What changed in this filing

/stocks — the workspaceLOADING

Item 2. Management’s Discussion and Analysis

2023-11-02 compared with 2023-05-04 · 306 added, 583 removed, 743 unchanged (54% of the section changed)

6 unchanged sentences

Specific forward-looking statements in this report include, but are not limited to, statements regarding:

(i) our focus in the fiscal year beginning July 1, 2022 and ending June 30, 2023 (Fiscal 2023) and July 1, 2023 and ending June 30, 2024 (Fiscal 2024) on growth in earnings and cash flows;

(i) our focus in the fiscal years beginning July 1, 2023 and ending June 30, 2024 (Fiscal 2024) and July 1, 2024 and ending June 30, 2025 (Fiscal 2025) on growth in earnings and cash flows;

(ii) creating value through investments in broader Information Management capabilities;

3 unchanged sentences

(vi) the Company’s presence in the cloud and in growth markets;

(vii) our expectation to grow Managed Service Providers (MSPs);

(viii) product and solution developments, enhancements and releases, the timing thereof and the customers targeted;

(ix) the Company’s financial condition, results of operations and earnings;

(x) the basis for any future growth and for our financial performance;

(xi) declaration of quarterly dividends;

(xii) future tax rates;

(xiii) the changing regulatory environment;

(xiv) annual recurring revenues;

(xv) research and development and related expenditures;

(xvi) our building, development and consolidation of our network infrastructure;

(xvii) competition and changes in the competitive landscape;

(xviii) our management and protection of intellectual property and other proprietary rights;

(xix) existing and foreign sales and exchange rate fluctuations;

(xx) cyclical or seasonal aspects of our business;

(xxi) capital expenditures;

(xxii) potential legal and/or regulatory proceedings;

(xxiii) acquisitions and their expected impact, including our ability to realize the benefits expected from the acquisitions and to successfully integrate the assets we acquire or utilize such assets to their full capacity, including in connection with the acquisition of Zix Corporation (Zix) and Micro Focus International Limited, formerly Micro Focus International plc, and its subsidiaries (Micro Focus) (see Note 19 “Acquisitions” to our Condensed Consolidated Financial Statements for more details);

(xxiv) tax audits;

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

(xxvii) targets regarding greenhouse gas emissions, waste diversion, energy consumption and Equity, Diversity and Inclusion (ED&I) initiatives;

(xviii) integration of Micro Focus and the results and timing thereof;

and (xxix) other matters.

(vii) product and solution developments, enhancements and releases, the timing thereof and the customers targeted;

(viii) the Company’s financial condition, results of operations and earnings;

(ix) the basis for any future growth and for our financial performance;

(x) declaration of quarterly dividends;

(xi) future tax rates;

(xii) the changing regulatory environment;

(xiii) annual recurring revenues;

(xiv) research and development and related expenditures;

(xv) our building, development and consolidation of our network infrastructure;

(xvi) competition and changes in the competitive landscape;

(xvii) our management and protection of intellectual property and other proprietary rights;

(xviii) existing and foreign sales and exchange rate fluctuations;

(xix) cyclical or seasonal aspects of our business;

(xx) capital expenditures;

(xxi) potential legal and/or regulatory proceedings;

(xxii) acquisitions and their expected impact, including our ability to realize the benefits expected from the acquisitions and to successfully integrate the assets we acquire or utilize such assets to their full capacity, including in connection with the acquisition of Micro Focus International Limited, formerly Micro Focus International plc, and its subsidiaries (Micro Focus) (see Note 19 “Acquisitions” to our Condensed Consolidated Financial Statements for more details);

(xxiii) tax audits;

(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;

(xxvi) targets regarding greenhouse gas emissions, waste diversion, energy consumption and Equity, Diversity and Inclusion (ED&I) initiatives;

(xvii) integration of Micro Focus, resulting synergies and timing thereof;

and (xxviii) 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.

3 unchanged sentences

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

(iii) the stability of general political, economic and market conditions, including any potential recession;

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

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

8 unchanged sentences

The risks and uncertainties that may affect forward-looking statements include, but are not limited to:

(i) the inability of us to realize successfully any anticipated synergy benefits from the acquisition of Micro Focus (Micro Focus Acquisition);

(i) our inability to realize successfully any anticipated synergy benefits from the acquisition of Micro Focus (Micro Focus Acquisition);

(ii) the actual and potential impacts of the use of cash and incurrence of indebtedness, including the granting of security interests related to such debt;

(iii) the change in scope and size of our operations as a result of the Micro Focus Acquisition;

(iv) the uncertainty around expectations related to Micro Focus’s business prospects;

(v) actual and potential risks and uncertainties relating to the ultimate geographic spread of COVID-19, the severity of the disease and the duration of the COVID-19 pandemic and issues relating to the resurgence of COVID-19 and/or new strains of COVID-19, including potential material adverse effects on our business, operations and financial performance;

(vi) actions that have been and may be taken by governmental authorities to contain the COVID-19 pandemic or to treat its impact on our

Table of Content s

business (or failure to implement additional stimulus programs) and the availability, effectiveness and use of treatments and vaccines (including the effectiveness of boosters);

(vii) the actual and potential negative impacts of COVID-19 on the global economy and financial markets;

(viii) integration of acquisitions and related restructuring efforts, including the quantum of restructuring charges and the timing thereof;

(ix) 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 and Micro Focus, (x) the potential for the incurrence of or assumption of debt in connection with acquisitions, its impact on future operations and on the ratings or outlooks of rating agencies on our outstanding debt securities, and the possibility of not being able to generate sufficient cash to service all indebtedness;

(xi) 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;

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

(xiii) fluctuations in currency exchange rates (including as a result of the impact of any policy changes resulting from trade and tariff disputes) and the impact of mark-to-market valuation relating to associated derivatives;

(xiv) delays in the purchasing decisions of the Company’s customers;

(xv) competition the Company faces in its industry and/or marketplace;

(xvi) the final determination of litigation, tax audits (including tax examinations in Canada, the United States or elsewhere) and other legal proceedings;

(xvii) potential exposure to greater than anticipated tax liabilities or expenses, including with respect to changes in Canadian, United States or international tax regimes;

(xviii) the possibility of technical, logistical or planning issues in connection with the deployment of the Company’s products or services;

(xix) the continuous commitment of the Company’s customers;

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

(xxi) increase in exposure to international business risks (including the impact of geopolitical instability, political unrest, war and other global conflicts, as we continue to increase our international operations;

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

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

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

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

(iv) the uncertainty around expectations related to Micro Focus’ business prospects;

(v) integration of acquisitions and related restructuring efforts, including the quantum of restructuring charges and the timing thereof;

(vi) 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 Micro Focus, (vii) the potential for the incurrence of or assumption of debt in connection with acquisitions, its impact on future operations and on the ratings or outlooks of rating agencies on our outstanding debt securities, and the possibility of not

being able to generate sufficient cash to service all indebtedness;

(viii) 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;

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

(x) fluctuations in currency exchange rates (including as a result of the impact of any policy changes resulting from trade and tariff disputes) and the impact of mark-to-market valuation relating to associated derivatives;

(xi) delays in the purchasing decisions of the Company’s customers;

(xii) competition the Company faces in its industry and/or marketplace;

(xiii) the final determination of litigation, tax audits (including tax examinations in Canada, the United States or elsewhere) and other legal proceedings;

(xiv) potential exposure to greater than anticipated tax liabilities or expenses, including with respect to changes in Canadian, United States or international tax regimes;

(xv) the possibility of technical, logistical or planning issues in connection with the deployment of the Company’s products or services;

(xvi) the continuous commitment of the Company’s customers;

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

(xviii) increase in exposure to international business risks including the impact of geopolitical instability, political unrest, war and other global conflicts, and other geopolitical tensions, including the Russia-Ukraine and the Israel-Hamas wars, as we continue to increase our international operations;

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

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

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

and (xxii) 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:

4 unchanged sentences

(v) infringement of third-party proprietary rights triggering indemnification obligations and resulting in significant expenses or restrictions on our ability to provide our products or services;

(vi) failure to comply with privacy laws and regulations that are extensive, open to various interpretations and complex to implement including General Data Protection Regulation (GDPR), California Consumer Privacy Act, California Privacy Rights Act, Virginia Consumer Data Protection Act, Colorado Privacy Act, Connecticut Data Privacy Act, Utah Consumer Privacy Act, and Country by Country Reporting (including with respect to transferring personal data outside of the European Economic Area and the United Kingdom, as a result of the ruling of the Court of Justice of the European Union that the EU-US Privacy Shield is an invalid data transfer mechanism and that Standard Contractual Clauses (SCCs) are a valid transfer mechanism unless the country to which personal data is exported restricts the ability to comply with such Clauses (Schrems II), and with respect to the new SCCs published by the European Commission and the International Data Transfer Agreement and Addendum published by the United Kingdom’s Information Commissioner’s Office to meet the requirements of GDPR and Schrems II);

(vi) failure to comply with privacy laws and regulations that are extensive, open to various interpretations and complex to implement;

(vii) the Company’s growth and other profitability prospects;

4 unchanged sentences

(xii) the Company’s financial condition and capital requirements;

(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;

(xiv) failure to achieve our environmental goals on energy consumption, waste diversion and greenhouse gas emissions or our targets relating to ED&I initiatives;

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

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

and (xvi) the ability of the Company’s subsidiaries to make distributions to the Company.

4 unchanged sentences

Readers are cautioned not to place undue reliance upon any such forward-looking statements, which speak only as of the date made.

Unless otherwise required by applicable securities laws, the Company disclaims any intention or

Table of Content s

obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

The following MD&A is intended to help readers understand our results of operations and financial condition, and is

provided as a supplement to, and should be read in conjunction with, our Condensed Consolidated Financial Statements and

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 nine months ended March 31, 2023 compared with the three and nine months ended March 31, 2022, unless otherwise noted.

Unless otherwise required by applicable securities laws, the Company disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

The following MD&A is intended to help readers understand our results of operations and financial condition, and is provided as a supplement to, and should be read in conjunction with, our Condensed Consolidated Financial Statements and 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 months ended September 30, 2023 compared with the three months ended September 30, 2022, 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.

1 unchanged sentence

At OpenText, we believe information and knowledge make business and people better.

We are an Information Management company that provides software and services that empower digital businesses of all sizes to become more intelligent, connected and responsible.

We are an Information Management company that provides software and services that empower digital businesses of all sizes to become more

intelligent, connected, secure and responsible.

Our innovations maximize the strategic benefits of data and content for our customers, strengthening their productivity, growth and competitive advantage.

1 unchanged sentence

We have a complete and integrated portfolio of Information Management solutions delivered at scale in the OpenText Cloud, helping organizations master modern work, automate application delivery and modernization, and optimize their digital supply chains.

To do this, we bring together our Content Cloud, Business Network Cloud, Experience Cloud, Cybersecurity Cloud, AI Cloud, DevOps Cloud, IT Operations Cloud and Developer Cloud.

To do this, we bring together our Content Cloud, Cybersecurity Cloud, Business Network Cloud, IT Operations Management Cloud, Application Automation Cloud and Analytics & AI Cloud.

We also accelerate information modernization with intelligent tools and services for moving off paper, automating classification and building clean data lakes for Artificial Intelligence (AI), analytics and automation.

6 unchanged sentences

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

As of March 31, 2023, we employed a total of approximately 25,550 individuals, of which approximately 10,600 joined our workforce as part of the Micro Focus Acquisition.

Of the total 25,550 individuals we employed as of March 31, 2023, 9,950 or 39% are in the Americas, 6,100 or 24% are in EMEA and 9,500 or 37% are in Asia Pacific.

As of September 30, 2023, we employed a total of approximately 24,050 individuals.

Of the total 24,050 individuals we employed as of September 30, 2023, 9,000 or 37% are in the Americas, 5,600 or 23% are in EMEA and 9,450 or 39% are in Asia Pacific.

Currently, we have employees in 45 countries enabling strong access to multiple talent pools while ensuring reach and proximity to our customers.

1 unchanged sentence

Quarterly Summary:

During the third quarter of Fiscal 2023 (which includes the results of Micro Focus from February 1, 2023 to March 31, 2023, which has a significant impact on period-over-period comparisons, as noted below) we saw the following activity:

• Total revenue was $1,244.7 million, up 41.1% compared to the same period in the prior fiscal year;

up 44.9% after factoring in the unfavorable impact of $33.7 million of foreign exchange rate changes.

• Total annual recurring revenue, which we define as the sum of cloud services and subscriptions revenue and customer support revenue, was $1,011.3 million, up 37.7% compared to the same period in the prior fiscal year;

up 41.1% after factoring in the unfavorable impact of $25.1 million of foreign exchange rate changes.

During the first quarter of Fiscal 2024 (which includes the results of Micro Focus, which has a significant impact on period-over-period comparisons) we saw the following activity:

• Total revenue was $1.4 billion, up 67.3% compared to the same period in the prior fiscal year;

up 65.4% after factoring in the favorable impact of $15.9 million of foreign exchange rate changes.

• Total annual recurring revenue, which we define as the sum of cloud services and subscriptions revenue and customer support revenue, was $1.1 billion, up 59.1% compared to the same period in the prior fiscal year;

up 57.5% after factoring in the favorable impact of $11.7 million of foreign exchange rate changes.

• Cloud services and subscriptions revenue was $451.0 million, up 11.5% compared to the same period in the prior fiscal year;

up 10.4% after factoring in the unfavorable impact of $8.2 million of foreign exchange rate changes.

Table of Content s

up 10.9% after factoring in the favorable impact of $2.4 million of foreign exchange rate changes.

• GAAP-based gross margin was 71.4% compared to 69.7% in the same period in the prior fiscal year.

• Non-GAAP-based gross margin was 77.3% compared to 75.2% in the same period in the prior fiscal year.

• GAAP-based net income attributable to OpenText was $57.6 million compared to $74.7 million in the same period in the prior fiscal year.

• GAAP-based net income (loss) attributable to OpenText was $80.9 million compared to $(116.9) million in the same period in the prior fiscal year.

• Non-GAAP-based net income attributable to OpenText was $274.3 million compared to $206.8 million in the same period in the prior fiscal year.

• GAAP-based earnings per share (EPS), diluted, was $0.21 compared to $0.28 in the same period in the prior fiscal year.

• GAAP-based earnings (loss) per share (EPS), diluted, was $0.30 compared to $(0.43) in the same period in the prior fiscal year.

• Non-GAAP-based EPS, diluted, was $1.01 compared to $0.77 the same period in the prior fiscal year.

• Adjusted EBITDA was $365.1 million compared to $284.5 million in the same period in the prior fiscal year.

• Operating cash flow was $663.9 million for the nine months ended March 31, 2023 compared to $729.9 million in the same period in the prior fiscal year, down 9.0%.

• Cash and cash equivalents were $1,396.8 million as of March 31, 2023, compared to $1,693.7 million as of June 30, 2022.

• Acquired Micro Focus for total consideration of $6.2 billion, inclusive of Micro Focus’ cash, subject to final adjustments.

• In connection with the financing of the Micro Focus Acquisition, we drew down the entire $3.585 billion of the Acquisition Term Loan (as defined below) and drew down $450.0 million under the Revolver (as defined below).

• Micro Focus contributed $374.4 million of revenues and $29.8 million of GAAP-based net losses for the three and nine months ended March 31, 2023.

• Enterprise cloud bookings were $108.2 million, which remained stable over the same period in the prior fiscal year.

We define Enterprise cloud bookings as the total value from cloud services and subscription contracts entered into in the period that is new, committed and incremental to our existing contracts, excluding the impact of Carbonite Inc.

(Carbonite) and Zix.

• Adjusted EBITDA, a non-GAAP measure, was $494.8 million compared to $304.0 million in the same period in the prior fiscal year.

• Operating cash flow was $47.1 million for the three months ended September 30, 2023 compared to $132.0 million in the same period in the prior fiscal year, down 64.3%.

• Cash and cash equivalents were $919.9 million as of September 30, 2023, compared to $1.2 billion as of June 30, 2023.

• We repaid $175 million of the outstanding balance on the Revolver.

Subsequent to the first quarter, in October 2023, we repaid the $100 million outstanding balance drawn under the Revolver and $75 million drawn under the Acquisition Term Loan.

• Enterprise cloud bookings were $121.0 million, compared to $111.8 million in the same period in the prior fiscal year.

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

3 unchanged sentences

On January 31, 2023, we acquired all of the issued and to be issued share capital of Micro Focus for a total purchase price of $6.2 billion, inclusive of Micro Focus’ cash and repayment of Micro Focus’ outstanding indebtedness, subject to final adjustments.

In connection with the financing of the Micro Focus Acquisition, concurrent with the announcement of the acquisition on August 25, 2022, the Company entered into the Acquisition Term Loan and Bridge Loan (as defined below) as well as certain derivative transactions.

On December 1, 2022, the Company issued and sold $1.0 billion in aggregate principal amount of 6.90% Senior Secured Notes due 2027 (Senior Secured Notes 2027), amended the Acquisition Term Loan and terminated the Bridge Loan.

On January 31, 2023, we drew down the entire aggregate principal amount of $3.585 billion of the Acquisition Term Loan, net of original issuance discount and other fees, and drew down $450.0 million under the Revolver.

We used these proceeds and cash on hand to fund the purchase price consideration and repayment of Micro Focus’ outstanding indebtedness.

In conjunction with the closing of the Micro Focus Acquisition, the deal-contingent forward contracts and non-contingent forward contract, as described in Note 17 “Derivative Instruments and Hedging Activities” to our Condensed Consolidated Financial Statements were settled.

See Note 19 “Acquisitions” to our Condensed Consolidated Financial Statements for more details.

The Micro Focus Acquisition has a significant impact on period-over-period comparability as more fully discussed below.

Table of Content s

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 $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.

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

The results of operations of Zix have been consolidated with those of OpenText beginning December 23, 2021.

The results of operations of Micro Focus have been consolidated with those of OpenText beginning February 1, 2023.

The Micro Focus Acquisition has contributed to the growth in our revenues and significantly impacts period-over-period comparability.

See Note 19 “Acquisitions” to our Condensed Consolidated Financial Statements for more details.

Impacts of COVID-19

We continue to closely monitor the potential effects and impact of the spread of COVID-19 on our operations, businesses and financial performance, including liquidity and capital usage.

We have conducted business with modifications to employee travel and work locations and also virtualization of certain events, along with modified interactions with customers and suppliers, among other modifications.

In addition, we have implemented a Flex-Office program in which a majority of our employees work a portion of their time in the office and a portion remotely.

We will continue to actively monitor the impact of the COVID-19 pandemic on all aspects of our business and geographies, and may take further actions that alter our business operations as may be required by governments, or that we determine are in the best interest of our employees, customers, partners, suppliers and shareholders.

The ultimate impact of the COVID-19 pandemic on our operations and financial performance depends on many factors that are not within our control.

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 2022.

Impacts of Russia-Ukraine Conflict

Impacts of Geopolitical Conflicts and Diplomatic Tensions

We continue to monitor the geopolitical conflicts and diplomatic tensions around the world, including the Russia-Ukraine and Israel-Hamas wars.

We have ceased all direct business in Russia and Belarus and with known Russian-owned companies.

To support certain of our cloud customers headquartered in the United States or allied countries that rely on our network to manage their global business (including their business in Russia), we have nonetheless allowed these customers to continue to use our services to the extent that it can be done in strict compliance with all applicable sanctions and export controls.

However, we may adjust our business practices as required by applicable rules and regulations.

While 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, it is not possible to predict the broader consequences of this conflict, including adverse effects on the global economy, on our business and operations as well as those of our customers, partners and third party service providers.

For more information, please see Part I, Item 1A “Risk Factors” included in our Annual Report on Form 10-K for Fiscal 2022.

We continue to operate our Israeli-based business and support our employees in the region.

While our operations within these locations are not material and we do not expect these geopolitical conflicts to have a material adverse effect on our overall business, results of operations or financial condition, it is not possible to predict the broader consequences of these conflicts, including adverse effects on the global economy, on our business and operations as well as those of our customers, partners and third party service providers.

For more information, please see Part I, Item 1A “Risk Factors” and Part II, Item 7 “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included in our Annual Report on Form 10-K for Fiscal 2023.

Outlook for Remainder of Fiscal 2024

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

With an emphasis on increasing recurring revenues and expanding our margins, we believe our Total Growth strategy will ultimately drive overall cash flow generation, thus helping to fuel our disciplined capital allocation approach and further our ability to deepen our account coverage and identify and execute strategic acquisitions.

With strategic acquisitions, we are well positioned to expand our product portfolio and improve our ability to innovate and grow organically, which will help us to meet our long-term growth targets.

We believe our Total Growth strategy is a durable model that will create both near and long-term shareholder value through organic and acquired growth, capital efficiency and profitability.

With an emphasis on increasing recurring revenues and expanding profitability, we believe our Total Growth strategy will ultimately drive cash flow growth, thus helping to fuel our innovation, broaden our go-to-market distribution and identify and execute strategic acquisitions.

We are well positioned to expand our product portfolio and improve our ability to innovate and grow organically, which helps us to meet our long-term growth targets.

Our Total Growth strategy is a durable model that we believe will create both near and long-term shareholder value through organic and acquired growth, capital efficiency and profitability.

We are committed to continuous innovation.

Our investments in research and development (R&D) push product innovation, increasing the value of our offerings to our installed customer base and new customers, which includes Global 10,000 companies (G10K), SMB and consumers.

The G10K are the world's largest companies, ranked by estimated total revenues, as well as the world's largest governments and organizations.

Our investments in research and development (R&D) push product innovation, increasing the value of our offerings to our existing customer base and new customers, which includes Global 10,000 companies (G10K), SMBs and consumers.

The G10K are the world's largest companies, ranked by estimated total revenues, as well as the world's largest governments and global organizations.

More valuable products, coupled with our established global partner program, lead to greater distribution and cross-selling opportunities which further help us to achieve organic growth.

On a fiscal year-to-date basis (and reflecting Micro Focus results from February 1, 2023 to March 31, 2023), we have invested $430.6 million or 14.4% of revenue in R&D expense, which is in line with our target spend for R&D expense this fiscal year.

As a result of the Micro Focus Acquisition, we will target to spend 13% to 15% of revenues for R&D expense for the remainder of this fiscal year.

Looking ahead, the destination for innovation is hybrid-cloud.

On a fiscal year-to-date basis, we have invested $234.4 million or 16.4% of revenue in R&D expense, which is in line with our target spend for R&D expense this fiscal year.

Looking ahead, the destination for innovation is cloud.

Businesses of all sizes rely on a combination of public and private clouds, managed services and off-cloud solutions.

As a result, we are committed to continue to modernize our technology infrastructure and leverage our existing investments in the OpenText Cloud and programs to help customers off-

Table of Content s

As a result, we are committed to continue to modernize our technology infrastructure and leverage our existing investments in the OpenText Cloud and programs to help customers off-cloud.

The combination of OpenText cloud-native applications and managed services, together with the scalability and performance of our partner public cloud providers, offer more secure, reliable and compliant solutions to customers wanting to deploy cloud-based Information Management applications.

The OpenText Cloud is designed to build additional flexibility and scalability for our customers:

The OpenText Cloud is designed to build additional flexibility and scalability for our

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

On January 31, 2023, we completed the Micro Focus Acquisition.

The Micro Focus Acquisition will substantially expand our scope and size by adding substantial assets and operations to our existing business.

We have incurred significant transaction costs in connection with the Micro Focus Acquisition.

We have incurred and will continue to incur additional integration costs following the close of the Micro Focus Acquisition.

During the third quarter of Fiscal 2023, as part of the Micro Focus Acquisition, the Company made a strategic decision to implement a restructuring plan that will impact its global workforce and further reduce its real estate footprint around the world in an effort to further streamline our operations, consistent with previously announced cost synergies of $400 million (Micro Focus Acquisition Restructuring Plan).

The total size of the plan is expected to result in a reduction in the combined workforce of approximately 8%, or 2,000 employees, with an estimated cost of $135 million to $150 million.

The Micro Focus Acquisition Restructuring Plan is proposed to be completed by the end of Fiscal 2024.

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

The completion of the Micro Focus Acquisition during Fiscal 2023 has substantially expanded our scope and size by adding assets and operations to our existing business.

We have incurred and will continue to incur additional integration costs.

As part of the Micro Focus Acquisition, we made a strategic decision to implement a restructuring plan that impacted its global workforce and further reduced our real estate footprint around the world in an effort to further streamline our operations, consistent with previously announced cost synergies of $400 million (Micro Focus Acquisition Restructuring Plan).

The total size of the plan is expected to result in a reduction in the combined workforce of approximately 8%, or 2,000 employees, with an estimated cost of $135 million to $150 million, of which we have incurred $79.1 million.

We expect the Micro Focus Acquisition Restructuring Plan to be completed by the end of Fiscal 2024.

See Part I, Item 1A, “Risk Factors” in our Annual Report on Form 10-K for Fiscal 2023.

The Micro Focus Acquisition has a significant impact on period-over-period comparability as more fully discussed below.

We will continue to closely monitor the potential impacts of COVID-19, inflation with respect to wages, services and goods, concerns regarding any potential recession, rising interest rates, financial market volatility, 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 and Part I, Item 1A, “Risk Factors” in our Annual Report on Form 10-K for Fiscal 2022.

We will continue to closely monitor the potential impacts of inflation with respect to wages, services and goods, concerns regarding any potential recession, rising interest rates, financial market volatility, the Russia-Ukraine and Israel-Hamas conflicts and other geopolitical disputes on our business.

See Part I, Item 1A, “Risk Factors” in our Annual Report on Form 10-K for Fiscal 2023.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

12 unchanged sentences

For a full discussion of all our accounting policies, please see Note 2 “Accounting Policies and Recent Accounting Pronouncements” to the Consolidated Financial Statements included in our Annual Report on Form 10-K for Fiscal 2023.

Table of Content s

RESULTS OF OPERATIONS

3 unchanged sentences

See “Use of Non-GAAP Financial Measures” below for a reconciliation of GAAP-based measures to Non-GAAP-based measures.

The comparability of our operating results in the third quarter of Fiscal 2023 compared to the same period of Fiscal 2022 was impacted by the recent Micro Focus Acquisition.

Our total revenues increased by $362.4 million across all of our product types in the third quarter of Fiscal 2023, relative to the third quarter of Fiscal 2022, primarily due to revenue contributions from the Micro Focus Acquisition, offset by unfavorable impact of $33.7 million of foreign exchange rate changes.

Micro Focus contributed $374.4 million to our total revenues during the third quarter of Fiscal 2023, of which $251.4 million related to customer support revenues and $73.5 million related to license revenues.

Total cost of revenues increased by $95.5 million in the third quarter of Fiscal 2023, relative to the third quarter of Fiscal 2022, primarily from additional cost of revenues as a result of the Micro Focus Acquisition.

Micro Focus incurred $108.2 million of cost of revenues during the third quarter Fiscal 2023.

Total operating expenses increased by $334.5 million in the third quarter of Fiscal 2023, relative to the third quarter of Fiscal 2022, primarily from additional operating expenses as a result of the Micro Focus Acquisition.

Micro Focus incurred $315.3 million of operating expenses during the third quarter Fiscal 2023, of which $223.7 million was related to research and development, sales and marketing, and general and administrative expenses.

Table of Content s

The comparability of our operating results for the three months ended September 30, 2023 as compared to the three months ended September 30, 2022 was impacted by the recent Micro Focus Acquisition, including with regard to the split of our revenues by geography.

Our total revenues increased by $573.4 million across all of our product types in the three months ended September 30, 2023, relative to the three months ended September 30, 2022, primarily due to revenue contributions from the Micro Focus Acquisition, in addition to a favorable impact of $15.9 million of foreign exchange rate changes.

The Micro Focus Acquisition contributed $562.9 million to our total revenues during the three months ended September 30, 2023, of which $369.9 million related to customer support revenues and $115.5 million related to license revenues.

Total cost of revenues increased by $148.7 million in the three months ended September 30, 2023, relative to the three months ended September 30, 2022, primarily from additional cost of revenues of $158.2 million as a result of the Micro Focus Acquisition.

Total operating expenses increased by $358.2 million in the three months ended September 30, 2023, relative to the three months ended September 30, 2022, primarily from additional operating expenses of $350.9 million as a result of the Micro Focus Acquisition, of which $267.9 million was related to research and development, sales and marketing, and general and administrative expenses.

Summary of Results of Operations

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

Three Months Ended September 30,

(In thousands) 2023 Change

increase (decrease) 2022 2023 Change

increase (decrease) 2022

37 unchanged sentences

Asia Pacific (4)

9.2 % 7.7 % 8.6 % 8.1 %

Other Metrics:

11 unchanged sentences

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

(3) EMEA primarily consists of countries in Europe, the Middle East and Africa.

(3) EMEA consists of countries in Europe, the Middle East and Africa.

(4) Asia Pacific primarily consists of Japan, Australia, China, Korea, Philippines, Singapore, India and New Zealand.

Table of Content s

(5) See “Use of Non-GAAP Financial Measures” (discussed later in this MD&A) for definitions and reconciliations of GAAP-based measures to Non-GAAP-based measures.

1 unchanged sentence

1) Cloud Services and Subscriptions:

Cloud services and subscriptions revenues are from hosting arrangements where in connection with the licensing of software, the end user does not take possession of the software, as well as from end-to-end fully outsourced business-to-business (B2B) integration solutions to our customers (collectively referred to as cloud arrangements).

Cloud services and subscriptions revenues are from hosting arrangements where in connection with the licensing of software, the end user does not take possession of the software, as well as from end-to-end fully outsourced B2B integration solutions to our customers (collectively referred to as cloud arrangements).

The software application resides on our hardware or that of a third party, and the customer accesses and uses the software on an as-needed basis via an identified line.

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

For the quarter ended March 31, 2023, our cloud renewal rate, excluding the impact of Carbonite, Zix and Micro Focus, increased to 95% from 93% over the quarter ended March 31, 2022.

For the quarter ended September 30, 2023, our cloud renewal rate, excluding the impact of Carbonite, Zix and Micro Focus remained stable at 94% over the quarter ended September 30, 2022.

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 March 31, Nine Months Ended March 31,

Three Months Ended September 30,

(In thousands) 2023 Change

increase (decrease) 2022 2023 Change

increase (decrease) 2022

11 unchanged sentences

Asia Pacific 6.5 % 6.1 %

Three Months Ended March 31, 2023 Compared to Three Months Ended March 31, 2022

Cloud services and subscriptions revenues increased by $33.5 million or 8.3% during the three months ended March 31, 2023 as compared to the same period in the prior fiscal year;

up 10.4% after factoring in the unfavorable impact of $8.2 million of foreign exchange rate changes.

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

Three Months Ended September 30, 2023 Compared to Three Months Ended September 30, 2022

Cloud services and subscriptions revenues increased by $46.4 million or 11.5% during the three months ended September 30, 2023 as compared to the same period in the prior fiscal year;

up 10.9% after factoring in the favorable impact of $2.4 million of foreign exchange rate changes.

The increase was primarily driven by incremental revenues from the Micro Focus Acquisition, as well as partially driven by organic revenue growth over the comparative period.

Geographically, the overall change was attributable to an increase in Americas of $26.7 million, an increase in EMEA of $14.9 million, and an increase in Asia Pacific of $4.8 million.

There were 13 cloud services contracts greater than $1.0 million that closed during the third quarter of Fiscal 2023, compared to 21 contracts during the third quarter of Fiscal 2022.

Cost of Cloud services and subscriptions revenues increased by $21.6 million during the three months ended March 31, 2023 as compared to the same period in the prior fiscal year.

This was due to an increase in labour-related costs of $13.7 million and an increase in third-party network usage fees of $8.5 million primarily driven by incremental Cloud services and subscriptions cost of revenues from the Micro Focus Acquisition over the comparative period.

There were 21 cloud services contracts greater than $1.0 million that closed during the first quarter of Fiscal 2024, compared to 18 contracts during the first quarter of Fiscal 2023.

Cost of Cloud services and subscriptions revenues increased by $39.6 million during the three months ended September 30, 2023 as compared to the same period in the prior fiscal year.

This was primarily due to an increase in labour-related costs of $27.1 million and an increase in third-party network usage fees of $12.6 million partially driven by incremental Cloud service and subscriptions cost of revenues from the Micro Focus Acquisition over the comparative period.

Overall, the gross margin percentage on Cloud services and subscriptions revenues decreased to 62% from 67%.

Table of Content s

Nine Months Ended March 31, 2023 Compared to Nine Months Ended March 31, 2022

Cloud services and subscriptions revenues increased by $125.4 million or 11.2% during the nine months ended March 31, 2023 as compared to the same period in the prior fiscal year;

up 14.3% after factoring in the unfavorable impact of $34.9 million of foreign exchange rate changes.

The increase was partially driven by incremental Cloud services and subscriptions revenues from the Micro Focus Acquisition over the comparative period.

Geographically, the overall change was attributable to an increase in Americas of $106.5 million and an increase in EMEA of $19.2 million, partially offset by a decrease in Asia Pacific of $0.4 million.

There were 54 cloud services contracts greater than $1.0 million that closed during the first nine months of Fiscal 2023, compared to 64 contracts during the first nine months of Fiscal 2022.

Cost of Cloud services and subscriptions revenues increased by $45.8 million during the nine months ended March 31, 2023 as compared to the same period in the prior fiscal year.

This was due to an increase in third-party network usage fees of $24.4 million and an increase in labour-related costs of $20.6 million partially driven by incremental Cloud services and subscriptions cost of revenues from the Micro Focus Acquisition over the comparative period.

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

2) Customer Support:

5 unchanged sentences

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 March 31, 2023, our Customer support renewal rate increased to 95% compared to 94% for the quarter ended March 31, 2022, excluding the impact of Carbonite, Zix and Micro Focus.

For the quarter ended September 30, 2023, our Customer support renewal rate decreased to 94%, compared to 95% for the quarter ended September 30, 2022.

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 March 31, Nine Months Ended March 31,

Three Months Ended September 30,

(In thousands) 2023 Change

increase (decrease) 2022 2023 Change

increase (decrease) 2022

11 unchanged sentences

Asia Pacific 9.2 % 8.2 %

Three Months Ended March 31, 2023 Compared to Three Months Ended March 31, 2022

Customer support revenues increased by $243.4 million or 73.2% during the three months ended March 31, 2023 as compared to the same period in the prior fiscal year;

up 78.3% after factoring in the unfavorable impact of $16.9 million of foreign exchange rate changes.

The increase was primarily driven by incremental Customer support revenues from the Micro Focus Acquisition over the comparative period.

Geographically, the overall change was attributable to an increase in Americas of $132.5 million, an increase in EMEA of $83.6 million and an increase in Asia Pacific of $27.3 million.

Cost of Customer support revenues increased by $35.3 million during the three months ended March 31, 2023 as compared to the same period in the prior fiscal year.

This was primarily due to an increase in labour-related costs of $32.7

Table of Content s

million driven by incremental Customer support cost of revenues from the Micro Focus Acquisition over the comparative period.

Overall, the gross margin percentage on Customer support revenues decreased to 88% from 90%.

Nine Months Ended March 31, 2023 Compared to Nine Months Ended March 31, 2022

Customer support revenues increased by $207.1 million or 20.7% during the nine months ended March 31, 2023 as compared to the same period in the prior fiscal year;

up 26.4% after factoring in the unfavorable impact of $57.6 million of foreign exchange rate changes.

The increase was primarily driven by incremental Customer support revenues from the Micro Focus Acquisition over the comparative period.

Three Months Ended September 30, 2023 Compared to Three Months Ended September 30, 2022

Customer support revenues increased by $380.4 million or 119.9% during the three months ended September 30, 2023 as compared to the same period in the prior fiscal year;

up 116.9% after factoring in the favorable impact of $9.2 million of foreign exchange rate changes.

The increase was primarily driven by incremental Customer support revenue from the Micro Focus Acquisition over the comparative period.

Geographically, the overall change was attributable to an increase in Americas of $202.4 million, an increase in EMEA of $139.5 million, and an increase in Asia Pacific of $38.5 million.

Cost of Customer support revenues increased by $32.1 million during the nine months ended March 31, 2023 as compared to the same period in the prior fiscal year.

This was primarily due to an increase in labour-related costs of $29.4 million driven by incremental Customer support cost of revenues from the Micro Focus Acquisition over the comparative period.

Cost of Customer support revenues increased by $47.7 million during the three months ended September 30, 2023 as compared to the same period in the prior fiscal year.

This was primarily due to an increase in labour-related costs of $45.9 million primarily driven by incremental Customer support cost of revenues from the Micro Focus Acquisition over the comparative period.

Overall, the gross margin percentage on Customer support revenues decreased to 89% from 91%.

2 unchanged sentences

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

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

Three Months Ended September 30,

(In thousands) 2023 Change

increase (decrease) 2022 2023 Change

increase (decrease) 2022

11 unchanged sentences

Asia Pacific 16.1 % 11.0 %

Three Months Ended March 31, 2023 Compared to Three Months Ended March 31, 2022

License revenues increased by $59.1 million or 73.3% during the three months ended March 31, 2023 as compared to the same period in the prior fiscal year;

up 79.9% after factoring in the unfavorable impact of $5.3 million of foreign exchange rate changes.

The increase was primarily driven by incremental License revenues from the Micro Focus Acquisition over the comparative period.

Geographically, the overall change was attributable to an increase in EMEA of $21.6 million, an increase in Americas of $27.6 million and an increase in Asia Pacific of $9.9 million.

During the third quarter of Fiscal 2023, we closed 42 license contracts greater than $0.5 million, of which 22 contracts were greater than $1.0 million, contributing $58.6 million of License revenues.

This was compared to 32 license contracts greater than $0.5 million during the third quarter of Fiscal 2022, of which 11 contracts were greater than $1.0 million, contributing $32.6 million of License revenues.

Cost of License revenues increased by $0.6 million during the three months ended March 31, 2023 as compared to the same period in the prior fiscal year as a result of higher third-party technology costs primarily driven by incremental cost of License revenues from the Micro Focus Acquisition over the comparative period.

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

Nine Months Ended March 31, 2023 Compared to Nine Months Ended March 31, 2022

License revenues increased by $46.6 million or 17.7% during the nine months ended March 31, 2023 as compared to the same period in the prior fiscal year;

up 23.7% after factoring in the unfavorable impact of $16.0 million of foreign exchange rate changes.

Three Months Ended September 30, 2023 Compared to Three Months Ended September 30, 2022

License revenues increased by $110.5 million or 176.6% during the three months ended September 30, 2023 as compared to the same period in the prior fiscal year;

up 172.8% after factoring in the favorable impact of $2.4 million of foreign exchange rate changes.

The increase was primarily driven by incremental License revenues from the Micro Focus Acquisition over the comparative period.

Geographically, the overall change was attributable to an increase in Americas of $25.6 million, an increase in Asia Pacific of $19.7 million and an increase in EMEA of $1.3 million.

Table of Content s

During the first nine months of Fiscal 2023, we closed 102 license contracts greater than $0.5 million, of which 46 contracts were greater than $1.0 million, contributing $124.2 million of License revenues.

This was compared to 81 license contracts greater than $0.5 million during the first nine months of Fiscal 2022, of which 35 contracts were greater than $1.0 million, contributing $94.9 million of License revenues.

Cost of License revenues decreased by $0.4 million during the nine months ended March 31, 2023 as compared to the same period in the prior fiscal year as a result of lower third-party technology costs.

Geographically, the overall change was attributable to an increase in Americas of $51.0 million, an increase in EMEA of $38.5 million, and an increase in Asia Pacific of $21.0 million.

During the first quarter of Fiscal 2024, we closed 51 license contracts greater than $0.5 million, of which 21 contracts were greater than $1.0 million, contributing $63.9 million of License revenues.

This was compared to 22 license contracts greater than $0.5 million during the first quarter of Fiscal 2023, of which 9 contracts were greater than $1.0 million, contributing $22.6 million of License revenues.

Cost of License revenues increased by $1.1 million during the three months ended September 30, 2023 as compared to the same period in the prior fiscal year as a result of higher third-party technology costs primarily driven by incremental cost of License revenue from the Micro Focus Acquisition over the comparative period.

Overall, the gross margin percentage on License revenues increased to 98% from 96%.

6 unchanged sentences

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

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

Three Months Ended September 30,

(In thousands) 2023 Change

increase (decrease) 2022 2023 Change

increase (decrease) 2022

11 unchanged sentences

Asia Pacific 12.4 % 12.3 %

Three Months Ended March 31, 2023 Compared to Three Months Ended March 31, 2022

Professional service and other revenues increased by $26.4 million or 39.4% during the three months ended March 31, 2023 as compared to the same period in the prior fiscal year;

up 44.1% after factoring in the unfavorable impact of $3.2 million of foreign exchange rate changes.

Three Months Ended September 30, 2023 Compared to Three Months Ended September 30, 2022

Professional service and other revenues increased by $36.2 million or 53.6% during the three months ended September 30, 2023 as compared to the same period in the prior fiscal year;

up 50.9% after factoring in the favorable impact of $1.9 million of foreign exchange rate changes.

The increase was primarily driven by incremental Professional service and other revenues from the Micro Focus Acquisition over the comparative period.

Geographically, the overall change was attributable to an increase in EMEA of $24.2 million, an increase in Americas of $7.4 million and an increase in Asia Pacific of $4.6 million.

Cost of Professional service and other revenues increased by $21.8 million during the three months ended March 31, 2023 as compared to the same period in the prior fiscal year.

This was due to an increase in labour-related costs of $22.1 million, primarily driven by incremental Professional service and other cost of revenues from the Micro Focus Acquisition over the comparative period, offset by a decrease in other miscellaneous costs of $0.3 million.

Overall, the gross margin percentage on Professional service and other revenues remained stable at 16%.

Table of Content s

Nine Months Ended March 31, 2023 Compared to Nine Months Ended March 31, 2022

Professional service and other revenues increased by $23.7 million or 11.8% during the nine months ended March 31, 2023 as compared to the same period in the prior fiscal year;

up 17.9% after factoring in the unfavorable impact of $12.4 million of foreign exchange rate changes.

The increase was primarily driven by incremental Professional service and other revenues from the Micro Focus Acquisition over the comparative period.

Geographically, the overall change was attributable to an increase in Americas of $12.3 million, an increase in Asia Pacific of $6.8 million and an increase in EMEA of $4.6 million.

Cost of Professional service and other revenues increased by $24.9 million during the nine months ended March 31, 2023 as compared to the same period in the prior fiscal year.

This was due to an increase in labour-related costs of $23.8 million primarily driven by incremental Professional service and other cost of revenues from the Micro Focus Acquisition over the comparative period, and an increase in other miscellaneous costs of $1.1 million.

Overall, the gross margin percentage on Professional service and other revenues decreased to 17% from 20%.

Cost of Professional service and other revenues increased by $26.1 million during the three months ended September 30, 2023 as compared to the same period in the prior fiscal year.

This was primarily due to an increase in labour-related costs of $27.0 million primarily driven by the incremental Professional service and other cost of revenues from the Micro Focus Acquisition over the comparative period.

Overall, the gross margin percentage on Professional service and other revenues increased to 23% from 20%.

Amortization of Acquired Technology-based Intangible Assets

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

Three Months Ended September 30,

(In thousands) 2023 Change

increase (decrease) 2022 2023 Change

increase (decrease) 2022

Amortization of acquired technology-based intangible assets $ 76,824 $ 34,187 $ 42,637

Amortization of acquired technology-based intangible assets increased during the three months ended March 31, 2023 by $16.1 million as compared to the same period in the prior fiscal year.

This was primarily due to amortization of newly acquired technology-based intangible assets from the Micro Focus Acquisition.

Amortization of acquired technology-based intangible assets decreased during the nine months ended March 31, 2023 by $6.2 million as compared to the same period in the prior fiscal year.

This was primarily due to a reduction of $44.5 million relating to intangible assets from previous acquisitions becoming fully amortized, partially offset by an increase of $36.2 million relating to amortization of newly acquired customer-based intangible assets from the Micro Focus Acquisition.

Amortization of acquired technology-based intangible assets increased during the three months ended September 30, 2023 by $34.2 million as compared to the same period in the prior fiscal year.

This was primarily due to amortization of newly acquired technology-based intangible assets from the Micro Focus Acquisition, partially offset by a reduction in amortization related to technology-based intangible assets from previous acquisitions becoming fully amortized.

Operating Expenses

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

Three Months Ended September 30,

(In thousands) 2023 Change

increase (decrease) 2022 2023 Change

increase (decrease) 2022

13 unchanged sentences

Special charges (recoveries) 1.0 % 1.7 %

Table of Content s

Research and development expenses consist primarily of payroll and payroll-related benefits expenses, contracted research and development expenses, and facility costs.

1 unchanged sentence

The primary drivers are typically software upgrades and development.

Change between

Three Months Ended

March 31, 2023 and 2022

Change between

Nine Months Ended

March 31, 2023 and 2022

Change between Three Months Ended

September 30, 2023 and 2022

(In thousands)

increase (decrease) increase (decrease)

increase (decrease)

Payroll and payroll-related benefits $ 85,421

5 unchanged sentences

Total change in research and development expenses $ 124,239

Research and development expenses increased by $93.0 million during the three months ended March 31, 2023 as compared to the same period in the prior fiscal year, primarily as a result of the Micro Focus Acquisition.

Payroll and payroll-related benefits, which is comprised of salaries, benefits and variable short-term incentives, increased by $63.6 million, facility-related expenses increased by $15.5 million, share-based compensation expense increased by $6.5 million, and contract labour and consulting increased by $5.7 million.

Overall, our research and development expenses, as a percentage of total revenues, increased to 17% compared to the same period in the prior fiscal year at 13%.

Research and development expenses increased by $109.1 million during the nine months ended March 31, 2023 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 $65.1 million, facility-related expenses increased by $17.7 million, share-based compensation expense increased by $15.6 million and contract labour and consulting increased by $7.8 million.

Research and development expenses increased by $124.2 million during the three months ended September 30, 2023 as compared to the same period in the prior fiscal year, primarily as a result of the Micro Focus Acquisition.

Payroll and payroll-related benefits, which is comprised of salaries, benefits and variable short-term incentives, increased by $85.4 million, facility-related expenses increased by $25.2 million, contract labour and consulting expense increased by $5.8 million, and share-based compensation expense increased by $4.9 million.

Overall, our research and development expenses, as a percentage of total revenues, increased to 16% compared to the same period in the prior fiscal year at 13%.

Our research and development labour resources increased by 4,153 employees, from 4,391 employees at March 31, 2022 to 8,544 employees at March 31, 2023.

Our research and development labour resources increased by 3,942 employees, from 4,293 employees at September 30, 2022 to 8,235 employees at September 30, 2023, primarily as a result of the Micro Focus Acquisition.

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

Change between

Three Months Ended

March 31, 2023 and 2022

Change between

Nine Months Ended

March 31, 2023 and 2022

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

Change between Three Months Ended

September 30, 2023 and 2022

(In thousands) increase (decrease)

Payroll and payroll-related benefits $ 71,550

8 unchanged sentences

Total change in sales and marketing expenses $ 104,631

Sales and marketing expenses increased by $90.1 million during the three months ended March 31, 2023 as compared to the same period in the prior fiscal year, primarily as a result of the Micro Focus Acquisition.

Payroll and payroll-related benefits, which is comprised of salaries, benefits and variable short-term incentives, increased by $53.7 million, commissions increased by $8.0 million, facility-related expenses increased by $7.5 million, share-based compensation expense increased by $6.2 million, marketing expenses increased by $5.1 million and travel and communication expenses increased by $4.7 million.

Overall, our sales and marketing expenses, as a percentage of total revenues, increased to 22% compared to 21% in the same period in the prior fiscal year.

Sales and marketing expenses increased by $124.2 million during the nine months ended March 31, 2023 as compared to the same period in the prior fiscal year, partially as a result of the Micro Focus Acquisition.

Payroll and payroll-related benefits,

Table of Content s

which is comprised of salaries, benefits and variable short-term incentives, increased by $58.1 million, share-based compensation expense increased by $12.9 million, marketing expenses increased by $12.5 million, commissions increased by $12.1 million, facility-related expenses increased by $9.3 million, travel and communication expenses increased by $8.5 million, and other miscellaneous costs increased by $5.1 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.

Our sales and marketing labour resources increased by 2,316 employees, from 2,770 employees at March 31, 2022 to 5,086 employees at March 31, 2023.

Sales and marketing expenses increased by $104.6 million during the three months ended September 30, 2023 as compared to the same period in the prior fiscal year, primarily as a result of the Micro Focus Acquisition.

Payroll and payroll-related benefits, which is comprised of salaries, benefits and variable short-term incentives, increased by $71.6 million, facility-related expenses increased by $9.6 million, commissions increased by $6.1 million, marketing expenses increased by $5.2 million, share-based compensation expense increased by $4.9 million, and travel and communication expenses increased by $3.4 million.

Overall, our sales and marketing expenses, as a percentage of total revenues, decreased to 19% compared to the same period in the prior fiscal year at 20%.

Our sales and marketing labour resources increased by 1,998 employees, from 2,656 employees at September 30, 2022 to 4,654 employees at September 30, 2023, primarily as a result of the Micro Focus Acquisition.

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

March 31, 2023 and 2022

Change between

Nine Months Ended

March 31, 2023 and 2022

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

Change between Three Months Ended

September 30, 2023 and 2022

(In thousands) increase (decrease)

Payroll and payroll-related benefits $ 31,181

5 unchanged sentences

Total change in general and administrative expenses $ 53,137

General and administrative expenses increased by $38.9 million during the three months ended March 31, 2023 as compared to the same period in the prior fiscal year, primarily as a result of the Micro Focus Acquisition.

Payroll and payroll-related benefits, which is comprised of salaries, benefits and variable short-term incentives, increased by $22.8 million, facility-related expenses increased by $5.7 million, contract labour and consulting increased by $4.5 million and travel and communication expenses increased by $4.1 million.

Overall, general and administrative expenses, as a percentage of total revenues, remained stable at 10%.

General and administrative expenses increased by $51.6 million during the nine months ended March 31, 2023 as compared to the same period in the prior fiscal year, primarily as a result of the Micro Focus Acquisition.

Payroll and payroll-related benefits, which is comprised of salaries, benefits and variable short-term incentives, increased by $22.7 million, other miscellaneous costs, which include professional fees such as legal, audit and tax related expenses, increased by $7.6 million, share-based compensation expense increased by $6.5 million, facilities expense increased by $6.2 million and travel and communications expense increased by $5.0 million.

Overall, general and administrative expenses, as a percentage of total revenues, remained stable at 9%.

Our general and administrative labour resources increased by 1,836 employees, from 1,980 employees at March 31, 2022 to 3,816 employees at March 31, 2023, primarily as a result of the Micro Focus Acquisition.

General and administrative expenses increased by $53.1 million during the three months ended September 30, 2023 as compared to the same period in the prior fiscal year, primarily as a result of the Micro Focus Acquisition.

Payroll and payroll-related benefits, which is comprised of salaries, benefits and variable short-term incentives, increased by $31.2 million, contract labour and consulting expenses increased by $7.6 million, other miscellaneous costs, which include professional fees such as legal, audit and tax related expenses increased by $5.7 million, travel and communication expenses increased by $4.4 million, share-based compensation expense increased by $2.3 million, and facility-related expenses increased by $2.0 million.

Overall, general and administrative expenses, as a percentage of total revenues, remained stable at 9% compared to the same period in the prior fiscal year.

Our general and administrative labour resources increased by 1,599 employees, from 1,864 employees at September 30, 2022 to 3,463 employees at September 30, 2023, primarily as a result of the Micro Focus Acquisition.

Depreciation expenses:

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

Three Months Ended September 30,

(In thousands) 2023 Change

increase (decrease) 2022 2023 Change

increase (decrease) 2022

Depreciation $ 34,091 $ 10,917 $ 23,174

Depreciation expenses increased during the three and nine months ended March 31, 2023 by $8.2 million and $11.1 million, respectively, compared to the same periods in the prior fiscal year, primarily as a result of the Micro Focus Acquisition.

Depreciation expenses, as a percentage of total revenue remained stable for the three and nine months ended March 31, 2023 at 3%, respectively, compared to the same periods in the prior fiscal year.

Depreciation expenses increased during the three months ended September 30, 2023 by $10.9 million compared to the same periods in the prior fiscal year, primarily as a result of the Micro Focus Acquisition.

Depreciation expenses as a

percentage of total revenue decreased for the three months ended September 30, 2023 at 2% compared to the same period in the prior fiscal year at 3%.

Amortization of acquired customer-based intangible assets:

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

Three Months Ended September 30,

(In thousands) 2023 Change

increase (decrease) 2022 2023 Change

increase (decrease) 2022

Amortization of acquired customer-based intangible assets $ 120,192 $ 65,754 $ 54,438

Table of Content s

Amortization of acquired customer-based intangible assets increased during the three months ended March 31, 2023 by $41.0 million as compared to the same period in the prior fiscal year.

This was primarily related to amortization of newly acquired customer-based intangible assets from the Micro Focus Acquisition over the prior fiscal year.

Amortization of acquired customer-based intangible assets increased during the nine months ended March 31, 2023 by $44.4 million as compared to the same period in the prior fiscal year.

This was primarily related to amortization of newly acquired customer-based intangible assets from the Micro Focus Acquisition over the prior fiscal year.

Amortization of acquired customer-based intangible assets increased during the three months ended September 30, 2023 by $65.8 million as compared to the same period in the prior fiscal year.

This was primarily related to amortization of newly acquired customer-based intangible assets from the Micro Focus Acquisition.

Special charges (recoveries):

3 unchanged sentences

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 March 31, Nine Months Ended March 31,

Three Months Ended September 30,

(In thousands) 2023 Change

increase (decrease) 2022 2023 Change

increase (decrease) 2022

Special charges (recoveries) $ 13,794 $ (487) $ 14,281

Special charges (recoveries) increased by $63.3 million during the three months ended March 31, 2023 over the comparative period.

Acquisition related costs increased by $33.5 million, primarily due to the Micro Focus Acquisition, other miscellaneous charges increased by $20.0 million primarily due to severance charges and restructuring costs related to the Micro Focus Acquisition increased by $11.2 million.

Special charges (recoveries) increased by $78.3 million during the nine months ended March 31, 2023 as compared to the same period in the prior fiscal year.

Acquisition related costs increased by $39.4 million, primarily due to the Micro Focus Acquisition, other miscellaneous charges increased by $21.0 million primarily due to severance charges and restructuring costs related to the Micro Focus Acquisition increased by $11.2 million.

Special charges (recoveries) decreased by $(0.5) million during the three months ended September 30, 2023 over the comparative period.

This was primarily due to a decrease in acquisition related costs of $3.5 million, offset by an increase of other charges (recoveries) of $1.9 million and an increase in restructuring costs of $1.1 million, as 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.

Table of Content s

Other Income (Expense), Net

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

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

Three Months Ended September 30,

(In thousands) 2023 Change

increase (decrease) 2022 2023 Change

increase (decrease) 2022

Foreign exchange gains (losses)

Unrealized losses on derivatives

not designated as hedges (1)

$ 11,434 $ 12,795 $ (1,361)

Realized gains on derivatives

not designated as hedges (2)

Unrealized gains (losses) on derivatives not designated as hedges (1)

17,895 199,356 (181,461)

1 unchanged sentence

(9,696) (3,162) (6,534)

Loss on debt extinguishment (4) (5)

(21) (21) — (8,152) 19,261 (27,413)

Other miscellaneous income 135 46 89 362 15 347

Total other income, net $ 85,706 $ 61,314 $ 24,392 $ 59,824 $ 30,687 $ 29,137

Other miscellaneous income (expense) 537 412 125

Total other income (expense), net $ 20,170 $ 209,401 $ (189,231)

__________________________

(1) Represents the unrealized gains (losses) on our derivatives not designated as hedges related to the financing of the Micro Focus Acquisition (see Note 17 “Derivative Instruments and Hedging Activities” to our Condensed Consolidated Financial Statements for more details).

(2) Represents the realized gains (losses) on our derivatives not designated as hedges related to the financing of the Micro Focus Acquisition (see Note 17 “Derivative Instruments and Hedging Activities” to our Condensed Consolidated Financial Statements for more details).

(3) Represents our share in net income (losses) of equity investees, which approximates fair value and subject to volatility based on market trends and business conditions, based on our interest in certain investment funds in which we are a limited partner.

(1) Represents the unrealized gains (losses) on our derivatives not designated as hedges related to the Micro Focus Acquisition (see Note 17 “Derivative Instruments and Hedging Activities” for more details).

(2) Represents our share in net income (loss) of equity investees, which approximates fair value and subject to volatility based on market trends and business conditions, based on our interest in certain investment funds in which we are a limited partner.

Our interests in each of these investees range from 4% to below 20% and these investments are accounted for using the equity method (see Note 9 “Prepaid Expenses and Other Assets” to our Condensed Consolidated Financial Statements for more details).

(4) On December 1, 2022, we amended the Acquisition Term Loan and Bridge Loan to reallocate commitments under the Bridge Loan to the Acquisition Term Loan and terminated all remaining commitments under the Bridge Loan which resulted in a loss on debt extinguishment of $8.2 million related to unamortized debt issuance costs (see Note 11 “Long-Term Debt” to our Condensed Consolidated Financial Statements for more details).

(5) On December 9, 2021, we redeemed Senior Notes 2026 in full, which resulted in a loss on debt extinguishment of $27.4 million.

Of this, $25.0 million related to the early termination call premium, $6.2 million related to unamortized debt issuance costs and $(3.8) million related to unamortized premium (see Note 11 “Long-Term Debt” to our Condensed Consolidated Financial Statements for more details).

Interest and Other Related Expense, Net

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 March 31, Nine Months Ended March 31,

Three Months Ended September 30,

(In thousands) 2023 Change

increase (decrease) 2022 2023 Change

increase (decrease) 2022

3 unchanged sentences

Other miscellaneous expense (2)

6,462 3,817 2,645

Total interest and other related expense, net $ 141,764 $ 101,382 $ 40,382

1 unchanged sentence

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

Provision for (recovery of) Income Taxes

(2) Other miscellaneous expense primarily consists of the amortization of debt discount and the debt issuance costs.

For more details see Note 11 “Long-Term Debt” to our Condensed Consolidated Financial Statements.

Provision for Income Taxes

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

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

Three Months Ended September 30,

(In thousands) 2023 Change

increase (decrease) 2022 2023 Change

increase (decrease) 2022

Provision for (recovery of) income taxes $ (12,420) $ (53,461) $ 41,041 $ 71,979 $ (51,778) $ 123,757

The effective tax rate for the three months ended March 31, 2023 was (27.5)% compared to a provision of 35.5% for the three months ended March 31, 2022.

The Company’s tax rate for the three months ended March 31, 2023, differs from the Canadian statutory rate of 26.5% primarily due to tax benefits related to the internal reorganization and a pre-tax gain created by the mark-to-market valuation on the derivatives not designated as hedges that the Company entered into in connection with the Micro Focus Acquisition (see Note 17 “Derivative Instruments and Hedging Activities” to our Condensed Consolidated

Table of Content s

Financial Statements).

The mark-to-market gains in the quarter are considered capital in nature for income tax purposes and 50% of realized gains are not taxable.

Other items impacting the rate include permanent items such as disallowed stock-based compensation and foreign income inclusions, offset by research and development credits, foreign tax credits and a net decrease in uncertain tax positions.

The Company’s effective tax rate for the three months ended March 31, 2022, differs from the Canadian statutory rate primarily due to US Base Erosion and Anti-Abuse Tax (BEAT), partially offset by research and development credits and tax benefits related to stock-based compensation deductions.

The effective tax rate for the nine months ended March 31, 2023 was 26.5% compared to a provision of 29.6% for the nine months ended March 31, 2022.

The Company’s tax rate for the nine months ended March 31, 2023 differs from the Canadian statutory rate of 26.5% primarily due to a net increase in uncertain tax positions, US BEAT and permanent items such as disallowed stock-based compensation and foreign passive income inclusion, partially offset by research and development credits, foreign tax credits, 50% non-taxable portion of capital gains on mark-to-market derivatives not designated as a hedge and tax benefits of internal reorganizations.

The Company’s effective tax rate for the nine months ended March 31, 2022, differs from the Canadian statutory rate primarily due to US BEAT, partially offset by research and development credits.

Additionally, the provision from the Tax Cuts and Jobs Act of 2017 that requires capitalization and amortization of research and development costs is effective starting Fiscal 2023.

If not deferred, modified or repealed, this provision may materially increase future cash taxes.

The Inflation Reduction Act and CHIPS and Science Act were signed into law in August 2022.

Provision for income taxes

$ 10,352 $ (23,273) $ 33,625

The Company’s effective tax rate for the three months ended September 30, 2023 was 11.3%, compared to a provision of (40.4)% for the three months ended September 30, 2022.

The Company’s effective tax rate for the three months ended September 30, 2023, differs from the Canadian statutory rate of 26.5% primarily due to tax benefits related to foreign tax rate differences, foreign tax credits and research and development credits, partially offset by US Base Erosion and Anti-Abuse Tax (BEAT).

The Company’s effective tax rate for the three months ended September 30, 2022 differs from the Canadian statutory rate primarily due to pre-tax losses created by the mark-to-market valuation on the derivatives not designated as hedges that the Company entered into in connection with the Micro Focus Acquisition, and the inability to recognize the tax benefit of mark-to-market losses.

The tax benefit of mark-to-market losses are considered capital losses for tax purposes and require capital income to be recognized.

Therefore we recorded a valuation allowance on the portion of the losses that are not supportable by capital gains.

The Inflation Reduction Act and Creating Helpful Incentives to Produce Semiconductors (CHIPS) were signed into law in August 2022.

The Inflation Reduction Act introduced new provisions, including a 15% corporate alternative minimum tax for certain large corporations that have at least an average of $1 billion adjusted financial statement income over a consecutive three-tax-year period.

The corporate minimum tax will be effective for Fiscal 2024.

We are currently evaluating the applicability and the effect of the new law to our financial results.

For information on certain potential tax contingencies, including the Canada Revenue Agency matter, see Note 14 “Guarantees and Contingencies” and Note 15 “Income Taxes” to our Condensed Consolidated Financial Statements.

We are currently evaluating the applicability and the effect of the new laws to our financial results.

For information on certain potential tax contingencies, including the CRA matter, see Note 14 “Guarantees and Contingencies” and Note 15 “Income Taxes” to our Condensed Consolidated Financial Statements.

Please also see Part I, Item 1A, “Risk Factors” in our Annual Report on Form 10-K for Fiscal 2023.

Table of Content s

Use of Non-GAAP Financial Measures

28 unchanged sentences

GAAP measures, supplementary Non-GAAP financial measures that exclude certain items from the presentation of its financial results.

Table of Content s

The following charts provide unaudited reconciliations of U.S.

GAAP-based financial measures to Non-GAAP-based financial measures for the following periods presented.

The Micro Focus Acquisition has a significant impact on period-over-period comparability as more fully discussed below.

The Micro Focus Acquisition significantly impacts period-over-period comparability.

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

for the three months ended March 31, 2023

for the three months ended September 30, 2023

(In thousands, except for per share data)

Three Months Ended March 31, 2023

Three Months Ended September 30, 2023

GAAP-based Measures GAAP-based Measures

14 unchanged sentences

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

Other income (expense), net 85,706 (85,706) (6) —

Provision for (recovery of) income taxes (12,420) 44,631 (7) 32,211

GAAP-based net income / Non-GAAP-based net income, attributable to OpenText 57,556 140,257 (8) 197,813

GAAP-based earnings per share / Non-GAAP-based earnings per share-diluted, attributable to OpenText $ 0.21 $ 0.52 (8) $ 0.73

212,892 247,905 (5) 460,797

(1) Adjustment relates to the exclusion of share-based compensation expense from our Non-GAAP-based operating expenses as this expense is excluded from our internal analysis of operating results.

(2) Adjustment relates to the exclusion of amortization expense from our Non-GAAP-based operating expenses as the timing and frequency of amortization expense is dependent on our acquisitions and is hence excluded from our internal analysis of operating results.

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

(4) Adjustment relates to the exclusion of special charges (recoveries) from our Non-GAAP-based operating expenses as special charges (recoveries) are generally incurred in the periods relevant to an acquisition and include certain charges or recoveries that are not indicative or related to continuing operations and are therefore excluded from our internal analysis of operating results.

See Note 18 “Special Charges (Recoveries)” to our Condensed Consolidated Financial Statements for more details.

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

(6) Adjustment relates to the exclusion of other income (expense) from our Non-GAAP-based operating expenses as other income (expense) generally relates to the transactional impact of foreign exchange and is generally not indicative or related to continuing operations and is therefore excluded from our internal analysis of operating results.

Other income (expense) also includes our share of income (losses) from our holdings in investments as a limited partner.

We do not actively trade equity securities in these privately held companies nor do we plan our ongoing operations based around any anticipated fundings or distributions from these investments.

We exclude gains and losses on these investments as we do not believe they are reflective of our ongoing business and operating results.

Other income (expense) also includes unrealized and realized gains (losses) on our derivatives which are not designated as hedges.

We exclude gains and losses on these derivatives as we do not believe they are reflective on our ongoing business and operating results.

(7) Adjustment relates to differences between the GAAP-based tax provision rate of approximately 27% and a Non-GAAP-based tax rate of approximately 14%;

these rate differences are due to the income tax effects of items that are excluded for the purpose of calculating Non-GAAP-based net income.

Such excluded items include amortization, share-based compensation, special charges (recoveries) and other income (expense), net.

Also excluded are tax benefits/expense items unrelated to current period income such as changes in reserves for tax uncertainties and valuation allowance reserves and “book to return” adjustments for tax return filings and tax assessments.

Included is the amount of net tax benefits arising from the internal reorganization that occurred in Fiscal 2017 assumed to be allocable to the current period based on the forecasted utilization period.

In arriving at our Non-GAAP-based tax rate of approximately 14%, we analyzed the individual adjusted expenses and took into consideration the impact of statutory tax rates from local jurisdictions incurring the expense.

Table of Content s

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

Three Months Ended March 31, 2023

Per share diluted

GAAP-based net income, attributable to OpenText $ 57,556 $ 0.21

Amortization 159,876 0.59

Share-based compensation 36,368 0.13

Special charges (recoveries) 74,350 0.28

Other income (expense), net 20,170 (20,170) (6) —

GAAP-based provision for (recovery of) income taxes (12,420) (0.04)

Non-GAAP-based provision for income taxes (32,211) (0.12)

Non-GAAP-based net income, attributable to OpenText $ 197,813 $ 0.73

Reconciliation of Adjusted EBITDA

Three Months Ended March 31, 2023

GAAP-based net income, attributable to OpenText $ 57,556

Provision for (recovery of) income taxes (12,420)

Interest and other related expense, net 104,502

Amortization of acquired technology-based intangible assets 62,639

Amortization of acquired customer-based intangible assets 97,237

Depreciation 30,577

Share-based compensation 36,368

Special charges (recoveries) 74,350

Other (income) expense, net (85,706)

Adjusted EBITDA $ 365,103

Table of Content s

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

for the three months ended March 31, 2022

(In thousands, except for per share data)

Three Months Ended March 31, 2022

GAAP-based Measures GAAP-based Measures

% of Total Revenue Adjustments Note Non-GAAP-based Measures Non-GAAP-based Measures

% of Total Revenue

Cost of revenues

Cloud services and subscriptions $ 136,020 $ (1,268) (1) $ 134,752

Customer support 31,763 (501) (1) 31,262

Professional service and other 56,693 (907) (1) 55,786

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 (%) 608,047 68.9% 49,240 (3) 657,287 74.5%

Operating expenses

Research and development 117,730 (4,350) (1) 113,380

Sales and marketing 180,955 (5,761) (1) 175,194

General and administrative 88,137 (3,961) (1) 84,176

Amortization of acquired customer-based intangible assets 56,215 (56,215) (2) —

Special charges (recoveries) 11,031 (11,031) (4) —

GAAP-based income from operations / Non-GAAP-based income from operations 131,609 130,558 (5) 262,167

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

Provision for income taxes

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

GAAP-based earnings per share / Non-GAAP-based earnings per share-diluted, attributable to OpenText $ 0.28 $ 0.42 (8) $ 0.70

10,352 34,313 (7) 44,665

(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.

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

See Note 18 “Special Charges (Recoveries)” to our Condensed Consolidated Financial Statements for more details.

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

Other income (expense) also includes our share of income (losses) from our holdings in investments as a limited partner.

We do not actively trade equity securities in these privately held companies nor do we plan our ongoing operations based around any anticipated fundings or distributions from these investments.

We exclude gains and losses on these investments as we do not believe they are reflective of our ongoing business and operating results.

(7) Adjustment relates to differences between the GAAP-based tax provision rate of approximately 35% and a Non-GAAP-based tax rate of approximately 14%;

these rate differences are due to the income tax effects of items that are excluded for the purpose of calculating Non-GAAP-based adjusted net income.

Such excluded items include amortization, share-based compensation, special charges (recoveries) and other income (expense), net.

Also excluded are tax benefits/expense items unrelated to current period income such as changes in reserves for tax uncertainties and valuation allowance reserves, and “book to return” adjustments for tax return filings and tax assessments.

Table of Content s

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

Three Months Ended March 31, 2022

Per share diluted

GAAP-based net income, attributable to OpenText $ 74,681 $ 0.28

Amortization 102,779 0.38

Share-based compensation 16,748 0.06

Special charges (recoveries) 11,031 0.04

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

GAAP-based provision for income taxes 41,041 0.15

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

Non-GAAP-based net income, attributable to OpenText $ 190,818 $ 0.70

Reconciliation of Adjusted EBITDA

Three Months Ended March 31, 2022

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

Provision for income taxes 41,041

Interest and other related expense, net 40,238

Amortization of acquired technology-based intangible assets 46,564

Amortization of acquired customer-based intangible assets 56,215

Depreciation 22,370

Share-based compensation 16,748

Special charges (recoveries) 11,031

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

Adjusted EBITDA $ 284,496

Table of Content s

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

for the nine months ended March 31, 2023

(In thousands, except for per share data)

Nine Months Ended March 31, 2023

GAAP-based Measures GAAP-based Measures

% of Total Revenue Adjustments Note Non-GAAP-based Measures Non-GAAP-based Measures

% of Total Revenue

Cost of revenues

Cloud services and subscriptions $ 423,771 $ (7,788) (1) $ 415,983

Customer support 123,010 (2,414) (1) 120,596

Professional service and other 186,390 (5,172) (1) 181,218

Amortization of acquired technology-based intangible assets 146,139 (146,139) (2) —

GAAP-based gross profit and gross margin (%) / Non-GAAP-based gross profit and gross margin (%) 2,104,379 70.3% 161,513 (3) 2,265,892 75.7%

Operating expenses

Research and development 430,629 (25,481) (1) 405,148

Sales and marketing 615,354 (28,243) (1) 587,111

General and administrative 282,724 (19,300) (1) 263,424

Amortization of acquired customer-based intangible assets 205,121 (205,121) (2) —

Special charges (recoveries) 98,937 (98,937) (4) —

GAAP-based income from operations / Non-GAAP-based income from operations 395,005 538,595 (5) 933,600

Other income (expense), net 59,824 (59,824) (6) —

Provision for income taxes 71,979 33,021 (7) 105,000

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

80,901 193,422 (8) 274,323

GAAP-based earnings per share / Non-GAAP-based earnings per share-diluted, attributable to OpenText $ 0.30 $ 0.71 (8) $ 1.01

11 unchanged sentences

Other income (expense) also includes unrealized and realized gains (losses) on our derivatives which are not designated as hedges.

We exclude gains and losses on these derivatives as we do not believe they are reflective on our ongoing business and operating results.

We exclude gains and losses on these derivatives as we do not believe they are reflective of our ongoing business and operating results.

(7) Adjustment relates to differences between the GAAP-based tax provision rate of approximately 11% and a Non-GAAP-based tax rate of approximately 14%;

4 unchanged sentences

Table of Content s

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

Nine Months Ended March 31, 2023

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

Three Months Ended September 30, 2023

Per share diluted

GAAP-based net income, attributable to OpenText

$ 80,901 $ 0.30

Amortization 197,016 0.72

4 unchanged sentences

Non-GAAP-based provision for income taxes

(44,665) (0.16)

Non-GAAP-based net income, attributable to OpenText

$ 274,323 $ 1.01

Reconciliation of Adjusted EBITDA

Nine Months Ended March 31, 2023

Three Months Ended September 30, 2023

GAAP-based net income, attributable to OpenText

8 unchanged sentences

Adjusted EBITDA $ 494,843

Table of Content s

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

for the nine months ended March 31, 2022

for the three months ended September 30, 2022

(In thousands, except for per share data)

Nine Months Ended March 31, 2022

Three Months Ended September 30, 2022

GAAP-based Measures GAAP-based Measures

14 unchanged sentences

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

146,353 134,564 (5) 280,917

Other income (expense), net (189,231) 189,231 (6) —

Provision for income taxes

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

33,625 50 (7) 33,675

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

(116,929) 323,745 (8) 206,816

GAAP-based earnings per share / Non-GAAP-based earnings per share-diluted, attributable to OpenText $ (0.43) $ 1.20 (8) $ 0.77

16 unchanged sentences

Table of Content s

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

Nine Months Ended March 31, 2022

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

Three Months Ended September 30, 2022

Per share diluted

GAAP-based net income, attributable to OpenText $ 294,894 $ 1.08

GAAP-based net loss, attributable to OpenText

$ (116,929) $ (0.43)

Amortization 97,075 0.36

4 unchanged sentences

Non-GAAP-based provision for income taxes

(33,675) (0.12)

Non-GAAP-based net income, attributable to OpenText

$ 206,816 $ 0.77

Reconciliation of Adjusted EBITDA

Nine Months Ended March 31, 2022

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

Three Months Ended September 30, 2022

GAAP-based net loss, attributable to OpenText

Provision for income taxes

7 unchanged sentences

Adjusted EBITDA $ 304,047

Table of Content s

LIQUIDITY AND CAPITAL RESOURCES

1 unchanged sentence

(In thousands)

As of March 31, 2023 Change

As of September 30, 2023 Change

increase (decrease) As of June 30, 2023

5 unchanged sentences

(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).

Nine Months Ended March 31,

Three Months Ended September 30,

(In thousands)

1 unchanged sentence

Cash provided by operating activities

$ 47,121 $ (84,838) $ 131,959

Cash used in investing activities

Cash provided by financing activities $ 4,662,276 $ 4,396,214 $ 266,062

$ (50,399) $ (14,075) $ (36,324)

Cash used in financing activities

$ (297,021) $ (239,860) $ (57,161)

Cash and cash equivalents

3 unchanged sentences

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

As of March 31, 2023, we have recognized a provision of $18.6 million (June 30, 2022—$15.1 million) in respect of 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 September 30, 2023, we have recognized a deferred income tax liability of $29.2 million (June 30, 2023—$28.3 million) on taxable 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.

Cash flows provided by operating activities

Cash flows from operating activities decreased by $66.0 million during the nine months ended March 31, 2023, as compared to the same period in the prior fiscal year due to a decrease in net income after the impact of non-cash items of $47.4 million and a decrease in changes from working capital of $18.4 million.

During the third quarter of Fiscal 2023 we had a days sales outstanding (DSO) of 45 days, compared to our DSO of 44 days during the third quarter of Fiscal 2022.

The per day impact of our DSO in the third quarter of Fiscal 2023 and Fiscal 2022 on our cash flows was $9.7 million and $9.8 million, respectively.

Cash flows from operating activities decreased by $84.8 million during the three months ended September 30, 2023, as compared to the same period in the prior fiscal year primarily due to a decrease in changes from working capital of $151.4 million offset by an increase in net income after the impact of non-cash items of $66.6 million.

During the first quarter of Fiscal 2024 we had a days sales outstanding (DSO) of 43 days, compared to our DSO of 40 days during the first quarter of Fiscal 2023.

The per day impact of our DSO in the first quarter of Fiscal 2024 and Fiscal 2023 on our cash flows was $15.8 million and $9.5 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.

1 unchanged sentence

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 $4,692.0 million during the nine months ended March 31, 2023, as compared to the same period in the prior fiscal year primarily due to the increase in consideration paid for an acquisition during the first nine months of Fiscal 2023, which includes cash paid for the Micro Focus Acquisition of $5,655.6 million, as compared to the cash paid during the first nine months of Fiscal 2022 for the acquisition of Zix of $856.2 million and acquisition of Bricata Inc.

of $17.9 million.

Cash flows provided by financing activities

Cash flows used in investing activities increased by $14.1 million during the three months ended September 30, 2023, as compared to the same period in the prior fiscal year primarily due to an increase in consideration paid for acquisitions, which includes cash paid for the Micro Focus Acquisition of $9.3 million and other investing activities of $5.6 million.

Cash flows used in financing activities

Our cash flows from financing activities generally consist of long-term debt financing and amounts received from stock options exercised by our employees and Employee Stock Purchase Plan (ESPP) purchases by our employees.

These inflows are

Table of Content s

typically offset by scheduled and non-scheduled repayments of our long-term debt financing and, when applicable, the payment of dividends and/or repurchases of our Common Shares.

Cash flows provided by financing activities increased by $4.396 billion during the nine months ended March 31, 2023 as compared to the same period in the prior fiscal year.

These inflows are typically offset by scheduled and non-scheduled repayments of our long-term debt financing and, when applicable, the payment of dividends and/or repurchases of our Common Shares.

Cash flows used in financing activities increased by $239.9 million during the three months ended September 30, 2023 as compared to the same period in the prior fiscal year.

This is primarily due to the net impact of the following activities:

(i) $3.427 billion increase in proceeds from the issuance of long-term debt and draw down on the Revolver;

(ii) $841.0 million decrease in repayments of long-term debt and Revolver;

(iii) $211.8 million related to less cash used in the repurchases of Common Shares and treasury stock;

(iv) $25.0 million relating to early call termination premium upon redemption of Senior Notes 2026 in Fiscal 2022 that did not occur in Fiscal 2023.

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

(i) $60.1 million increase in debt issuance costs;

(ii) $31.3 million related to lower proceeds from the issuance of Common Shares for the exercise of options and the OpenText ESPP;

(i) $184.0 million increase due to repayments of long-term debt and the Revolver;

(ii) $53.1 million related to more cash used in the repurchases of treasury stock;

(iii) $2.3 million related to higher cash dividends paid to shareholders;

(iv) $2.0 million increase in debt issuance costs.

The increases in cash flows used in financing activities above were partially offset by $1.4 million due to increased proceeds from the issuance of Common Shares for the exercise of options and the OpenText ESPP.

Cash Dividends

During the three and nine months ended March 31, 2023, we declared and paid cash dividends of $0.24299 and $0.72897 per Common Share, respectively, in the aggregate amount of $64.9 million and $194.5 million, respectively (three and nine months ended March 31, 2022—$0.2209 and $0.6627 per Common Share, respectively, in the aggregate amount of $59.1 million and $178.6 million, respectively).

During the three months ended September 30, 2023, we declared and paid cash dividends of $0.25 per Common Share in the aggregate amount of $67.0 million (three months ended September 30, 2022—$0.24299 per Common Share in the aggregate amount of $64.7 million).

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

15 unchanged sentences

(i) create certain liens and enter into sale and lease-back transactions;

(ii) in the case of our non-guarantor subsidiaries, create, assume, incur or guarantee additional indebtedness of OTHI, the Company or the guarantors

Table of Content s

without such subsidiary becoming a subsidiary guarantor of Senior Notes 2031;

(ii) in the case of our non-guarantor subsidiaries, create, assume, incur or guarantee additional indebtedness of OTHI, the Company or the guarantors without such subsidiary becoming a subsidiary guarantor of Senior Notes 2031;

and (iii) consolidate, amalgamate or merge with, or convey, transfer, lease or otherwise dispose of its property and assets substantially as an entirety to, another person.

2 unchanged sentences

Senior Notes 2031 are guaranteed on a senior unsecured basis by the Company and the Company’s existing and future wholly-owned subsidiaries (other than OTHI) that borrow or guarantee the obligations under our senior credit facilities.

Senior Notes 2031 and the guarantees rank equally in right of payment with all of the Company’s, OTHI’s and the guarantors’ existing and future senior unsubordinated debt and will rank senior in right of payment to all of the Company’s, OTHI’s and the guarantors’ future subordinated debt.

Notes 2031 and the guarantees rank equally in right of payment with all of the Company’s, OTHI’s and the guarantors’ existing and future senior unsubordinated debt and will rank senior in right of payment to all of the Company’s, OTHI’s and the guarantors’ future subordinated debt.

Senior Notes 2031 and the guarantees will be effectively subordinated to all of the Company’s, OTHI’s and the guarantors’ existing and future secured debt, including the obligations under the senior credit facilities, to the extent of the value of the assets securing such secured debt.

The foregoing description of the 2031 Indenture does not purport to be complete and is qualified in its entirety by reference to the full text of the 2031 Indenture, which is filed as an exhibit to the Company’s Current Report on Form 8-K filed with the SEC on November 24, 2021.

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

Senior Notes 2030

17 unchanged sentences

Senior Notes 2030 and the guarantees will be effectively subordinated to all of the Company, OTHI and the guarantors’ existing and future secured debt, including the obligations under the senior credit facilities, to the extent of the value of the assets securing such secured debt.

Table of Content s

The foregoing description of the 2030 Indenture does not purport to be complete and is qualified in its entirety by reference to the full text of the 2030 Indenture, which is filed as an exhibit to the Company’s Current Report on Form 8-K filed with the SEC on February 18, 2020.

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

Senior Notes 2029

18 unchanged sentences

The foregoing description of the 2029 Indenture does not purport to be complete and is qualified in its entirety by reference to the full text of the 2029 Indenture, which is filed as an exhibit to the Company’s Current Report on Form 8-K filed with the SEC on November 24, 2021.

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

Senior Notes 2028

5 unchanged sentences

We may also redeem up to 40% of the aggregate principal amount of the Senior Notes 2028, on one or more occasions, prior to February 15, 2023, using the net proceeds from certain qualified equity offerings at a redemption price of 103.875% of the principal amount, plus accrued and unpaid interest, if any, to the redemption date, subject to compliance with certain conditions.

We may, on one or more occasions, redeem the Senior Notes 2028, in whole or in part,

Table of Content s

at any time on and after February 15, 2023 at the applicable redemption prices set forth in the indenture governing the Senior Notes 2028, dated as of February 18, 2020, among the Company, the subsidiary guarantors party thereto, The Bank of New York Mellon, as U.S.

We may, on one or more occasions, redeem the Senior Notes 2028, in whole or in part, at any time on and after February 15, 2023 at the applicable redemption prices set forth in the indenture governing the Senior Notes 2028, dated as of February 18, 2020, among the Company, the subsidiary guarantors party thereto, The Bank of New

York Mellon, as U.S.

trustee, and BNY Trust Company of Canada, as Canadian trustee (the 2028 Indenture), plus accrued and unpaid interest, if any, to the redemption date.

10 unchanged sentences

The foregoing description of the 2028 Indenture does not purport to be complete and is qualified in its entirety by reference to the full text of the 2028 Indenture, which is filed as an exhibit to the Company’s Current Report on Form 8-K filed with the SEC on February 18, 2020.

Senior Notes 2026

On May 31, 2016 we issued $600 million in aggregate principal amount of 5.875% Senior Notes due 2026 (Senior Notes 2026) in an unregistered offering to qualified institutional buyers pursuant to Rule 144A under the Securities Act, and to certain persons in offshore transactions pursuant to Regulation S under the Securities Act.

Senior Notes 2026 had 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 would have matured on June 1, 2026.

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 had identical terms, were fungible with and were 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, 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.

A portion of the net proceeds from the offerings of Senior Notes 2029 and Senior Notes 2031 was used to redeem Senior Notes 2026.

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.

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

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

Senior Secured Fixed Rate Notes

Senior Secured Notes 2027

On December 1, 2022, we issued $1 billion in aggregate principal amount of Senior Secured Notes 2027 in connection with the financing of the Micro Focus Acquisition in an unregistered offering to qualified institutional buyers pursuant to Rule 144A under the Securities Act and to certain non-U.S.

On December 1, 2022, we issued $1 billion in aggregate principal amount of Senior Secured Notes due 2027 (Senior Secured Notes 2027) in connection with the financing of the Micro Focus Acquisition in an unregistered offering to qualified institutional buyers pursuant to Rule 144A under the Securities Act and to certain non-U.S.

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

Senior Secured Notes 2027 bear interest at a rate of 6.90% per annum, payable semi-annually in arrears on June

Table of Content s

1 and December 1, commencing on June 1, 2023.

Senior Secured Notes 2027 bear interest at a rate of 6.90% per annum, payable semi-annually in arrears on June 1 and December 1, commencing on June 1, 2023.

Senior Secured Notes 2027 will mature on December 1, 2027, unless earlier redeemed, in accordance with their terms, or repurchased.

We may redeem all or a portion of the Senior Secured Notes 2027 at any time prior to November 1, 2027 at a redemption price equal to the greater of 100% of the principal amount of the Senior Secured Notes 2027 to be redeemed and (b) the net present value of the remaining scheduled payments of principal and interest thereon discounted to the Par Call Date less interest accrued to the date of redemption, plus accrued and unpaid interest to, but excluding, the redemption date.

On or after the Par Call Date, the Company may redeem the Senior Secured Notes 2027, in whole or in part, at any time and from time to time, at a redemption price equal to 100% of the principal amount of the Senior Secured Notes 2027 being redeemed plus accrued and unpaid interest thereon to the redemption date.

We may redeem all or a portion of the Senior Secured Notes 2027 at any time prior to November 1, 2027 at a redemption price equal to the greater of (a) 100% of the principal amount of the Senior Secured Notes 2027 to be redeemed and (b) the net present value of the remaining scheduled payments of principal and interest thereon discounted to the Par Call Date less interest accrued to the date of redemption, plus accrued and unpaid interest to, but excluding, the redemption date.

On or after the Par Call Date (as defined in the 2027 Indenture), the Company may redeem the Senior Secured Notes 2027, in whole or in part, at any time and from time to time, at a redemption price equal to 100% of the principal amount of the Senior Secured Notes 2027 being redeemed plus accrued and unpaid interest thereon to the redemption date.

If we experience one of the kinds of change of control triggering events specified in the indenture governing the Senior Secured Notes 2027 dated as of December 1, 2022, among the Company, the subsidiary guarantors party thereto, The Bank of New York Mellon, as U.S.

5 unchanged sentences

These covenants are subject to a number of important limitations and exceptions as set forth in the 2027 Indenture.

The 2027 Indenture also provides for certain events of default, which, if any of them occurs, may permit or, in certain circumstances, require the principal, premium, if any, interest and any other monetary obligations on all the then-outstanding Senior Secured Notes 2027 to be due and payable immediately.

The 2027 Indenture also provides for certain events of default, which, if any of them occurs, may permit or, in certain circumstances, require the principal,

premium, if any, interest and any other monetary obligations on all the then-outstanding Senior Secured Notes 2027 to be due and payable immediately.

The Senior Secured Notes 2027 are guaranteed on a senior secured basis by certain of the Company’s subsidiaries and are secured with the same priority as the Company’s senior credit facilities.

1 unchanged sentence

The foregoing description of the 2027 Indenture does not purport to be complete and is qualified in its entirety by reference to the full text of the 2027 Indenture, which is filed as an exhibit to the Company’s Current Report on Form 8-K filed with the SEC on December 1, 2022.

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

On May 30, 2018, we entered into a credit facility, which provides for a $1 billion term loan facility with certain lenders named therein, Barclays Bank PLC (Barclays), as sole administrative agent and collateral agent, and as lead arranger and joint bookrunner (Term Loan B) and borrowed the full amount on May 30, 2018 to, among other things, repay in full the loans under our prior $800 million term loan credit facility originally entered into on January 16, 2014.

2 unchanged sentences

Term Loan B has a seven-year term, maturing in May 2025.

Borrowings under Term Loan B bear interest at a rate per annum equal to an applicable margin plus, at the borrower’s option, either (1) the Eurodollar rate for the interest period relevant to such borrowing or (2) an ABR rate.

The applicable margin for borrowings under Term Loan B is 1.75%, with respect to LIBOR advances and 0.75%, with respect to ABR advances.

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 March 31, 2023, the outstanding balance on the Term Loan B bears an interest rate of 6.38%.

For more information regarding the impact and discontinuance 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 2022.

On June 6, 2023, we amended the Term Loan B to replace the LIBOR benchmark rate applicable to borrowings under Term Loan B with a SOFR benchmark rate.

Borrowings under Term Loan B bear interest at a rate per annum equal to an applicable margin plus, at the borrower’s option, either (1) the SOFR benchmark rate for the interest period relevant to such borrowing or (2) an alternate base rate (ABR).

The applicable margin for borrowings under Term Loan B is 1.75%, with respect to SOFR advances and 0.75%, with respect to ABR advances.

The interest on the current outstanding balance for Term Loan B is equal to 1.75% plus Adjusted Term SOFR (as defined in the Term Loan B).

As of September 30, 2023, the outstanding balance on the Term Loan B bears an interest rate of 7.18%.

Term Loan B has incremental facility capacity of (i) $250 million plus (ii) additional amounts, subject to meeting a “consolidated senior secured net leverage” ratio not exceeding 2.75:1.00, in each case subject to certain conditions.

Table of Content s

trailing twelve months net income before interest, taxes, depreciation, amortization, restructuring, share-based compensation and other miscellaneous charges.

Consolidated senior secured 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, that is secured by our or any of our subsidiaries’ assets, over our trailing twelve months net income before interest, taxes, depreciation, amortization, restructuring, share-based compensation and other miscellaneous charges.

Under Term Loan B, we must maintain a “consolidated net leverage” ratio of no more than 4.00:1.00 at the end of each financial quarter.

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 March 31, 2023, our consolidated net leverage ratio, as calculated in accordance with the applicable agreement, was 3.3:1.

As of September 30, 2023, our consolidated net leverage ratio, as calculated in accordance with the applicable agreement, was 3.64:1.00.

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

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.

1 unchanged sentence

The Revolver has no fixed repayment date prior to the end of the term.

Borrowings under the Revolver bear interest per annum at a floating rate of LIBOR plus a fixed margin dependent on our consolidated net leverage ratio ranging from 1.25% to 1.75%.

On June 6, 2023, we amended the Revolver to replace the LIBOR benchmark rate applicable to borrowings with a SOFR benchmark rate.

Borrowings under the Revolver currently bear interest per annum at a floating rate of interest equal to Adjusted Term SOFR (as defined in the Revolver) and a fixed margin dependent on our consolidated net leverage ratio ranging from 1.25% to 1.75%.

Under the Revolver, we must maintain a “consolidated net leverage” ratio of no more than 4:1 at the end of each financial quarter.

During the third quarter of Fiscal 2023, the Company drew down $450.0 million from the Revolver to partially fund the Micro Focus Acquisition, and as of March 31, 2023, $450.0 million remains outstanding (June 30, 2022—nil).

In April 2023, the Company paid $175 million drawn under the Revolver.

For the three and nine months ended March 31, 2023, we recorded interest expense of $5.0 million, respectively, relating to the Revolver (three and nine months ended March 31, 2022—nil).

As of September 30, 2023, we had $100 million outstanding balance under the Revolver (June 30, 2023—$275 million).

For the three months ended September 30, 2023, we recorded interest expense of $2.0 million, respectively, relating to the Revolver (three months ended September 30, 2022—nil).

In October 2023, the Company repaid the $100 million outstanding balance drawn under the Revolver.

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

Acquisition Term Loan

1 unchanged sentence

During the third quarter of Fiscal 2023, the Company drew down $3.585 billion, net of original issuance discount of 3% and other fees, of which the net proceeds were used to fund the Micro Focus Acquisition (see Note 19 “Acquisitions” to our Condensed Consolidated Financial Statements for more details).

On August 14, 2023, we amended the Acquisition Term Loan, to reduce the applicable interest rate margin by 0.75% over the remaining term of the Acquisition Term Loan.

The reduction in interest rate margin on the Acquisition Term Loan resulting from the amendment was accounted for by the Company as a debt modification.

The Acquisition Term Loan has a seven-year term from the date of funding, and repayments under the Acquisition Term Loan are equal to 0.25% of the principal amount in equal quarterly installments for the life of the Acquisition Term Loan, with the remainder due at maturity.

Borrowings under the Acquisition Term Loan currently bear a floating rate of interest equal to 3.5% plus Term Secured Overnight Financing Rate (SOFR) and the SOFR adjustment.

As of March 31, 2023, the outstanding balance on the Acquisition Term Loan bears an interest rate of 8.22%.

Borrowings under the Acquisition Term Loan currently bear a floating rate of interest equal to 2.75% plus Adjusted Term SOFR (as defined in the Acquisition Term Loan).

As of September 30, 2023, the outstanding balance on the Acquisition Term Loan bears an interest rate of 8.18%.

As of September 30, 2023, the Acquisition Term Loan bears an effective interest rate of 9.27%.

The effective interest rate includes interest expense of $77.2 million and amortization of debt discount and issuance costs of $3.3 million.

The Acquisition Term Loan has incremental facility capacity of (i) $250 million plus (ii) additional amounts, subject to meeting a “consolidated senior secured net leverage” ratio not exceeding 2.75:1.00, in each case subject to certain conditions.

2 unchanged sentences

Consolidated net leverage ratio is defined for this purpose as the proportion of the Company’s total debt reduced by unrestricted cash, including guarantees and letters of credit, over the Company’s trailing four financial quarter net income before interest, taxes, depreciation, amortization, restructuring, share-based compensation and other miscellaneous charges as defined in the Acquisition Term Loan.

As of March 31, 2023, our consolidated net leverage ratio, as calculated in accordance with the applicable agreement, was 3.3:1.

As of September 30, 2023, our consolidated net leverage ratio, as calculated in accordance with the applicable agreement, was 3.64:1:00.

The Acquisition Term Loan is unconditionally guaranteed by certain subsidiary guarantors, as defined in the Acquisition Term Loan, and is secured by a first charge on substantially all of the assets of the Company and the subsidiary guarantors on a pari passu basis with the Revolver, Term Loan B and the Senior Secured Notes 2027.

Table of Content s

For the three and nine months ended March 31, 2023, we recorded interest expense of $48.1 million, respectively, relating to the Acquisition Term Loan (three and nine months ended March 31, 2022— nil, respectively).

For the three months ended September 30, 2023, we recorded interest expense of $77.2 million, relating to the Acquisition Term Loan (three months ended September 30, 2022— nil).

In October 2023, the Company repaid $75 million drawn under the Acquisition Term Loan.

The foregoing description of the Acquisition Term Loan does not purport to be complete and is qualified in its entirety by reference to the full text of the Acquisition Term Loan, which is filed as an exhibit to the Company’s Current Report on Form 8-K filed with the SEC on August 25, 2022.

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

On August 25, 2022, we entered into a bridge loan agreement (Bridge Loan) which provided for commitments of up to $2.0 billion to finance a portion of the repayment of Micro Focus’ existing debt.

On December 1, 2022, we entered into an amendment to the Bridge Loan that reallocated commitments under the Bridge Loan to the Acquisition Term Loan.

In connection with the amendment to the Bridge Loan and the receipt of proceeds from the issuance of the Senior Secured Notes 2027, all remaining commitments under the Bridge Loan were reduced to zero and the Bridge Loan was terminated, which resulted in a loss on debt extinguishment of $8.2 million relating to unamortized debt issuance costs (see Note 22 “Other Income (Expense), Net” to our Condensed Consolidated Financial Statements for more details).

As of March 31, 2023, we had no borrowings under the Bridge Loan.

For the three and nine months ended March 31, 2023, we did not record any interest expense relating to the Bridge Loan.

On December 1, 2022, we entered into an

amendment to the Bridge Loan that reallocated commitments under the Bridge Loan to the Acquisition Term Loan.

As of September 30, 2023, we had no borrowings under the Bridge Loan.

For the three months ended September 30, 2023, we did not record any interest expense relating to the Bridge Loan.

The foregoing description of the Bridge Loan does not purport to be complete and is qualified in its entirety by reference to the full text of the Bridge Loan, which is filed as an exhibit to the Company’s Current Report on Form 8-K filed with the SEC on August 25, 2022.

6 unchanged sentences

Share Repurchase Plan / Normal Course Issuer Bid

On November 5, 2020, the Board authorized a share repurchase plan (the Fiscal 2021 Repurchase Plan), pursuant to which we were authorized to purchase in open market transactions, from time to time over the 12 month period commencing November 12, 2020, up to an aggregate of $350 million of our Common Shares on the NASDAQ Global Select Market, the TSX 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 price that we were authorized to pay for Common Shares in open market transactions was the market price at the time of purchase or such other price as was permitted by applicable law or stock exchange rules.

The Fiscal 2021 Repurchase Plan was effected in accordance with Rule 10b-18 under the Exchange Act (Rule 10b-18).

Purchases made under the Fiscal 2021 Repurchase Plan were subject to a limit of 13,618,774 shares (representing 5% of the Company’s issued and outstanding Common Shares as of November 4, 2020).

All Common Shares purchased by us pursuant to the Fiscal 2021 Repurchase Plan were cancelled.

On November 4, 2021, the Board authorized a share repurchase plan (the Fiscal 2022 Repurchase Plan), pursuant to which we were authorized to 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 TSX (as part of a Fiscal 2022 Normal Course Issuer Bid (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.

2 unchanged sentences

All Common Shares purchased by us pursuant to the Fiscal 2022 Repurchase Plan were cancelled.

Table of Content s

During the three and nine months ended March 31, 2023, we did not repurchase and cancel any Common Shares (three and nine months ended March 31, 2022—1,000,000 and 2,809,559 Common Shares, respectively, for $45.1 million and $136.1 million, respectively).

During the three months ended September 30, 2023 and 2022, we did not repurchase and cancel any Common Shares.

Normal Course Issuer Bid

4 unchanged sentences

The TSX approved the Company’s notice of intention to commence the Fiscal 2022 NCIB pursuant to which the Company was authorized to purchase Common Shares over the TSX for the period commencing November 12, 2021 until November 11, 2022 in accordance with the TSX's normal course issuer bid rules, including that such purchases were to be made at prevailing market prices or as otherwise permitted.

Under the rules of the TSX, the maximum number of Common Shares that could be purchased in this period was 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 could be purchased on a single day was 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.

Under the rules of the TSX, the maximum number of Common Shares that could be purchased in this period was 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 could be purchased on a single day was 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.

Commitments and Contractual Obligations

As of March 31, 2023, we have entered into the following contractual obligations with minimum payments for the indicated fiscal periods as follows:

As of September 30, 2023, we have entered into the following contractual obligations with minimum payments for the indicated fiscal periods as follows:

Payments due between

(In thousands)

Total April 1, 2023 - June 30, 2023 July 1, 2023 - June 30, 2025 July 1, 2025 - June 30, 2027 July 1, 2027 and beyond

Total October 1, 2023 - June 30, 2024 July 1, 2024 - June 30, 2026 July 1, 2026 - June 30, 2028 July 1, 2028 and beyond

Long-term debt obligations (1)

15 unchanged sentences

We have entered into customer agreements which may include provisions to indemnify our customers against third party claims that our software products or services infringe certain third-party intellectual property rights and for liabilities related to a breach of our confidentiality obligations.

We have not made any material payments in relation to such indemnification

Table of Content s

provisions and have not accrued any liabilities related to these indemnification provisions in our Condensed Consolidated Financial Statements.

We have not made any material payments in relation to such indemnification provisions and have not accrued any liabilities related to these indemnification provisions in our Condensed Consolidated Financial Statements.

Occasionally, we enter into financial guarantees with third parties in the ordinary course of our business, including, among others, guarantees relating to taxes and letters of credit on behalf of parties with whom we conduct business.

8 unchanged sentences

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 March 31, 2023, 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 March 31, 2023, we have provisionally paid approximately $32 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, 2023.

Assuming the utilization of available tax attributes (further described below), we estimate our potential aggregate liability, as of September 30, 2023, 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 $76 million.

As of September 30, 2023, 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 September 30, 2023.

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.

3 unchanged sentences

Even if we are unsuccessful in challenging the CRA's reassessments to increase our taxable income for Fiscal 2012, Fiscal 2013, Fiscal 2014, Fiscal 2015 and Fiscal 2016, we have elective deductions available for those years (including carry-backs from later years) that would offset such increased amounts so that no additional cash tax would be payable, exclusive of any assessed penalties and interest, as described above.

The CRA has audited Fiscal 2017 and Fiscal 2018 on a basis that we strongly disagree with and are contesting.

The CRA has audited Fiscal 2017, Fiscal 2018 and Fiscal 2019 on a basis that we strongly disagree with and are contesting.

The focus of the CRA audit has been the valuation of certain intellectual property and goodwill when one of our subsidiaries continued into Canada from Luxembourg in July 2016.

In accordance with applicable rules, these assets were recognized for tax purposes at fair market value as of that time, which value was supported by an expert valuation prepared by an independent leading accounting and advisory firm.

CRA’s position for Fiscal 2017 and Fiscal 2018 relies in significant part on the application of its positions regarding our transfer pricing methodology that are the basis for its reassessment of our fiscal years 2012 to 2016 described above, and that we believe are without merit.

Other aspects of CRA’s position for Fiscal 2017 and Fiscal 2018 conflict with the expert valuation prepared by the independent leading accounting and advisory firm that was used to support our original filing position.

The CRA issued notices of reassessment in respect of Fiscal 2017 and Fiscal 2018 on a basis

Table of Content s

consistent with its proposal to reduce the available depreciable basis of assets in Canada.

CRA’s position for Fiscal 2017 through Fiscal 2019 relies in significant part on the application of its positions regarding our transfer pricing methodology that are the basis for its reassessment of our fiscal years 2012 to 2016 described above, and that we believe are without merit.

Other aspects of CRA’s position for Fiscal 2017 through Fiscal 2019 conflict with the expert valuation prepared by the independent leading accounting and advisory firm that was used to support our original filing position.

The CRA issued notices of reassessment in respect of Fiscal 2017, Fiscal 2018 and Fiscal 2019 on a basis consistent with its proposal to reduce the available depreciable basis of assets in Canada.

On April 19, 2022, we filed our notice of objection regarding the reassessment in respect of Fiscal 2017 and on March 15, 2023, we filed our notice of objection regarding the reassessment in respect of Fiscal 2018.

We intend to file a notice of objection regarding Fiscal 2019.

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.

We strongly disagree with the CRA’s position for Fiscal 2017 and Fiscal 2018 and intend to vigorously defend our original filing position.

We are not required to provisionally pay any cash amounts to the CRA as a result of the reassessment in respect of Fiscal 2017 and Fiscal 2018 due to the utilization of available tax attributes;

We strongly disagree with the CRA’s position for Fiscal 2017 through Fiscal 2019 and intend to vigorously defend our original filing position.

We are not required to provisionally pay any cash amounts to the CRA as a result of the reassessment in respect of Fiscal 2017 through Fiscal 2019 due to the utilization of available tax attributes;

however, to the extent the CRA reassesses subsequent fiscal years on a similar basis, we expect to make certain minimum payments required under Canadian legislation, which may need to be provisionally made starting in Fiscal 2024 while the matter is in dispute.

2 unchanged sentences

Accordingly, as of the date of this Quarterly Report on Form 10-Q, we have not recorded any accruals in respect of these reassessments or proposed reassessment in our Condensed Consolidated Financial Statements.

The CRA is currently in preliminary stages of auditing Fiscal 2019.

The CRA is also in preliminary stages of auditing Fiscal 2020.

Carbonite Class Action Complaint

On August 1, 2019, prior to our acquisition of Carbonite, a purported stockholder of Carbonite filed a putative class action complaint against Carbonite, its former Chief Executive Officer, Mohamad S.

On August 1, 2019, prior to our acquisition of Carbonite Inc.

(Carbonite), a purported stockholder of Carbonite filed a putative class action complaint against Carbonite, its former Chief Executive Officer, Mohamad S.

Ali, and its former Chief Financial Officer, Anthony Folger, in the United States District Court for the District of Massachusetts captioned Ruben A.

15 unchanged sentences

On December 21, 2021, the United States Court of Appeals for the First Circuit issued a decision reversing and remanding the Securities Actions to the district court for further proceedings.

The parties are engaged in discovery.

The parties have completed discovery.

On July 14, 2023, the district court certified the lead plaintiff’s proposed class.

The defendants have filed a motion for class decertification and a motion for summary judgment, both of which are pending.

The defendants remain confident in their position, believe the Securities Actions are without merit, and will continue to vigorously defend the matter.

19 unchanged sentences

Court of Appeals for the Federal Circuit.

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

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

We have not accrued a loss contingency related to this matter because litigation related to a non-practicing entity is inherently unpredictable.

Although a loss is reasonably possible, an unfavorable outcome is not considered by management to be probable at this time and we remain unable to reasonably estimate a possible loss or range of loss associated with this litigation.

Table of Content s

Other Matters

Please see Part I, Item 1A, “Risk Factors” in our Annual Report on Form 10-K for Fiscal 2022, Part II, Item 1A “Risk Factors” included elsewhere within this Quarterly Report on Form 10-Q as well as Micro Focus’ Audited Consolidated Financial Statements for the years ended October 31, 2022 and 2021, included in our Form 8-K/A filed on April 10, 2023, related to certain historical matters arising prior to the Micro Focus Acquisition.

Based upon the order in the Delaware case, the U.S.

District Court for the District of Massachusetts granted summary judgment in Carbonite’s favor.

Realtime Data appealed the order, but stipulated to stay the appeal pending the outcome of their appeal in the District of Delaware case and agreed that if the U.S.

Court of Appeals for the Federal Circuit affirmed the District of Delaware’s judgment of invalidity, Realtime Data would subsequently dismiss their appeal against Carbonite.

On August 2, 2023, the U.S.

Court of Appeals for the Federal Circuit affirmed the invalidity of the patents asserted against Carbonite.

Pursuant to the parties’ stipulation, Realtime Data dismissed its appeal against Carbonite to fully resolve this matter.

Off-Balance Sheet Arrangements

1 unchanged sentence

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