OpenText is making a move that many enterprises may be making as it permanently shutters offices to opt for a hybrid model for work.
At OpenText, the last two months have also been an experiment in remote work at scale. Over the course of one week, more than 95% of OpenText employees moved to remote work and have maintained productivity throughout.
Given this, OpenText will not reopen approximately 50% of our offices and will institute a hybrid model with those employees continuing to work from home. These are smaller offices and will be closed permanently. Our corporate offices, our centers of excellence, innovation centers and country head offices will re-open when we are able to do so.
Barrenechea is saying out loud what a lot of C-level executives are thinking. The new normal will require less commercial real estate as the capital expenses required can be deployed elsewhere. PwC's CFO surveys have found executives are increasingly eyeing remote work as a permanent fixture.
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OpenText's real estate plan is part of a larger restructuring. The company said it will spend about $80 million to $100 million on streamlining operations, cutting an undermined number of positions and consolidating functions. The restructuring moves should save $65 million to $75 million annually.
The company ended the quarter with $1.45 billion in cash but drew down on its $600 million credit revolver. OpenText also raised $1.8 billion to refinance existing debt at low interest rates. OpenText has largely grown via acquisitions and growing its cloud portfolio.
OpenText reported third quarter earnings of 10 cents a share on revenue of $814.7 million with cloud services and subscriptions representing $339.5 million of sales. Non-GAAP earnings were 61 cents a share.
In addition, OpenText outlined a partnership with Amazon Web Services.