Technology

OpenText Reports Fourth Quarter and Fiscal Year 2024 Financial Results, Raises Fiscal 2025 Margin Targets

Published

2 years ago

August 1, 2024

– Delivers Total Annual Revenues of $5.8 Billion with 29% Growth –
– Announces New $300 Million Share Repurchase Program –
– Increases Annualized Dividend By 5% –

Fiscal 2024 Annual Highlights Y/Y

Total Revenues

(in millions)

Annual Recurring Revenues

(in millions)

Cloud Revenues

(in millions)

Reported

Constant
Currency

Reported

Constant
Currency

Reported

Constant
Currency

$5,770

$5,729

$4,534

$4,506

$1,821

$1,816

+28.6 %

+27.7 %

+25.4 %

+24.6 %

+7.1 %

+6.8 %

Annual Recurring Revenues represent 79% of Total Revenues

“OpenText delivered solid Fiscal 2024 financial results with total revenues of $5.8 billion, representing a 29% year-over-year growth, we grew organically, and delivered $2 billion in Adjusted EBITDA Dollars, or 34%. Looking ahead into Fiscal 2025, we are focused on extending our Information Management competitive advantage, expanding margin, delivering a record year of capital return with our new $300 Million Share Repurchase program, and increasing our annualized dividend from $1 per share to $1.05 per share. We expect to return approximately $570 million during Fiscal 2025, via dividends and share repurchases, the highest in our history. We are excited about our differentiated products, as well as our business and financial momentum.”

Mark J. Barrenechea, OpenText CEO & CTO

“We are incredibly proud of our Fiscal 2024 performance. We delivered strong operating results including our AMC divestiture, $808 million of free cash flows, and reduced our net leverage ratio from 3.8x to 2.9x(1). Our focus is now on delivering to our Fiscal 2025 plans and targets, and the significant margin and FCF opportunity in front of us.”

Madhu Ranganathan, OpenText President & CFO

WATERLOO, ON, Aug. 1, 2024 /CNW/ — Open Text Corporation (NASDAQ: OTEX), (TSX: OTEX), today announced its financial results for the fourth quarter and year ended June 30, 2024.

Fiscal Year Financial Highlights Y/Y

Total revenues of $5.8 billion up 28.6% Y/Y or up 27.7% Y/Y in constant currency (CC)Annual Recurring Revenues (ARR) of $4.5 billion, up 25.4% Y/Y or up 24.6% Y/Y in CCCloud revenues of $1.8 billion up 7.1% Y/Y or up 6.8% Y/Y in CCEnterprise cloud bookings(2) of $701 million, up 32.9% Y/YOperating cash flows were $968 million and free cash flows(3) were $808 millionGAAP-based net income of $465 million, up 209.3% Y/Y, margin of 8.1%, primarily due to the gain on AMC divestitureAdjusted EBITDA(3) of $2.0 billion, margin of 34.1% while making key investments in cloud, security and AICompleted Divestiture of Application Modernization and Connectivity (AMC) Business to Rocket Software for $2.275 billionPrepaid $2.766 billion of aggregate outstanding debt, 30% since the January 2023 close of Micro Focus acquisitionRecord capital returns of $417 million including $267 million via dividends and $150 million of share repurchasesGAAP-based diluted earnings per share (EPS) of $1.71, Non-GAAP diluted EPS(3) of $4.17Declared quarterly dividend of $0.2625 per share

Fiscal 2024 Fourth Quarter Highlights

Total Revenues

(in millions)

Annual Recurring Revenues

(in millions)

Cloud Revenues

(in millions)

Reported

Constant
Currency

Reported

Constant
Currency

Reported

Constant
Currency

$1,362

$1,367

$1,093

$1,097

$465

$466

(8.6) %

(8.3) %

(5.5) %

(5.2) %

+2.9 %

+3.3 %

Annual Recurring Revenues represent 80% of Total Revenues

Total revenues of $1.4 billion, down (8.6)% Y/Y or down (8.3)% in CC, reflecting AMC divestiture completed May 1, 2024Annual recurring revenues of $1.1 billion, down (5.5)% Y/Y or down (5.2)% in CCCloud revenues of $465 million, up 2.9% Y/Y or up 3.3% Y/Y in CCQuarterly enterprise cloud bookings(2) of $180 million, up 10.3%Operating cash flows were $185 million and free cash flows(3) were $145 millionGAAP-based net income of $248 million, up 609.4% Y/Y, margin of 18.2%, primarily due to the gain on AMC divestitureAdjusted EBITDA(3) of $445 million, margin of 32.7%GAAP-based diluted earnings per share (EPS) of $0.91, Non-GAAP diluted EPS(3) of $0.98

(1) As of June 30, 2024, the consolidated Net Leverage Ratio, as calculated using the bank covenant methodology, was 2.3x. Excluding the gain from the divestiture of the AMC business, the consolidated Net Leverage Ratio was 2.9x. As of March 31, 2024, the consolidated Net Leverage Ratio, as calculated using bank covenant methodology, was 3.8x.

(2) Enterprise cloud bookings is defined as the total value from cloud services and subscription contracts, entered into in the fiscal year that are new, committed and incremental to our existing contracts, entered into with our enterprise based customers.

(3) Please see Note 2 “Use of Non-GAAP Financial Measures” to the consolidated financial statements below.

Financial Highlights for Fiscal 2024 and Q4 with Year Over Year Comparisons

Summary of Annual Results

(In millions, except per share data)

FY’24

FY’23

$ Change

% Change

FY’24 in
CC*

% Change
in CC*

Revenues:

Cloud services and subscriptions

$1,820.5

$1,700.4

$120.1

7.1 %

$1,815.6

6.8 %

Customer support

2,713.3

1,915.0

$798.3

41.7 %

2,690.0

40.5 %

Total annual recurring revenues**

$4,533.8

$3,615.5

$918.4

25.4 %

$4,505.5

24.6 %

License

834.2

539.0

$295.1

54.8 %

826.6

53.3 %

Professional service and other

401.6

330.5

$71.1

21.5 %

396.9

20.1 %

Total revenues

$5,769.6

$4,485.0

$1,284.6

28.6 %

$5,729.0

27.7 %

GAAP-based operating income

$ 887.1

$516.3

$370.8

71.8 %

N/A

Non-GAAP-based operating income (1)

$1,838.8

$1,365.3

$473.5

34.7 %

$1,808.3

32.4 %

GAAP-based net income attributable to OpenText

$465.1

$150.4

$314.7

209.3 %

N/A

GAAP-based EPS, diluted

$1.71

$0.56

$1.15

205.4 %

N/A

Non-GAAP-based EPS, diluted (1)(2)

$4.17

$3.29

$0.88

26.7 %

$4.08

24.0 %

Adjusted EBITDA (1)

$1,970.2

$1,472.9

$497.3

33.8 %

$1,938.3

31.6 %

Operating cash flows

$967.7

$779.2

$188.5

24.2 %

N/A

Free cash flows (1)

$808.4

$655.4

$153.0

23.3 %

N/A

Summary of Quarterly Results

(In millions, except per share data)

Q4 FY’24

Q4 FY’23

$ Change

% Change

Q4 FY’24 in
CC*

% Change
in CC*

Revenues:

Cloud services and subscriptions

$464.9

$451.7

$13.2

2.9 %

$466.5

3.3 %

Customer support

628.4

705.3

($76.9)

(10.9) %

630.2

(10.6) %

Total annual recurring revenues**

$1,093.3

$1,156.9

($63.7)

(5.5) %

$1,096.7

(5.2) %

License

171.5

228.8

($57.3)

(25.0) %

172.3

(24.7) %

Professional service and other

97.3

105.1

($7.8)

(7.4) %

97.6

(7.1) %

Total revenues

$1,362.1

$1,490.8

($128.7)

(8.6) %

$1,366.6

(8.3) %

GAAP-based operating income

$193.3

$121.3

$72.0

59.3 %

N/A

Non-GAAP-based operating income (1)

$413.5

$431.7

($18.3)

(4.2) %

$414.3

(4.1) %

GAAP-based net income attributable to OpenText

$248.2

($48.7)

$297.0

609.4 %

N/A

GAAP-based EPS, diluted

$0.91

($0.18)

$1.09

605.6 %

N/A

Non-GAAP-based EPS, diluted (1)(2)

$0.98

$0.91

$0.07

7.7 %

$0.99

8.8 %

Adjusted EBITDA (1)

$445.4

$462.8

($17.4)

(3.8) %

$446.1

(3.6) %

Operating cash flows

$185.2

$115.3

$69.9

60.6 %

N/A

Free cash flows (1)

$145.2

$91.2

$54.0

59.2 %

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.

Quarterly Business Highlights

Key customer wins in the quarter include: California Department of Employment Development, Export Development Bank Of Egypt, Ford O’Brien Landy LLP, Grupo Marista, GS1 Australia, Johnson & Johnson, Nestle, Rheinmetall AG, SICK AG, TaboolaOpenText Completes Divestiture of Application Modernization and Connectivity (AMC) Business to Rocket Software for $2.275 billionOpenText completes $2.0 billion debt reductionOpenText buys Pillr, a cybersecurity MDR platformOpenText cloud for government solution achieves FedRAMP authorizationOpenText named a leader in two IDC MarketScapes for worldwide unified endpoint management (UEM) software for small and medium-sized businesses (SMBs) and client endpoint management for Microsoft Windows devicesOpenText’s IDOL™ named a leader in document mining and analytics platforms report

Dividend Program
As part of our quarterly, non-cumulative cash dividend program, the Board declared on July 31, 2024, a quarterly cash dividend of $0.2625 per common share. The record date for this dividend is August 30, 2024, and the payment date is September 20, 2024. Any future declarations of dividends and the establishment of future record and payment dates are all subject to the final determination and discretion of the Board of Directors.

Share Repurchase Plan/Normal Course Issuer Bid
OpenText also announced today that, in order to align its share repurchase plan to its fiscal year, it has terminated its existing share repurchase plan (the “Fiscal 2024 Repurchase Plan”) and commenced a new share repurchase plan (the “Fiscal 2025 Repurchase Plan”), pursuant to which it intends to purchase for cancellation in open market transactions, from time to time over the next 12 months, if considered advisable, up to a maximum of 21,179,064 common shares, subject to a maximum aggregate value of US$300 million, on the Toronto Stock Exchange (the “TSX”), the NASDAQ Global Select Market and/or alternative trading systems in Canada and/or the United States, if eligible, subject to applicable law and stock exchange rules. The price that OpenText will pay for common shares in open market transactions will be the market price at the time of purchase or such other price as may be permitted by applicable law or stock exchange rules.

Under the Fiscal 2024 Repurchase Plan, which was voluntarily terminated by OpenText on July 31, 2024, OpenText purchased and cancelled 5,073,913 common shares, through the facilities of the TSX or by such other permitted means, out of the 13,643,472 common shares it was authorized to repurchase, for an aggregate amount of approximately US$150 million and at a volume-weighted average purchase price of US$29.57 per common share. As a result of the early termination of the Fiscal 2024 Repurchase Plan, the 5,073,913 Common Shares purchased under the Fiscal 2024 Repurchase Plan will be deducted from the Fiscal 2025 Repurchase Plan’s annual limit as per the requirements of the TSX.

Under the Fiscal 2025 Repurchase Plan, during the course of Fiscal 2025, OpenText intends to purchase for cancellation, from time to time, up to US$300 million of its issued and outstanding common shares, subject to a maximum of 21,179,064 common shares, representing 10% of the Company’s public float (calculated in accordance with TSX rules) as at July 24, 2024, less the 5,073,913 common shares purchased under the Fiscal 2024 Repurchase Plan. Purchases made under the Fiscal 2025 Repurchase Plan may commence on August 7, 2024 and will expire on August 6, 2025.

The Fiscal 2025 Repurchase Plan will be effected in accordance with Rule 10b-18 under the U.S. Securities Exchange Act of 1934, as amended. All common shares purchased by OpenText pursuant to the Fiscal 2025 Repurchase Plan will be cancelled.

The Company’s decision to commence the Fiscal 2025 Repurchase Plan to purchase up to US$300 million of its issued and outstanding common shares, in addition to the approximately US$150 million of common shares purchased and cancelled under the Fiscal 2024 Repurchase Plan, for a total of approximately US$450 million of expected share repurchases over five fiscal quarters, is indicative of its confidence in its operational execution and expanding cash flows, with the Fiscal 2025 Repurchase Plan being part of the Company’s previously disclosed overall strategic capital allocation, complementing its ongoing M&A activity and dividend program.

Normal Course Issuer Bid

The Company has voluntarily terminated its existing normal course issuer bid (the “Fiscal 2024 NCIB”) and commenced a new normal course issuer bid (the “Fiscal 2025 NCIB”) in order to provide it with a means to execute purchases over the TSX during the course of Fiscal 2025 as part of the overall Fiscal 2025 Repurchase Plan.

The TSX has approved the Company’s voluntary termination of the Fiscal 2024 NCIB. The TSX has also approved the Company’s notice of intention to commence the Fiscal 2025 NCIB pursuant to which the Company may purchase common shares over the TSX for the period commencing August 7, 2024 until August 6, 2025 in accordance with the TSX’s normal course issuer bid rules, including that such purchases are to be made at prevailing market prices or as otherwise permitted. Under the rules of the TSX, the maximum number of shares that may be purchased in this period is 21,179,064 common shares (representing 10% of the Company’s public float (calculated in accordance with TSX rules) as at July 24, 2024, less the 5,073,913 common shares purchased under the Fiscal 2024 NCIB), and the maximum number of shares that may be purchased on a single day is 138,175 common shares, which is 25% of 552,700 (the average daily trading volume for the common shares on the TSX for the six months ended March 31, 2024), subject to certain exceptions for block purchases, subject in any case to the volume and other limitations under Rule 10b-18.

The purchases made under the Fiscal 2024 Repurchase Plan are the only common shares purchased and cancelled under a normal course issuer bid within the past 12 months.

Summary of Annual Results

FY’24

FY’23

% Change

Revenue (millions)

$5,769.6

$4,485.0

28.6 %

GAAP-based gross margin

72.6 %

70.6 %

200

bps

Non-GAAP-based gross margin (1)

77.3 %

76.1 %

120

bps

GAAP-based EPS, diluted

$1.71

$0.56

205.4 %

Non-GAAP-based EPS, diluted (1)(2)

$4.17

$3.29

26.7 %

Summary of Quarterly Results

Q4 FY’24

Q3 FY’24

Q4 FY’23

% Change

(Q4 FY’24 vs
Q3 FY’24)

% Change

(Q4 FY’24 vs
Q4 FY’23)

Revenue (millions)

$1,362.1

$1,447.1

$1,490.8

(5.9) %

(8.6) %

GAAP-based gross margin

72.5 %

73.0 %

71.4 %

(50)

bps

110

bps

Non-GAAP-based gross margin (1)

76.4 %

76.7 %

76.9 %

(30)

bps

(50)

bps

GAAP-based EPS, diluted

$0.91

$0.36

($0.18)

152.8 %

605.6 %

Non-GAAP-based EPS, diluted (1)(2)

$0.98

$0.94

$0.91

4.3 %

7.7 %

(1) Please see Note 2 “Use of Non-GAAP Financial Measures” to the consolidated financial statements below.

Conference Call Information

OpenText posted an investor presentation on its Investor Relations website and invites the public to listen to the earnings conference call webcast today at 5:00 p.m. ET (2:00 p.m. PT) from the Investor Relations section of the Company’s website at https://investors.opentext.com. To join the webcast instantly, use this webcast link. A webcast replay will be available shortly following completion of the live call.

Please see Note 2 “Use of Non-GAAP Financial Measures” to the consolidated financial statements below for a reconciliation of U.S. GAAP-based financial measures used in this press release to Non-GAAP-based financial measures.

About OpenText

OpenText is the leading Information Management software and services company in the world. We help organizations solve complex global problems with a comprehensive suite of Business Clouds, Business AI, and Business Technology. For more information about OpenText (NASDAQ/TSX: OTEX), please visit us at www.opentext.com.

Cautionary Statement Regarding Forward-Looking Statements

Certain statements in this press release, including statements about Open Text Corporation (“OpenText” or “the Company”) on growth, profitability and future of Information Management, including executing on strategic programs; cloud bookings, demand, scale and revenue growth; future organic growth initiatives and deployment of capital; innovation fueled by cloud, AI and security technologies; raising margin targets and executing on Fiscal 2025 plans; future revenues, operating expenses, margins, free cash flows, interest expense and capital expenditures; market share of our products; intention to maintain a dividend program, including any targeted annualized dividend; expected size and timing of the Repurchase Plan, including execution thereof; execution of our business optimization plan; the expected impact of the divestiture of the AMC business; future tax rates; renewal rates; new platform and product offerings, including OpenText AI products, and associated benefits to customers; internal automation and AI leverage, including our AI strategy, vision and growth; strategy to build shareholder value; and other matters, which may contain words such as “anticipates”, “expects”, “intends”, “plans”, “believes”, “seeks”, “estimates”, “may”, “could”, “would”, “might”, “will” and variations of these words or similar expressions are intended to identify forward-looking statements or information under applicable securities laws (forward-looking statements). In addition, any statements or information that refer to expectations, beliefs, plans, projections, objectives, performance or other characterizations of future events or circumstances, including any underlying assumptions, are forward-looking statements, and are based on our current expectations, forecasts and projections about the operating environment, economies and markets in which we operate. Forward-looking statements reflect our current estimates, beliefs and assumptions, which are based on management’s perception of historic trends, current conditions and expected future developments, as well as other factors it believes are appropriate in the circumstances, such as certain assumptions about the economy, as well as market, financial and operational assumptions. Management’s estimates, beliefs and assumptions, including statements regarding future targets and aspirations, are inherently subject to significant business, economic, competitive and other uncertainties and contingencies regarding future events and, as such, are subject to change and are not considered guidance. We can give no assurance that such estimates, beliefs and assumptions will prove to be correct. Future declarations of dividends are also subject to the final determination and discretion of the Board of Directors, and an annualized dividend has not been approved or declared by the Board. Forward-looking statements involve known and unknown risks and uncertainties such as those relating to: all statements regarding the expected future financial position, results of operations, revenues, expenses, margins, cash flows, dividends, share buybacks, financing plans, business strategy, budgets, capital expenditures, competitive positions, growth opportunities, plans and objectives of management, including any anticipated synergy benefits; incurring unanticipated costs, delays or difficulties, including as a result of the integration of Micro Focus, the divestiture of the AMC business or the execution of our business optimization plan; and our ability to develop, protect and maintain our intellectual property and proprietary technology and to operate without infringing on the proprietary rights of others. We rely on a combination of copyright, patent, trademark and trade secret laws, non-disclosure agreements and other contractual provisions to establish and maintain our proprietary rights, which are important to our success. From time to time, we may also enforce our intellectual property rights through litigation in line with our strategic and business objectives. The actual results that OpenText achieves may differ materially from any forward-looking statements. For additional information with respect to risks and other factors which could occur, see the Company’s Annual Report on Form 10-K, Quarterly Reports on Form 10-Q and other securities filings with the Securities and Exchange Commission (SEC) and other securities regulators. Readers are cautioned not to place undue reliance upon any such forward-looking statements, which speak only as of the date made. Unless otherwise required by applicable securities laws, the Company disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. Further, readers should note that we may announce information using our website, press releases, securities law filings, public conference calls, webcasts and the social media channels identified on the Investors section of our website (https://investors.opentext.com). Such social media channels may include the Company’s or our CEO’s blog, X, formerly known as Twitter, account or LinkedIn account. The information posted through such channels may be material. Accordingly, readers should monitor such channels in addition to our other forms of communication.

OTEX-F

Copyright ©2024 Open Text. OpenText is a trademark or registered trademark of Open Text. The list of trademarks is not exhaustive of other trademarks. Registered trademarks, product names, company names, brands and service names mentioned herein are property of Open Text. All rights reserved. For more information, visit: https://www.opentext.com/about/copyright-information.

OPEN TEXT CORPORATION

CONSOLIDATED BALANCE SHEETS

(In thousands of U.S. dollars, except share data)

June 30, 2024

June 30, 2023

ASSETS

Cash and cash equivalents

$ 1,280,662

$ 1,231,625

Accounts receivable trade, net of allowance for credit losses of $12,108 as of June 30, 2024 and $13,828 as of June 30, 2023

626,189

682,517

Contract assets

66,450

71,196

Income taxes recoverable

61,113

68,161

Prepaid expenses and other current assets

242,911

221,732

Total current assets

2,277,325

2,275,231

Property and equipment

367,740

356,904

Operating lease right of use assets

219,774

285,723

Long-term contract assets

38,684

64,553

Goodwill

7,488,367

8,662,603

Acquired intangible assets

2,486,264

4,080,879

Deferred tax assets

932,657

926,719

Other assets

298,281

342,318

Long-term income taxes recoverable

96,615

94,270

Total assets

$ 14,205,707

$ 17,089,200

LIABILITIES AND SHAREHOLDERS’ EQUITY

Current liabilities:

Accounts payable and accrued liabilities

$ 931,116

$ 996,261

Current portion of long-term debt

35,850

320,850

Operating lease liabilities

76,446

91,425

Deferred revenues

1,521,416

1,721,781

Income taxes payable

235,666

89,297

Total current liabilities

2,800,494

3,219,614

Long-term liabilities:

Accrued liabilities

46,483

51,961

Pension liability, net

127,255

126,312

Long-term debt

6,356,943

8,562,096

Long-term operating lease liabilities

218,174

271,579

Long-term deferred revenues

162,401

217,771

Long-term income taxes payable

145,644

193,808

Deferred tax liabilities

148,632

423,955

Total long-term liabilities

7,205,532

9,847,482

Shareholders’ equity:

Share capital and additional paid-in capital

267,800,517 and 270,902,571 Common Shares issued and outstanding at June 30, 2024 and June 30, 2023, respectively; authorized Common Shares: unlimited

2,271,886

2,176,947

Accumulated other comprehensive income (loss)

(69,619)

(53,559)

Retained earnings

2,119,159

2,048,984

Treasury stock, at cost (3,135,980 and 3,536,375 shares at June 30, 2024 and June 30, 2023, respectively)

(123,268)

(151,597)

Total OpenText shareholders’ equity

4,198,158

4,020,775

Non-controlling interests

1,523

1,329

Total shareholders’ equity

4,199,681

4,022,104

Total liabilities and shareholders’ equity

$ 14,205,707

$ 17,089,200

OPEN TEXT CORPORATION

CONSOLIDATED STATEMENTS OF INCOME

(In thousands of U.S. dollars, except share and per share data)

(unaudited)

Three Months Ended June 30,

2024

2023

Revenues:

Cloud services and subscriptions

$ 464,891

$ 451,659

Customer support

628,381

705,277

License

171,535

228,796

Professional service and other

97,342

105,098

Total revenues

1,362,149

1,490,830

Cost of revenues:

Cloud services and subscriptions

175,799

166,394

Customer support

69,706

86,695

License

9,017

6,184

Professional service and other

71,691

90,498

Amortization of acquired technology-based intangible assets

48,220

77,045

Total cost of revenues

374,433

426,816

Gross profit

987,716

1,064,014

Operating expenses:

Research and development

205,253

249,958

Sales and marketing

285,352

333,244

General and administrative

126,639

136,866

Depreciation

31,984

31,152

Amortization of acquired customer-based intangible assets

97,446

121,285

Special charges (recoveries)

47,784

70,222

Total operating expenses

794,458

942,727

Income from operations

193,258

121,287

Other income (expense), net

397,055

(25,355)

Interest and other related expense, net

(102,461)

(145,829)

Income (loss) before income taxes

487,852

(49,897)

Provision for (recovery of) income taxes

239,578

(1,212)

Net income (loss) for the period

$ 248,274

$ (48,685)

Net (income) attributable to non-controlling interests

(45)

(49)

Net income (loss) attributable to OpenText

$ 248,229

$ (48,734)

Earnings per share—basic attributable to OpenText

$ 0.92

$ (0.18)

Earnings per share—diluted attributable to OpenText

$ 0.91

$ (0.18)

Weighted average number of Common Shares outstanding—basic (in ‘000’s)

271,178

270,772

Weighted average number of Common Shares outstanding—diluted (in ‘000’s)

271,724

270,772

OPEN TEXT CORPORATION

CONSOLIDATED STATEMENTS OF INCOME

(In thousands of U.S. dollars, except share and per share data)

Year Ended June 30,

2024

2023

2022

Revenues:

Cloud services and subscriptions

$ 1,820,524

$ 1,700,433

$ 1,535,017

Customer support

2,713,297

1,915,020

1,330,965

License

834,162

539,026

358,351

Professional service and other

401,594

330,501

269,511

Total revenues

5,769,577

4,484,980

3,493,844

Cost of revenues:

Cloud services and subscriptions

713,759

590,165

511,713

Customer support

292,733

209,705

121,485

License

25,608

16,645

13,501

Professional service and other

302,527

276,888

216,895

Amortization of acquired technology-based intangible assets

243,922

223,184

198,607

Total cost of revenues

1,578,549

1,316,587

1,062,201

Gross profit

4,191,028

3,168,393

2,431,643

Operating expenses:

Research and development

893,932

680,587

440,448

Sales and marketing

1,133,665

948,598

677,118

General and administrative

577,038

419,590

317,085

Depreciation

131,599

107,761

88,241

Amortization of acquired customer-based intangible assets

432,404

326,406

217,105

Special charges (recoveries)

135,305

169,159

46,873

Total operating expenses

3,303,943

2,652,101

1,786,870

Income from operations

887,085

516,292

644,773

Other income, net

358,391

34,469

29,118

Interest and other related expense, net

(516,180)

(329,428)

(157,880)

Income before income taxes

729,296

221,333

516,011

Provision for income taxes

264,012

70,767

118,752

Net income

$ 465,284

$ 150,566

$ 397,259

Net (income) attributable to non-controlling interests

(194)

(187)

(169)

Net income attributable to OpenText

$ 465,090

$ 150,379

$ 397,090

Earnings per share—basic attributable to OpenText

$ 1.71

$ 0.56

$ 1.46

Earnings per share—diluted attributable to OpenText

$ 1.71

$ 0.56

$ 1.46

Weighted average number of Common Shares outstanding—basic

(in ‘000’s)

271,548

270,299

271,271

Weighted average number of Common Shares outstanding—diluted

(in ‘000’s)

272,588

270,451

271,909

OPEN TEXT CORPORATION

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(In thousands of U.S. dollars)

Year Ended June 30,

2024

2023

2022

Net income for the period

$ 465,284

$ 150,566

$ 397,259

Other comprehensive income (loss)—net of tax:

Net foreign currency translation adjustments

(15,646)

(40,798)

(78,724)

Unrealized gain (loss) on cash flow hedges:

Unrealized gain (loss) – net of tax (1)

(2,697)

(941)

(1,859)

(Gain) loss reclassified into net income – net of tax (2)

965

2,721

373

Unrealized gain (loss) on available-for-sale financial assets:

Unrealized gain (loss) – net of tax (3)

228

(602)

—

Actuarial gain (loss) relating to defined benefit pension plans:

Actuarial gain (loss) – net of tax (4)

640

(6,605)

5,595

Amortization of actuarial (gain) loss into net income – net of tax (5)

450

325

718

Total other comprehensive loss net

(16,060)

(45,900)

(73,897)

Total comprehensive income

449,224

104,666

323,362

Comprehensive income attributable to non-controlling interests

(194)

(187)

(169)

Total comprehensive income attributable to OpenText

$ 449,030

$ 104,479

$ 323,193

______________________________

(1)

Net of tax expense (recovery) of $(972), $(339), and $(671) for the year ended June 30, 2024, 2023 and 2022, respectively.

(2)

Net of tax expense (recovery) of $347, $981 and $134 for the year ended June 30, 2024, 2023 and 2022, respectively.

(3)

Net of tax expense (recovery) of $112, $(159), and $— for the year ended June 30, 2024, 2023 and 2022, respectively.

(4)

Net of tax expense (recovery) of $765, $(1,961) and $1,866 for the year ended June 30, 2024, 2023 and 2022, respectively.

(5)

Net of tax expense (recovery) of $193, $143 and $290 for the year ended June 30, 2024, 2023 and 2022, respectively.

OPEN TEXT CORPORATION

CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY

(In thousands of U.S. dollars and shares)

Common Shares and
Additional Paid in Capital

Treasury Stock

Retained

Earnings

Accumulated
Other

Comprehensive

Income

Non-
Controlling
Interests

Total

Amount

Balance as of June 30, 2021

271,541

$ 1,947,764

(1,568)

$ (69,386)

$ 2,153,326

$ 66,238

$ 1,511

$ 4,099,453

Issuance of Common Shares

Under employee stock option plans

950

32,714

—

32,714

Under employee stock purchase plans

842

33,806

—

33,806

Share-based compensation

—

69,556

—

69,556

Purchase of treasury stock

—

(2,630)

(111,593)

—

(111,593)

Issuance of treasury stock

—

(21,013)

492

21,013

—

Common Shares repurchased

(3,810)

(24,295)

—

(152,692)

—

(176,987)

Dividends declared

($0.8836 per Common Share)

—

(237,655)

—

(237,655)

Other comprehensive loss – net

—

(73,897)

—

(73,897)

Distribution to non-controlling interest

—

142

—

(538)

(396)

Net income

—

397,090

—

169

397,259

Balance as of June 30, 2022

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

245

7,830

—

7,830

Under employee stock purchase plans

1,135

31,679

—

31,679

Share-based compensation

—

130,119

—

130,119

Purchase of treasury stock

—

(521)

(21,919)

—

(21,919)

Issuance of treasury stock

—

(31,355)

691

30,288

—

(1,067)

Dividends declared

($0.9720 per Common Share)

—

(261,464)

—

(261,464)

Other comprehensive loss – net

—

(45,900)

—

(45,900)

Net income

—

150,379

—

187

150,566

Balance as of June 30, 2023

270,903

$ 2,176,947

(3,536)

$ (151,597)

$ 2,048,984

$ (53,559)

$ 1,329

$ 4,022,104

Issuance of Common Shares

Under employee stock option plans

945

31,358

—

31,358

Under employee stock purchase plans

1,027

34,120

—

34,120

Share-based compensation

—

139,779

—

139,779

Purchase of treasury stock

—

(1,400)

(53,085)

—

(53,085)

Issuance of treasury stock

—

(76,178)

1,800

81,414

(5,236)

—

Common Shares repurchased

(5,074)

(34,140)

—

(118,193)

—

(152,333)

Dividends declared ($1.00 per Common Share)

—

(271,486)

—

(271,486)

Other comprehensive loss – net

—

(16,060)

—

(16,060)

Net income

—

465,090

—

194

465,284

Balance as of June 30, 2024

267,801

$ 2,271,886

(3,136)

$ (123,268)

$ 2,119,159

$ (69,619)

$ 1,523

$ 4,199,681

OPEN TEXT CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands of U.S. dollars)

(unaudited)

Three Months Ended June 30,

2024

2023

Cash flows from operating activities:

Net income (loss) for the period

$ 248,274

$ (48,685)

Adjustments to reconcile net income (loss) to net cash provided by operating activities:

Depreciation and amortization of intangible assets

177,650

229,482

Share-based compensation expense

26,767

41,904

Pension expense

4,302

3,401

Amortization of debt discount and issuance costs

5,670

8,257

Write-off of right of use assets

4,815

2,507

Loss on extinguishment of debt

45,590

—

Gain on AMC Divestiture

(429,102)

—

Loss on sale and write down of property and equipment

1,995

903

Deferred taxes

106,903

29,140

Share in net (income) loss of equity investees

(819)

11,530

Changes in financial instruments

(6,667)

16,274

Changes in operating assets and liabilities:

Accounts receivable

57,075

27,335

Contract assets

(23,917)

(43,643)

Prepaid expenses and other current assets

(33,112)

42,151

Income taxes

36,421

(116,569)

Accounts payable and accrued liabilities

7,000

10,582

Deferred revenue

(57,312)

(85,764)

Other assets

18,981

(5,299)

Operating lease assets and liabilities, net

(5,294)

(8,205)

Net cash provided by operating activities

185,220

115,301

Cash flows from investing activities:

Additions of property and equipment

(39,979)

(24,060)

Micro Focus acquisition

—

(2,357)

Proceeds from AMC Divestiture

2,229,187

—

Other investing activities

(9,291)

—

Net cash provided by (used in) investing activities

2,179,917

(26,417)

Cash flows from financing activities:

Proceeds from issuance of Common Shares from exercise of stock options and ESPP

9,887

14,159

Repayment of long-term debt and Revolver

(2,008,963)

(186,463)

Debt issuance costs

(1,041)

(690)

Net change in transition services agreement obligation

15,278

—

Repurchase of Common Shares

(150,017)

—

Purchase of treasury stock

—

(21,919)

Payments of dividends to shareholders

(66,690)

(65,068)

Other financing activities

—

758

Net cash used in financing activities

(2,201,546)

(259,223)

Foreign exchange gain (loss) on cash held in foreign currencies

(8,281)

4,571

Increase (decrease) in cash, cash equivalents and restricted cash during the period

155,310

(165,768)

Cash, cash equivalents and restricted cash at beginning of the period

1,127,483

1,399,720

Cash, cash equivalents and restricted cash at end of the period

$ 1,282,793

$ 1,233,952

OPEN TEXT CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands of U.S. dollars)

Reconciliation of cash, cash equivalents and restricted cash:

June 30, 2024

June 30, 2023

Cash and cash equivalents

$ 1,280,662

$ 1,231,625

Restricted cash (1)

2,131

2,327

Total cash, cash equivalents and restricted cash

$ 1,282,793

$ 1,233,952

OPEN TEXT CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands of U.S. dollars)

Year Ended June 30,

2024

2023

2022

Cash flows from operating activities:

Net income for the period

$ 465,284

$ 150,566

$ 397,259

Adjustments to reconcile net income to net cash provided by operating activities:

Depreciation and amortization of intangible assets

807,925

657,351

503,953

Share-based compensation expense

140,079

130,302

69,556

Pension expense

13,881

9,207

6,606

Amortization of debt discount and issuance costs

25,257

16,753

5,422

Write-off of right of use assets

20,056

9,626

17,707

Loss on extinguishment of debt

56,393

8,152

27,413

Gain on AMC divestiture

(429,102)

—

Loss on sale and write down of property and equipment

3,710

2,331

294

Deferred taxes

(142,271)

(149,560)

(36,088)

Share in net (income) loss of equity investees

18,194

23,077

(58,702)

Changes in financial instruments

(3,116)

128,841

—

Changes in operating assets and liabilities:

Accounts receivable

108,562

168,604

81,841

Contract assets

(95,403)

(73,539)

(37,966)

Prepaid expenses and other current assets

(28,395)

(23,035)

(13,954)

Income taxes

112,097

14,948

34,589

Accounts payable and accrued liabilities

(65,887)

(127,092)

(24,177)

Deferred revenue

(42,974)

(128,395)

(5,236)

Other assets

24,849

(11,297)

17,297

Operating lease assets and liabilities, net

(21,448)

(27,635)

(4,004)

Net cash provided by operating activities

967,691

779,205

981,810

Cash flows from investing activities:

Additions of property and equipment

(159,295)

(123,832)

(93,109)

Purchase of Micro Focus International PLC, net of cash acquired

(9,272)

(5,657,963)

—

Purchase of Zix Corporation, net of cash acquired

—

(856,175)

Purchase of Bricata Inc.

—

(17,753)

Proceeds from AMC divestiture

2,229,187

—

Realized gain (loss) on financial instruments

—

131,248

—

Proceeds from net investment hedge derivative contracts

4,456

—

Other investing activities

(9,759)

(873)

(3,922)

Net cash provided by (used in) investing activities

2,055,317

(5,651,420)

(970,959)

Cash flows from financing activities:

Proceeds from issuance of Common Shares from exercise of stock options and ESPP

66,914

39,331

67,215

Proceeds from long-term debt and Revolver

—

4,927,450

1,500,000

Repayment of long-term debt and Revolver

(2,568,352)

(202,926)

(860,000)

Debt extinguishment costs

—

(24,969)

Debt issuance costs

(3,833)

(77,899)

(17,159)

Net change in transition services agreement obligation

15,278

—

Repurchase of Common Shares

(150,017)

—

(176,987)

Purchase of treasury stock

(53,085)

(21,919)

(111,593)

Distribution to non-controlling interest

—

(396)

Payments of dividends to shareholders

(267,362)

(259,549)

(237,655)

Other financing activities

(1,447)

(1,435)

—

Net cash provided by (used in) financing activities

(2,961,904)

4,403,053

138,456

Foreign exchange gain (loss) on cash held in foreign currencies

(12,263)

7,203

(63,196)

Increase (decrease) in cash, cash equivalents and restricted cash during the period

48,841

(461,959)

86,111

Cash, cash equivalents and restricted cash at beginning of the period

1,233,952

1,695,911

1,609,800

Cash, cash equivalents and restricted cash at end of the period

$ 1,282,793

$ 1,233,952

$ 1,695,911

OPEN TEXT CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands of U.S. dollars)

(unaudited)

Reconciliation of cash, cash equivalents and restricted cash:

June 30, 2024

June 30, 2023

June 30, 2022

Cash and cash equivalents

$ 1,280,662

$ 1,231,625

$ 1,693,741

Restricted cash (1)

2,131

2,327

2,170

Total cash, cash equivalents and restricted cash

$ 1,282,793

$ 1,233,952

$ 1,695,911

(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 U.S. Dollars unless otherwise indicated.

(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 U.S. GAAP (Non-GAAP). These Non-GAAP financial measures have certain limitations in that they do not have a standardized meaning and thus the Company’s definition may be different from similar Non-GAAP financial measures used by other companies and/or analysts and may differ from period to period. Thus it may be more difficult to compare the Company’s financial performance to that of other companies. However, the Company’s management compensates for these limitations by providing the relevant disclosure of the items excluded in the calculation of these Non-GAAP financial measures both in its reconciliation to the U.S. GAAP financial measures and its consolidated financial statements, all of which should be considered when evaluating the Company’s results.

The Company uses these Non-GAAP financial measures to supplement the information provided in its consolidated financial statements, which are presented in accordance with U.S. GAAP. The presentation of Non-GAAP financial measures is not meant to be a substitute for financial measures presented in accordance with U.S. GAAP, but rather should be evaluated in conjunction with and as a supplement to such U.S. GAAP measures. OpenText strongly encourages investors to review its financial information in its entirety and not to rely on a single financial measure. The Company therefore believes that despite these limitations, it is appropriate to supplement the disclosure of the U.S. GAAP measures with certain Non-GAAP measures defined below.

Non-GAAP-based net income and Non-GAAP-based EPS, attributable to OpenText, are consistently calculated as GAAP-based net income (loss) or earnings (loss) per share, attributable to OpenText, on a diluted basis, excluding the effects of the amortization of acquired intangible assets, other income (expense), share-based compensation, and special charges (recoveries), all net of tax and any tax benefits/expense items unrelated to current period income, as further described in the tables below. Non-GAAP-based gross profit is the arithmetical sum of GAAP-based gross profit and the amortization of acquired technology-based intangible assets and share-based compensation within cost of sales. Non-GAAP-based gross margin is calculated as Non-GAAP-based gross profit expressed as a percentage of total revenue. Non-GAAP-based income from operations is calculated as GAAP-based income from operations, excluding the amortization of acquired intangible assets, special charges (recoveries), and share-based compensation expense.

Adjusted earnings before interest, taxes, depreciation and amortization (Adjusted EBITDA) is consistently calculated as GAAP-based net income (loss), attributable to OpenText, excluding interest income (expense), provision for (recovery of) income taxes, depreciation and amortization of acquired intangible assets, other income (expense), share-based compensation and special charges (recoveries). Adjusted EBITDA margin is calculated as adjusted EBITDA expressed as a percentage of total revenue.

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 U.S. GAAP.

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 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 OpenText’s performance or expected performance of future operations and facilitates period-to-period comparison of operating performance (although prior performance is not necessarily indicative of future performance). As a result, the Company considers it appropriate and reasonable to provide, in addition to U.S. GAAP measures, supplementary Non-GAAP financial measures that exclude certain items from the presentation of its financial results. Information reconciling certain forward-looking GAAP measures to non-GAAP measures related to F’25 targets and F’27 aspirations, including A-EBITDA is not available without unreasonable effort due to high variability, complexity and uncertainty with respect to forecasting and quantifying certain amounts that are necessary for such reconciliations.

The following charts provide unaudited reconciliations of U.S. GAAP-based financial measures to Non-GAAP-based financial measures for the following periods presented. The Micro Focus Acquisition significantly impacts period-over-period comparability.

Reconciliation of selected GAAP-based measures to Non-GAAP-based measures

for the three months ended June 30, 2024

(In thousands, except for per share data)

Three Months Ended June 30, 2024

GAAP-based
Measures

% of Total
Revenue

Adjustments

Note

Non-GAAP-
based
Measures

% of Total
Revenue

Cost of revenues

Cloud services and subscriptions

$ 175,799

$ (2,966)

(1)

$ 172,833

Customer support

69,706

(1,022)

(1)

68,684

Professional service and other

71,691

(1,202)

(1)

70,489

Amortization of acquired technology-based intangible assets

48,220

(48,220)

(2)

—

GAAP-based gross profit and gross margin (%) / Non-GAAP-based gross profit and gross margin (%)

987,716

72.5 %

53,410

(3)

1,041,126

76.4 %

Operating expenses

Research and development

205,253

(5,312)

(1)

199,941

Sales and marketing

285,352

(9,278)

(1)

276,074

General and administrative

126,639

(6,987)

(1)

119,652

Amortization of acquired customer-based intangible assets

97,446

(97,446)

(2)

—

Special charges (recoveries)

47,784

(47,784)

(4)

—

GAAP-based income from operations / Non-GAAP-based income from operations

193,258

220,217

(5)

413,475

Other income (expense), net

397,055

(397,055)

(6)

—

Provision for income taxes

239,578

(196,036)

(7)

43,542

GAAP-based net income / Non-GAAP-based net income, attributable to OpenText

248,229

19,198

(8)

267,427

GAAP-based earnings per share / Non-GAAP-based earnings per share-diluted, attributable to OpenText

$ 0.91

$ 0.07

(8)

$ 0.98

(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 and realized gains (losses) on our derivatives which are not designated as hedges. We exclude gains and losses on these derivatives 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 49% 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 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 income to Non-GAAP-based net income:

Three Months Ended June 30, 2024

Per share diluted

GAAP-based net income, attributable to OpenText

$ 248,229

$ 0.91

Add (deduct):

Amortization

145,666

0.54

Share-based compensation

26,767

0.10

Special charges (recoveries)

47,784

0.18

Other (income) expense, net

(397,055)

(1.47)

GAAP-based provision for income taxes

239,578

0.88

Non-GAAP-based provision for income taxes

(43,542)

(0.16)

Non-GAAP-based net income, attributable to OpenText

$ 267,427

$ 0.98

Reconciliation of Adjusted EBITDA

Three Months Ended June 30, 2024

GAAP-based net income, attributable to OpenText

$ 248,229

Add:

Provision for income taxes

239,578

Interest and other related expense, net

102,461

Amortization of acquired technology-based intangible assets

48,220

Amortization of acquired customer-based intangible assets

97,446

Depreciation

31,984

Share-based compensation

26,767

Special charges (recoveries)

47,784

Other (income) expense, net

(397,055)

Adjusted EBITDA

$ 445,414

GAAP-based net income margin

18.2 %

Adjusted EBITDA margin

32.7 %

Reconciliation of Free cash flows

Three Months Ended June 30, 2024

GAAP-based cash flows provided by operating activities

$ 185,220

Add:

Capital expenditures (1)

(39,979)

Free cash flows

$ 145,241

(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 year ended June 30, 2024

(In thousands, except for per share data)

Year Ended June 30, 2024

GAAP-based

Measures

GAAP-based
Measures

% of Total
Revenue

Adjustments

Note

Non-GAAP-
based

Measures

Non-GAAP-
based
Measures

% of Total
Revenue

Cost of revenues

Cloud services and subscriptions

$ 713,759

$ (12,858)

(1)

$ 700,901

Customer support

292,733

(4,357)

(1)

288,376

Professional service and other

302,527

(6,298)

(1)

296,229

Amortization of acquired technology-based intangible assets

243,922

(243,922)

(2)

—

GAAP-based gross profit and gross margin (%) / Non-GAAP-based gross profit and gross margin (%)

4,191,028

72.6 %

267,435

(3)

4,458,463

77.3 %

Operating expenses

Research and development

893,932

(40,612)

(1)

853,320

Sales and marketing

1,133,665

(46,572)

(1)

1,087,093

General and administrative

577,038

(29,382)

(1)

547,656

Amortization of acquired customer-based intangible assets

432,404

(432,404)

(2)

—

Special charges (recoveries)

135,305

(135,305)

(4)

—

GAAP-based income from operations / Non-GAAP-based income from operations

887,085

951,710

(5)

1,838,795

Other income (expense), net

358,391

(358,391)

(6)

—

Provision for income taxes

264,012

(78,845)

(7)

185,167

GAAP-based net income / Non-GAAP-based net income, attributable to OpenText

465,090

672,164

(8)

1,137,254

GAAP-based earnings per share / Non-GAAP-based earnings per share-diluted, attributable to OpenText

$ 1.71

$ 2.46

(8)

$ 4.17

(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)

(3)

GAAP-based and Non-GAAP-based gross profit stated in dollars and gross margin stated as a percentage of total revenue.

(4)

(5)

GAAP-based and Non-GAAP-based income from operations stated in dollars.

(6)

(7)

Adjustment relates to differences between the GAAP-based tax provision rate of approximately 36% 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 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:

Year Ended June 30, 2024

Per share diluted

GAAP-based net income, attributable to OpenText

$ 465,090

$ 1.71

Add (deduct):

Amortization

676,326

2.48

Share-based compensation

140,079

0.51

Special charges (recoveries)

135,305

0.50

Other (income) expense, net

(358,391)

(1.32)

GAAP-based provision for income taxes

264,012

0.97

Non-GAAP-based provision for income taxes

(185,167)

(0.68)

Non-GAAP-based net income, attributable to OpenText

$ 1,137,254

$ 4.17

Reconciliation of Adjusted EBITDA

Year Ended June 30, 2024

GAAP-based net income, attributable to OpenText

$ 465,090

Add:

Provision for income taxes

264,012

Interest and other related expense, net

516,180

Amortization of acquired technology-based intangible assets

243,922

Amortization of acquired customer-based intangible assets

432,404

Depreciation

131,599

Share-based compensation

140,079

Special charges (recoveries)

135,305

Other (income) expense, net

(358,391)

Adjusted EBITDA

$ 1,970,200

GAAP-based net income margin

8.1 %

Adjusted EBITDA margin

34.1 %

Reconciliation of Free cash flows

Year Ended June 30, 2024

GAAP-based cash flows provided by operating activities

$ 967,691

Add:

Capital expenditures (1)

(159,295)

Free cash flows

$ 808,396

(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 March 31, 2024

(In thousands, except for per share data)

Three Months Ended March 31, 2024

GAAP-based

Measures

GAAP-based
Measures

% of Total
Revenue

Adjustments

Note

Non-GAAP-
based

Measures

Non-GAAP-
based
Measures

% of Total
Revenue

Cost of revenues

Cloud services and subscriptions

$ 186,400

$ (3,292)

(1)

$ 183,108

Customer support

74,639

(1,149)

(1)

73,490

Professional service and other

75,455

(1,458)

(1)

73,997

Amortization of acquired technology-based intangible assets

48,094

(48,094)

(2)

—

GAAP-based gross profit and gross margin (%) /Non-GAAP-based gross profit and gross margin (%)

1,055,774

73.0 %

53,993

(3)

1,109,767

76.7 %

Operating expenses

Research and development

234,022

(10,799)

(1)

223,223

Sales and marketing

296,249

(12,260)

(1)

283,989

General and administrative

145,924

(7,084)

(1)

138,840

Amortization of acquired customer-based intangible assets

100,841

(100,841)

(2)

—

Special charges (recoveries)

19,561

(19,561)

(4)

—

GAAP-based income from operations / Non-GAAP-based income from operations

227,068

204,538

(5)

431,606

Other income (expense), net

9,950

(9,950)

(6)

—

Provision for income taxes

6,028

35,824

(7)

41,852

GAAP-based net income / Non-GAAP-based net income, attributable to OpenText

98,285

158,764

(8)

257,049

GAAP-based earnings (loss) per share / Non-GAAP-based earnings per share-diluted, attributable to OpenText

$ 0.36

$ 0.58

(8)

$ 0.94

(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)

(3)

GAAP-based and Non-GAAP-based gross profit stated in dollars and gross margin stated as a percentage of total revenue.

(4)

(5)

GAAP-based and Non-GAAP-based income from operations stated in dollars.

(6)

(7)

Adjustment relates to differences between the GAAP-based tax provision rate of approximately 6% 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 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 March 31, 2024

Per share diluted

GAAP-based net income, attributable to OpenText

$ 98,285

$ 0.36

Add (deduct):

Amortization

148,935

0.55

Share-based compensation

36,042

0.13

Special charges (recoveries)

19,561

0.07

Other (income) expense, net

(9,950)

(0.04)

GAAP-based provision for income taxes

6,028

0.02

Non-GAAP-based provision for income taxes

(41,852)

(0.15)

Non-GAAP-based net income, attributable to OpenText

$ 257,049

$ 0.94

Reconciliation of Adjusted EBITDA

Three Months Ended March 31, 2024

GAAP-based net income, attributable to OpenText

$ 98,285

Add (deduct):

Provision for income taxes

6,028

Interest and other related expense, net

132,663

Amortization of acquired technology-based intangible assets

48,094

Amortization of acquired customer-based intangible assets

100,841

Depreciation

32,109

Share-based compensation

36,042

Special charges (recoveries)

19,561

Other (income) expense, net

(9,950)

Adjusted EBITDA

$ 463,673

GAAP-based net income margin

6.8 %

Adjusted EBITDA margin

32.0 %

Reconciliation of Free cash flows

Three Months Ended March 31, 2024

GAAP-based cash flows provided by operating activities

$ 384,697

Add:

Capital expenditures (1)

(36,537)

Free cash flows

$ 348,160

(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 June 30, 2023

(In thousands, except for per share data)

Three Months Ended June 30, 2023

GAAP-based

Measures

GAAP-based
Measures

% of Total
Revenue

Adjustments

Note

Non-GAAP-
based

Measures

Non-GAAP-
based
Measures

% of Total
Revenue

Cost of revenues

Cloud services and subscriptions

$ 166,394

$ (2,876)

(1)

$ 163,518

Customer support

86,695

(1,213)

(1)

85,482

Professional service and other

90,498

(1,826)

(1)

88,672

Amortization of acquired technology-based intangible assets

77,045

(77,045)

(2)

—

GAAP-based gross profit and gross margin (%) /Non-GAAP-based gross profit and gross margin (%)

1,064,014

71.4 %

82,960

(3)

1,146,974

76.9 %

Operating expenses

Research and development

249,958

(13,584)

(1)

236,374

Sales and marketing

333,244

(13,467)

(1)

319,777

General and administrative

136,866

(8,938)

(1)

127,928

Amortization of acquired customer-based intangible assets

121,285

(121,285)

(2)

—

Special charges (recoveries)

70,222

(70,222)

(4)

—

GAAP-based income from operations / Non-GAAP-based income from operations

121,287

310,456

(5)

431,743

Other income (expense), net

(25,355)

25,355

(6)

—

Provision for (recovery of) income taxes

(1,212)

41,240

(7)

40,028

GAAP-based net loss / Non-GAAP-based net income, attributable to OpenText

(48,734)

294,571

(8)

245,837

GAAP-based earnings per share / Non-GAAP-based earnings per share-diluted, attributable to OpenText

$ (0.18)

$ 1.09

(8)

$ 0.91

(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)

(3)

GAAP-based and Non-GAAP-based gross profit stated in dollars and gross margin stated as a percentage of total revenue.

(4)

(5)

GAAP-based and Non-GAAP-based income from operations stated in dollars.

(6)

(7)

Adjustment relates to differences between the GAAP-based tax provision rate of approximately 2% 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 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 loss to Non-GAAP-based net income:

Three Months Ended June 30, 2023

Per share diluted

GAAP-based net loss, attributable to OpenText

$ (48,734)

$ (0.18)

Add (deduct):

Amortization

198,330

0.73

Share-based compensation

41,904

0.15

Special charges (recoveries)

70,222

0.26

Other (income) expense, net

25,355

0.10

GAAP-based recovery of income taxes

(1,212)

—

Non-GAAP-based provision for income taxes

(40,028)

(0.15)

Non-GAAP-based net income, attributable to OpenText

$ 245,837

$ 0.91

Reconciliation of Adjusted EBITDA

Three Months Ended June 30, 2023

GAAP-based net loss, attributable to OpenText

$ (48,734)

Add (deduct):

Recovery of income taxes

(1,212)

Interest and other related expense, net

145,829

Amortization of acquired technology-based intangible assets

77,045

Amortization of acquired customer-based intangible assets

121,285

Depreciation

31,152

Share-based compensation

41,904

Special charges (recoveries)

70,222

Other (income) expense, net

25,355

Adjusted EBITDA

$ 462,846

GAAP-based net loss margin

(3.3) %

Adjusted EBITDA margin

31.0 %

Reconciliation of Free cash flows

Three Months Ended June 30, 2023

GAAP-based cash flows provided by operating activities

$ 115,301

Add:

Capital expenditures (1)

(24,060)

Free cash flows

$ 91,241

(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 year ended June 30, 2023

(In thousands, except for per share data)

Year Ended June 30, 2023

GAAP-based

Measures

GAAP-based
Measures

% of Total
Revenue

Adjustments

Note

Non-GAAP-
based

Measures

Non-GAAP-
based
Measures

% of Total
Revenue

Cost of revenues

Cloud services and subscriptions

$ 590,165

$ (10,664)

(1)

$ 579,501

Customer support

209,705

(3,627)

(1)

206,078

Professional service and other

276,888

(6,998)

(1)

269,890

Amortization of acquired technology-based intangible assets

223,184

(223,184)

(2)

—

GAAP-based gross profit and gross margin (%) / Non-GAAP-based gross profit and gross margin (%)

3,168,393

70.6 %

244,473

(3)

3,412,866

76.1 %

Operating expenses

Research and development

680,587

(39,065)

(1)

641,522

Sales and marketing

948,598

(41,710)

(1)

906,888

General and administrative

419,590

(28,238)

(1)

391,352

Amortization of acquired customer-based intangible assets

326,406

(326,406)

(2)

—

Special charges (recoveries)

169,159

(169,159)

(4)

—

GAAP-based income from operations / Non-GAAP-based income from operations

516,292

849,051

(5)

1,365,343

Other income (expense), net

34,469

(34,469)

(6)

—

Provision for income taxes

70,767

74,261

(7)

145,028

GAAP-based net income / Non-GAAP-based net income, attributable to OpenText

150,379

740,321

(8)

890,700

GAAP-based earnings per share / Non-GAAP-based earnings per share-diluted, attributable to OpenText

$ 0.56

$ 2.73

(8)

$ 3.29

(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)

(3)

GAAP-based and Non-GAAP-based gross profit stated in dollars and gross margin stated as a percentage of total revenue.

(4)

(5)

GAAP-based and Non-GAAP-based income from operations stated in dollars.

(6)

(7)

Adjustment relates to differences between the GAAP-based tax provision rate of approximately 32% 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 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:

Year Ended June 30, 2023

Per share diluted

GAAP-based net income, attributable to OpenText

$ 150,379

$ 0.56

Add (deduct):

Amortization

549,590

2.03

Share-based compensation

130,302

0.48

Special charges (recoveries)

169,159

0.63

Other (income) expense, net

(34,469)

(0.13)

GAAP-based provision for income taxes

70,767

0.26

Non-GAAP-based provision for income taxes

(145,028)

(0.54)

Non-GAAP-based net income, attributable to OpenText

$ 890,700

$ 3.29

Reconciliation of Adjusted EBITDA

Year Ended June 30, 2023

GAAP-based net income, attributable to OpenText

$ 150,379

Add:

Provision for income taxes

70,767

Interest and other related expense, net

329,428

Amortization of acquired technology-based intangible assets

223,184

Amortization of acquired customer-based intangible assets

326,406

Depreciation

107,761

Share-based compensation

130,302

Special charges (recoveries)

169,159

Other (income) expense, net

(34,469)

Adjusted EBITDA

$ 1,472,917

GAAP-based net income margin

3.4 %

Adjusted EBITDA margin

32.8 %

Reconciliation of Free cash flows

Year Ended June 30, 2023

GAAP-based cash flows provided by operating activities

$ 779,205

Add:

Capital expenditures (1)

(123,832)

Free cash flows

$ 655,373

(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 year ended June 30, 2024 and 2023:

Three Months Ended June 30, 2024

Three Months Ended June 30, 2023

Currencies

% of Revenue

% of Expenses(1)

% of Revenue

% of Expenses(1)

EURO

22 %

13 %

21 %

12 %

GBP

5 %

7 %

5 %

9 %

CAD

3 %

10 %

3 %

10 %

USD

59 %

49 %

60 %

48 %

Other

11 %

21 %

11 %

21 %

Total

100 %

Year Ended June 30, 2024

Year Ended June 30, 2023

Currencies

% of Revenue

% of Expenses(1)

% of Revenue

% of Expenses(1)

EURO

22 %

12 %

20 %

12 %

GBP

5 %

7 %

5 %

7 %

CAD

3 %

10 %

3 %

11 %

USD

59 %

50 %

62 %

51 %

Other

11 %

21 %

10 %

19 %

Total

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).

View original content to download multimedia:https://www.prnewswire.com/news-releases/opentext-reports-fourth-quarter-and-fiscal-year-2024-financial-results-raises-fiscal-2025-margin-targets-302212857.html

SOURCE Open Text Corporation

Technology

Wearable Technology Market Expected to Reach $183.2 Billion by 2031, Growing at a CAGR of 12.75% — Allied Market Research

Published

51 minutes ago

April 21, 2026

Surge in AI & IoT-enabled smart wearables, rising healthcare monitoring demand, and expanding enterprise deployments are reshaping the global wearable technology market.

WILMINGTON, Del., April 21, 2026 /PRNewswire/ — Allied Market Research has published a comprehensive new report titled, “Wearable Technology Market by Device, Product Type, and Application: Global Opportunity Analysis and Industry Forecast, 2024–2033.” According to the report, the global wearable technology market size was valued at USD 54.8 billion in 2020 and is projected to reach USD 183.2 billion by 2031, registering a CAGR of 12.75% from 2022 to 2031. Rising global rates of chronic disease, post-pandemic behavioral shifts toward preventive health, and the accelerating integration of artificial intelligence and IoT connectivity into wearable devices are the primary forces fueling robust wearable technology market growth across consumer, clinical, and enterprise segments.

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Key Market Snapshot

Report Title

Wearable Technology Market — Global Opportunity Analysis & Industry Forecast, 2024–2033

Market Size (2020)

USD 54.8 Billion

Market Forecast (2031)

USD 183.2 Billion

CAGR (2022–2031)

12.75 %

Leading Segment by Product

Smartwatches & Fitness Bands

Leading Application

Healthcare & Medical Monitoring

Leading End User

Consumer Electronics Segment

Dominant Region

North America

Fastest Growing Region

Asia-Pacific

Top Growth Driver

AI & IoT-Enabled Wearable Devices

Report Coverage

2017–2033 | Multi-segmented, Multi-regional

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Key Market Insights

Market Size: The global wearable technology market was valued at USD 54.8 billion in 2020 and is projected to reach USD 183.2 billion by 2031 growing at a CAGR of12.75% making it one of the fastest-growing consumer electronics and digital health segments worldwide.The Smartwatches and fitness bands, who are not only growing the presence in the field of heart rate tracking or sleep tracking but also new product advances such contactless payments along with smartphone features basically serving needs for both a proliferation of wellness consumers and burgeoning population of more clinically oriented users.The Highest Growing Application Vertical: Healthcare and medical monitoring is the fastest-growing segment of application vertical, due to increasing clinical validation for ECG monitoring, blood glucose estimation, SpO2 tracking & fall detection in wearable devices — allowing continuous remote patient management.Hearables as a New Subsector: A growing sector of wearables, hearables — smart earbuds and AI-driven hearing aids are one of the most dynamic wearable categories now, propelled further by relaxation of US regulations on over-the-counter (OTC) hearing aids.Regional Leaders: North America led the market for global wearable technology in 2020 due to high consumer technology adoption, advanced healthcare infrastructure and a strong ecosystem for employer-subsidized wellness programs.Largest Growth Frontier: Equipped with increasing smartphone penetration, expanding urban middle class incomes, and large young rural populations across India, China, South Korea & Southeast Asia; AsiaPacific is undoubtedly the fastest growing region.Artificial intelligence (AI) as an Enabler: The addition of AI built directly into wearables — delivering personalized fitness coaching, real-time alerts to changes in health conditions, anomaly detection and predictive analytics — will finally be transforming the nature of smart watches from mere data collectors to actual intelligent health companions.

Technology Drivers

Introduction There are several converging technologies that will redefine usage wearables. On-device AI and machine learning provide personal fitness recommendations, real-time health alerts, and behavioral coaching to individual users which will drive stickiness on the platform The widespread emergence of 5G infrastructure worldwide is enabling low-latency biosignal streaming to cloud health platforms, paving the way for new use cases in remote patient monitoring and augmented reality wearables along with industrial safety applications.

Flexible batteries, which can keep power-hungry chip designs thinner and allow energy harvesting from body heat and motion, combined with increasingly compact chip design are helping create tinier devices that provide better fulfillment of consumer expectations surrounding comfort and aesthetics. With the birth of smart ring category — small, low-power and unobtrusive devices —shows that appetite is growing for wearable form factors beyond the wrist.

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Market Segmentation

Based on Product Type: Smartwatches: & amp; Fitness bands, hearables, medical wearables smart glasses and smart clothing.

By Application: Sports and fitness is still the largest segment by volume, while healthcare and medical monitoring is fastest-growing as biosensors receive clinical validation (for arrhythmia detection), continuous glucose monitoring and chronic disease management.

Global Shipments of Device by End User: Individual consumers are the leader in global shipments of devices. But healthcare providers and enterprise clients are scaling too quickly as wearables move past consumer toys to actual clinical and operational tools with credible ROI. Through comprehensive employee wellness programs, enterprises throughout North America and Europe are integrating wearables into their health initiatives that form another valuable institutional procurement channel, next to where most consumer wearables are sold today retail.

Regional Insights

North America will occupy the largest revenue share as a growing middle class translates to overall health, with high levels of consumer technology adoption and a healthcare system that has embraced remote monitoring. Consumer health wearables are accelerating clinical validation with FDA clearances, and sustained demand is being created by employer subsidized wellness programs, over above direct retail

Technological advances coupled with significant smartphone penetration and an increasing middle-class income are propelling growth of the Asia-Pacific market, which is also home to some of the youngest populations in world (in India, China, South Korea and Southeast Asia). China has the combined characteristics of being the largest manufacturer in the world as well as a large domestic consumer market: many new brands compete fiercely on feature set and price. India is forecast to also experience one of the highest regional growth rates until 2033 from e-commerce expansion and rising urban health awareness.

Europe has a large presence, spinning off notably to the medical and sports performance space. Representing a different landscape of data governance that wearable health platforms face today, consumer privacy awareness is affecting the market and EU digital health regulations actively are shaping product development for manufacturers worldwide. Its the UK and Germany, France and the Nordic nations that are at the fore.

LAMEA (Latin America, Middle East, and Africa) is an emerging high-growth opportunity. In Saudi Arabia, the UAE and Qatar this institutional push for wearables is being supported by government-led incentives for Smart City and digital health initiatives. For Latin American adoption, Brazil leads and South Africa anchors the African wearables ecosystem.

Competitive Landscape

The market is defined by intense competition among technology giants, specialized medical device makers, and consumer electronics challengers:

Apple leads the smartwatch segment with its Apple Watch ecosystem, integrating consumer wellness with clinical-grade health monitoring.Samsung competes through its Galaxy Watch and Galaxy Buds portfolio, backed by the Samsung Health platform.Fitbit (Google) pioneered consumer fitness tracking and is now targeting clinical-grade health monitoring within Google’s broader digital health ecosystem.Garmin commands premium loyalty among athletes and outdoor professionals through precision GPS and biometric analytics.Huawei and Xiaomi dominate volume in Asia-Pacific — Huawei through advanced health sensing and Xiaomi through ultra-competitive pricing in emerging markets.Abbott, Dexcom, and Medtronic lead in medical wearables, particularly continuous glucose monitors and implantable cardiac devices.Meta and Snap are pursuing next-generation augmented reality smart glasses.

Recent Developments

There are a few major trends that will influence the direction of the market in the near term. Non-invasive Blood Glucose monitoring is one of the most awaited features in future smartwatches and for good reason too; it could unlock the world’s biggest diabetic care market. So far, large language model-based AI coaching assistants have been dispersed in wearable platforms and are producing tailored fitness, sleep and stress management advice. For Consumer Domestics: The FDA and CE Clearances for ECG, Atrial Fibrillation Detection, And Blood Oxygen Monitoring Have Notably Broadened the Clinical Legitimacy of Smartwatches from Consumers Ruggedized wearables for workplace safety and augmented reality-assisted operations will deliver a high-value B2B channel targeting enterprise and industrial deployments. With technology conglomerates, healthcare systems, and insurers all vying to consolidate platforms and intellectual property across connected health, strategic M&A and investment activity is accelerating.

Analyst Perspective

Structural Inflection Point for Wearable Tech Market With the largest-aged population globally, they require continuous non-invasive monitoring of heart, lung and brain health by detecting early symptoms. At the same time, healthcare systems pressed financially are transitioning to preventive care models — a switch in which clinically validated consumer wearables form a critical enabling play.

The synthesis of AI-enabled edge computing, 5G, next-generation biosensor arrays, and flexible electronics is creating a new class of devices that will serve not only as data collectors but also as smart health companions with capabilities for personalization, anomaly detection and integration across larger digital health systems.

For market stakeholders, the key success factors all remain constant; device accuracy and clinical validation (with effective engagement that engenders habitual use), platform ecosystem stickiness (entrenchment to create a barrier to competition), data privacy & regulatory compliance, and the demonstrated ability to deliver measurable health outcomes that warrant a premium price point for consumers or institutional uptake. Those companies getting all four of these dimensions right are best positioned to capture outsized value as the market scales through 2033

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SOURCE Allied Market Research

Technology

AI Innovation Surges as Security Fundamentals Lag, Kroll Research Finds

Published

51 minutes ago

April 21, 2026

Key Takeaways

76% of organizations have experienced a security incident involving AI applications or models in the past two years. 27% of organizations report costs exceeding $1 million from AI-related security incidents.As organizational cyber maturity increases, the likelihood of experiencing an incident involving AI reduces significantly, from 89% (very low maturity) to 54% (very high maturity).

NEW YORK, April 21, 2026 /PRNewswire/ — Kroll, the leading independent provider of global financial and risk advisory solutions, has released global cyber resilience research which reveals that rapid artificial intelligence (AI) adoption is dramatically outpacing governance, security controls and incident preparedness.

It has become clear that AI, and in particular agentic AI, has changed the threat model permanently. The research results indicate that while AI is becoming embedded across enterprise operations, 76% of businesses have experienced a security incident involving AI applications or models in the past two years. The research reveals organizations lack the foundational security practices and governance frameworks necessary to deploy AI safely and effectively, costing almost one-third of organizations (27%) over one million dollars related to AI-related security incidents.

While there is appetite to incorporate the promise of AI into security infrastructure, 90% of respondents surveyed identified barriers preventing greater investment in AI security. Lack of clear ROI, insufficient executive understanding of AI risks and the belief that current measures are sufficient account for 40% of those barriers.

The Innovation-Security Trade-Off

The research shows that most organizations are inadequately prepared for AI threats, despite the rapid increase in attacks.

Organizations spend an average of 13% of their AI initiative budget on using AI to test security controls or to test the models themselves, leaving critical gaps in AI security posture and illuminating a disconnect between AI adoption and AI security investment.Companies with highly mature security practices are six times more likely to spend over 20% of their AI budget on testing security controls.Almost half (48%) of respondents stated they have little to no organizational governance on AI tool and service adoption, creating an expanded attack surface that extends far beyond the organization’s traditional perimeter.

Dave Burg, Global Group Head of Cyber and Data Resilience at Kroll, says, “Organizations are under pressure to embrace AI to respond faster and with greater precision to increasingly complex threats. However, this cannot come at the expense of the basics for prevention, detection and responding to attacks. We’re seeing businesses enthusiastically integrate AI into their operations without getting the fundamentals right first, and that’s creating a dangerous security debt.

The real story isn’t that AI is risky; it’s that without the right foundational security in place, AI amplifies existing security weaknesses. Fortunately, there are opportunities for organizations to remediate this. Kroll was recently among industry leaders joining CrowdStrike’s Charlotte AI AgentWorks Ecosystem which helps operationalize AI within managed detection and response, building tailored agents that accelerate investigations and response.”

Maturity Matters: Organizations with Strong Foundations Experience Significantly Fewer AI Incidents

As organizational cyber maturity increases, the likelihood of experiencing an AI-related security incident drops significantly:

89% of organizations with very low cyber maturity experience AI-related security incidents.In contrast, 54% of organizations with very high cyber maturity experience AI-related security incidents.Even further, 46% of organizations with very high cyber maturity reported zero AI-related cyber incidents in the past two years, demonstrating that robust security foundations directly translate to AI security resilience.This is understandable as 69% of organizations with very high cyber maturity have a centralized AI platform strategy with security controls, compared to just 39% of those with very low cyber maturity.

Quiessence Philips, Head of Security Architecture and Engineering at Kroll, says, “AI’s ability to accelerate productivity and innovation is undeniable, and the goal is not to slow it down. However, adoption without concurrent investment in security foundations is not bold, it’s reckless. The agentic AI ecosystem is now the fastest-growing enterprise attack surface, and the organizations most at risk are the ones chasing the opportunity without building security alongside it. Secure architecture, identity management, incident response, security culture – these aren’t limitations on innovation, but what make innovation sustainable.”

You can access the full report on the Kroll website.

You can also register for the webinar discussing these results in-depth here.

About the Research

Kroll commissioned independent research firm Sapio Research to conduct a comprehensive study into cybersecurity resilience and risk alignment in enterprise organizations. The research surveyed 1,000 cybersecurity decision-makers at companies with annual revenues from $50 million to more than $5 billion across 10 countries: the United Kingdom, Ireland, Germany, Switzerland, the United States, Japan, Singapore, Australia, the United Arab Emirates and Saudi Arabia. The survey was conducted in November and December 2025.

About Kroll

As the leading independent provider of financial and risk advisory solutions, Kroll leverages our unique insights, data and technology to help clients stay ahead of complex valuation demands. Kroll’s team of more than 6,500 professionals worldwide continues the firm’s nearly 100-year history of trusted expertise spanning risk, governance, transactions and valuation. Our advanced solutions and intelligence provide clients the foresight they need to create an enduring competitive advantage. At Kroll, our values define who we are and how we partner with clients and communities. Learn more at kroll.com.

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SOURCE Kroll

Technology

Premialab Partners with BBVA CIB

Published

51 minutes ago

April 21, 2026

LONDON, April 21, 2026 /PRNewswire/ — Premialab, the leading independent platform for quantitative analytics and systematic investment strategies, today announced that BBVA Global Markets QIS has joined its global contributor network. BBVA GM QIS will add its suite of rule-based strategies to the Premialab platform and leverage Premialab’s advanced analytics, including its Pure Factors framework, to independently benchmark and analyze performance and risk characteristics. This collaboration underscores Premialab’s commitment to deepening its quantitative solutions ecosystem and offering institutional investors a broader toolkit of data-driven strategies.

BBVA GM QIS offers a diverse suite of systematic strategies spanning equities including thematic and smart beta and systematic asset allocation, both aligned with its well-established Structured Products platform, as well as Alternative Risk Premia indices designed to capture systematic risk premiums available in the market. These solutions can also serve as overlays to traditional portfolios, providing additional income or hedging features.

Together, these investable systematic strategies enable investors to achieve their risk-return objectives by calibrating factor exposures and risk budgets in a flexible, transparent, and cost-efficient manner.

“Joining the Premialab platform is an exciting step for BBVA GM QIS,” said Pablo Suárez, Head of QIS at BBVA Global Markets. “We see Premialab as a natural partner, given the strong alignment between its independent analytics capabilities and our systematic investment framework. Its data infrastructure provides an ideal environment to showcase our strategies to a global institutional audience. This collaboration reflects our commitment to working closely together, enabling investors to better understand the risk and return drivers of our systematic solutions and how they can complement their broader portfolio objectives.”

We are delighted to partner with BBVA GM QIS,” said Adrien Geliot, CEO of Premialab. “Their quantitative expertise and strong track record in developing innovative, rule-based investment solutions align with our mission to bring greater transparency, consistency, and insight to the systematic investing landscape. This partnership expands our coverage and strengthens the value we deliver to institutional investors.

Premialab’s multi-asset, multi-region platform handles over 15 million data points daily across more than 7,000 investible systematic strategies, representing client assets under management of approximately USD 20 trillion. Its proprietary dataset and analytics provide detailed risk decomposition, factor attribution, and scenario-based analysis – enabling investors to make better allocation decisions.

Notes to Editors

About Premialab
Premialab is the leading independent platform that collaborates with leading investment banks and institutional investors globally, providing data, analytics, and risk solutions for systematic, factor, and multi-asset strategies. With offices in London, Paris, New York, Hong Kong, Dubai and Sydney, the company partners with the top 18 investment banks, leading asset managers, pension funds, sovereign wealth funds and insurance companies globally. For more information, please visit: www.premialab.com.

About BBVA CIB

BBVA is a global financial services group founded in 1857. The bank is present in more than 25 countries, has a strong leadership position in the Spanish market, is the largest financial institution in Mexico and it has leading franchises in South America and Turkey. In the United States, BBVA also has a significant investment, transactional, and capital markets banking business.

Its division BBVA Corporate & Investment Banking (BBVA CIB) brings together the activities of investment banking, markets, financing and transactional services for institutional investors and corporate clients. It has a strong global presence, providing services in 25 countries through an extensive team of experts, including investment banking specialists and advisors in specific industries and sectors. BBVA CIB offers a wide range of value-added products and financial solutions, for the simplest needs and for the most complex ones. Its mission is to help clients to carry out their projects and achieve their business, transformation and sustainability objectives, whether they are local or international.

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