,230 | |||
Income from operations | 184,663 | 192,884 | 331,016 | 375,573 | |||
Other income (expense), net | 163,349 | (25,037) | (25,882) | 4,745 | |||
Interest and other related expense, net | (38,715) | (40,245) | (79,097) | (77,300) | |||
Income before income taxes | 309,297 | 127,602 | 226,037 | 303,018 | |||
Provision for income taxes | 50,774 | 39,266 | 84,399 | 82,716 | |||
Net income for the period | $ 258,523 | $ 88,336 | $ 141,638 | $ 220,302 | |||
Net (income) loss attributable to non-controlling interests | (37) | (38) | (81) | (89) | |||
Net income attributable to | $ 258,486 | $ 88,298 | $ 141,557 | $ 220,213 | |||
Earnings per share—basic attributable to | $ 0.96 | $ 0.32 | $ 0.52 | $ 0.81 | |||
Earnings per share—diluted attributable to | $ 0.96 | $ 0.32 | $ 0.52 | $ 0.81 | |||
Weighted average number of Common Shares outstanding—basic (in '000's) | 270,189 | 272,112 | 269,997 | 272,078 | |||
Weighted average number of Common Shares outstanding—diluted (in '000's) | 270,189 | 272,931 | 270,009 | 273,074 | |||
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME | |||||||
(In thousands of | |||||||
(unaudited) | |||||||
Three Months Ended | Six Months Ended | ||||||
2022 | 2021 | 2022 | 2021 | ||||
Net income | $ 258,523 | $ 88,336 | $ 141,638 | $ 220,302 | |||
Other comprehensive income (loss)—net of tax: | |||||||
Net foreign currency translation adjustments | 39,419 | (21,347) | 3,053 | (31,439) | |||
Unrealized gain (loss) on cash flow hedges: | |||||||
Unrealized gain (loss) - net of tax expense (recovery) effect of | 959 | 104 | (2,381) | (982) | |||
(Gain) loss reclassified into net income - net of tax (expense) recovery effect of | 1,101 | (18) | 1,689 | (305) | |||
Actuarial gain (loss) relating to defined benefit pension plans: | |||||||
Actuarial gain (loss) - net of tax expense (recovery) effect of | 32 | (1,435) | 4,196 | (2,484) | |||
Amortization of actuarial (gain) loss into net income - net of tax (expense) recovery effect of | 37 | 159 | 74 | 321 | |||
Total other comprehensive income (loss) net | 41,548 | (22,537) | 6,631 | (34,889) | |||
Total comprehensive income | 300,071 | 65,799 | 148,269 | 185,413 | |||
Comprehensive (income) loss attributable to non-controlling interests | (37) | (38) | (81) | (89) | |||
Total comprehensive income attributable to | $ 300,034 | $ 65,761 | $ 148,188 | $ 185,324 | |||
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY | |||||||||||||||
(In thousands of | |||||||||||||||
(unaudited) | |||||||||||||||
Three Months Ended | |||||||||||||||
Common Shares and | Treasury Stock | Retained Earnings | Accumulated Comprehensive Income | Non- | Total | ||||||||||
Shares | Amount | Shares | Amount | ||||||||||||
Balance as of | 269,881 | $ 2,067,881 | (3,586) | $ 1,978,442 | $ (42,576) | $ 1,186 | $ 3,850,141 | ||||||||
Issuance of Common Shares | |||||||||||||||
Under employee stock purchase plans | 354 | 8,042 | — | — | — | — | — | 8,042 | |||||||
Share-based compensation | — | 28,822 | — | — | — | — | — | 28,822 | |||||||
Issuance of treasury stock | — | (12,666) | 291 | 12,666 | — | — | — | — | |||||||
Dividends declared ( | — | — | — | — | (65,692) | — | — | (65,692) | |||||||
Other comprehensive income (loss) - net | — | — | — | — | — | 41,548 | — | 41,548 | |||||||
Net income for the period | — | — | — | — | 258,486 | — | 37 | 258,523 | |||||||
Balance as of | 270,235 | $ 2,092,079 | (3,295) | $ 2,171,236 | $ (1,028) | $ 1,223 | |||||||||
Three Months Ended | |||||||||||||||
Common Shares and | Treasury Stock | Retained Earnings | Accumulated Comprehensive Income | Non- | Total | ||||||||||
Shares | Amount | Shares | Amount | ||||||||||||
Balance as of | 272,534 | $ 1,991,719 | (1,426) | $ 2,225,363 | $ 53,886 | $ 1,024 | $ 4,208,515 | ||||||||
Issuance of Common Shares | |||||||||||||||
Under employee stock option plans | 56 | 1,966 | — | — | — | — | — | 1,966 | |||||||
Under employee stock purchase plans | 226 | 9,421 | — | — | — | — | — | 9,421 | |||||||
Share-based compensation | — | 14,409 | — | — | — | — | — | 14,409 | |||||||
Purchase of treasury stock | — | — | (400) | (19,593) | — | — | — | (19,593) | |||||||
Issuance of treasury stock | — | (15,104) | 350 | 15,104 | — | — | — | — | |||||||
Repurchase of Common Shares | (1,810) | (11,498) | — | — | (79,536) | — | — | (91,034) | |||||||
Dividends declared ( | — | — | — | — | (59,658) | — | — | (59,658) | |||||||
Other comprehensive income (loss) - net | — | — | — | — | — | (22,537) | — | (22,537) | |||||||
Net income for the period | — | — | — | — | 88,298 | — | 38 | 88,336 | |||||||
Balance as of | 271,006 | $ 1,990,913 | (1,476) | $ 2,174,467 | $ 31,349 | $ 1,062 | $ 4,129,825 | ||||||||
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY | |||||||||||||||
(In thousands of | |||||||||||||||
(unaudited) | |||||||||||||||
Six Months Ended | |||||||||||||||
Common Shares and | Treasury Stock | Retained Earnings | Accumulated Comprehensive Income | Non- | Total | ||||||||||
Shares | Amount | Shares | Amount | ||||||||||||
Balance as of | 269,523 | $ 2,038,674 | (3,706) | $ (159,966) | $ 2,160,069 | $ (7,659) | $ 1,142 | $ 4,032,260 | |||||||
Issuance of Common Shares | |||||||||||||||
Under employee stock option plans | 72 | 1,994 | — | — | — | — | — | 1,994 | |||||||
Under employee stock purchase plans | 640 | 17,221 | — | — | — | — | — | 17,221 | |||||||
Share-based compensation | — | 52,030 | — | — | — | — | — | 52,030 | |||||||
Issuance of treasury stock | — | (17,840) | 411 | 17,840 | — | — | — | — | |||||||
Dividends declared ( | — | — | — | — | (130,390) | — | — | (130,390) | |||||||
Other comprehensive income (loss) - net | — | — | — | — | — | 6,631 | — | 6,631 | |||||||
Net income for the period | — | — | — | — | 141,557 | — | 81 | 141,638 | |||||||
Balance as of | 270,235 | $ 2,092,079 | (3,295) | $ (142,126) | $ 2,171,236 | $ (1,028) | $ 1,223 | $ 4,121,384 | |||||||
Six Months Ended | |||||||||||||||
Common Shares and | Treasury Stock | Retained Earnings | Accumulated Comprehensive Income | Non- | Total | ||||||||||
Shares | Amount | Shares | Amount | ||||||||||||
Balance as of | 271,541 | $ 1,947,764 | (1,568) | $ 2,153,326 | $ 66,238 | $ 1,511 | $ 4,099,453 | ||||||||
Issuance of Common Shares | |||||||||||||||
Under employee stock option plans | 852 | 29,265 | — | — | — | — | — | 29,265 | |||||||
Under employee stock purchase plans | 423 | 17,910 | — | — | — | — | — | 17,910 | |||||||
Share-based compensation | — | 28,343 | — | — | — | — | — | 28,343 | |||||||
Purchase of treasury stock | — | — | (400) | (19,593) | — | — | — | (19,593) | |||||||
Issuance of treasury stock | — | (21,013) | 492 | 21,013 | — | — | — | — | |||||||
Repurchase of Common Shares | (1,810) | (11,498) | — | — | (79,536) | — | — | (91,034) | |||||||
Dividends declared ( | — | — | — | — | (119,536) | — | — | (119,536) | |||||||
Other comprehensive income (loss) - net | — | — | — | — | — | (34,889) | — | (34,889) | |||||||
Distribution to non-controlling interest | — | 142 | — | — | — | — | (538) | (396) | |||||||
Net income for the period | — | — | — | — | 220,213 | — | 89 | 220,302 | |||||||
Balance as of | 271,006 | $ 1,990,913 | (1,476) | $ 2,174,467 | $ 31,349 | $ 1,062 | $ 4,129,825 | ||||||||
CONSOLIDATED STATEMENTS OF CASH FLOWS | |||||||
(In thousands of | |||||||
(unaudited) | |||||||
Three Months Ended | Six Months Ended | ||||||
2022 | 2021 | 2022 | 2021 | ||||
Cash flows from operating activities: | |||||||
Net income for the period | $ 258,523 | $ 88,336 | $ 141,638 | $ 220,302 | |||
Adjustments to reconcile net income to net cash provided by operating activities: | |||||||
Depreciation and amortization of intangible assets | 117,167 | 127,046 | 237,416 | 253,483 | |||
Share-based compensation expense | 28,822 | 14,409 | 52,030 | 28,343 | |||
Pension expense | 2,057 | 1,529 | 3,444 | 3,015 | |||
Amortization of debt issuance costs | 1,686 | 1,293 | 3,166 | 2,454 | |||
Write off of right of use assets | 948 | — | 3,775 | — | |||
Loss on extinguishment of debt | 8,131 | 27,413 | 8,131 | 27,413 | |||
Loss on sale and write down of property and equipment | 121 | 11 | 121 | 38 | |||
Deferred taxes | (26,135) | 6,210 | (46,802) | 20,892 | |||
Share in net (income) loss of equity investees | 289 | (2,042) | 6,823 | (31,357) | |||
Unrealized (gain) loss on financial instruments | (171,607) | — | 9,854 | — | |||
Changes in operating assets and liabilities: | |||||||
Accounts receivable | (86,091) | (25,339) | (26,597) | 51,187 | |||
Contract assets | (9,400) | (11,497) | (18,454) | (18,745) | |||
Prepaid expenses and other current assets | (131) | (1,410) | (3,065) | (11,221) | |||
Income taxes | 28,406 | (13,985) | 44,240 | 2,776 | |||
Accounts payable and accrued liabilities | 36,143 | 5,705 | 8,964 | (108,629) | |||
Deferred revenue | 24,646 | (12,177) | (29,133) | (50,693) | |||
Other assets | (12,957) | 9,371 | (60,706) | 16,913 | |||
Operating lease assets and liabilities, net | (5,448) | 1,771 | (7,716) | 142 | |||
Net cash provided by operating activities | 195,170 | 216,644 | 327,129 | 406,313 | |||
Cash flows from investing activities: | |||||||
Additions of property and equipment | (32,215) | (10,635) | (68,539) | (37,347) | |||
Purchase of Zix Corporation, net of cash acquired | — | (837,573) | — | (837,573) | |||
Purchase of | — | (17,927) | — | (17,927) | |||
Other investing activities | (873) | (3,567) | (873) | (3,271) | |||
Net cash used in investing activities | (33,088) | (869,702) | (69,412) | (896,118) | |||
Cash flows from financing activities: | |||||||
Proceeds from issuance of Common Shares from exercise of stock options and ESPP | 5,736 | 8,968 | 15,773 | 45,688 | |||
Proceeds from long-term debt and Revolver | 1,000,000 | 1,500,000 | 1,000,000 | 1,500,000 | |||
Repayment of long-term debt and Revolver | (2,500) | (852,500) | (5,000) | (855,000) | |||
Debt extinguishment costs | — | (24,969) | — | (24,969) | |||
Debt issuance costs | (11,650) | (15,347) | (11,650) | (15,347) | |||
Repurchase of Common Shares | — | (91,034) | — | (91,034) | |||
Purchase of treasury stock | — | (19,593) | — | (19,593) | |||
Distribution to non-controlling interest | — | — | — | (396) | |||
Payments of dividends to shareholders | (64,864) | (59,658) | (129,562) | (119,536) | |||
Net cash provided by financing activities | 926,722 | 445,867 | 869,561 | 419,813 | |||
Foreign exchange gain (loss) on cash held in foreign currencies | 27,831 | (16,436) | (271) | (25,713) | |||
Increase (decrease) in cash, cash equivalents and restricted cash during the period | 1,116,635 | (223,627) | 1,127,007 | (95,705) | |||
Cash, cash equivalents and restricted cash at beginning of the period | 1,706,283 | 1,737,722 | 1,695,911 | 1,609,800 | |||
Cash, cash equivalents and restricted cash at end of the period | $ 2,822,918 | $ 1,514,095 | $ 2,822,918 | $ 1,514,095 | |||
CONSOLIDATED STATEMENTS OF CASH FLOWS | |||
(In thousands of | |||
(unaudited) | |||
Reconciliation of cash, cash equivalents and restricted cash: | |||
Cash and cash equivalents | $ 2,820,927 | $ 1,511,792 | |
Restricted cash (1) | 1,991 | 2,303 | |
Total cash, cash equivalents and restricted cash | $ 2,822,918 | $ 1,514,095 | |
(1) Restricted cash is classified under the Prepaid expenses and other current assets and Other assets line items on the Consolidated Balance Sheets. |
Notes
(1) All dollar amounts in this press release are in
(2) Use of Non-GAAP Financial Measures: In addition to reporting financial results in accordance with U.S. GAAP, the Company provides certain financial measures that are not in accordance with
The Company uses these Non-GAAP financial measures to supplement the information provided in its consolidated financial statements, which are presented in accordance with
Non-GAAP-based net income and Non-GAAP-based EPS, attributable to
Adjusted earnings before interest, taxes, depreciation and amortization (Adjusted EBITDA) is consistently calculated as GAAP-based net income (loss), attributable to
The Company's management believes that the presentation of the above defined Non-GAAP financial measures provides useful information to investors because they portray the financial results of the Company before the impact of certain non-operational charges. The use of the term "non-operational charge" is defined for this purpose as an expense that does not impact the ongoing operating decisions taken by the Company's management. These items are excluded based upon the way the Company's management evaluates the performance of the Company's business for use in the Company's internal reports and are not excluded in the sense that they may be used under
The Company does not acquire businesses on a predictable cycle, and therefore believes that the presentation of Non-GAAP measures, which in certain cases adjust for the impact of amortization of intangible assets and the related tax effects that are primarily related to acquisitions, will provide readers of financial statements with a more consistent basis for comparison across accounting periods and be more useful in helping readers understand the Company's operating results and underlying operational trends. Additionally, the Company has engaged in various restructuring activities over the past several years, primarily due to acquisitions and most recently in response to our return to office planning, that have resulted in costs associated with reductions in headcount, consolidation of leased facilities and related costs, all which are recorded under the Company's "Special charges (recoveries)" caption on the Consolidated Statements of Income. Each restructuring activity is a discrete event based on a unique set of business objectives or circumstances, and each differs in terms of its operational implementation, business impact and scope, and the size of each restructuring plan can vary significantly from period to period. Therefore, the Company believes that the exclusion of these special charges (recoveries) will also better aid readers of financial statements in the understanding and comparability of the Company's operating results and underlying operational trends.
In summary, the Company believes the provision of supplemental Non-GAAP measures allow investors to evaluate the operational and financial performance of the Company's core business using the same evaluation measures that management uses, and is therefore a useful indication of
The following charts provide unaudited reconciliations of U.S. GAAP-based financial measures to Non-GAAP-based financial measures for the following periods presented.
Reconciliation of selected GAAP-based measures to Non-GAAP-based measures for the three months ended (In thousands, except for per share data) | ||||||
Three Months Ended | ||||||
GAAP-based | GAAP-based | Adjustments | Note | Non-GAAP- | Non-GAAP- % of Total | |
Cost of revenues | ||||||
Cloud services and subscriptions | $ 134,314 | $ (2,812) | (1) | $ 131,502 | ||
Customer support | 28,589 | (690) | (1) | 27,899 | ||
Professional service and other | 54,064 | (1,763) | (1) | 52,301 | ||
Amortization of acquired technology-based intangible assets | 40,863 | (40,863) | (2) | — | ||
GAAP-based gross profit and gross margin (%) / Non-GAAP-based gross profit and gross margin (%) | 635,747 | 70.8 % | 46,128 | (3) | 681,875 | 76.0 % |
Operating expenses | ||||||
Research and development | 109,700 | (7,826) | (1) | 101,874 | ||
Sales and marketing | 177,171 | (9,437) | (1) | 167,734 | ||
General and administrative | 77,603 | (6,294) | (1) | 71,309 | ||
Amortization of acquired customer-based intangible assets | 53,446 | (53,446) | (2) | — | ||
Special charges (recoveries) | 10,306 | (10,306) | (4) | — | ||
GAAP-based income from operations / Non-GAAP-based income from operations | 184,663 | 133,437 | (5) | 318,100 | ||
Other income (expense), net | 163,349 | (163,349) | (6) | — | ||
Provision for income taxes | 50,774 | (11,660) | (7) | 39,114 | ||
GAAP-based net income / Non-GAAP-based net income, attributable to | 258,486 | (18,252) | (8) | 240,234 | ||
GAAP-based earnings per share / Non-GAAP-based earnings per share-diluted, attributable to | $ 0.96 | $ (0.07) | (8) | $ 0.89 | ||
(1) | Adjustment relates to the exclusion of share-based compensation expense from our Non-GAAP-based operating expenses as this expense is excluded from our internal analysis of operating results. |
(2) | Adjustment relates to the exclusion of amortization expense from our Non-GAAP-based operating expenses as the timing and frequency of amortization expense is dependent on our acquisitions and is hence excluded from our internal analysis of operating results. |
(3) | GAAP-based and Non-GAAP-based gross profit stated in dollars and gross margin stated as a percentage of total revenue. |
(4) | Adjustment relates to the exclusion of special charges (recoveries) from our Non-GAAP-based operating expenses as special charges (recoveries) are generally incurred in the periods relevant to an acquisition and include certain charges or recoveries that are not indicative or related to continuing operations, and are therefore excluded from our internal analysis of operating results. |
(5) | GAAP-based and Non-GAAP-based income from operations stated in dollars. |
(6) | Adjustment relates to the exclusion of other income (expense) from our Non-GAAP-based operating expenses as other income (expense) generally relates to the transactional impact of foreign exchange and is generally not indicative or related to continuing operations and is therefore excluded from our internal analysis of operating results. Other income (expense) also includes our share of income (losses) from our holdings in investments as a limited partner. We do not actively trade equity securities in these privately held companies nor do we plan our ongoing operations based around any anticipated fundings or distributions from these investments. We exclude gains and losses on these investments as we do not believe they are reflective of our ongoing business and operating results. Other income (expense) also includes unrealized gains (losses) on our derivatives which are not designated as hedges, that are related to the financing of the Micro Focus Acquisition. We exclude gains and losses on these derivatives as we do not believe they are reflective on our ongoing business and operating results. |
(7) | Adjustment relates to differences between the GAAP-based tax provision rate of approximately |
(8) | Reconciliation of GAAP-based net income (loss) to Non-GAAP-based net income: |
Three Months Ended | ||
Per share diluted | ||
GAAP-based net income, attributable to | $ 258,486 | $ 0.96 |
Add: | ||
Amortization | 94,309 | 0.35 |
Share-based compensation | 28,822 | 0.10 |
Special charges (recoveries) | 10,306 | 0.04 |
Other (income) expense, net | (163,349) | (0.60) |
GAAP-based provision for income taxes | 50,774 | 0.19 |
Non-GAAP-based provision for income taxes | (39,114) | (0.15) |
Non-GAAP-based net income, attributable to | $ 240,234 | $ 0.89 |
Reconciliation of Adjusted EBITDA | |
Three Months Ended | |
GAAP-based net income, attributable to | $ 258,486 |
Add: | |
Provision for income taxes | 50,774 |
Interest and other related expense, net | 38,715 |
Amortization of acquired technology-based intangible assets | 40,863 |
Amortization of acquired customer-based intangible assets | 53,446 |
Depreciation | 22,858 |
Share-based compensation | 28,822 |
Special charges (recoveries) | 10,306 |
Other (income) expense, net | (163,349) |
Adjusted EBITDA | $ 340,921 |
GAAP-based net income margin | 28.8 % |
Adjusted EBITDA margin | 38.0 % |
Reconciliation of Free cash flows | |
Three Months Ended | |
GAAP-based cash flows provided by operating activities | $ 195,170 |
Add: | |
Capital expenditures (1) | (32,215) |
Free cash flows | $ 162,955 |
(1) Defined as "Additions of property and equipment" in the Consolidated Statements of Cash Flows. | |
Reconciliation of selected GAAP-based measures to Non-GAAP-based measures for the six months ended (In thousands, except for per share data) | ||||||
Six Months Ended | ||||||
GAAP-based Measures | GAAP-based % of Total | Adjustments | Note | Non-GAAP- Measures | Non-GAAP- % of Total | |
Cost of revenues | ||||||
Cloud services and subscriptions | $ 266,113 | $ (4,845) | (1) | $ 261,268 | ||
Customer support | 55,943 | (1,257) | (1) | 54,686 | ||
Professional service and other | 107,864 | (3,288) | (1) | 104,576 | ||
Amortization of acquired technology-based intangible assets | 83,500 | (83,500) | (2) | — | ||
GAAP-based gross profit and gross margin (%) / Non-GAAP-based gross profit and gross margin (%) | 1,229,435 | 70.3 % | 92,890 | (3) | 1,322,325 | 75.6 % |
Operating expenses | ||||||
Research and development | 219,898 | (14,680) | (1) | 205,218 | ||
Sales and marketing | 344,341 | (16,296) | (1) | 328,045 | ||
General and administrative | 155,677 | (11,664) | (1) | 144,013 | ||
Amortization of acquired customer-based intangible assets | 107,884 | (107,884) | (2) | — | ||
Special charges (recoveries) | 24,587 | (24,587) | (4) | — | ||
GAAP-based income from operations / Non-GAAP-based income from operations | 331,016 | 268,001 | (5) | 599,017 | ||
Other income (expense), net | (25,882) | 25,882 | (6) | — | ||
Provision for income taxes | 84,399 | (11,610) | (7) | 72,789 | ||
GAAP-based net income / Non-GAAP-based net income, attributable to | 141,557 | 305,493 | (8) | 447,050 | ||
GAAP-based earnings per share / Non-GAAP-based earnings per share-diluted, attributable to | $ 0.52 | $ 1.14 | (8) | $ 1.66 | ||
(1) | Adjustment relates to the exclusion of share-based compensation expense from our Non-GAAP-based operating expenses as this expense is excluded from our internal analysis of operating results. |
(2) | Adjustment relates to the exclusion of amortization expense from our Non-GAAP-based operating expenses as the timing and frequency of amortization expense is dependent on our acquisitions and is hence excluded from our internal analysis of operating results. |
(3) | GAAP-based and Non-GAAP-based gross profit stated in dollars and gross margin stated as a percentage of total revenue. |
(4) | Adjustment relates to the exclusion of special charges (recoveries) from our Non-GAAP-based operating expenses as special charges (recoveries) are generally incurred in the periods relevant to an acquisition and include certain charges or recoveries that are not indicative or related to continuing operations, and are therefore excluded from our internal analysis of operating results. |
(5) | GAAP-based and Non-GAAP-based income from operations stated in dollars. |
(6) | Adjustment relates to the exclusion of other income (expense) from our Non-GAAP-based operating expenses as other income (expense) generally relates to the transactional impact of foreign exchange and is generally not indicative or related to continuing operations and is therefore excluded from our internal analysis of operating results. Other income (expense) also includes our share of income (losses) from our holdings in investments as a limited partner. We do not actively trade equity securities in these privately held companies nor do we plan our ongoing operations based around any anticipated fundings or distributions from these investments. We exclude gains and losses on these investments as we do not believe they are reflective of our ongoing business and operating results. Other income (expense) also includes unrealized gains (losses) on our derivatives which are not designated as hedges, that are related to the financing of the Micro Focus Acquisition. We exclude gains and losses on these derivatives as we do not believe they are reflective on our ongoing business and operating results. |
(7) | Adjustment relates to differences between the GAAP-based tax provision rate of approximately |
(8) | Reconciliation of GAAP-based net income to Non-GAAP-based net income: |
Six Months Ended | ||
Per share diluted | ||
GAAP-based net income, attributable to | $ 141,557 | $ 0.52 |
Add: | ||
Amortization | 191,384 | 0.71 |
Share-based compensation | 52,030 | 0.19 |
Special charges (recoveries) | 24,587 | 0.09 |
Other (income) expense, net | 25,882 | 0.10 |
GAAP-based provision for income taxes | 84,399 | 0.31 |
Non-GAAP-based provision for income taxes | (72,789) | (0.26) |
Non-GAAP-based net income, attributable to | $ 447,050 | $ 1.66 |
Reconciliation of Adjusted EBITDA | |
Six Months Ended | |
GAAP-based net income, attributable to | $ 141,557 |
Add: | |
Provision for income taxes | 84,399 |
Interest and other related expense, net | 79,097 |
Amortization of acquired technology-based intangible assets | 83,500 |
Amortization of acquired customer-based intangible assets | 107,884 |
Depreciation | 46,032 |
Share-based compensation | 52,030 |
Special charges (recoveries) | 24,587 |
Other (income) expense, net | 25,882 |
Adjusted EBITDA | $ 644,968 |
GAAP-based net income margin | 8.1 % |
Adjusted EBITDA margin | 36.9 % |
Reconciliation of Free cash flows | |
Six Months Ended | |
GAAP-based cash flows provided by operating activities | $ 327,129 |
Add: | |
Capital expenditures (1) | (68,539) |
Free cash flows | $ 258,590 |
(1) Defined as "Additions of property and equipment" in the Consolidated Statements of Cash Flows. | |
Reconciliation of selected GAAP-based measures to Non-GAAP-based measures for the three months ended (In thousands, except for per share data) | ||||||
Three Months Ended | ||||||
GAAP-based Measures | GAAP-based % of Total | Adjustments | Note | Non-GAAP- Measures | Non-GAAP- % of Total | |
Cost of revenues | ||||||
Cloud services and subscriptions | $ 131,799 | $ (2,033) | (1) | $ 129,766 | ||
Customer support | 27,354 | (567) | (1) | 26,787 | ||
Professional service and other | 53,800 | (1,525) | (1) | 52,275 | ||
Amortization of acquired technology-based intangible assets | 42,637 | (42,637) | (2) | — | ||
GAAP-based gross profit and gross margin (%) /Non-GAAP-based gross profit and gross margin (%) | 593,688 | 69.7 % | 46,762 | (3) | 640,450 | 75.2 % |
Operating expenses | ||||||
Research and development | 110,198 | (6,854) | (1) | 103,344 | ||
Sales and marketing | 167,170 | (6,859) | (1) | 160,311 | ||
General and administrative | 78,074 | (5,370) | (1) | 72,704 | ||
Amortization of acquired customer-based intangible assets | 54,438 | (54,438) | (2) | — | ||
Special charges (recoveries) | 14,281 | (14,281) | (4) | — | ||
GAAP-based income from operations / Non-GAAP-based income from operations | 146,353 | 134,564 | (5) | 280,917 | ||
Other income (expense), net | (189,231) | 189,231 | (6) | — | ||
Provision for income taxes | 33,625 | 50 | (7) | 33,675 | ||
GAAP-based net income (loss) / Non-GAAP-based net income, attributable to | (116,929) | 323,745 | (8) | 206,816 | ||
GAAP-based earnings (loss) per share / Non-GAAP-based earnings per share-diluted, attributable to | $ (0.43) | $ 1.20 | (8) | $ 0.77 | ||
(1) | Adjustment relates to the exclusion of share-based compensation expense from our Non-GAAP-based operating expenses as this expense is excluded from our internal analysis of operating results. |
(2) | Adjustment relates to the exclusion of amortization expense from our Non-GAAP-based operating expenses as the timing and frequency of amortization expense is dependent on our acquisitions and is hence excluded from our internal analysis of operating results. |
(3) | GAAP-based and Non-GAAP-based gross profit stated in dollars and gross margin stated as a percentage of total revenue. |
(4) | Adjustment relates to the exclusion of special charges (recoveries) from our Non-GAAP-based operating expenses as special charges (recoveries) are generally incurred in the periods relevant to an acquisition and include certain charges or recoveries that are not indicative or related to continuing operations, and are therefore excluded from our internal analysis of operating results. |
(5) | GAAP-based and Non-GAAP-based income from operations stated in dollars. |
(6) | Adjustment relates to the exclusion of other income (expense) from our Non-GAAP-based operating expenses as other income (expense) generally relates to the transactional impact of foreign exchange and is generally not indicative or related to continuing operations and is therefore excluded from our internal analysis of operating results. Other income (expense) also includes our share of income (losses) from our holdings in investments as a limited partner. We do not actively trade equity securities in these privately held companies nor do we plan our ongoing operations based around any anticipated fundings or distributions from these investments. We exclude gains and losses on these investments as we do not believe they are reflective of our ongoing business and operating results. Other income (expense) also includes unrealized gains (losses) on our derivatives which are not designated as hedges, that are related to the financing of the Micro Focus Acquisition. We exclude gains and losses on these derivatives as we do not believe they are reflective on our ongoing business and operating results. |
(7) | Adjustment relates to differences between the GAAP-based tax provision rate of approximately |
(8) | Reconciliation of GAAP-based net income to Non-GAAP-based net income: |
Three Months Ended | ||
Per share diluted | ||
GAAP-based net income (loss), attributable to | $ (116,929) | $ (0.43) |
Add: | ||
Amortization | 97,075 | 0.36 |
Share-based compensation | 23,208 | 0.09 |
Special charges (recoveries) | 14,281 | 0.05 |
Other (income) expense, net | 189,231 | 0.70 |
GAAP-based provision for income taxes | 33,625 | 0.12 |
Non-GAAP-based provision for income taxes | (33,675) | (0.12) |
Non-GAAP-based net income, attributable to | $ 206,816 | $ 0.77 |
Reconciliation of Adjusted EBITDA | |
Three Months Ended | |
GAAP-based net income (loss), attributable to | $ (116,929) |
Add: | |
Provision for income taxes | 33,625 |
Interest and other related expense, net | 40,382 |
Amortization of acquired technology-based intangible assets | 42,637 |
Amortization of acquired customer-based intangible assets | 54,438 |
Depreciation | 23,174 |
Share-based compensation | 23,208 |
Special charges (recoveries) | 14,281 |
Other (income) expense, net | 189,231 |
Adjusted EBITDA | $ 304,047 |
GAAP-based net income (loss) margin | (13.7) % |
Adjusted EBITDA margin | 35.7 % |
Reconciliation of Free cash flows | |
Three Months Ended | |
GAAP-based cash flows provided by operating activities | $ 131,959 |
Add: | |
Capital expenditures (1) | (36,324) |
Free cash flows | $ 95,635 |
(1) Defined as "Additions of property and equipment" in the Consolidated Statements of Cash Flows. | |
Reconciliation of selected GAAP-based measures to Non-GAAP-based measures for the three months ended (In thousands, except for per share data) | ||||||
Three Months Ended | ||||||
GAAP-based Measures | GAAP-based % of Total | Adjustments | Note | Non-GAAP- Measures | Non-GAAP- % of Total | |
Cost of revenues | ||||||
Cloud services and subscriptions | $ 122,129 | $ (897) | (1) | $ 121,232 | ||
Customer support | 29,668 | (409) | (1) | 29,259 | ||
Professional service and other | 53,041 | (647) | (1) | 52,394 | ||
Amortization of acquired technology-based intangible assets | 52,602 | (52,602) | (2) | — | ||
GAAP-based gross profit and gross margin (%) /Non-GAAP-based gross profit and gross margin (%) | 615,618 | 70.2 % | 54,555 | (3) | 670,173 | 76.4 % |
Operating expenses | ||||||
Research and development | 103,622 | (2,652) | (1) | 100,970 | ||
Sales and marketing | 163,938 | (5,006) | (1) | 158,932 | ||
General and administrative | 71,513 | (4,798) | (1) | 66,715 | ||
Amortization of acquired customer-based intangible assets | 52,665 | (52,665) | (2) | — | ||
Special charges (recoveries) | 9,217 | (9,217) | (4) | — | ||
GAAP-based income from operations / Non-GAAP-based income from operations | 192,884 | 128,893 | (5) | 321,777 | ||
Other income (expense), net | (25,037) | 25,037 | (6) | — | ||
Provision for income taxes | 39,266 | 148 | (7) | 39,414 | ||
GAAP-based net income / Non-GAAP-based net income, attributable to | 88,298 | 153,782 | (8) | 242,080 | ||
GAAP-based earnings per share / Non-GAAP-based earnings per share-diluted, attributable to | $ 0.32 | $ 0.57 | (8) | $ 0.89 | ||
(1) | Adjustment relates to the exclusion of share-based compensation expense from our Non-GAAP-based operating expenses as this expense is excluded from our internal analysis of operating results. |
(2) | Adjustment relates to the exclusion of amortization expense from our Non-GAAP-based operating expenses as the timing and frequency of amortization expense is dependent on our acquisitions and is hence excluded from our internal analysis of operating results. |
(3) | GAAP-based and Non-GAAP-based gross profit stated in dollars and gross margin stated as a percentage of total revenue. |
(4) | Adjustment relates to the exclusion of special charges (recoveries) from our Non-GAAP-based operating expenses as special charges (recoveries) are generally incurred in the periods relevant to an acquisition and include certain charges or recoveries that are not indicative or related to continuing operations, and are therefore excluded from our internal analysis of operating results. |
(5) | GAAP-based and Non-GAAP-based income from operations stated in dollars. |
(6) | Adjustment relates to the exclusion of other income (expense) from our Non-GAAP-based operating expenses as other income (expense) generally relates to the transactional impact of foreign exchange and is generally not indicative or related to continuing operations and is therefore excluded from our internal analysis of operating results. Other income (expense) also includes our share of income (losses) from our holdings in investments as a limited partner. We do not actively trade equity securities in these privately held companies nor do we plan our ongoing operations based around any anticipated fundings or distributions from these investments. We exclude gains and losses on these investments as we do not believe they are reflective of our ongoing business and operating results. |
(7) | Adjustment relates to differences between the GAAP-based tax provision rate of approximately |
(8) | Reconciliation of GAAP-based net income to Non-GAAP-based net income: |
Three Months Ended | ||
Per share diluted | ||
GAAP-based net income, attributable to | $ 88,298 | $ 0.32 |
Add: | ||
Amortization | 105,267 | 0.39 |
Share-based compensation | 14,409 | 0.05 |
Special charges (recoveries) | 9,217 | 0.03 |
Other (income) expense, net | 25,037 | 0.09 |
GAAP-based provision for income taxes | 39,266 | 0.15 |
Non-GAAP-based provision for income taxes | (39,414) | (0.14) |
Non-GAAP-based net income, attributable to | $ 242,080 | $ 0.89 |
Reconciliation of Adjusted EBITDA | |
Three Months Ended | |
GAAP-based net income, attributable to | $ 88,298 |
Add: | |
Provision for income taxes | 39,266 |
Interest and other related expense, net | 40,245 |
Amortization of acquired technology-based intangible assets | 52,602 |
Amortization of acquired customer-based intangible assets | 52,665 |
Depreciation | 21,779 |
Share-based compensation | 14,409 |
Special charges (recoveries) | 9,217 |
Other (income) expense, net | 25,037 |
Adjusted EBITDA | $ 343,518 |
GAAP-based net income margin | 10.1 % |
Adjusted EBITDA margin | 39.2 % |
Reconciliation of Free cash flows | |
Three Months Ended | |
GAAP-based cash flows provided by operating activities | $ 216,644 |
Add: | |
Capital expenditures (1) | (10,635) |
Free cash flows | $ 206,009 |
(1) Defined as "Additions of property and equipment" in the Consolidated Statements of Cash Flows. | |
Reconciliation of selected GAAP-based measures to Non-GAAP-based measures for the six months ended (In thousands, except for per share data) | ||||||
Six Months Ended | ||||||
GAAP-based Measures | GAAP-based % of Total | Adjustments | Note | Non-GAAP- Measures | Non-GAAP- % of Total | |
Cost of revenues | ||||||
Cloud services and subscriptions | $ 241,908 | $ (1,804) | (1) | $ 240,104 | ||
Customer support | 59,151 | (1,130) | (1) | 58,021 | ||
Professional service and other | 104,766 | (1,368) | (1) | 103,398 | ||
Amortization of acquired technology-based intangible assets | 105,769 | (105,769) | (2) | — | ||
GAAP-based gross profit and gross margin (%) / Non-GAAP-based gross profit and gross margin (%) | 1,189,803 | 69.6 % | 110,071 | (3) | 1,299,874 | 76.1 % |
Operating expenses | ||||||
Research and development | 203,787 | (5,586) | (1) | 198,201 | ||
Sales and marketing | 310,178 | (9,616) | (1) | 300,562 | ||
General and administrative | 142,990 | (8,839) | (1) | 134,151 | ||
Amortization of acquired customer-based intangible assets | 104,549 | (104,549) | (2) | — | ||
Special charges (recoveries) | 9,561 | (9,561) | (4) | — | ||
GAAP-based income from operations / Non-GAAP-based income from operations | 375,573 | 248,222 | (5) | 623,795 | ||
Other income (expense), net | 4,745 | (4,745) | (6) | — | ||
Provision for income taxes | 82,716 | (6,207) | (7) | 76,509 | ||
GAAP-based net income / Non-GAAP-based net income, attributable to | 220,213 | 249,684 | (8) | 469,897 | ||
GAAP-based earnings per share / Non-GAAP-based earnings per share-diluted, attributable to | $ 0.81 | $ 0.91 | (8) | $ 1.72 | ||
(1) | Adjustment relates to the exclusion of share-based compensation expense from our Non-GAAP-based operating expenses as this expense is excluded from our internal analysis of operating results. |
(2) | Adjustment relates to the exclusion of amortization expense from our Non-GAAP-based operating expenses as the timing and frequency of amortization expense is dependent on our acquisitions and is hence excluded from our internal analysis of operating results. |
(3) | GAAP-based and Non-GAAP-based gross profit stated in dollars and gross margin stated as a percentage of total revenue. |
(4) | Adjustment relates to the exclusion of special charges (recoveries) from our Non-GAAP-based operating expenses as special charges (recoveries) are generally incurred in the periods relevant to an acquisition and include certain charges or recoveries that are not indicative or related to continuing operations, and are therefore excluded from our internal analysis of operating results. |
(5) | GAAP-based and Non-GAAP-based income from operations stated in dollars. |
(6) | Adjustment relates to the exclusion of other income (expense) from our Non-GAAP-based operating expenses as other income (expense) generally relates to the transactional impact of foreign exchange and is generally not indicative or related to continuing operations and is therefore excluded from our internal analysis of operating results. Other income (expense) also includes our share of income (losses) from our holdings in investments as a limited partner. We do not actively trade equity securities in these privately held companies nor do we plan our ongoing operations based around any anticipated fundings or distributions from these investments. We exclude gains and losses on these investments as we do not believe they are reflective of our ongoing business and operating results. |
(7) | Adjustment relates to differences between the GAAP-based tax provision rate of approximately |
(8) | Reconciliation of GAAP-based net income to Non-GAAP-based net income: |
Six Months Ended | ||
Per share diluted | ||
GAAP-based net income, attributable to | $ 220,213 | $ 0.81 |
Add: | ||
Amortization | 210,318 | 0.77 |
Share-based compensation | 28,343 | 0.10 |
Special charges (recoveries) | 9,561 | 0.04 |
Other (income) expense, net | (4,745) | (0.02) |
GAAP-based provision for income taxes | 82,716 | 0.30 |
Non-GAAP-based provision for income taxes | (76,509) | (0.28) |
Non-GAAP-based net income, attributable to | $ 469,897 | $ 1.72 |
Reconciliation of Adjusted EBITDA | |
Six Months Ended | |
GAAP-based net income, attributable to | $ 220,213 |
Add: | |
Provision for income taxes | 82,716 |
Interest and other related expense, net | 77,300 |
Amortization of acquired technology-based intangible assets | 105,769 |
Amortization of acquired customer-based intangible assets | 104,549 |
Depreciation | 43,165 |
Share-based compensation | 28,343 |
Special charges (recoveries) | 9,561 |
Other (income) expense, net | (4,745) |
Adjusted EBITDA | $ 666,871 |
GAAP-based net income margin | 12.9 % |
Adjusted EBITDA margin | 39.0 % |
Reconciliation of Free cash flows | |
Six Months Ended | |
GAAP-based cash flows provided by operating activities | $ 406,313 |
Add: | |
Capital expenditures (1) | (37,347) |
Free cash flows | $ 368,966 |
(1) Defined as "Additions of property and equipment" in the Consolidated Statements of Cash Flows. | |
(3) The following tables provide a composition of our major currencies for revenue and expenses, expressed as a percentage, for the three and six months ended
Three Months Ended | Three Months Ended | ||||
Currencies | % of Revenue | % of Expenses(1) | % of Revenue | % of Expenses(1) | |
EURO | 19 % | 12 % | 25 % | 13 % | |
GBP | 4 % | 5 % | 4 % | 6 % | |
CAD | 3 % | 13 % | 3 % | 13 % | |
USD | 65 % | 55 % | 60 % | 52 % | |
Other | 9 % | 15 % | 8 % | 16 % | |
Total | 100 % | 100 % | 100 % | 100 % | |
Six Months Ended | Six Months Ended | ||||
Currencies | % of Revenue | % of Expenses(1) | % of Revenue | % of Expenses(1) | |
EURO | 20 % | 11 % | 24 % | 13 % | |
GBP | 4 % | 5 % | 5 % | 6 % | |
CAD | 3 % | 14 % | 3 % | 14 % | |
USD | 65 % | 55 % | 60 % | 52 % | |
Other | 8 % | 15 % | 8 % | 15 % | |
Total | 100 % | 100 % | 100 % | 100 % | |
(1) | Expenses include all cost of revenues and operating expenses included within the Consolidated Statements of Income, except for amortization of intangible assets, share-based compensation and special charges (recoveries). |
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