Open Text : 2022 ANNUAL REPORT (opens in new window)

Annual Report 2022

Dear Shareholders,

I have never felt better about the future of OpenText, the relevancy of our technology and expertise, the intrepidness of our people and roadmap, the transformative nature of our mission to elevate all organizations of all sizes to gain the information advantage, and the value we are creating through the OpenText Business System of Total Growth, Cash Flow Expansion, and Capital Efficiency.

Fiscal 2022 was a year of resilience and growth. Each one of us has been affected by the pandemic, and we've emerged more focused, stronger, and more connected-more connected as humans, more connected as machines. As The Information Company, we power and protect information and our purpose is to elevate every person and every organization to gain the information advantage in the OpenText Cloud.

Fiscal 2022 was also a year of significant strategic progress for OpenText. We delivered another banner year based on the bedrock of our 4Cs: Customer Success, Cloud, Cash Flow and Capital Efficiency Strength.

FISCAL 2022 HIGHLIGHTS

• Delivered record results
• Acquired Zix for $894.5 million
• Strengthened our relationships with Google and Microsoft
• Named SAP Pinnacle Partner of the Year, our 17th Pinnacle Award in 14 years
• Extended our debt maturity profile and raised $650 million in new debt. Approximately 75% of our debt is now fixed at a 4% weighted average interest rate and a weighted average maturity of more than 7 years

RECORD FINANCIAL RESULTS

• Revenue was a record $3.5 billion, up 3.2% as reported and 4.3% in constant currency
• Cloud revenue was a record of $1.5 billion, an increase of 9.1% as reported and 9.8% in constant currency, this is the 6th consecutive quarter of y/y cloud organic growth in constant currency
• Enterprise cloud bookings(1) were $466 million
• ARR was a record $2.9 billion, up 4.5% as reported and 5.5% in constant currency or 82% of total revenue, it was the sixth consecutive quarter of positive organic ARR growth in constant currency

• Cloud and off-cloud renewal rates of 94% and 94% respectively
• GAAP-basednet income of $397 million, up 27.8% y/y, GAAP-based net income margin of 11.4%
• A-EBITDA(2) of $1.3 billion for an upper quartile margin(2) of 36.2%
• Operating cash flows of $982 million, up 12.1%
• Free cash flows(2) of $889 million or 25% of total revenue, up 9.4% y/y; Return on Invested Capital of 18.1%(2)
• We returned over $415 million to shareholders via dividends and buybacks including the purchase and cancellation of more than 3.8 million shares during the year
• We ended the year with $1.7 billion of cash, $2.4 billion of available liquidity and a net leverage ratio of 2x

INFORMATION MANAGEMENT: THE CLOUD OPPORTUNITY

The need for Information Management is strategic and essential and has never been more urgent. This is a $92 billion market that is growing and accelerating into the cloud which affords us the opportunity to grow even faster. There is an immediate need for OpenText to help our customers navigate through these turbulent times.

For our customers, the move to digital technology is paramount, and our demand drivers are very clear:

• Converting our off-cloud install base to the OpenText Cloud
• The continued value realization of digitizing all transactions and repeatable work
• The overhaul of supply chains for regionalization, insight, and mitigating ongoing disruptions
• The exploding growth in security, data trust and compliance regulations
• The need for information and process insights to remove cost and do more with less
• The transition to the green agenda: new ESG audits, new trading partners, new manufacturing, de- carbonization, and 2030 pledges to be Climate Innovators

It is time to standardize on the companies built for the long-term, like OpenText. We remain focused on the acceleration of our large off-cloud customer base moving to the OpenText Cloud. Scaling of our private cloud business while expanding options and opportunities for customers to deploy in public clouds.

HELPING CUSTOMERS WIN

Like other premier technology companies, we are managing through the macro issues: the pandemic continues, high inflation, the strength of the USD, Russia's war on Ukraine, the energy crisis in Europe, and recessionary indicators. This is a very real context, a context that requires every company to think uniquely about their business, and to act pre-emptively and boldly.

OpenText has a long history of standing tall with our customers regardless of economic, geopolitical, health or other crises and we see a real opportunity to help organizations of all sizes to use digital technology to overcome today's challenges, emerge stronger, and outcompete their rivals. We are very proud at OpenText to have helped our customers be agile, responsive, and resilient during these times of uncertainty. OpenText is fantastically positioned to help organizations deliver on their digital imperatives - to innovate, to grow,

to connect people / organizations / systems, to be well run, and to do more with less.

With disruption accelerating, now more than ever, the world's largest companies are relying on OpenText to solve their largest challenges. From climate innovation, security, and compliance to the green bottom line, we are here to help equip organizations of all sizes gain the Information Advantage. I want to highlight some of our customers' successes this year:

Bayer, a life science company with core competencies in the areas of health care and agriculture, is contributing to finding solutions to some of the major challenges of our time. The company has selected OpenText to consolidate integration activities onto one single platform. This will enable Bayer to release several global integration providers and, therefore, harmonize and simplify their system landscape and increase agility within their IT environment.

The Bank of New York Mellon's Pershing LLC provides clearing, brokerage custody and other related services. Pershing selected OpenText Exstream Cloud Native to modernize their Customer Communications Management (CCM) process. The solution will enhance user functionality, improve creation & delivery of mission-critical client communications, and drive cost savings by migrating applications off the mainframe.

BDO, the 5th largest accounting firm in the world by revenue, provides a range of services within the areas of audit, accounting, consultancy, and taxation and duties. BDO wanted to improve their information governance by centralizing their various content management systems into one single platform on Extended ECM for Microsoft Office 365 to share, collaborate, approve, and process documents via workflows.

Novartis Pharmaceuticals brings innovative medicines to market to enhance health outcomes for patients and offer solutions to the healthcare providers who treat them. The company selected OpenText Intelligent Capture to capture, digitize and analyze content using AI, content analytics and auto-classification in their business processes.

Hydro-Québec has been generating, transmitting and distributing electricity for over 75 years. They do their utmost to provide a reliable supply of electricity services at competitive prices while making use of clean, renewable energy sources. Over the past ten years, they've stored an impressive number of HR-related documents for easy retrieval and review using Document Access for SAP. Moving to Extended ECM for SuccessFactors will keep this functionality and enable more self-service transactions, allowing HR to focus on people instead of technology.

PRODUCT UPDATE

Cloud has grown from $0 in Fiscal 2012 to $1.5 billion in revenue in Fiscal 2022 and now is our biggest business. OpenText's five Cloud offerings empower customers to be more intelligent, connected, and responsible.

Our products are consistently recognized by industry analysts for our category leadership. OpenText Cloud offerings can be deployed in the infrastructure framework of the customer's choice including off-cloud, private cloud, or public cloud including our partners' clouds. OpenText Cloud Editions allows customers to leverage our full cloud suites, with less friction and less professional services, and seamlessly going from one module to all modules.

Cloud Editions is the largest, most comprehensive suite in our history - including more features and deeper integrations with leading business applications. The innovations in Cloud Editions provide customers with a complete set of tools to harness the power of information and manage it collectively, securely, and intelligently.

• Content Cloud: We released deeper integrations with Salesforce and Microsoft Teams for our
  Core Content offering. The deeper integrations enable us to deliver more content capabilities to two fast-growing software platforms.
• Business Network Cloud: We released our BN Cloud Foundations offering - a SaaS-based,self-service product offering that meaningfully expands the reach of our trading network. Many of the same market-leading services used and trusted by 40 of the 50 largest supply chains in the world are now available to businesses of all sizes. BN Foundations is off to a fast start with several major customer wins already secured.
• Experience Cloud: We released integration between the Google Marketing Platform and OpenText™ Experience CDP (Customer Data Platform), OpenText™ Exstream, and OpenText™ TeamSite.
• Security Cloud: We announced the release of OpenText's Digital Evidence Center, a cloud-based solution that helps law enforcement agencies close cases faster by centralizing the collection, analysis and storage of rich media and digital evidence.
• Developer Cloud: We expanded access to our API Services beyond North America so developers can commercialize their applications and extend OpenText Core Content subscriptions within Europe and the EU Data Protection Zone.