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Revenues (Tables)

6 Months Ended

Dec. 31, 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 December 31, 2018				Six Months Ended December 31, 2018
Total Revenues by Geography:
Americas (1)	$	420,696			$	810,036
EMEA (2)	243,937				458,412
Asia Pacific (3)	70,598				133,940
Total Revenues	$	735,231			$	1,402,388
Total Revenues by Type of Performance Obligation:
Recurring revenue (4)
Cloud services and subscriptions revenue	$	219,233			$	427,316
Customer support revenue	310,354				621,905
Total recurring revenues	$	529,587			$	1,049,221
License revenue (perpetual, term and subscriptions)	132,756				209,643
Professional service and other revenue	72,888				143,524
Total revenues	$	735,231			$	1,402,388
Total Revenues by Timing of Revenue Recognition
Point in time	132,756				209,643
Over time (including professional service and other revenue)	602,475				1,192,745
Total revenues	$	735,231			$	1,402,388

⁽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.

⁽⁴⁾ Recurring revenue is defined as the sum of cloud services and subscriptions revenue and customer support revenue.

Contract Balances

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

	As of December 31, 2018				As of July 1, 2018
Short-term contract assets	$	13,607			$	5,474
Long-term contract assets	$	11,804			$	12,382
Short-term deferred revenue	$	572,915			$	618,197
Long-term deferred revenue	$	45,538			$	64,743

Incremental Costs of Obtaining a Contract with a Customer

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	9,532
Amortization of capitalized costs	(4,390		)
Adjustments on account of foreign exchange	(311		)
Capitalized costs to obtain a contract as of December 31, 2018	$	39,982

Schedule of New Accounting Pronouncements, Impact on Financial Statements

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:

	Six Months Ended December 31, 2017
	As Previously Reported				Adjustments				As Adjusted
Net cash provided by operating activities	$	233,749			$	(317	)		$	233,432
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	32,657				(317		)		32,340
Cash, cash equivalents and restricted cash at end of period	$	476,014			$	2,536			$	478,550

As a

result, certain prior period comparative figures in the Condensed Consolidated Statements of Income for the three and six months ended December 31, 2017 have been adjusted to conform to current period presentation as follows:

	Three Months Ended December 31, 2017												Six Months Ended December 31, 2017
	As Previously Reported				Adjustments				As Adjusted				As Previously Reported				Adjustments				As Adjusted
Cost of revenues - Cloud services	$	90,418			$	67			$	90,485			$	174,748			$	(129	)		$	174,619
Cost of revenues - Customer Support	33,194				(77		)		33,117				65,985				(98		)		65,887
Cost of revenues - Professional service and other	64,985				(99		)		64,886				124,444				(130		)		124,314
Total cost of revenues	240,312				(109		)		240,203				463,812				(357		)		463,455
Gross profit	494,093				109				494,202				911,280				357				911,637
Research and Development	80,304				(181		)		80,123				157,933				(236		)		157,697
Sales and Marketing	129,142				9				129,151				251,964				(198		)		251,766
General and administrative	48,985				(31		)		48,954				97,900				(44		)		97,856
Total operating expense	327,485				(203		)		327,282				657,549				(478		)		657,071
Income from operations	166,608				312				166,920				253,731				835				254,566
Interest and other related expense, net	(34,092		)		(312		)		(34,404		)		(67,380		)		(835		)		(68,215		)

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 December 31, 2018
	As reported under Topic 606				Adjustments				Proforma as if Topic 605 was in effect
ASSETS
Contract assets	$	13,607			$	(13,607	)		$	—
Prepaid expenses and other current assets	82,188				7,378				89,566
Total current assets	1,212,541				(6,229		)		1,206,312
Long-term contract assets	11,804				(11,804		)		—
Deferred tax assets	1,085,272				11,683				1,096,955
Other assets	124,414				(4,788		)		119,626
Total assets	$	7,729,403			$	(11,138	)		$	7,718,265
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Accounts payable and accrued liabilities	$	282,870			$	(21	)		$	282,849
Deferred revenues	572,915				16,619				589,534
Total current liabilities	911,465				16,598				928,063
Long-term liabilities:
Deferred revenues	45,538				26,868				72,406
Deferred tax liabilities	87,753				(5,746		)		82,007
Total long-term liabilities	3,031,926				21,122				3,053,048
Shareholders’ equity:
Accumulated other comprehensive income	25,971				827				26,798
Retained earnings	2,056,831				(49,685		)		2,007,146
Total OpenText shareholders' equity	3,784,860				(48,858		)		3,736,002
Non-controlling interests	1,152				—				1,152
Total shareholders’ equity	3,786,012				(48,858		)		3,737,154
Total liabilities and shareholders’ equity	$	7,729,403			$	(11,138	)		$	7,718,265

Condensed Consolidated Statements of Income

	Three Months Ended December 31, 2018												Six Months Ended December 31, 2018
	As reported under Topic 606				Adjustments				Proforma as if Topic 605 was in effect				As reported under Topic 606				Adjustments				Proforma as if Topic 605 was in effect
Revenues:
License	$	132,756			$	(15,610	)		$	117,146			$	209,643			$	(18,211	)		$	191,432
Cloud services and subscriptions	219,233				(1,603		)		217,630				427,316				(2,138		)		425,178
Customer support	310,354				(157		)		310,197				621,905				(740		)		621,165
Professional service and other	72,888				9				72,897				143,524				(45		)		143,479
Total revenues	735,231				(17,361		)		717,870				1,402,388				(21,134		)		1,381,254
Cost of revenues:
Cloud services and subscriptions	88,698				(57		)		88,641				176,401				410				176,811
Total cost of revenues	228,022				(57		)		227,965				454,335				410				454,745
Gross profit	507,209				(17,304		)		489,905				948,053				(21,544		)		926,509
Operating expenses:
Sales and marketing	126,193				3,618				129,811				246,375				4,725				251,100
Total operating expenses	333,277				3,618				336,895				674,894				4,725				679,619
Income from operations	173,932				(20,922		)		153,010				273,159				(26,269		)		246,890
Interest and other related expense, net	(33,613		)		(211		)		(33,824		)		(68,144		)		(370		)		(68,514		)
Income before income taxes	140,697				(21,133		)		119,564				206,915				(26,639		)		180,276
Provision for (recovery of) income taxes	36,236				(5,487		)		30,749				66,086				(6,740		)		59,346
Net income for the period	$	104,461			$	(15,646	)		$	88,815			$	140,829			$	(19,899	)		$	120,930

Condensed Consolidated Statement of Cash Flows

	Six Months Ended December 31, 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	$	140,829			$	(19,899	)		$	120,930
Adjustments to reconcile net income to net cash provided by operating activities:
Deferred taxes	8,909				(6,784		)		2,125
Changes in operating assets and liabilities:
Accounts receivable	33,548				(5,742		)		27,806
Contract assets	(13,400		)		13,400				—
Prepaid expenses and other current assets	12,532				355				12,887
Income taxes and deferred charges and credits	17,324				62				17,386
Accounts payable and accrued liabilities	(29,748		)		110				(29,638		)
Deferred revenue	(69,151		)		13,433				(55,718		)
Other assets	4,919				5,065				9,984
Net cash provided by operating activities	$	360,504			$	—			$	360,504

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