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Press Release: OpenText Reports Second Quarter -8-

· 02/04/2021 16:01
share-diluted, attributable to OpenText $ 0.40 $ 0.44 (8) $ 0.84 (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 30% and a Non-GAAP-based tax rate of approximately 14%; these rate differences are due to the income tax effects of items that are excluded for the purpose of calculating Non-GAAP-based adjusted net income. Such excluded items include amortization, share-based compensation, special charges (recoveries) and other income (expense), net. Also excluded are tax benefits/expense items unrelated to current period income such as changes in reserves for tax uncertainties and valuation allowance reserves, and "book to return" adjustments for tax return filings and tax assessments. Included is the amount of net tax benefits arising from the internal reorganization that occurred in Fiscal 2017 assumed to be allocable to the current period based on the forecasted utilization period. In arriving at our Non-GAAP-based tax rate of approximately 14%, we analyzed the individual adjusted expenses and took into consideration the impact of statutory tax rates from local jurisdictions incurring the expense. (8) Reconciliation of GAAP-based net income to Non-GAAP-based net income: Three Months Ended December 31, 2019 Per share diluted GAAP-based net income, attributable to OpenText $ 107,467 $ 0.40 Add: Amortization 93,759 0.35 Share-based compensation 7,783 0.03 Special charges (recoveries) 10,072 0.04 Other (income) expense, net (1,972) (0.01) GAAP-based provision for (recovery of) income taxes 46,818 0.17 Non-GAAP-based provision for income taxes (36,957) (0.14) Non-GAAP-based net income, attributable to OpenText $ 226,970 $ 0.84 Reconciliation of Adjusted EBITDA Three Months Ended December 31, 2019 GAAP-based net income, attributable to OpenText $ 107,467 Add: Provision for (recovery of) income taxes 46,818 Interest and other related expense, net 32,376 Amortization of acquired technology-based intangible assets 42,299 Amortization of acquired customer-based intangible assets 51,460 Depreciation 20,712 Share-based compensation 7,783 Special charges (recoveries) 10,072 Other (income) expense, net (1,972) Adjusted EBITDA $ 317,015 GAAP-based net income margin 13.9 % Adjusted EBITDA margin 41.1 % Reconciliation of Free cash flows Three Months Ended December 31, 2019 GAAP-based cash flows provided by operating activities $ 207,238 Add: Capital expenditures (1) (19,598) Free cash flows $ 187,640 (1) Defined as "Additions of property and equipment" in the Condensed Consolidated Statements of Cash Flows. Reconciliation of selected GAAP-based measures to Non-GAAP-based measures for the six months ended December 31, 2019. (In thousands, except for per share data) -------------------------------------------------------------------------------------------- Six Months Ended December 31, 2019 Non-GAAP- GAAP-based based Measures Non-GAAP- Measures % GAAP-based % of Total based of Total Measures Revenue Adjustments Note Measures Revenue Cost of revenues Cloud services and subscriptions $ 205,806 $ (754) (1) $ 205,052 Customer support 59,175 (613) (1) 58,562 Professional service and other 107,942 (589) (1) 107,353 Amortization of acquired technology-based intangible assets 82,597 (82,597) (2) -- GAAP-based gross profit and gross margin (%) / Non-GAAP-based gross profit and gross margin (%) 1,007,552 68.6 % 84,553 (3) 1,092,105 74.4 % Operating expenses Research and development 161,461 (2,476) (1) 158,985 Sales and marketing 265,928 (4,499) (1) 261,429 General and administrative 106,130 (5,743) (1) 100,387 Amortization of acquired customer-based intangible assets 100,618 (100,618) (2) -- Special charges (recoveries) 15,173 (15,173) (4) -- GAAP-based income from operations / Non-GAAP-based income from operations 317,253 213,062 (5) 530,315 Other income (expense), net (813) 813 (6) -- Provision for (recovery of) income taxes 69,909 (4,707) (7) 65,202 GAAP-based net income / Non-GAAP-based net income, attributable to OpenText 181,868 218,582 (8) 400,450 GAAP-based earnings per share / Non-GAAP-based earnings per share-diluted, attributable to OpenText $ 0.67 $ 0.81 (8) $ 1.48 (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

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February 04, 2021 16:01 ET (21:01 GMT)