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Revenues (Tables)

3 Months Ended

Sep. 30, 2018

Revenue from Contract with Customer [Abstract]

Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction

A summary of our typical performance obligations and when the obligations are satisfied are as follows:

Performance Obligation	When Performance Obligation is Typically Satisfied
License revenue:
Software licenses (Perpetual,Term, Subscription)	When software activation keys have been made available for download (point in time)
Cloud services and subscriptions revenue:
Outsourced Professional Services	As the services are provided (over time)
Managed Services / Ongoing Hosting	Over the contract term, beginning on the date that service is made available (i.e. "Go live") to the customer (over time)
Customer support revenue:
When and if available updates and upgrades and technical support	Ratable over the course of the service term (over time)
Professional service and other revenue:
Professional services	As the services are provided (over time)

Disaggregation of Revenue

The following table disaggregates our revenue by significant geographic area, based on the location of our end customer, and by type of performance obligation and timing of revenue recognition for the periods indicated:

	Three Months Ended September 30, 2018
Total Revenues by Geography:
Americas (1)	$	389,340
EMEA (2)	214,475
Asia Pacific (3)	63,342
Total Revenues	$	667,157
Total Revenues by Type of Performance Obligation:
Recurring revenue
Cloud services and subscriptions revenue	$	208,083
Customer support revenue	311,551
Total recurring revenues	$	519,634
License revenue (perpetual, term and subscriptions)	76,887
Professional service and other revenue	70,636
Total revenues	$	667,157
Total Revenues by Timing of Revenue Recognition
Point in time	76,887
Over time (including professional service and other revenue)	590,270
Total revenues	$	667,157

⁽¹⁾ Americas consists of countries in North, Central and South America.

⁽²⁾ EMEA primarily consists of countries in Europe, the Middle East and Africa.

⁽³⁾ Asia Pacific primarily consists of the countries Japan, Australia, China, Korea, Philippines, Singapore and New Zealand.

Contract with Customer, Asset and Liability

The balance for our contract assets and contract liabilities (i.e. deferred revenues) for the periods indicated below were as follows:

	As of September 30, 2018				As of July 1, 2018
Short-term contract assets	$	8,767			$	5,474
Long-term contract assets	$	12,041			$	12,382
Short-term deferred revenue	$	582,139			$	618,197
Long-term deferred revenue	$	43,585			$	64,743

Capitalized Contract Cost

The following table summarizes the changes since July 1, 2018:

Capitalized costs to obtain a contract as of July 1, 2018	$	35,151
New capitalized costs incurred	3,179
Amortization of capitalized costs	(2,271		)
Capitalized costs to obtain a contract as of September 30, 2018	$	36,059

Schedule of New Accounting Pronouncements and Changes in Accounting Principles

As a result, certain prior period comparative figures in the Condensed Consolidated Statements of Income for the three months ended September 30, 2017 have been adjusted to conform to current period presentation as follows:

	Three Months Ended September 30, 2017
	As Previously Reported				Adjustments				As Adjusted
Cost of revenues - Cloud services	$	84,330			$	(196	)		$	84,134
Cost of revenues - Customer Support	32,791				(21		)		32,770
Cost of revenues - Professional service and other	59,459				(31		)		59,428
Total cost of revenues	223,500				(248		)		223,252
Gross profit	417,187				248				417,435
Research and Development	77,629				(55		)		77,574
Sales and Marketing	122,822				(207		)		122,615
General and administrative	48,915				(13		)		48,902
Total operating expense	330,064				(275		)		329,789
Income from operations	87,123				523				87,646
Interest and other related expense, net	(33,288		)		(523		)		(33,811		)

As a result, certain prior period comparative figures in the Condensed Consolidated Statements of Cash Flows have been adjusted to conform to current period presentation as follows:

	Three Months Ended September 30, 2017
	As Previously Reported				Adjustments				As Adjusted
Net cash provided by operating activities	$	67,102			$	144			$	67,246
Cash, cash equivalents and restricted cash at beginning of period	443,357				2,853				446,210
Increase (decrease) in cash, cash equivalents and restricted cash during the period	(66,967		)		144				(66,823		)
Cash, cash equivalents and restricted cash at end of period	$	376,390			$	2,997			$	379,387

The following tables summarize the impacts of adopting Topic 606 on our condensed consolidated balance sheets, statements of income and cash flows, all as compared to proforma balances illustrating if ASC Topic 605 "Revenue Recognition" (Topic 605) had still been in effect. Financial statement line items that were not impacted by the adoption of Topic 606 have been excluded from the tables below.

Condensed Consolidated Balance Sheet

	As of September 30, 2018
	As reported under Topic 606				Adjustments				Proforma as if Topic 605 was in effect
ASSETS
Contract assets	$	8,767			$	(8,767	)		$	—
Prepaid expenses and other current assets	80,624				6,481				87,105
Total current assets	1,325,106				(2,286		)		1,322,820
Long-term contract assets	12,041				(12,041		)		—
Deferred tax assets	1,106,377				8,004				1,114,381
Other assets	116,536				(179		)		116,357
Total assets	$	7,619,048			$	(6,502	)		$	7,612,546
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Accounts payable and accrued liabilities	$	252,079			$	(2	)		$	252,077
Deferred revenues	582,139				11,011				593,150
Total current liabilities	875,273				11,009				886,282
Long-term liabilities:
Deferred revenues	43,585				20,000				63,585
Deferred tax liabilities	74,328				(3,934		)		70,394
Total long-term liabilities	3,016,745				16,066				3,032,811
Shareholders’ equity:
Accumulated other comprehensive income	32,256				462				32,718
Retained earnings	1,993,099				(34,039		)		1,959,060
Total OpenText shareholders' equity	3,725,907				(33,577		)		3,692,330
Non-controlling interests	1,123				—				1,123
Total shareholders’ equity	3,727,030				(33,577		)		3,693,453
Total liabilities and shareholders’ equity	$	7,619,048			$	(6,502	)		$	7,612,546

Condensed Consolidated Statements of Income

	Three Months Ended September 30, 2018
	As reported under Topic 606				Adjustments				Proforma as if Topic 605 was in effect
Revenues:
License	$	76,887			$	(2,601	)		$	74,286
Cloud services and subscriptions	208,083				(535		)		207,548
Customer support	311,551				(583		)		310,968
Professional service and other	70,636				(54		)		70,582
Total revenues	667,157				(3,773		)		663,384
Cost of revenues:
Cloud services and subscriptions	87,703				467				88,170
Total cost of revenues	226,313				467				226,780
Gross profit	440,844				(4,240		)		436,604
Operating expenses:
Sales and marketing	120,182				1,107				121,289
Total operating expenses	341,617				1,107				342,724
Income from operations	99,227				(5,347		)		93,880
Interest and other related expense, net	(34,531		)		(159		)		(34,690		)
Income before income taxes	66,218				(5,506		)		60,712
Provision for (recovery of) income taxes	29,850				(1,253		)		28,597
Net income for the period	$	36,368			$	(4,253	)		$	32,115

Condensed Consolidated Statement of Cash Flows

	Three Months Ended September 30, 2018
	As reported under Topic 606				Adjustments				Proforma as if Topic 605 was in effect
Cash flows from operating activities:
Net income for the period	$	36,368			$	(4,253	)		$	32,115
Adjustments to reconcile net income to net cash provided by operating activities:
Deferred taxes	7,769				(1,293		)		6,476
Changes in operating assets and liabilities:
Accounts receivable	73,875				(2,281		)		71,594
Contract assets	(5,346		)		5,346				—
Prepaid expenses and other current assets	9,732				1,213				10,945
Income taxes and deferred charges and credits	12,561				36				12,597
Accounts payable and accrued liabilities	(40,001		)		75				(39,926		)
Deferred revenue	(57,403		)		703				(56,700		)
Other assets	2,444				454				2,898
Net cash provided by operating activities	$	171,401			$	—			$	171,401

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