Open Text Corporation (OTEX)
F4Q2010 Earnings Call Transcript
August 18, 2010 5:00 pm ET
Greg Secord – VP, IR
Paul McFeeters – CFO
John Shackleton – President & CEO
Scott Penner – TD Newcrest
Mike Abramsky – RBC Capital
Paul Steep – Scotia Capital
Steven Li – Raymond James
Eyal Ofir – Canaccord Genuity
Derrick Wood – Wedbush Securities
Blair Abernethy – Stifel Nicolaus
Gabriel Leung – Paradigm Capital
Sera Kim – GMP Securities
Paul Lechem – CIBC World Markets
Ralph Garcea – Northland Capital Partners
Previous Statements by OTEX
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Good afternoon, ladies and gentlemen. Thank you for standing by. Welcome to Open Text Corporation’s fourth quarter and fiscal year 2010 financial results conference call. At this time all participants are in listen-only mode. Following the presentation we will conduct a question-and-answer session with instructions provided. I would like to remind everyone that this conference is being recorded today, Wednesday August 18, 2010, at 5 pm Eastern Time.
I would now like to turn the conference over to Mr. Greg Secord, Vice President Investor Relations. Please go ahead.
Thanks, Luke. Thank you for joining us. Please note that during the course of the conference call we may make projections or other forward-looking statements relating to the future performance of Open Text or its subsidiaries. These all statements may contain forward-looking information and actual results could differ materially from a conclusion, forecast or projection in the forward-looking information.
Certain material factors or assumptions were applied in drawing a conclusion or while making a forecast or projection as reflected in the forward-looking information. Additional information about the material factors or assumptions that could cause actual results to differ materially from a conclusion, forecast or projection in the forward-looking information and the material factors or assumptions that were applied in drawing a conclusion, while making a forecast or projection as reflected in the forward-looking information are contained in Form 10-K and Form 10-Q for Open Text or of Open Text as well as in our press release that was issued earlier today.
With that, I’d just like to comment on a few housekeeping items. First of all, Open Text will be holding an informal analyst briefing at the Microsoft campus in Redmond, Washington on Monday, September 13
. This will be an excellent opportunity to understand Microsoft’s perspective how we bring value to the partnership.
As well, we will be hosting an analyst briefing at our Annual Users Conference Content World on Wednesday, November 10, 2010 in Washington D.C. Content World is being held on the week of November 7 through November 12. Please reach to Investor Relations or email me directly, if you’re interested in attending or being part of any of these events.
Now with that, I’ll turn the call over to Paul.
Thank you, Greg. Turning to the financial results, I will highlight our fourth quarter and then the fiscal year 2010. Total revenue for the quarter was $240 million, up 18% compared to $203.4 million for the same period last year. License revenue for the quarter was $58.5 million, up 9%, compared to $63 million reported for same period last year.
Maintenance revenue for the quarter was $129 million, up 24%, compared to $105 million for the same period last year. Services and other revenue in the quarter was $42 million, up 18% compared to $36 million in same period of last year.
We reported fourth quarter adjusted net income of $54.9 million, up 40% compared to the $39.2 million in the same period year ago. Fourth quarter adjusted EPS was $0.95 per share on a diluted basis, up from $0.73 per share for the same period year ago.
Gross margin for the fourth quarter before amortization of acquired technology was 75%, which remained the same as in the same quarter last year.
Pre-tax adjusted operating margin was 32.2% in the fourth quarter, compared to 26.6% in the same quarter last year. Adjusted tax rate for the quarter is 27%.
Net income for the fourth quarter in accordance of GAAP was $51.5 million or $0.89 per share on a diluted basis compared to $19.5 million or $0.36 per share on a diluted basis for the same period a year ago. There were approximately 57.9 million shares outstanding on a fully diluted basis for the quarter.
Operating cash flow in the quarter was $65.2 million compared to $38.6 million in the same period last year. Absent the impact of restructuring and direct acquisition-related costs incurred in the quarter, operating cash flow would have been approximately $74 million for the quarter.
Now turning to our fiscal 2010 results, total revenues was $912 million, up 16% from $785.7 million in fiscal 2009. License revenue was $238 million, up 4% compared to $230 million last year.
Our maintenance revenue was $507 million, up 25% compared to $405 million last year. Service and other revenue increased 11% to $167 million. For the fiscal year, license revenue was 26% of overall revenue. Product maintenance revenues accounted for 56%, and the remaining 18% came from professional and other services.
Gross margin for the fiscal year, before amortization of acquired technology was 74% which remained the same as last year. Pre-tax adjusted operating margin was 27.9% for fiscal 2010, up from 25.2% last year.
Adjusted net income for fiscal 2010 was $178 million, up 34% compared to $132.8 million for fiscal 2009. Adjusted EPS for fiscal 2010 was $3.10 per share on a diluted basis compared to $2.49 per share for fiscal 2009.