What changed in this filing

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Item 2. Management’s Discussion and Analysis

2022-05-04 compared with 2022-02-03 · 251 added, 241 removed, 965 unchanged (34% of the section changed)

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(xxiii) tax audits;

and (xxiv) other matters.

(xxiv) the expected impact of our decision to cease all direct business in Russia and Belarus and with known Russian-owned companies;(xxv) expected costs of the restructuring plans;

and (xxvi) other matters.

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, and based on our current expectations, forecasts and projections about the operating environment, economies and markets in which we operate.

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(ii) our continued operation of a secure and reliable business network;

(iii) the stability of general political, economic and market conditions, currency exchange rates, and interest rates, including potential for inflation and rising interest rates;

(iv) equity and debt markets continuing to provide us with access to capital;

(v) our continued ability to identify, source and finance attractive and executable business combination opportunities;

(vi) our continued ability to avoid infringing third party intellectual property rights;

and (vii) our ability to successfully implement our restructuring plans.

(iii) the stability of general political, economic and market conditions;

(iv) our ability to manage inflation, including rising interest rates and increased labour costs associated with attracting and retaining employees;

(v) our continued ability to manage certain foreign currency risk through hedging;

(vi) equity and debt markets continuing to provide us with access to capital;

(vii) our continued ability to identify, source and finance attractive and executable business combination opportunities;

(viii) our continued ability to avoid infringing third party intellectual property rights;

and (ix) our ability to successfully implement our restructuring plans.

Management’s estimates, beliefs and assumptions are inherently subject to significant business, economic, competitive and other uncertainties and contingencies regarding future events and, as such, are subject to change.

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(v) the possibility that we may be unable to successfully integrate the assets we acquire or fail to utilize such assets to their full capacity and not realize the benefits we expect from our acquired portfolios and businesses, including the acquisition of Zix Corporation, (vi) the potential for the incurrence of or assumption of debt in connection with acquisitions and the impact on the ratings or outlooks of rating agencies on our outstanding debt securities;

(vii) the possibility that the Company may be unable to meet its future reporting requirements under the Exchange Act, and the rules promulgated thereunder, or applicable Canadian securities regulation;

(viii) the risks

associated with bringing new products and services to market;

(vii) the possibility that the Company may be unable to meet its future reporting requirements

under the Exchange Act, and the rules promulgated thereunder, or applicable Canadian securities regulation;

(viii) the risks associated with bringing new products and services to market;

(ix) fluctuations in currency exchange rates (including as a result of the impact of Brexit and any policy changes resulting from trade and tariff disputes);

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(xvi) demand for the Company’s products and services;

(xvii) increase in exposure to international business risks (including as a result of the impact of Brexit and any policy changes resulting from the transition from the North American Free Trade Agreement to the United States-Mexico-Canada Agreement) as we continue to increase our international operations;

(xviii) inability to raise capital at all or on not unfavorable terms in the future;

(xix) downward pressure on our share price and dilutive effect of future sales or issuances of equity securities (including in connection with future acquisitions);

and (xx) potential changes in ratings or outlooks of rating agencies on our outstanding debt securities.

(xvii) increase in exposure to international business risks (including the impact of geopolitical instability, political unrest, war and other global conflicts, the impact of Brexit and any policy changes resulting from the transition from the North American Free Trade Agreement to the United States-Mexico-Canada Agreement) as we continue to increase our international operations;

(xviii) adverse macroeconomic conditions, including inflation, disruptions in global supply chains and increased labour costs;

(xix) inability to raise capital at all or on not unfavorable terms in the future;

(xx) downward pressure on our share price and dilutive effect of future sales or issuances of equity securities (including in connection with future acquisitions);

and (xxi) potential changes in ratings or outlooks of rating agencies on our outstanding debt securities.

Other factors that may affect forward-looking statements include, but are not limited to:

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(xiii) system or network failures or information security, cybersecurity or other data breaches in connection with the Company's offerings or the information technology systems used by the Company generally, the risk of which may be increased during times of natural disaster or pandemic (including COVID-19) due to remote working arrangements;

and (xiv) failure to attract and retain key personnel to develop and effectively manage the Company's business.

(xiv) failure to achieve our environmental goals on energy consumption, waste diversion and greenhouse gas emissions;

and (xv) failure to attract and retain key personnel to develop and effectively manage the Company's business.

Readers should carefully review Part II, Item 1A “Risk Factors” herein and the Company's Annual Report on Form 10-K, including Part I, Item 1A “Risk Factors” therein, Quarterly Reports on Form 10-Q, including Item 1A therein and other documents we file from time to time with the Securities and Exchange Commission (SEC) and other securities regulators.

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the accompanying Notes to our Condensed Consolidated Financial Statements under Part I, Item 1 of this Quarterly Report on Form 10-Q.

All dollar and percentage comparisons made herein refer to the three and six months ended December 31, 2021 compared with the three and six months ended December 31, 2020, unless otherwise noted.

All dollar and percentage comparisons made herein refer to the three and nine months ended March 31, 2022 compared with the three and nine months ended March 31, 2021, unless otherwise noted.

Where we say “we”, “us”, “our”, “OpenText” or “the Company”, we mean Open Text Corporation or Open Text Corporation and its subsidiaries, as applicable.

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Our ticker symbol on both the NASDAQ and the TSX is “OTEX”.

As of December 31, 2021, we employed a total of approximately 15,000 individuals, of which 7,300 or 49% are in the Americas, 2,700 or 18% are in EMEA and 5,000 or 33% are in Asia Pacific.

As of March 31, 2022, we employed a total of approximately 15,000 individuals, of which 7,300 or 49% are in the Americas, 2,700 or 18% are in EMEA and 5,000 or 33% are in Asia Pacific.

Currently, we have employees in 35 countries enabling strong access to multiple talent pools while ensuring reach and proximity to our customers.

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Quarterly Summary:

During the second quarter of Fiscal 2022 we saw the following activity:

During the third quarter of Fiscal 2022 we saw the following activity:

• Total revenue was $882.3 million, up 5.9% compared to the same period in the prior fiscal year;

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• Non-GAAP-based gross margin was 74.5% compared to 75.2% in the same period in the prior fiscal year.

• GAAP-based net income (loss) attributable to OpenText was $88.3 million compared to ($65.5) million in the same period in the prior fiscal year.

• GAAP-based net income attributable to OpenText was $74.7 million compared to $91.5 million in the same period in the prior fiscal year.

• Non-GAAP-based net income attributable to OpenText was $190.8 million compared to $204.5 million in the same period in the prior fiscal year.

• GAAP-based earnings (loss) per share (EPS), diluted, was $0.32 compared to ($0.24) in the same period in the prior fiscal year.

• GAAP-based earnings per share (EPS), diluted, was $0.28 compared to $0.33 in the same period in the prior fiscal year.

• Non-GAAP-based EPS, diluted, was $0.70 compared to $0.75 in the same period in the prior fiscal year.

• Adjusted EBITDA was $284.5 million compared to $297.1 million in the same period in the prior fiscal year.

• Operating cash flow was $406.3 million for the six months ended December 31, 2021 compared to $516.4 million in the same period in the prior fiscal year, down 21.3%.

• Cash and cash equivalents were $1,511.8 million as of December 31, 2021, compared to $1,607.3 million as of June 30, 2021.

• Acquired Zix Corporation (Zix) for total consideration of $896.0 million, comprised of $875.9 million paid in cash (inclusive of $38.3 million of cash acquired) and $20.1 million currently held back and unpaid.

• Issued $850 million in aggregate principal amount of 3.875% Senior Notes due 2029 and $650 million in aggregate principal amount of 4.125% Senior Notes due 2031.

A portion of the net proceeds was used to redeem in full our outstanding Senior Notes 2026 (defined herein) in the principal amount of $850 million.

• Operating cash flow was $729.9 million for the nine months ended March 31, 2022 compared to $579.9 million in the same period in the prior fiscal year, up 25.9%.

• Cash and cash equivalents were $1,633.7 million as of March 31, 2022, compared to $1,607.3 million as of June 30, 2021.

See “Use of Non-GAAP Financial Measures” below for definitions and reconciliations of GAAP-based measures to Non-GAAP-based measures.

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Acquisition of Zix Corporation

On December 23, 2021, we acquired all of the equity interest in Zix, a leader in software as a service (SaaS) based email encryption, threat protection and compliance cloud solutions for SMBs.

Total consideration for Zix was $896.0 million, comprised of $875.9 million paid in cash (inclusive of $38.3 million of cash acquired) and $20.1 million, relating to the cash settlement of pre-acquisition vested share-based compensation, currently held back and unpaid in accordance with the purchase agreement.

On December 23, 2021, we acquired all of the equity interest in Zix Corporation (Zix), a leader in software as a service (SaaS) based email encryption, threat protection and compliance cloud solutions for SMBs.

Total consideration for Zix was $894.5 million paid in cash, inclusive of $38.3 million of cash acquired and $18.6 million relating to the cash settlement of pre-acquisition vested share-based compensation that was previously accrued but since paid as of March 31, 2022.

We believe the acquisition increases our position in the data protection, threat management, email security and compliance solutions spaces.

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For more information, please see Part II, Item 1A “Risk Factors” included elsewhere within this Quarterly Report on Form 10-Q and Part I, Item 1A, “Risk Factors” in our Annual Report on Form 10-K for Fiscal 2021.

Outlook for Fiscal 2022

Outlook for Remainder of Fiscal 2022

As an organization, we are committed to “Total Growth,” meaning we strive towards delivering value through organic growth initiatives, innovations and acquisitions, as well as financial performance.

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becoming cloud-native, connecting anything, and extending capabilities quickly with multi-tenant SaaS applications and services.

We will continue to closely monitor the global impacts of COVID-19.

We will continue to closely monitor the potential impacts of COVID-19, inflation with respect to wages, services and goods and the Russia-Ukraine conflict on our business.

We do not expect our decision to cease all direct business in Russia and Belarus and with known Russian-owned companies to have a material adverse effect on our overall business, results of operations or financial condition.

See Part II, Item 1A, "Risk Factors" included within this Quarterly Report on Form 10-Q.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

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We will continue to monitor the potential impact of COVID-19 on our financial statements and related disclosures, including the need for additional estimates going forward, which could include costs related to items such as special charges, restructurings, asset impairments and other non-recurring costs.

As of December 31, 2021, we have recorded certain estimates in our Condensed Consolidated Financial Statements resulting from the pandemic, particularly with respect to the COVID-19 Restructuring Plan and allowance for credit losses, based on management's estimates and assumptions utilizing the most currently available information.

As of March 31, 2022, we have recorded certain estimates in our Condensed Consolidated Financial Statements resulting from the pandemic, particularly with respect to the COVID-19 Restructuring Plan and allowance for credit losses, based on management's estimates and assumptions utilizing the most currently available information.

Such estimates may be subject to change particularly given the unprecedented nature of the COVID-19 pandemic.

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Summary of Results of Operations

Three Months Ended December 31, Six Months Ended December 31,

Three Months Ended March 31, Nine Months Ended March 31,

(In thousands) 2022 Change

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74.5 % 75.2 % 75.5 % 76.3 %

Net income (loss), attributable to OpenText $ 88,298 $ (65,477) $ 220,213 $ 37,899

GAAP-based earnings (loss) per share, diluted $ 0.32 $ (0.24) $ 0.81 $ 0.14

Net income, attributable to OpenText $ 74,681 $ 91,490 $ 294,894 $ 129,389

GAAP-based EPS, diluted $ 0.28 $ 0.33 $ 1.08 $ 0.47

Non-GAAP-based EPS, diluted (5)

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$ 284,496 $ 297,131 $ 951,367 $ 1,000,225

(1) Total revenues by geography are determined based on the location of our end customer.

(1) Total revenues by geography are determined based on the location of our direct end customer.

(2) Americas consists of countries in North, Central and South America.

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Our cloud arrangements can be broadly categorized as platform as a service (PaaS), SaaS, cloud subscriptions and managed services.

For the quarter ended December 31, 2021, our cloud renewal rate, excluding the impact of Carbonite Inc.

(Carbonite), was approximately 93%, compared to approximately 96% for the quarter ended December 31, 2020.

For the quarter ended March 31, 2022, our cloud renewal rate, excluding the impact of Carbonite Inc.

(Carbonite) and Zix, was approximately 93%, consistent with the quarter ended March 31, 2021.

Cost of Cloud services and subscriptions revenues is comprised primarily of third party network usage fees, maintenance of in-house data hardware centers, technical support personnel-related costs, and some third party royalty costs.

Three Months Ended December 31, Six Months Ended December 31,

Three Months Ended March 31, Nine Months Ended March 31,

(In thousands) 2022 Change

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Asia Pacific 6.5 % 7.3 % 7.0 % 7.3 %

Three Months Ended December 31, 2021 Compared to Three Months Ended December 31, 2020

Cloud services and subscriptions revenues increased by $14.4 million or 4.1% during the three months ended December 31, 2021 as compared to the same period in the prior fiscal year;

Three Months Ended March 31, 2022 Compared to Three Months Ended March 31, 2021

Cloud services and subscriptions revenues increased by $46.1 million or 13.0% during the three months ended March 31, 2022 as compared to the same period in the prior fiscal year;

up 14.3% after factoring in the unfavorable impact of $4.6 million of foreign exchange rate changes.

Geographically, the overall change was attributable to an increase in Americas of $13.3 million and an increase in Asia Pacific of $1.2 million, partially offset by a decrease in EMEA of $0.1 million.

There were 27 cloud services contracts greater than $1.0 million that closed during the second quarter of Fiscal 2022, compared to 15 contracts during the second quarter of Fiscal 2021.

Cost of Cloud services and subscriptions revenues increased by $4.2 million during the three months ended December 31, 2021 as compared to the same period in the prior fiscal year.

This was primarily due to an increase in third party network usage fees of $3.1 million, an increase in labour-related costs of $0.7 million and an increase in other miscellaneous costs of $0.4 million.

The increase was primarily driven by incremental Cloud services and subscriptions revenues from acquisitions over the comparative period.

Geographically, the overall change was attributable to an increase in Americas of $38.9 million and an increase in EMEA of $7.4 million, partially offset by a decrease in Asia Pacific of $0.2 million.

There were 21 cloud services contracts greater than $1.0 million that closed during the third quarter of Fiscal 2022, compared to 16 contracts during the third quarter of Fiscal 2021.

Cost of Cloud services and subscriptions revenues increased by $12.3 million during the three months ended March 31, 2022 as compared to the same period in the prior fiscal year.

This was primarily due to an increase in third party network usage fees of $7.0 million and increase in labour-related costs of $4.7 million.

Overall, the gross margin percentage on Cloud services and subscriptions revenues increased to 66% from 65%.

Six Months Ended December 31, 2021 Compared to Six Months Ended December 31, 2020

Cloud services and subscriptions revenues increased by $30.0 million or 4.3% during the six months ended December 31, 2021 as compared to the same period in the prior fiscal year;

up 3.9% after factoring in the favorable impact of $3.3 million of foreign exchange rate changes.

Geographically, the overall change was attributable to an increase in Americas of $25.9 million, an increase in Asia Pacific of $2.6 million and an increase in EMEA of $1.5 million.

There were 43 cloud services contracts greater than $1.0 million that closed during the first six months of Fiscal 2022, compared to 21 contracts during the first six months of Fiscal 2021.

Cost of Cloud services and subscriptions revenues increased by $11.4 million during the six months ended December 31, 2021 as compared to the same period in the prior fiscal year.

This was primarily due to an increase in third party network usage

fees of $6.5 million, an increase in labour-related costs of $3.8 million and an increase in other miscellaneous costs of $1.1 million.

Nine Months Ended March 31, 2022 Compared to Nine Months Ended March 31, 2021

Cloud services and subscriptions revenues increased by $76.1 million or 7.3% during the nine months ended March 31, 2022 as compared to the same period in the prior fiscal year;

up 7.4% after factoring in the unfavorable impact of $1.4 million of foreign exchange rate changes.

The increase was primarily driven by incremental Cloud services and subscriptions revenues from acquisitions over the comparative period.

Geographically, the overall change was attributable to an increase in Americas of $64.8 million, an increase in EMEA of $8.9 million and an increase in Asia Pacific of $2.5 million.

There were 64 cloud services contracts greater than $1.0 million that closed during the first nine months of Fiscal 2022, compared to 37 contracts during the first nine months of Fiscal 2021.

Cost of Cloud services and subscriptions revenues increased by $23.7 million during the nine months ended March 31, 2022 as compared to the same period in the prior fiscal year.

This was primarily due to an increase in third party network usage fees of $13.5 million, an increase in labour-related costs of $8.5 million and an increase in other miscellaneous costs of $1.7 million.

Overall, the gross margin percentage on Cloud services and subscriptions revenues remained stable at 66%.

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Our management reviews our Customer support renewal rates on a quarterly basis, and we use these rates as a method of monitoring our customer service performance.

For the quarter ended December 31, 2021, our Customer support renewal rate was approximately 94%, consistent with the quarter ended December 31, 2020.

For the quarter ended March 31, 2022, our Customer support renewal rate was approximately 94%, consistent with the quarter ended March 31, 2021.

Cost of Customer support revenues is comprised primarily of technical support personnel and related costs, as well as third party royalty costs.

Three Months Ended December 31, Six Months Ended December 31,

Three Months Ended March 31, Nine Months Ended March 31,

(In thousands) 2022 Change

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Asia Pacific 8.2 % 8.1 % 8.4 % 8.1 %

Three Months Ended December 31, 2021 Compared to Three Months Ended December 31, 2020

Customer support revenues increased by $0.4 million or 0.1% during the three months ended December 31, 2021 as compared to the same period in the prior fiscal year;

Three Months Ended March 31, 2022 Compared to Three Months Ended March 31, 2021

Customer support revenues decreased by $3.4 million or 1.0% during the three months ended March 31, 2022 as compared to the same period in the prior fiscal year;

up 1.5% after factoring in the unfavorable impact of $8.6 million of foreign exchange rate changes.

Geographically, the overall change was attributable to an increase in Asia Pacific of $0.9 million and an increase in EMEA of $0.8 million, partially offset by a decrease in Americas of $1.3 million.

Cost of Customer support revenues were stable during the three months ended December 31, 2021 as compared to the same period in the prior fiscal year.

Overall, the gross margin percentage on Customer support revenues remained stable at 91%.

Six Months Ended December 31, 2021 Compared to Six Months Ended December 31, 2020

Customer support revenues increased by $6.2 million or 0.9% during the six months ended December 31, 2021 as compared to the same period in the prior fiscal year;

constant after factoring in the favorable impact of $6.2 million of foreign exchange rate changes.

Geographically, the overall change was attributable to a decrease in EMEA of $2.9 million, a decrease in Americas of $0.3 million and a decrease in Asia Pacific of $0.2 million.

Cost of Customer support revenues increased by $0.8 million during the three months ended March 31, 2022 as compared to the same period in the prior fiscal year.

This was primarily due to an increase in labour-related costs of $0.9 million.

Overall, the gross margin percentage on Customer support revenues decreased to 90% from 91%.

Nine Months Ended March 31, 2022 Compared to Nine Months Ended March 31, 2021

Customer support revenues increased by $2.8 million or 0.3% during the nine months ended March 31, 2022 as compared to the same period in the prior fiscal year;

up 0.5% after factoring in the unfavorable impact of $2.3 million of foreign exchange rate changes.

Geographically, the overall change was attributable to an increase in EMEA of $4.0 million and an increase in Asia Pacific of $3.1 million, partially offset by a decrease in Americas of $4.3 million.

Cost of Customer support revenues increased by $0.3 million during the six months ended December 31, 2021 as compared to the same period in the prior fiscal year.

This was primarily due to an increase in other miscellaneous costs of $0.8 million, partially offset by a decrease in labour-related costs of $0.5 million.

Cost of Customer support revenues increased by $1.1 million during the nine months ended March 31, 2022 as compared to the same period in the prior fiscal year.

This was primarily due to an increase in other miscellaneous costs of $1.0 million.

Overall, the gross margin percentage on Customer support revenues remained stable at 91%.

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Cost of License revenues consists primarily of royalties payable to third parties.

Three Months Ended December 31, Six Months Ended December 31,

Three Months Ended March 31, Nine Months Ended March 31,

(In thousands) 2022 Change

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Asia Pacific 9.5 % 9.2 % 9.3 % 10.6 %

Three Months Ended December 31, 2021 Compared to Three Months Ended December 31, 2020

License revenues increased by $2.1 million or 2.0% during the three months ended December 31, 2021 as compared to the same period in the prior fiscal year;

Three Months Ended March 31, 2022 Compared to Three Months Ended March 31, 2021

License revenues increased by $4.3 million or 5.7% during the three months ended March 31, 2022 as compared to the same period in the prior fiscal year;

up 8.4% after factoring in the unfavorable impact of $2.1 million of foreign exchange rate changes.

Geographically, the overall change was attributable to an increase Americas of $4.4 million and an increase in Asia Pacific of $3.1 million, partially offset by a decrease in EMEA of $5.4 million.

During the second quarter of Fiscal 2022, we closed 32 license contracts greater than $0.5 million, of which 15 contracts were greater than $1.0 million, contributing $41.4 million of License revenues.

This was compared to 36 license contracts greater than $0.5 million during the second quarter of Fiscal 2021, of which 9 contracts were greater than $1.0 million, contributing $32.7 million of License revenues.

Cost of License revenues decreased by $0.6 million during the three months ended December 31, 2021 as compared to the same period in the prior fiscal year as a result of lower third party technology costs.

Overall, the gross margin percentage on License revenues increased to 97% from 96%.

Six Months Ended December 31, 2021 Compared to Six Months Ended December 31, 2020

License revenues increased by $7.2 million or 4.1% during the six months ended December 31, 2021 as compared to the same period in the prior fiscal year;

up 4.1% after factoring in the insignificant impact of foreign exchange rate changes.

Geographically, the overall change was attributable to an increase in Americas of $7.5 million and an increase in EMEA of $2.3 million, partially offset by a decrease in Asia Pacific of $2.7 million.

During the first six months of Fiscal 2022, we closed 49 license contracts greater than $0.5 million, of which 24 contracts were greater than $1.0 million, contributing $62.3 million of License revenues.

This was compared to 51 license contracts greater than $0.5 million during the first six months of Fiscal 2021, of which 15 contracts were greater than $1.0 million, contributing $47.5 million of License revenues.

Cost of License revenues increased by $0.9 million during the six months ended December 31, 2021 as compared to the same period in the prior fiscal year as a result of higher third party technology costs.

Geographically, the overall change was attributable to an increase in Americas of $11.3 million and an increase in Asia Pacific of $0.5 million, partially offset by a decrease in EMEA of $7.5 million.

During the third quarter of Fiscal 2022, we closed 32 license contracts greater than $0.5 million, of which 11 contracts were greater than $1.0 million, contributing $32.6 million of License revenues.

This was compared to 21 license contracts greater than $0.5 million during the third quarter of Fiscal 2021, of which 8 contracts were greater than $1.0 million, contributing $19.4 million of License revenues.

Cost of License revenues increased by $0.4 million during the three months ended March 31, 2022 as compared to the same period in the prior fiscal year as a result of higher third party technology costs.

Overall, the gross margin percentage on License revenues remained stable at 96%.

Nine Months Ended March 31, 2022 Compared to Nine Months Ended March 31, 2021

License revenues increased by $11.5 million or 4.6% during the nine months ended March 31, 2022 as compared to the same period in the prior fiscal year;

up 5.4% after factoring in the unfavorable impact of $2.1 million of foreign exchange rate changes.

Geographically, the overall change was attributable to an increase in Americas of $18.8 million, partially offset by a decrease in EMEA of $5.1 million and a decrease in Asia Pacific of $2.1 million.

During the first nine months of Fiscal 2022, we closed 81 license contracts greater than $0.5 million, of which 35 contracts were greater than $1.0 million, contributing $94.9 million of License revenues.

This was compared to 72 license contracts greater than $0.5 million during the first nine months of Fiscal 2021, of which 23 contracts were greater than $1.0 million, contributing $66.9 million of License revenues.

Cost of License revenues increased by $1.3 million during the nine months ended March 31, 2022 as compared to the same period in the prior fiscal year as a result of higher third party technology costs.

Overall, the gross margin percentage on License revenues remained stable at 96%.

4) Professional Service and Other:

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The most significant components of these costs are personnel-related expenses, travel costs and third party subcontracting.

Three Months Ended December 31, Six Months Ended December 31,

Three Months Ended March 31, Nine Months Ended March 31,

(In thousands) 2022 Change

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Asia Pacific 11.2 % 9.8 % 11.4 % 10.3 %

Three Months Ended December 31, 2021 Compared to Three Months Ended December 31, 2020

Professional service and other revenues increased by $4.2 million or 6.6% during the three months ended December 31, 2021 as compared to the same period in the prior fiscal year;

Three Months Ended March 31, 2022 Compared to Three Months Ended March 31, 2021

Professional service and other revenues increased by $2.3 million or 3.6% during the three months ended March 31, 2022 as compared to the same period in the prior fiscal year;

up 6.4% after factoring in the unfavorable impact of $1.9 million of foreign exchange rate changes.

Geographically, the overall change was attributable to an increase in Americas of $2.0 million, an increase in Asia Pacific of $1.3 million and an increase in EMEA of $0.9 million.

Cost of Professional service and other revenues increased by $6.4 million during the three months ended December 31, 2021 as compared to the same period in the prior fiscal year.

This was primarily due to an increase in labour-related costs of $6.4 million.

Geographically, the overall change was attributable to an increase in Americas of $3.2 million and increase in Asia Pacific of $1.2 million, partially offset by a decrease in EMEA of $2.1 million.

Cost of Professional service and other revenues increased by $6.4 million during the three months ended March 31, 2022 as compared to the same period in the prior fiscal year.

This was primarily due to an increase in labour-related costs of $5.7 million and an increase in other miscellaneous costs of $0.7 million.

Overall, the gross margin percentage on Professional service and other revenues decreased to 16% from 22%.

Six Months Ended December 31, 2021 Compared to Six Months Ended December 31, 2020

Professional service and other revenues increased by $6.0 million or 4.7% during the six months ended December 31, 2021 as compared to the same period in the prior fiscal year;

up 3.9% after factoring in the favorable impact of $1.1 million of foreign exchange rate changes.

Geographically, the overall change was attributable to an increase in EMEA of $4.1 million and an increase in Asia Pacific of $1.9 million.

Cost of Professional service and other revenues increased by $11.6 million during the six months ended December 31, 2021 as compared to the same period in the prior fiscal year.

This was primarily due to an increase in labour-related costs of $11.6 million.

Nine Months Ended March 31, 2022 Compared to Nine Months Ended March 31, 2021

Professional service and other revenues increased by $8.4 million or 4.3% during the nine months ended March 31, 2022 as compared to the same period in the prior fiscal year;

up 4.7% after factoring in the unfavorable impact of $0.8 million of foreign exchange rate changes.

Geographically, the overall change was attributable to an increase in Americas of $3.3 million, an increase in Asia Pacific of $3.1 million and an increase in EMEA of $2.0 million.

Cost of Professional service and other revenues increased by $17.9 million during the nine months ended March 31, 2022 as compared to the same period in the prior fiscal year.

This was primarily due to an increase in labour-related costs of $17.6 million and an increase in other miscellaneous costs of $0.3 million.

Overall, the gross margin percentage on Professional service and other revenues decreased to 20% from 26%.

Amortization of Acquired Technology-based Intangible Assets

Three Months Ended December 31, Six Months Ended December 31,

Three Months Ended March 31, Nine Months Ended March 31,

(In thousands) 2022 Change

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increase (decrease) 2021

Amortization of acquired technology-based

intangible assets $ 52,602 $ (1,489) $ 54,091 $ 105,769 $ (6,359) $ 112,128

Amortization of acquired technology-based intangible assets decreased during the three months ended December 31, 2021 by $1.5 million as compared to the same period in the prior fiscal year, primarily due to intangible assets from previous acquisitions becoming fully amortized.

Amortization of acquired technology-based intangible assets decreased during the six months ended December 31, 2021 by $6.4 million as compared to the same period in the prior fiscal year, primarily due to intangible assets from previous acquisitions becoming fully amortized.

Amortization of acquired technology-based intangible assets $ 46,564 $ (6,889) $ 53,453 $ 152,333 $ (13,248) $ 165,581

Amortization of acquired technology-based intangible assets decreased during the three months ended March 31, 2022 by $6.9 million as compared to the same period in the prior fiscal year.

This was due to a reduction of $10.7 million relating to intangible assets from previous acquisitions becoming fully amortized, partially offset by an increase of $3.8 million relating to amortization of newly acquired customer-based intangible assets from recent acquisitions.

Amortization of acquired technology-based intangible assets decreased during the nine months ended March 31, 2022 by $13.2 million as compared to the same period in the prior fiscal year.

This was due to a reduction of $17.3 million relating to intangible assets from previous acquisitions becoming fully amortized, partially offset by an increase of $4.1 million relating to amortization of newly acquired customer-based intangible assets from recent acquisitions.

Operating Expenses

Three Months Ended December 31, Six Months Ended December 31,

Three Months Ended March 31, Nine Months Ended March 31,

(In thousands) 2022 Change

19 unchanged sentences

Change between Three Months Ended

December 31, 2021 and 2020 Change between Six Months Ended

December 31, 2021 and 2020

March 31, 2022 and 2021 Change between Nine Months Ended

March 31, 2022 and 2021

(In thousands)

7 unchanged sentences

Total change in research and development expenses $ 7,659 $ 17,305

Research and development expenses increased by $3.4 million during the three months ended December 31, 2021 as compared to the same period in the prior fiscal year.

Payroll and payroll-related benefits, which is comprised of salaries, benefits and variable short-term incentives, increased by $5.4 million, including the impact of the compensation restoration discussed under "Impacts of COVID-19" above.

Additionally, other miscellaneous costs increased by $0.4 million.

Research and development expenses increased by $7.7 million during the three months ended March 31, 2022 as compared to the same period in the prior fiscal year, primarily as a result of recent acquisitions.

Payroll and payroll-related benefits, which is comprised of salaries, benefits and variable short-term incentives, increased by $5.6 million.

Additionally, share-based compensation expense increased by $2.2 million and contract labour and consulting increased by $1.4 million.

These increases were partially offset by reductions in facility-related expenses of $1.8 million.

Overall, our research and development expenses, as a percentage of total revenues, remained stable compared to the same period in the prior fiscal year at 13%.

Research and development expenses increased by $9.6 million during the six months ended December 31, 2021 as compared to the same period in the prior fiscal year.

Research and development expenses increased by $17.3 million during the nine months ended March 31, 2022 as compared to the same period in the prior fiscal year, partially as a result of recent acquisitions.

Payroll and payroll-related benefits, which is comprised of salaries, benefits and variable short-term incentives, increased by $20.2 million, including the impact of the compensation restoration discussed under “Impacts of COVID-19” above.

Additionally, share-based compensation expense increased by $0.5 million and other miscellaneous costs increased by $0.4 million.

Additionally, share-based compensation expense increased by $2.7 million, contract labour and consulting increased by $1.3 million and other miscellaneous costs increased by $0.7 million.

These increases were partially offset by reductions in facility-related expenses of $7.6 million.

Overall, our research and development expenses, as a percentage of total revenues, remained stable compared to the same period in the prior fiscal year at 12%.

Our research and development labour resources increased by 257 employees, from 4,107 employees at December 31, 2020 to 4,364 employees at December 31, 2021.

Our research and development labour resources increased by 213 employees, from 4,178 employees at March 31, 2021 to 4,391 employees at March 31, 2022.

Sales and marketing expenses consist primarily of personnel expenses and costs associated with advertising, marketing events and trade shows.

Change between Three Months Ended

December 31, 2021 and 2020 Change between Six Months Ended

December 31, 2021 and 2020

March 31, 2022 and 2021 Change between Nine Months Ended

March 31, 2022 and 2021

(In thousands) increase (decrease) increase (decrease)

9 unchanged sentences

Total change in sales and marketing expenses $ 22,268 $ 52,149

Sales and marketing expenses increased by $16.0 million during the three months ended December 31, 2021 as compared to the same period in the prior fiscal year.

Payroll and payroll-related benefits, which is comprised of salaries, benefits and variable short-term incentives, increased by $12.6 million, including the impact of the compensation restoration discussed under "Impacts of COVID-19" above.

Additionally, commissions increased by $3.6 million, marketing expenses increased by $3.0 million, travel and communication expenses increased by $0.8 million and other miscellaneous costs increased by $0.7 million.

Sales and marketing expenses increased by $22.3 million during the three months ended March 31, 2022 as compared to the same period in the prior fiscal year, partially as a result of recent acquisitions.

Payroll and payroll-related benefits, which is comprised of salaries, benefits and variable short-term incentives, increased by $13.8 million.

Additionally, marketing expenses increased by $4.1 million, commissions increased by $3.8 million, other miscellaneous costs increased by $1.7 million, share-based compensation expense increased by $1.2 million and travel and communication expenses increased by $1.1 million.

These increases were partially offset by reductions in credit loss expense of $2.4 million and reductions in facility-related expenses of $0.7 million.

Overall, our sales and marketing expenses, as a percentage of total revenues, increased to 21% from 19% in the same period in the prior fiscal year.

Sales and marketing expenses increased by $29.9 million during the six months ended December 31, 2021 as compared to the same period in the prior fiscal year.

Sales and marketing expenses increased by $52.1 million during the nine months ended March 31, 2022 as compared to the same period in the prior fiscal year, partially as a result of recent acquisitions.

Payroll and payroll-related benefits, which is comprised of salaries, benefits and variable short-term incentives, increased by $37.9 million, including the impact of the compensation restoration discussed under “Impacts of COVID-19” above.

Additionally, commissions increased by $6.8 million, marketing expenses increased by $4.3 million, other miscellaneous costs increased by $0.9 million and travel and communication expensed increased by $0.9 million.

Additionally, commissions increased by $10.6 million, marketing expenses increased by $8.4 million, other miscellaneous costs increased by $2.6 million, travel and communication expenses increased by $1.9 million and share-based compensation expense increased by $1.8 million.

These increases were partially offset by reductions in credit loss expense of $7.6 million and reductions in facility-related expenses of $3.7 million.

Overall, our sales and marketing expenses, as a percentage of total revenues, increased to 19% from 18% in the same period in the prior fiscal year.

Our sales and marketing labour resources increased by 302 employees, from 2,415 employees at December 31, 2020 to 2,717 employees at December 31, 2021.

Our sales and marketing labour resources increased by 322 employees, from 2,448 employees at March 31, 2021 to 2,770 employees at March 31, 2022.

General and administrative expenses consist primarily of payroll and payroll related benefits expenses, related overhead, audit fees, other professional fees, contract labour and consulting expenses and public company costs.

Change between Three Months Ended

December 31, 2021 and 2020 Change between Six Months Ended

December 31, 2021 and 2020

March 31, 2022 and 2021 Change between Nine Months Ended

March 31, 2022 and 2021

(In thousands) increase (decrease) increase (decrease)

6 unchanged sentences

Total change in general and administrative expenses $ 16,589 $ 40,625

General and administrative expenses increased by $8.7 million during the three months ended December 31, 2021 as compared to the same period in the prior fiscal year.

Payroll and payroll-related benefits, which is comprised of salaries, benefits and variable short-term incentives, increased by $10.8 million, including the impact of the compensation restoration discussed under "Impacts of COVID-19" above.

Additionally, travel and communication expenses increased by $1.7 million, contract labour and consulting increased by $1.6 million, facility related expenses increased by $0.9 million and shared-based compensation increased by $0.2 million.

These increases were partially offset by reductions in other miscellaneous costs, which

include professional fees such as legal, audit and tax related expenses, of $6.4 million.

General and administrative expenses increased by $16.6 million during the three months ended March 31, 2022 as compared to the same period in the prior fiscal year, partially as a result of recent acquisitions.

Payroll and payroll-related benefits, which is comprised of salaries, benefits and variable short-term incentives, increased by $14.4 million.

Additionally,

contract labour and consulting increased by $2.0 million and travel and communication expenses increased by $1.4 million.

These increases were partially offset by reductions in other miscellaneous costs, which include professional fees such as legal, audit and tax related expenses, of $1.1 million.

Overall, general and administrative expenses, as a percentage of total revenues, increased to 10% from 9% in the same period in the prior fiscal year.

General and administrative expenses increased by $24.0 million during the six months ended December 31, 2021 as compared to the same period in the prior fiscal year.

General and administrative expenses increased by $40.6 million during the nine months ended March 31, 2022 as compared to the same period in the prior fiscal year, partially as a result of recent acquisitions.

Payroll and payroll-related benefits, which is comprised of salaries, benefits and variable short-term incentives, increased by $36.0 million, including the impact of the compensation restoration discussed under “Impacts of COVID-19” above.

Additionally, contract labour and consulting increased by $3.1 million, travel and communication expenses increased by $2.2 million and share-based compensation increased by $0.7 million.

Additionally, contract labour and consulting increased by $5.1 million, travel and communication expenses increased by $3.6 million and share-based compensation expense increased by $0.7 million.

These increases were partially offset by reductions in other miscellaneous costs, which include professional fees such as legal, audit and tax related expenses of $4.7 million.

Overall, general and administrative expenses, as a percentage of total revenues, increased to 9% from 8% in the same period in the prior fiscal year.

Our general and administrative labour resources increased by 127 employees, from 1,865 employees at December 31, 2020 to 1,992 employees at December 31, 2021.

Our general and administrative labour resources increased by 129 employees, from 1,851 employees at March 31, 2021 to 1,980 employees at March 31, 2022.

Depreciation expenses:

Three Months Ended December 31, Six Months Ended December 31,

Three Months Ended March 31, Nine Months Ended March 31,

(In thousands) 2022 Change

2 unchanged sentences

Depreciation $ 22,370 $ 409 $ 21,961 $ 65,535 $ 1,291 $ 64,244

Depreciation expenses increased during the three and six months ended December 31, 2021 by $1.5 million and $0.9 million, respectively as compared to the same periods in the prior fiscal year.

Depreciation expenses, as a percentage of total revenue remained stable for the three and six months ended December 31, 2021 at 2% and 3%, respectively, compared to the same periods in the prior fiscal year.

Depreciation expenses increased during the three and nine months ended March 31, 2022 by $0.4 million and $1.3 million, respectively, compared to the same periods in the prior fiscal year.

Depreciation expenses, as a percentage of total revenue remained stable for the three and nine months ended March 31, 2022 at 3%, respectively, compared to the same periods in the prior fiscal year.

Amortization of acquired customer-based intangible assets:

Three Months Ended December 31, Six Months Ended December 31,

Three Months Ended March 31, Nine Months Ended March 31,

(In thousands) 2022 Change

2 unchanged sentences

Amortization of acquired customer-based intangible assets $ 56,215 $ 2,059 $ 54,156 $ 160,764 $ (3,311) $ 164,075

Amortization of acquired customer-based intangible assets decreased during the three months ended December 31, 2021 by $2.3 million as compared to the same period in the prior fiscal year, primarily due to intangible assets from previous acquisitions becoming fully amortized.

Amortization of acquired customer-based intangible assets decreased during the six months ended December 31, 2021 by $5.4 million as compared to the same period in the prior fiscal year, primarily due to intangible assets from previous acquisitions becoming fully amortized.

Amortization of acquired customer-based intangible assets increased during the three months ended March 31, 2022 by $2.1 million as compared to the same period in the prior fiscal year.

This was due to an increase of $4.3 million relating to amortization of newly acquired customer-based intangible assets from recent acquisitions, partially offset by a reduction of $2.2 million relating to intangible assets from previous acquisitions becoming fully amortized.

Amortization of acquired customer-based intangible assets decreased during the nine months ended March 31, 2022 by $3.3 million as compared to the same period in the prior fiscal year.

This was due to a reduction of $8.3 million relating to intangible assets from previous acquisitions becoming fully amortized, partially offset by an increase of $5.0 million relating to amortization of newly acquired customer-based intangible assets from recent acquisitions.

Special charges (recoveries):

Special charges (recoveries) typically relate to amounts that we expect to pay in connection with restructuring plans, acquisition-related costs and other similar charges and recoveries.

Generally, we implement such plans in the context of integrating acquired entities with existing OpenText operations and most recently in response to the COVID-19 pandemic.

Generally, we implement such plans in the context of integrating acquired entities with existing OpenText operations and most recently in response to our return to office planning.

Actions related to such restructuring plans are typically completed within a period of one year.

In certain limited situations, if the planned activity does not need to be implemented, or an expense lower than anticipated is paid out, we record a recovery of the originally recorded expense to Special charges (recoveries).

Three Months Ended December 31, Six Months Ended December 31,

Three Months Ended March 31, Nine Months Ended March 31,

(In thousands) 2022 Change

increase (decrease) 2020 2021 Change increase (decrease) 2020

increase (decrease) 2021 2022 Change

increase (decrease) 2021

Special charges (recoveries) $ 11,031 $ 8,185 $ 2,846 $ 20,592 $ 21,996 $ (1,404)

Special charges (recoveries) increased by $26.7 million during the three months ended December 31, 2021, primarily due to the net recoveries recognized in the comparative period, resulting in an increase in restructuring activities of $18.4 million, primarily related to the COVID-19 and Fiscal 2020 restructuring plans.

Additionally, acquisition related costs increased by $3.3 million and other miscellaneous charges increased by $5.0 million, primarily driven by $2.0 million pre-acquisition equity incentives, which upon acquisition were replaced by equivalent value cash settlements (see note 19 "Acquisitions" to our Condensed Consolidated Financial Statements) compared to the same period in the prior fiscal year.

Special charges (recoveries) increased by $13.8 million during the six months ended December 31, 2021 as compared to the same period in the prior fiscal year.

This was primarily due to the net recoveries recognized in the comparative period, resulting in an increase in restructuring activities of $5.5 million, primarily related to the COVID-19 and Fiscal 2020 restructuring plans.

Additionally, acquisition related costs increased by $3.2 million and other miscellaneous charges increased by $5.1 million, primarily driven by $2.0 million pre-acquisition equity incentives, which upon acquisition were replaced by equivalent value cash settlements (see note 19 "Acquisitions" to our Condensed Consolidated Financial Statements) compared to the same period in the prior fiscal year.

Special charges (recoveries) increased by $8.2 million during the three months ended March 31, 2022 over the comparative period.

Restructuring activities increased by $0.5 million during the three months ended March 31, 2022 primarily related to the Fiscal 2022 Restructuring Plan.

Additionally, other miscellaneous charges increased by $9.5 million, primarily driven by pre-acquisition equity incentives, which upon acquisition were replaced by equivalent value cash settlements (see note 19 “Acquisitions” to our Condensed Consolidated Financial Statements) compared to the same period in the prior fiscal year.

These increases were partially offset by a reduction in acquisition related costs of $1.8 million.

Special charges (recoveries) increased by $22.0 million during the nine months ended March 31, 2022 as compared to the same period in the prior fiscal year.

This was primarily due to the net recoveries recognized in the comparative period, resulting in an increase in restructuring activities of $6.0 million, primarily related to the Fiscal 2022 Restructuring Plan, COVID-19 Restructuring Plan and Fiscal 2020 Restructuring Plan.

Additionally, acquisition related costs increased by $1.4 million and other miscellaneous charges increased by $14.6 million, primarily driven by pre-acquisition equity incentives, which upon acquisition were replaced by equivalent value cash settlements (see note 19 “Acquisitions” to our Condensed Consolidated Financial Statements) compared to the same period in the prior fiscal year.

For more details on Special charges (recoveries), see note 18 “Special Charges (Recoveries)” to our Condensed Consolidated Financial Statements.

1 unchanged sentence

The components of other income (expense), net were as follows:

Three Months Ended December 31, Six Months Ended December 31,

Three Months Ended March 31, Nine Months Ended March 31,

(In thousands) 2022 Change

increase (decrease) 2020 2021 Change increase (decrease) 2020

increase (decrease) 2021 2022 Change

increase (decrease) 2021

Foreign exchange gains (losses)

12 unchanged sentences

Interest and other related expense, net is primarily comprised of interest paid and accrued on our debt facilities, offset by interest income earned on our cash and cash equivalents.

Three Months Ended December 31, Six Months Ended December 31,

Three Months Ended March 31, Nine Months Ended March 31,

(In thousands) 2022 Change

increase (decrease) 2020 2021 Change increase (decrease) 2020

increase (decrease) 2021 2022 Change

increase (decrease) 2021

Interest expense related to total outstanding debt (1)

4 unchanged sentences

(1) For more details see note 11 “Long-Term Debt” to our Condensed Consolidated Financial Statements.

Provision for (Recovery of) Income Taxes

Provision for Income Taxes

We operate in several tax jurisdictions and are exposed to various foreign tax rates.

Three Months Ended December 31, Six Months Ended December 31,

Three Months Ended March 31, Nine Months Ended March 31,

(In thousands) 2022 Change

increase (decrease) 2020 2021 Change increase (decrease) 2020

Provision for (recovery of) income taxes $ 39,266 $ (228,293) $ 267,559 $ 82,716 $ (227,587) $ 310,303

The effective tax rate decreased to a provision of 30.8% for the three months ended December 31, 2021, compared to a provision of 132.4% for the three months ended December 31, 2020.

Tax expense decreased from $267.6 million during the three months ended December 31, 2020 to $39.3 million during the three months ended December 31, 2021.

This was primarily due to (i) a decrease of $299.3 million related to Internal Revenue Service (IRS) settlements in Fiscal 2021, (ii) a decrease of $20.2 million relating to lower net income before taxes including the impact of foreign rates, (iii) a decrease of $7.3 million related to differences in tax filings being lower than estimates and (iv) a decrease of $6.0 million related to the US Base Erosion and Anti-Abuse Tax (US BEAT).

These were partially offset by (i) an increase of $93.4 million for changes in unrecognized tax benefits and (ii) an increase of $4.9 million related to tax benefits of internal reorganizations in Fiscal 2021 that did not reoccur in Fiscal 2022.

increase (decrease) 2021 2022 Change

increase (decrease) 2021

Provision for income taxes $ 41,041 $ 9,223 $ 31,818 $ 123,757 $ (218,364) $ 342,121

The effective tax rate increased to a provision of 35.5% for the three months ended March 31, 2022, compared to a provision of 25.8% for the three months ended March 31, 2021.

Tax expense increased from $31.8 million during the three months ended March 31, 2021 to $41.0 million during the three months ended March 31, 2022.

This was primarily due to (i) an increase of $10.6 million related to the US Base Erosion and Anti-Abuse Tax (US BEAT) and (ii) an increase of $4.4 million relating to tax impacts of legal entity rationalization.

These were partially offset by (i) a net decrease of $2.9 million related to Foreign Accrual Property Income and (ii) a net increase of $2.1 million benefit related to the 50% exclusion on gains in certain investment funds in which we are a limited partner.

The remainder of the difference was due to normal course movements and non-material items.

The effective tax rate decreased to a provision of 27.3% for the six months ended December 31, 2021, compared to a provision of 89.1% for the six months ended December 31, 2020.

Tax expense decreased from $310.3 million during the six months ended December 31, 2020 to $82.7 million during the six months ended December 31, 2021.

This was primarily due to (i) a decrease of $299.3 million related to IRS settlements in Fiscal 2021, (ii) a decrease of $12.0 million relating to lower net income before taxes including the impact of the foreign rates, (iii) a decrease of $10.5 million related to differences in tax filings being lower than estimates and (iv) a decrease of $10.1 million related to US BEAT.

These were partially offset by (i) an increase of $89.8 million for changes in unrecognized tax benefits and (ii) an increase of $12.5 million related to tax benefits of internal reorganizations in Fiscal 2021 that did not reoccur in Fiscal 2022.

The effective tax rate decreased to a provision of 29.6% for the nine months ended March 31, 2022, compared to a provision of 72.5% for the nine months ended March 31, 2021.

Tax expense decreased from $342.1 million during the nine months ended March 31, 2021 to $123.8 million during the nine months ended March 31, 2022.

This was primarily due to (i) a decrease of $300.6 million related to Internal Revenue Service (IRS) settlements in Fiscal 2021, (ii) a decrease of $11.3 million related to differences in tax filings, (iii) a net decrease of $5.9 million for related Subpart F and (iv) an increase of $5.2 million benefit related to the 50% exclusion on gains in certain investment funds in which we are a limited partner.

These were partially offset by (i) an increase of $90.6 million for changes in unrecognized tax benefits, (ii) a net increase of $17.0 million related to internal reorganizations and (iii) a decrease of $4.4 million in share-based compensation benefits.

The remainder of the difference was due to normal course movements and non-material items.

16 unchanged sentences

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 net income and Non-GAAP-based EPS, attributable to OpenText, are consistently calculated as GAAP-based net income or earnings 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.

1 unchanged sentence

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 income taxes, depreciation and amortization of acquired intangible assets, other income (expense), share-based compensation and special charges (recoveries).

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

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.

2 unchanged sentences

The Company does not acquire businesses on a predictable cycle, and therefore believes that the presentation of Non-GAAP measures, which in certain cases adjust for the impact of amortization of intangible assets and the related tax effects that are primarily related to acquisitions, will provide readers of financial statements with a more consistent basis for comparison across accounting periods and be more useful in helping readers understand the Company’s operating results and underlying operational trends.

Additionally, the Company has engaged in various restructuring activities over the past several years, primarily due to acquisitions and most recently in response to the COVID-19 pandemic, 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 Condensed Consolidated Statements of Income (Loss).

Additionally, the Company has engaged in various restructuring activities over the past several years, primarily due to acquisitions and most recently in response to our return to office planning, that have resulted in costs associated with reductions in headcount, consolidation of leased facilities and related costs, all which are recorded under the Company’s “Special charges (recoveries)” caption on the Condensed 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.

6 unchanged sentences

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

for the three months ended December 31, 2021

for the three months ended March 31, 2022

(In thousands, except for per share data)

Three Months Ended December 31, 2021

Three Months Ended March 31, 2022

GAAP-based Measures GAAP-based Measures

6 unchanged sentences

Amortization of acquired technology-based intangible assets 46,564 (46,564) (2) —

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

Non-GAAP-based gross profit and gross margin (%) 615,618 70.2% 54,555 (3) 670,173 76.4%

GAAP-based gross profit and gross margin (%) / Non-GAAP-based gross profit and gross margin (%) 608,047 68.9% 49,240 (3) 657,287 74.5%

Operating expenses

6 unchanged sentences

Other income (expense), net 24,392 (24,392) (6) —

Provision for (recovery of) income taxes 39,266 148 (7) 39,414

Provision for income taxes 41,041 (9,971) (7) 31,070

GAAP-based net income / Non-GAAP-based net income, attributable to OpenText 74,681 116,137 (8) 190,818

17 unchanged sentences

(8) Reconciliation of GAAP-based net income to Non-GAAP-based net income:

Three Months Ended December 31, 2021

Three Months Ended March 31, 2022

Per share diluted

4 unchanged sentences

Other (income) expense, net (24,392) (0.09)

GAAP-based provision for (recovery of) income taxes 39,266 0.15

GAAP-based provision for income taxes 41,041 0.15

Non-GAAP-based provision for income taxes (31,070) (0.12)

1 unchanged sentence

Reconciliation of Adjusted EBITDA

Three Months Ended December 31, 2021

Three Months Ended March 31, 2022

GAAP-based net income, attributable to OpenText $ 74,681

Provision for (recovery of) income taxes 39,266

Provision for income taxes 41,041

Interest and other related expense, net 40,238

7 unchanged sentences

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

for the three months ended December 31, 2020

for the three months ended March 31, 2021

(In thousands, except for per share data)

Three Months Ended December 31, 2020

Three Months Ended March 31, 2021

GAAP-based Measures GAAP-based Measures

6 unchanged sentences

Amortization of acquired technology-based intangible assets 53,453 (53,453) (2) —

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

Non-GAAP-based gross profit and gross margin (%) 603,082 70.5% 56,399 (3) 659,481 77.1%

GAAP-based gross profit and gross margin (%) / Non-GAAP-based gross profit and gross margin (%) 571,665 68.6% 55,106 (3) 626,771 75.2%

Operating expenses

6 unchanged sentences

Other income (expense), net 8,283 (8,283) (6) —

Provision for (recovery of) income taxes 267,559 (225,150) (7) 42,409

GAAP-based net income (loss) / Non-GAAP-based net income, attributable to OpenText (65,477) 325,948 (8) 260,471

GAAP-based earnings (loss) per share / Non-GAAP-based earnings per share-diluted, attributable to OpenText $ (0.24) $ 1.19 (8) $ 0.95

Provision for income taxes 31,818 1,485 (7) 33,303

GAAP-based net income / Non-GAAP-based net income, attributable to OpenText 91,490 113,044 (8) 204,534

GAAP-based earnings per share / Non-GAAP-based earnings per share-diluted, attributable to OpenText $ 0.33 $ 0.42 (8) $ 0.75

(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.

14 unchanged sentences

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.

The GAAP-based tax provision rate for the three months ended December 31, 2020 includes an income tax provision charge from IRS settlements partially offset by a tax benefit from the release of unrecognized tax benefits due to the conclusion of relevant tax audits.

(8) Reconciliation of GAAP-based net loss to Non-GAAP-based net income:

Three Months Ended December 31, 2020

(8) Reconciliation of GAAP-based net income to Non-GAAP-based net income:

Three Months Ended March 31, 2021

Per share diluted

GAAP-based net loss, attributable to OpenText $ (65,477) $ (0.24)

GAAP-based net income, attributable to OpenText $ 91,490 $ 0.33

Amortization 107,609 0.39

2 unchanged sentences

Other (income) expense, net (8,283) (0.03)

GAAP-based provision for (recovery of) income taxes 267,559 0.98

GAAP-based provision for income taxes 31,818 0.12

Non-GAAP-based provision for income taxes (33,303) (0.12)

Non-GAAP-based net income, attributable to OpenText $ 204,534 $ 0.75

*Weighted average number of Common Shares - diluted (in thousands) used in the calculation of Non-GAAP-based earnings per share for the three months ended December 31, 2020 were 273,183.

Reconciliation of Adjusted EBITDA

Three Months Ended December 31, 2020

GAAP-based net loss, attributable to OpenText $ (65,477)

Provision for (recovery of) income taxes 267,559

Three Months Ended March 31, 2021

GAAP-based net income, attributable to OpenText $ 91,490

Provision for income taxes 31,818

Interest and other related expense, net 37,333

7 unchanged sentences

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

for the six months ended December 31, 2021

for the nine months ended March 31, 2022

(In thousands, except for per share data)

Six Months Ended December 31, 2021

Nine Months Ended March 31, 2022

GAAP-based Measures GAAP-based Measures

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Amortization of acquired technology-based intangible assets 152,333 (152,333) (2) —

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

Non-GAAP-based gross profit and gross margin (%) 1,189,803 69.6% 110,071 (3) 1,299,874 76.1%

GAAP-based gross profit and gross margin (%) / Non-GAAP-based gross profit and gross margin (%) 1,797,850 69.4% 159,311 (3) 1,957,161 75.5%

Operating expenses

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Other income (expense), net 29,137 (29,137) (6) —

Provision for (recovery of) income taxes 82,716 (6,207) (7) 76,509

Provision for income taxes 123,757 (16,178) (7) 107,579

GAAP-based net income / Non-GAAP-based net income, attributable to OpenText 294,894 365,821 (8) 660,715

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(8) Reconciliation of GAAP-based net income to Non-GAAP-based net income:

Six Months Ended December 31, 2021

Nine Months Ended March 31, 2022

Per share diluted

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Other (income) expense, net (29,137) (0.11)

GAAP-based provision for (recovery of) income taxes 82,716 0.30

GAAP-based provision for income taxes 123,757 0.45

Non-GAAP-based provision for income taxes (107,579) (0.39)

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Reconciliation of Adjusted EBITDA

Six Months Ended December 31, 2021

Nine Months Ended March 31, 2022

GAAP-based net income, attributable to OpenText $ 294,894

Provision for (recovery of) income taxes 82,716

Provision for income taxes 123,757

Interest and other related expense, net 117,538

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

for the six months ended December 31, 2020

for the nine months ended March 31, 2021

(In thousands, except for per share data)

Six Months Ended December 31, 2020

Nine Months Ended March 31, 2021

GAAP-based Measures GAAP-based Measures

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Amortization of acquired technology-based intangible assets 165,581 (165,581) (2) —

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

Non-GAAP-based gross profit and gross margin (%) 1,158,170 69.8% 116,231 (3) 1,274,401 76.8%

GAAP-based gross profit and gross margin (%) / Non-GAAP-based gross profit and gross margin (%) 1,729,835 69.4% 171,337 (3) 1,901,172 76.3%

Operating expenses

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Other income (expense), net 16,417 (16,417) (6) —

Provision for (recovery of) income taxes 310,303 (228,515) (7) 81,788

Provision for income taxes 342,121 (227,030) (7) 115,091

GAAP-based net income / Non-GAAP-based net income, attributable to OpenText 129,389 577,484 (8) 706,873

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The GAAP-based tax provision rate for the six months ended December 31, 2020 includes an income tax provision charge from IRS settlements partially offset by a tax benefit from the release of unrecognized tax benefits due to the conclusion of relevant tax audits.

The GAAP-based tax provision rate for the nine months ended March 31, 2021 includes an income tax provision charge from IRS settlements partially offset by a tax benefit from the release of unrecognized tax benefits due to the conclusion of relevant tax audits that was recognized during the three months ended December 31, 2020.

(8) Reconciliation of GAAP-based net income to Non-GAAP-based net income:

Six Months Ended December 31, 2020

Nine Months Ended March 31, 2021

Per share diluted

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Other (income) expense, net (16,417) (0.06)

GAAP-based provision for (recovery of) income taxes 310,303 1.14

GAAP-based provision for income taxes 342,121 1.26

Non-GAAP-based provision for income taxes (115,091) (0.42)

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Reconciliation of Adjusted EBITDA

Six Months Ended December 31, 2020

Nine Months Ended March 31, 2021

GAAP-based net income, attributable to OpenText $ 129,389

Provision for (recovery of) income taxes 310,303

Provision for income taxes 342,121

Interest and other related expense, net 114,017

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(In thousands)

As of December 31, 2021 Change

As of March 31, 2022 Change

increase (decrease) As of June 30, 2021

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(1) Restricted cash is classified under the Prepaid expenses and other current assets and Other assets line items on the Condensed Consolidated Balance Sheets (see note 9 “Prepaid Expenses and Other Assets” to our Condensed Consolidated Financial Statements for more details).

Six Months Ended December 31,

Nine Months Ended March 31,

(In thousands)

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For more details, see “Long-term Debt and Credit Facilities” below.

As of December 31, 2021, we have recognized a provision of $28.0 million (June 30, 2021—$27.5 million) in respect of both additional foreign taxes or deferred income tax liabilities for temporary differences related to the undistributed earnings of certain non-United States subsidiaries and planned periodic repatriations from certain German subsidiaries, that will be subject to withholding taxes upon distribution.

As of March 31, 2022, we have recognized a provision of $29.2 million (June 30, 2021—$27.5 million) in respect of both additional foreign taxes or deferred income tax liabilities for temporary differences related to the undistributed earnings of certain non-United States subsidiaries and planned periodic repatriations from certain German subsidiaries, that will be subject to withholding taxes upon distribution.

We have deferred a total of approximately $99.0 million of tax payments under the CARES Act and other COVID-19 related tax relief programs in EMEA since our fourth quarter of Fiscal 2020.

During the six months ended December 31, 2021, we made repayments of approximately $9.0 million related to amounts previously deferred.

As of December 31, 2021, we have remaining deferrals of $30.0 million which will become payable throughout Fiscal 2022 and Fiscal 2023.

During the nine months ended March 31, 2022, we made repayments of approximately $9.0 million related to amounts previously deferred.

As of March 31, 2022, we have remaining deferrals of $30.0 million which will become payable throughout Fiscal 2022 and Fiscal 2023.

Cash flows provided by operating activities

Cash flows from operating activities decreased by $110.0 million, due to a decrease in changes from working capital of $227.6 million, partially offset by an increase in net income before the impact of non-cash items of $117.6 million.

The decrease in operating cash flow from changes in working capital was primarily due to the net impact of the following decreases:

Cash flows from operating activities increased by $149.9 million, due to an increase in net income after the impact of non-cash items of $106.4 million and an increase in changes from working capital of $43.5 million.

The increase in operating cash flow from changes in working capital was primarily due to the net impact of the following increases:

(i) $106.3 million relating to income taxes payable, net of receivables;

(ii) $72.1 million relating to accounts payable and accrued liabilities;

(iii) $32.1 million relating to deferred revenues;

(iv) $19.2 million relating to prepaid expenses and other current assets.

These decreases in operating cash flows were partially offset by the following increases:

(i) $23.5 million relating to net operating lease assets and liabilities;

(ii) $18.5 million relating to accounts receivable;

(ii) $26.8 million relating to net operating lease assets and liabilities;

(iii) $15.8 million relating to other assets;

(iv) $1.8 million relating to contract assets.

During the second quarter of Fiscal 2022 our days sales outstanding (DSO) was 44 days, compared to a DSO of 47 days during the second quarter of Fiscal 2021, largely as a result of strong improvement in collections efficiency.

The per day impact

of our DSO in the second quarter of Fiscal 2022 and Fiscal 2021 on our cash flows was $9.7 million and $9.5 million, respectively.

These increases in operating cash flows were partially offset by the following decreases:

(i) $38.4 million relating to accounts payable and accrued liabilities;

(ii) $37.0 million relating to deferred revenues;

(iii) $18.6 million relating to accounts receivable;

(iv) $13.2 million relating to prepaid expenses and other current assets.

During the third quarter of Fiscal 2022 our days sales outstanding (DSO) of 44 days remained stable compared to our DSO during the third quarter of Fiscal 2021.

The per day impact of our DSO in the third quarter of Fiscal 2022 and Fiscal 2021

on our cash flows was $9.8 million and $9.3 million, respectively.

In arriving at DSO, we exclude contract assets as these assets do not provide an unconditional right to the related consideration from the customer.

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Our cash flows used in investing activities is primarily on account of acquisitions and additions of property and equipment.

Cash flows used in investing activities increased by $871.9 million, primarily due to an increase in consideration paid for acquisitions during the first half of Fiscal 2022, which includes cash paid for the acquisitions of Zix of $837.6 million and Bricata of $17.9 million.

Cash flows used in investing activities increased by $894.7 million, primarily due to an increase in consideration paid for acquisitions during the first nine months of Fiscal 2022, which includes cash paid for the acquisitions of Zix of $856.2 million and Bricata of $17.9 million.

Cash flows provided by (used in) financing activities

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(i) $1.5 billion relating to proceeds from the issuance of Senior Notes 2031 and Senior Notes 2029 (both defined below), of which a portion of the net proceeds was used to redeem $850.0 million of our Senior Notes 2026 (as defined below);

(i) $22.3 million relating to less cash used in the repurchase of Common Shares on the open market for potential reissuance under our stock compensation plans;

(ii) $10.7 million higher proceeds from the issuance of Common Shares for the exercise of options and the OpenText Employee Stock Purchase Plan (ESPP).

The increases in cash flows provided by financing activities were partially offset by the following decreases:

(i) $250.0 million relating to higher repayments of our long-term debt and Revolver (as defined below), which is inclusive of $850.0 million redemption of Senior Notes 2026 (as defined below) in the second quarter of Fiscal 2022, partially offset by $600.0 million repaid on amounts previously drawn on our Revolver in the second quarter of Fiscal 2021;

(i) $250.0 million relating to higher repayments of our long-term debt and Revolver (as defined below), which is inclusive of $850.0 million redemption of Senior Notes 2026 (as defined below) during our second quarter of Fiscal 2022, partially offset by $600.0 million repaid on amounts previously drawn on our Revolver in the second quarter of Fiscal 2021;

(ii) $136.1 million relating to the repurchase and cancellation of 2,809,559 Common Shares under our share repurchase plans authorized on both November 5, 2020 and November 4, 2021 (as discussed below);

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(iv) $22.3 million relating to higher cash dividends paid to shareholders;

(v) $0.4 million relating to a cash distribution to non-controlling interests holder.

(v) $10.8 million relating to more cash used in the repurchase of Common Shares on the open market for potential reissuance under our Long-Term Incentive Plans (LTIP) or other stock compensation plans;

(vi) $0.4 million relating to a cash distribution to non-controlling interests holder.

Cash Dividends

During the three and six months ended December 31, 2021, we declared and paid cash dividends of $0.2209 and $0.4418 per Common Share, respectively, in the aggregate amount of $59.7 million and $119.5 million, respectively (three and six months ended December 31, 2020—$0.2008 and $0.3754 per Common Share, respectively, in the aggregate amount of $54.5 million and $101.8 million, respectively).

During the three and nine months ended March 31, 2022, we declared and paid cash dividends of $0.2209 and $0.6627 per Common Share, respectively, in the aggregate amount of $59.1 million and $178.6 million, respectively (three and nine months ended March 31, 2021—$0.2008 and $0.5762 per Common Share, respectively, in the aggregate amount of $54.5 million and $156.3 million, respectively).

Future declarations of dividends and the establishment of future record and payment dates are subject to final determination and discretion of the Board.

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On November 24, 2021, OpenText Holdings, Inc.

(OTHI), a wholly-owned indirect subsidiary of the Company, issued $650 million in aggregate principal amount of 4.125% Senior Notes due 2031 guaranteed by the Company (Senior Notes 2031)

in an unregistered offering to qualified institutional buyers pursuant to Rule 144A under the Securities Act of 1933, as amended (Securities Act), and to certain non-U.S.

(OTHI), a wholly-owned indirect subsidiary of the Company, issued $650 million in aggregate principal amount of 4.125% Senior Notes due 2031 guaranteed by the Company (Senior Notes 2031) in an unregistered offering to qualified institutional buyers pursuant to Rule 144A under the Securities Act of 1933, as amended

(Securities Act), and to certain non-U.S.

persons in offshore transactions pursuant to Regulation S under the Securities Act.

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Senior Notes 2026 bear interest at a rate of 5.875% per annum, payable semi-annually in arrears on June 1 and December 1, commencing on December 1, 2016.

Senior Notes 2026 will mature on June 1, 2026, unless earlier redeemed, in accordance with their terms, or repurchased.

Senior Notes 2026 would have matured on June 1, 2026, unless earlier redeemed, in accordance with their terms, or repurchased.

On December 20, 2016, we issued an additional $250 million in aggregate principal amount by reopening our Senior Notes 2026 at an issue price of 102.75%.

The additional notes have identical terms, are fungible with and are a part of a single series with the previously issued $600 million aggregate principal amount of Senior Notes 2026.

The outstanding aggregate principal amount of Senior Notes 2026, after taking into consideration the additional issuance, is $850 million.

The outstanding aggregate principal amount of Senior Notes 2026, after taking into consideration the additional issuance, was $850 million as of December 9, 2021.

On December 9, 2021, we redeemed Senior Notes 2026 in full at a price equal to 102.9375% of the principal amount plus accrued and unpaid interest to, but excluding, the redemption date.

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Upon redemption, Senior Notes 2026 were cancelled and any obligation thereunder was extinguished.

The resulting loss of $27.4 million, consisting of $25.0 million relating to the early termination call premium, $6.2 million relating to unamortized debt issuance costs and ($3.8) million relating to unamortized premium, has been recorded as a component of Other income (expense), net in our Condensed Consolidated Statements of Income (Loss).

See note 22 “Other Income (Expense), Net” to our Condensed Consolidated Financial Statements.

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The interest on the current outstanding balance for Term Loan B is equal to 1.75% plus LIBOR (subject to a 0.00% floor).

As of December 31, 2021, the outstanding balance on the Term Loan B bears an interest rate of 1.84%.

As of March 31, 2022, the outstanding balance on the Term Loan B bears an interest rate of 1.96%.

For more information regarding the impact of LIBOR, see “Stress in the global financial system may adversely affect our finances and operations in ways that may be hard to predict or to defend against” included within Part I, Item 1A, “Risk Factors” in our Annual Report on Form 10-K for Fiscal 2021.

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Consolidated net leverage ratio is defined for this purpose as the proportion of our total debt reduced by unrestricted cash, including guarantees and letters of credit, over our trailing twelve months net income before interest, taxes, depreciation, amortization, restructuring, share-based compensation and other miscellaneous charges.

As of December 31, 2021, our consolidated net leverage ratio was 2.0:1.

As of March 31, 2022, our consolidated net leverage ratio was 1.9:1.

On October 31, 2019, we amended our committed revolving credit facility (the Revolver) to increase the total commitments under the Revolver from $450 million to $750 million as well as to extend the maturity from May 5, 2022 to October 31, 2024.

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As of December 31, 2021, we had no outstanding balance under the Revolver (June 30, 2021—nil).

As of March 31, 2022, we had no outstanding balance under the Revolver (June 30, 2021—nil).

For further details relating to our debt, please see note 11 “Long-Term Debt” to our Condensed Consolidated Financial Statements.

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All Common Shares purchased by us pursuant to the Repurchase Plan were cancelled.

On November 4, 2021, the Board authorized a share repurchase plan, pursuant to which we may purchase in open market transactions, from time to time over the 12 month period commencing November 12, 2021, up to an aggregate of $350 million of our Common Shares on the NASDAQ Global Select Market, the Toronto Stock Exchange (as part of a NCIB) and/or other exchanges and alternative trading systems in Canada and/or the United States, if eligible, subject to applicable law and stock exchange rules (the "Renewed Repurchase Plan").

On November 4, 2021, the Board authorized a share repurchase plan, pursuant to which we may purchase in open market transactions, from time to time over the 12 month period commencing November 12, 2021, up to an aggregate of $350 million of our Common Shares on the NASDAQ Global Select Market, the Toronto Stock Exchange (as part of a NCIB as defined below) and/or other exchanges and alternative trading systems in Canada and/or the United States, if eligible, subject to applicable law and stock exchange rules (the “Renewed Repurchase Plan”).

The price that we have paid and will pay for Common Shares in open market transactions has been and 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.

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All Common Shares purchased by us pursuant to the Renewed Repurchase Plan have been and will be cancelled.

During the three and six months ended December 31, 2021, we repurchased and cancelled 1,809,559 Common Shares, respectively, for $91.0 million, respectively (three and six months ended December 31, 2020—nil, respectively).

Share repurchases during the three and six months ended December 31, 2021 were completed under the share repurchase plans authorized on both November 5, 2020 and November 4, 2021.

During the three and nine months ended March 31, 2022, we repurchased and cancelled 1,000,000 and 2,809,559 Common Shares, respectively, for $45.1 million and $136.1 million, respectively (three and nine months ended March 31, 2021—nil, respectively).

Share repurchases during the three and nine months ended March 31, 2022 were completed under our share repurchase plans authorized on both November 5, 2020 and November 4, 2021.

Normal Course Issuer Bid

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in this period is 13,638,008 (representing 5% of the Company’s issued and outstanding Common Shares as of October 31, 2021), and the maximum number of Common Shares that may be purchased on a single day is 112,590 Common Shares, which is 25% of 450,361 (the average daily trading volume for the Common Shares on the TSX for the six months ended October 31, 2021), subject to certain exceptions for block purchases, subject in any case to the volume and other limitations under Rule 10b-18.

As of December 31, 2021, our total unfunded pension plan obligations were $77.6 million, of which $2.6 million is payable within the next twelve months.

As of March 31, 2022, our total unfunded pension plan obligations were $78.9 million, of which $2.5 million is payable within the next twelve months.

We expect to be able to make the long-term and short-term payments related to these obligations in the normal course of operations.

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CDT GXS GER GXS PHP

2022 (six months ended) $ 418 $ 502 $ 8

2022 (three months ended) $ 203 $ 244 $ —

2023 886 965 116

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Commitments and Contractual Obligations

As of December 31, 2021, we have entered into the following contractual obligations with minimum payments for the indicated fiscal periods as follows:

As of March 31, 2022, we have entered into the following contractual obligations with minimum payments for the indicated fiscal periods as follows:

Payments due between

Total January 1, 2022 -

Total April 1, 2022 -

June 30, 2022 July 1, 2022 -

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As part of its ongoing audit of our Canadian tax returns, the Canada Revenue Agency (CRA) has disputed our transfer pricing methodology used for certain intercompany transactions with our international subsidiaries and has issued notices of reassessment for Fiscal 2012, Fiscal 2013, Fiscal 2014, Fiscal 2015 and Fiscal 2016.

Assuming the utilization of available tax attributes (further described below), we estimate our potential aggregate liability, as of December 31, 2021, in connection with the CRA's reassessments for Fiscal 2012, Fiscal 2013, Fiscal 2014, Fiscal 2015 and Fiscal 2016, to be limited to penalties, interest and provincial taxes that may be due of approximately $73 million.

As of December 31, 2021, we have provisionally paid approximately $33 million in order to fully preserve our rights to object to the CRA's audit positions, being the minimum payment required under Canadian legislation while the matter is in dispute.

This amount is recorded within "Long-term income taxes recoverable" on the Condensed Consolidated Balance Sheets as of December 31, 2021.

Assuming the utilization of available tax attributes (further described below), we estimate our potential aggregate liability, as of March 31, 2022, in connection with the CRA's reassessments for Fiscal 2012, Fiscal 2013, Fiscal 2014, Fiscal 2015 and Fiscal 2016, to be limited to penalties, interest and provincial taxes that may be due of approximately $75 million.

As of March 31, 2022, we have provisionally paid approximately $34 million in order to fully preserve our rights to object to the CRA's audit positions, being the minimum payment required under Canadian legislation while the matter is in dispute.

This amount is recorded within “Long-term income taxes recoverable” on the Condensed Consolidated Balance Sheets as of March 31, 2022.

The notices of reassessment for Fiscal 2012, Fiscal 2013, Fiscal 2014, Fiscal 2015 and Fiscal 2016 would, as drafted, increase our taxable income by approximately $90 million to $100 million for each of those years, as well as impose a 10% penalty on the proposed adjustment to income.

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Other aspects of CRA’s position for Fiscal 2017 conflict with the expert valuation prepared by the independent leading accounting and advisory firm that was used to support our original filing position.

Despite our submissions, on February 1, 2022, we were notified that the CRA issued a notice of reassessment in respect of Fiscal 2017 on the basis of its position set forth in the Proposal Letter.

On January 27, 2022, the CRA issued a notice of reassessment in respect of Fiscal 2017 on the basis of its position set forth in the Proposal Letter.

On April 19, 2022, we filed our notice of objection regarding the reassessment in respect of Fiscal 2017.

If we are ultimately unsuccessful in defending our position, the estimated impact of the proposed adjustment could result in us recording an income tax expense, with no immediate cash payment, to reduce the stated value of our deferred tax assets of up to approximately $470 million.

Any such income tax expense could also have a corresponding cash tax impact that would

primarily occur over a period of several future years based upon annual income realization in Canada.

Any such income tax expense could also have a corresponding cash tax impact that would primarily occur over a period of several future years based upon annual

income realization in Canada.

We strongly disagree with the CRA’s position for Fiscal 2017 and intend to vigorously defend our original filing position.

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We continue to vigorously defend the matter, and the U.S.

District Court for the District of Massachusetts recently issued a claim construction order.

District Court for the District of Massachusetts has issued a claim construction order.

We anticipate motion practice based upon the result of that order.

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis