Open Text (NASDAQ:OTEX) Releases Earnings Results, Beats Estimates By $0.21 EPS

Open Text (NASDAQ:OTEX) (TSE:OTC) issued its quarterly earnings data on Thursday. The software maker reported $1.23 earnings per share (EPS) for the quarter, topping the consensus estimate of $1.02 by $0.21, Briefing.com reports. Open Text had a return on equity of 25.80% and a net margin of 12.26%.The firm had revenue of $1.33 billion during the quarter, compared to the consensus estimate of $1.29 billion. During the same period in the previous year, the firm posted $0.97 EPS. The company’s quarterly revenue was up 2.9% compared to the same quarter last year.

Here are the key takeaways from Open Text’s conference call:

• Core and cloud growth remained solid: Q4 core revenue rose 3.1% in constant currency, while core cloud revenue increased 8.9%; enterprise cloud bookings grew 24.1% year over year and 64 cloud deals exceeded $1 million.
• Management expects each of its four core businesses to grow in fiscal 2027, with core revenue projected to rise 2%–3% and core cloud revenue 8%–10% in constant currency. The company highlighted Aviator AI adoption, noting that deals incorporating Aviator are more than four times larger.
• Fiscal 2027 will be a “foundation year” requiring $100 million–$200 million of investments, primarily in sales capacity, partner enablement, R&D, cloud, and AI; adjusted EBITDA margin is therefore expected to decline to 32%–33% from 36.3% in fiscal 2026, while free cash flow is guided to $625 million–$725 million.
• OpenText reduced debt by $649 million in fiscal 2026, bringing net leverage down from 3.02x to 2.75x, within its historical target range. The company also renewed its share-repurchase program for up to 10% of its public float, although management said debt reduction and organic investment are the higher priorities.
• Management is conducting a broad enterprise assessment covering go-to-market execution, portfolio composition, R&D, marketing, operating structure, and talent, with a multi-year strategic plan expected in early calendar 2027; potential divestitures remain under review but will not be pursued at distressed prices.

Open Text Trading Down 2.8%

Shares of NASDAQ:OTEX traded down $0.72 during midday trading on Friday, reaching $24.94. The company’s stock had a trading volume of 3,148,540 shares, compared to its average volume of 1,655,615. The firm has a market cap of $6.04 billion, a price-to-earnings ratio of 9.67 and a beta of 1.03. The business has a 50 day moving average price of $23.05 and a 200 day moving average price of $23.61. Open Text has a 1 year low of $19.77 and a 1 year high of $39.90. The company has a quick ratio of 0.94, a current ratio of 0.94 and a debt-to-equity ratio of 1.56.

Open Text Increases Dividend

The firm also recently disclosed a quarterly dividend, which will be paid on Friday, September 18th. Stockholders of record on Friday, September 4th will be given a $0.28 dividend. This is an increase from Open Text’s previous quarterly dividend of $0.28. This represents a $1.12 dividend on an annualized basis and a dividend yield of 4.5%. The ex-dividend date of this dividend is Friday, September 4th. Open Text’s dividend payout ratio (DPR) is presently 53.66%.

Analysts Set New Price Targets

A number of research firms have recently weighed in on OTEX. Weiss Ratings reissued a “hold (c-)” rating on shares of Open Text in a report on Wednesday, June 24th. National Bank Financial decreased their price objective on Open Text from $45.00 to $33.00 and set an “outperform” rating on the stock in a research note on Wednesday, May 27th. Royal Bank Of Canada dropped their price objective on Open Text from $30.00 to $27.00 and set a “sector perform” rating for the company in a research report on Friday, May 8th. UBS Group boosted their target price on shares of Open Text from $25.00 to $27.00 and gave the company a “neutral” rating in a research note on Friday. Finally, Scotia decreased their price target on shares of Open Text from $40.00 to $33.00 and set a “sector outperform” rating on the stock in a research note on Friday. Three equities research analysts have rated the stock with a Buy rating and eleven have assigned a Hold rating to the company’s stock. Based on data from MarketBeat, Open Text presently has a consensus rating of “Hold” and a consensus target price of $32.46.

Institutional Trading of Open Text

Hedge funds have recently added to or reduced their stakes in the business. CIBC Private Wealth Group LLC acquired a new position in shares of Open Text during the 3rd quarter valued at about $33,000. WealthCollab LLC increased its position in Open Text by 39.5% during the second quarter. WealthCollab LLC now owns 1,640 shares of the software maker’s stock worth $48,000 after purchasing an additional 464 shares during the last quarter. Osaic Holdings Inc. raised its stake in Open Text by 108.8% during the second quarter. Osaic Holdings Inc. now owns 1,798 shares of the software maker’s stock worth $52,000 after purchasing an additional 937 shares during the period. EverSource Wealth Advisors LLC boosted its holdings in shares of Open Text by 39.7% in the 2nd quarter. EverSource Wealth Advisors LLC now owns 2,005 shares of the software maker’s stock valued at $59,000 after purchasing an additional 570 shares during the last quarter. Finally, Barclays PLC grew its stake in shares of Open Text by 55.5% during the 4th quarter. Barclays PLC now owns 1,854 shares of the software maker’s stock valued at $60,000 after buying an additional 662 shares during the period. 70.37% of the stock is owned by institutional investors and hedge funds.

Open Text News Roundup

Here are the key news stories impacting Open Text this week:

• Positive Sentiment: Fiscal Q4 EPS of $1.23 exceeded the $1.02 consensus estimate, while revenue of $1.33 billion topped expectations of $1.29 billion. Revenue increased 2.9% year over year, cloud revenue rose 6.0% to $503 million, and adjusted EBITDA increased 26.8%. OpenText Reports Fourth Quarter and Fiscal Year 2026 Financial Results
• Positive Sentiment: Scotia maintained a “sector outperform” rating and sees substantial potential upside, although it reduced its price target to $33 from $40. Citigroup also raised its target to $28 from $25, implying more modest upside, while retaining a “neutral” rating. Analyst Ratings
• Positive Sentiment: OpenText announced a quarterly dividend of $0.28 per share, representing an approximately 4.4% annualized yield. The dividend may support the stock’s appeal to income-focused investors.

About Open Text

Open Text Corporation is a Canadian enterprise information management (EIM) software company that develops solutions for organizations seeking to manage, protect and extract insight from their unstructured and structured data. The company’s platform encompasses document management, records management, digital asset management and archiving, enabling companies to govern information across its lifecycle.

Open Text’s product suite includes content services, business process management, customer experience management, analytics and security products.