One of Canada’s biggest tech companies says that making its employees work from home during the pandemic has gone so well that it’s closing half of its offices for good.
Waterloo, Ont.-based Open Text Corp. became one of the Toronto Stock Exchange’s biggest tech stocks over the past two decades by swallowing up fellow enterprise software companies that align with its own customers. The result has been a network of offices all over the world.
It’s also in the midst of a multiyear restructuring program and looking for costs to cut. With 95 per cent of its nearly 15,000 employees working remotely over the past two months, the company says it’s “maintained productivity” at usual levels. It will close nearly half of its offices, mostly smaller ones, worldwide. Its corporate and country head offices, including in Waterloo, will remain open, among other offices.
The company announced the news Thursday when it reported results for its fiscal third quarter. Its profit fell 64.3 per cent year-over-year to US$26-million, or 10 cents per diluted share, as costs rose – largely in research and development, but also from sales and marketing.
Revenue rose 13.3 per cent to US$814.7-million. The portion of recurring, subscription-based revenue rose 20.6 per cent to US$662.3-million. Chief executive officer Mark Barrenechea warned that the pandemic, which began partway through the quarter, was “impacting overall demand.”
Open Text said the shuttering would save the company between US$65-million and US$75-million a year. It made its decision as many companies face enormous rent and real-estate bills during a period of steep revenue decline and reckon with their ability to pay such costs in the future.
The company said in January that it would be restructuring its organization after its most recent acquisition, U.S. security software company Carbonite Inc. While it did not say how many employees would lose jobs, Mr. Barrenechea said at the time that some positions, such as outsourcing, would be centralized in Canada.
He said the office closings were part of a continuing restructuring plan but would only affect about 15 per cent of employees, and credited his staff for their work during the novel coronavirus pandemic. “Our work-from-home [program] has been remarkably productive,” he said.
In January, the company said the restructuring would cost between US$26-million and US$34-million. That cost has now surged to US$80-million to US$100-million, Open Text said Thursday.
The company also said that on March 19, as the pandemic forced workplace shutdowns around the world, it drew US$600-million from its line of credit to invest in money market funds.
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