XML 46 R35.htm IDEA: XBRL DOCUMENT v3.19.1

Revenues (Tables)

9 Months Ended

Mar. 31, 2019

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 March 31, 2019				Nine Months Ended March 31, 2019
Total Revenues by Geography:
Americas (1)	$	436,873			$	1,246,909
EMEA (2)	216,287				674,699
Asia Pacific (3)	65,986				199,926
Total Revenues	$	719,146			$	2,121,534
Total Revenues by Type of Performance Obligation:
Recurring revenue (4)
Cloud services and subscriptions revenue	$	238,607			$	665,923
Customer support revenue	310,762				932,667
Total recurring revenues	$	549,369			$	1,598,590
License revenue (perpetual, term and subscriptions)	98,721				308,364
Professional service and other revenue	71,056				214,580
Total revenues	$	719,146			$	2,121,534
Total Revenues by Timing of Revenue Recognition
Point in time	98,721				308,364
Over time (including professional service and other revenue)	620,425				1,813,170
Total revenues	$	719,146			$	2,121,534

⁽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 March 31, 2019				As of July 1, 2018
Short-term contract assets	$	19,737			$	5,474
Long-term contract assets	$	15,794			$	12,382
Short-term deferred revenue	$	664,208			$	618,197
Long-term deferred revenue	$	50,905			$	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	16,157
Amortization of capitalized costs	(6,843		)
Adjustments on account of foreign exchange	(169		)
Capitalized costs to obtain a contract as of March 31, 2019	$	44,296

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:

	Nine Months Ended March 31, 2018
	As Previously Reported				Adjustments				As Adjusted
Net cash provided by operating activities	$	504,426			$	(405	)		$	504,021
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	162,140				(405		)		161,735
Cash, cash equivalents and restricted cash at end of period	$	605,497			$	2,448			$	607,945

As a

result, certain prior period comparative figures in the Condensed Consolidated Statements of Income for the three and nine months ended March 31, 2018 have been adjusted to conform to current period presentation as follows:

	Three Months Ended March 31, 2018												Nine Months Ended March 31, 2018
	As Previously Reported				Adjustments				As Adjusted				As Previously Reported				Adjustments				As Adjusted
Cost of revenues - Cloud services	$	94,264			$	(69	)		$	94,195			$	269,012			$	(198	)		$	268,814
Cost of revenues - Customer Support	$	33,820			$	(50	)		$	33,770			$	99,805			$	(148	)		$	99,657
Cost of revenues - Professional service and other	$	64,246			$	(67	)		$	64,179			$	188,690			$	(197	)		$	188,493
Total cost of revenues	$	242,731			$	(186	)		$	242,545			$	706,543			$	(543	)		$	706,000
Gross profit	$	443,148			$	186			$	443,334			$	1,354,428			$	543			$	1,354,971
Research and Development	$	83,522			$	(126	)		$	83,396			$	241,455			$	(362	)		$	241,093
Sales and Marketing	$	129,987			$	(111	)		$	129,876			$	381,951			$	(309	)		$	381,642
General and administrative	$	54,817			$	(23	)		$	54,794			$	152,717			$	(67	)		$	152,650
Total operating expense	$	340,825			$	(260	)		$	340,565			$	998,374			$	(738	)		$	997,636
Income from operations	$	102,323			$	446			$	102,769			$	356,054			$	1,281			$	357,335
Interest and other related expense, net	$	(34,534	)		$	(446	)		$	(34,980	)		$	(101,914	)		$	(1,281	)		$	(103,195	)

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 March 31, 2019
	As reported under Topic 606				Adjustments				Proforma as if Topic 605 was in effect
ASSETS
Contract assets	$	19,737			$	(19,737	)		$	—
Prepaid expenses and other current assets	96,048				6,350				102,398
Total current assets	1,398,314				(13,387		)		1,384,927
Long-term contract assets	15,794				(15,794		)		—
Deferred tax assets	1,035,481				15,663				1,051,144
Other assets	135,159				(5,665		)		129,494
Total assets	$	7,864,637			$	(19,183	)		$	7,845,454
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Accounts payable and accrued liabilities	$	295,749			$	(34	)		$	295,715
Deferred revenues	664,208				26,355				690,563
Total current liabilities	1,015,081				26,321				1,041,402
Long-term liabilities:
Deferred revenues	50,905				28,624				79,529
Deferred tax liabilities	52,944				(7,702		)		45,242
Total long-term liabilities	3,011,184				20,922				3,032,106
Shareholders’ equity:
Accumulated other comprehensive income	25,418				186				25,604
Retained earnings	2,088,858				(66,612		)		2,022,246
Total OpenText shareholders' equity	3,837,189				(66,426		)		3,770,763
Non-controlling interests	1,183				—				1,183
Total shareholders’ equity	3,838,372				(66,426		)		3,771,946
Total liabilities and shareholders’ equity	$	7,864,637			$	(19,183	)		$	7,845,454

Condensed Consolidated Statements of Income

	Three Months Ended March 31, 2019												Nine Months Ended March 31, 2019
	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	$	98,721			$	(17,285	)		$	81,436			$	308,364			$	(35,496	)		$	272,868
Cloud services and subscriptions	238,607				(3,087		)		235,520				665,923				(5,225		)		660,698
Customer support	310,762				(415		)		310,347				932,667				(1,155		)		931,512
Professional service and other	71,056				16				71,072				214,580				(29		)		214,551
Total revenues	719,146				(20,771		)		698,375				2,121,534				(41,905		)		2,079,629
Cost of revenues:
Cloud services and subscriptions	103,873				(381		)		103,492				280,274				29				280,303
Professional service and other	56,626				4				56,630				169,452				4				169,456
Total cost of revenues	239,631				(377		)		239,254				693,966				33				693,999
Gross profit	479,515				(20,394		)		459,121				1,427,568				(41,938		)		1,385,630
Operating expenses:
Sales and marketing	132,244				2,256				134,500				378,619				6,981				385,600
Total operating expenses	343,638				2,256				345,894				1,018,532				6,981				1,025,513
Income from operations	135,877				(22,650		)		113,227				409,036				(48,919		)		360,117
Interest and other related expense, net	(35,607		)		(214		)		(35,821		)		(103,751		)		(584		)		(104,335		)
Income before income taxes	105,335				(22,864		)		82,471				312,250				(49,503		)		262,747
Provision for (recovery of) income taxes	32,542				(5,937		)		26,605				98,628				(12,677		)		85,951
Net income for the period	$	72,793			$	(16,927	)		$	55,866			$	213,622			$	(36,826	)		$	176,796

The adjustment on license revenue for the three and nine months ended March 31, 2019 of $17.3 million and $35.5 million, respectively, is primarily due to new contracts entered into during Fiscal 2019 for which a timing difference of revenue recognition exists between Topic 606 and Topic 605. See above for an explanation of how license revenues are recognized under Topic 606. The Fiscal 2019 contracts pertaining to the respective adjustments are recognized up front under Topic 606, whereas such revenues would have been recognized over time under Topic 605.

Condensed Consolidated Statement of Cash Flows

	Nine Months Ended March 31, 2019
	As reported under Topic 606				Adjustments				Proforma as if Topic 605 was in effect
Cash flows from operating activities:
Net income for the period	$	213,622			$	(36,826	)		$	176,796
Adjustments to reconcile net income to net cash provided by operating activities:
Deferred taxes	11,307				(12,720		)		(1,413		)
Changes in operating assets and liabilities:
Accounts receivable	52,777				(11,171		)		41,606
Contract assets	(28,872		)		28,872				—
Prepaid expenses and other current assets	(495		)		1,340				845
Income taxes and deferred charges and credits	21,006				16				21,022
Accounts payable and accrued liabilities	(30,644		)		(8		)		(30,652		)
Deferred revenue	24,134				24,583				48,717
Other assets	4,300				5,914				10,214
Net cash provided by operating activities	$	646,501			$	—			$	646,501

X

- Definition

Tabular disclosure of cost capitalized in obtaining or fulfilling contract with customer.

+ References

Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 340
-SubTopic 40
-Section 50
-Paragraph 3
-URI http://asc.fasb.org/extlink&oid=68051541&loc=SL49131252-203054

+ Details

Name:	us-gaap_CapitalizedContractCostTableTextBlock
Namespace Prefix:	us-gaap_
Data Type:	nonnum:textBlockItemType
Balance Type:	na
Period Type:	duration

X

- Definition

Tabular disclosure of contract balances and changes in contract balances.

+ References

Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 606
-SubTopic 10
-Section 50
-Paragraph 10
-URI http://asc.fasb.org/extlink&oid=109196051&loc=SL49130551-203045

+ Details

Name:	us-gaap_ContractWithCustomerAssetAndLiabilityTableTextBlock
Namespace Prefix:	us-gaap_
Data Type:	nonnum:textBlockItemType
Balance Type:	na
Period Type:	duration

X

- Definition

Tabular disclosure of disaggregation of revenue into categories depicting how nature, amount, timing, and uncertainty of revenue and cash flows are affected by economic factor.

+ References

Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 606
-SubTopic 10
-Section 50
-Paragraph 5
-URI http://asc.fasb.org/extlink&oid=109196051&loc=SL49130545-203045

+ Details

Name:	us-gaap_DisaggregationOfRevenueTableTextBlock
Namespace Prefix:	us-gaap_
Data Type:	nonnum:textBlockItemType
Balance Type:	na
Period Type:	duration

X

- References

No definition available.

+ Details

Name:	us-gaap_RevenueFromContractWithCustomerAbstract
Namespace Prefix:	us-gaap_
Data Type:	xbrli:stringItemType
Balance Type:	na
Period Type:	duration

X

- Definition

Tabular disclosure of expected timing for satisfying remaining performance obligation.

+ References

Reference 1: http://www.xbrl.org/2009/role/commonPracticeRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 606
-SubTopic 10
-Section 50
-Paragraph 13
-Subparagraph (b)(1)
-URI http://asc.fasb.org/extlink&oid=109196051&loc=SL49130556-203045

+ Details

Name:	us-gaap_RevenueRemainingPerformanceObligationExpectedTimingOfSatisfactionTableTextBlock
Namespace Prefix:	us-gaap_
Data Type:	nonnum:textBlockItemType
Balance Type:	na
Period Type:	duration

X

- Definition

Tabular disclosure of changes in accounting principles, including adoption of new accounting pronouncements, that describes the new methods, amount and effects on financial statement line items.

+ References

Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 250
-SubTopic 10
-Section 50
-Paragraph 1
-URI http://asc.fasb.org/extlink&oid=109234566&loc=d3e22499-107794

Reference 2: http://fasb.org/us-gaap/role/ref/legacyRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 270
-SubTopic 10
-Section 45
-Paragraph 13
-URI http://asc.fasb.org/extlink&oid=109236672&loc=d3e765-108305

Reference 3: http://fasb.org/us-gaap/role/ref/legacyRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 270
-SubTopic 10
-Section S99
-Paragraph 1
-Subparagraph (SX 210.10-01.(b)(6))
-URI http://asc.fasb.org/extlink&oid=27015980&loc=d3e46468-122699

Reference 4: http://fasb.org/us-gaap/role/ref/legacyRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 250
-SubTopic 10
-Section 50
-Paragraph 2
-URI http://asc.fasb.org/extlink&oid=109234566&loc=d3e22580-107794

Reference 5: http://fasb.org/us-gaap/role/ref/legacyRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 270
-SubTopic 10
-Section 45
-Paragraph 12
-URI http://asc.fasb.org/extlink&oid=109236672&loc=d3e725-108305

Reference 6: http://fasb.org/us-gaap/role/ref/legacyRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 250
-SubTopic 10
-Section 50
-Paragraph 3
-URI http://asc.fasb.org/extlink&oid=109234566&loc=d3e22583-107794

+ Details

Name:	us-gaap_ScheduleOfNewAccountingPronouncementsAndChangesInAccountingPrinciplesTextBlock
Namespace Prefix:	us-gaap_
Data Type:	nonnum:textBlockItemType
Balance Type:	na
Period Type:	duration