Open Text (NASDAQ:OTEX) Releases Earnings Results, Beats Expectations By $0.11 EPS

Open Text (NASDAQ:OTEX) (TSE:OTC) announced its earnings results on Thursday. The software maker reported $1.05 earnings per share (EPS) for the quarter, topping analysts’ consensus estimates of $0.94 by $0.11, Briefing.com reports. Open Text had a return on equity of 25.76% and a net margin of 12.26%. The business had revenue of $1.24 billion for the quarter, compared to analyst estimates of $1.22 billion. During the same period in the previous year, the company earned $1.05 earnings per share. The company’s revenue for the quarter was down 4.0% compared to the same quarter last year.

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

• OpenText reported Q1 revenue of $1.237 billion, within its expected range, and adjusted EBITDA margin of 35.8%, above its 32%–33% outlook range. Core revenue grew 2.7% year over year in constant currency, while Core Cloud grew 11.7%.
• Content Cloud grew 20.7% year over year, its fifth consecutive quarter of roughly 20% growth; management also cited increasing adoption of its Aviator AI agents. The company said it closed 35 cloud deals over $1 million, up 6% year over year.
• ITOM and cybersecurity declined by double digits, which CEO Ayman Antoun attributed to execution and sales coverage gaps. He said the company is adding specialized sales capacity and expects improvement each quarter, with both categories targeted to grow for the full fiscal year.
• OpenText expects growth investments to be weighted toward the second half of the fiscal year, which it said will make second-half adjusted EBITDA margin lower than first-half margin. Management maintained its full-year outlook and expects Core growth of 2%–3% in constant currency.
• The company reduced gross debt by $949 million from a year earlier and reported net debt to adjusted EBITDA leverage of 2.55, which management said strengthens financial flexibility. It also raised $1 billion to refinance its 2027 bonds and retired $300 million of 2028 bonds.

Open Text Stock Performance

Shares of OTEX stock traded down $1.27 during trading hours on Friday, hitting $24.85. 2,120,515 shares of the company were exchanged, compared to its average volume of 1,399,378. The company has a current ratio of 0.81, a quick ratio of 0.81 and a debt-to-equity ratio of 1.43. The firm has a fifty day simple moving average of $24.44 and a 200 day simple moving average of $23.84. Open Text has a 52-week low of $19.77 and a 52-week high of $35.65. The stock has a market capitalization of $6.00 billion, a price-to-earnings ratio of 9.41 and a beta of 0.98.

Open Text Announces Dividend

The firm also recently disclosed a quarterly dividend, which will be paid on Friday, December 18th. Shareholders of record on Friday, December 4th will be given a $0.28 dividend. The ex-dividend date of this dividend is Friday, December 4th. This represents a $1.12 annualized dividend and a yield of 4.5%. Open Text’s payout ratio is currently 43.41%.

Open Text News Roundup

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

• Positive Sentiment: Open Text earned $1.05 per share, ahead of the $0.94 consensus, and revenue of $1.24 billion topped estimates of $1.22 billion. Core revenue grew 2% year over year, core cloud revenue rose 11%, and adjusted EBITDA margin was 35.8%. OpenText first-quarter fiscal 2027 results
• Positive Sentiment: Barclays raised its price target from $27 to $29, implying 16.6% upside from the cited share price. Its rating remains “equal weight,” however, signaling a broadly market-level view.
• Positive Sentiment: The company declared a quarterly dividend of $0.28 per share, equivalent to $1.12 annually and a stated yield of about 4.3%.
• Neutral Sentiment: Second-quarter revenue guidance of $1.3 billion is in line with analyst consensus.
• Negative Sentiment: Fiscal 2027 revenue guidance of $5.1 billion–$5.2 billion has a midpoint below the $5.2 billion consensus, a modest forecast shortfall that could temper the earnings beat.
• Negative Sentiment: Despite beating estimates, quarterly revenue declined 4% year over year, and EPS was unchanged from the same quarter last year. That weak growth comparison may limit the positive impact of the results.

Wall Street Analysts Forecast Growth

Several research firms have recently commented on OTEX. Raymond James Financial downgraded Open Text from an “outperform” rating to a “market perform” rating and cut their price objective for the company from $35.00 to $29.50 in a report on Thursday, August 6th. Weiss Ratings raised shares of Open Text from a “hold (c-)” rating to a “hold (c)” rating in a research report on Wednesday, October 14th. Scotiabank dropped 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 report on Friday, August 7th. Scotia cut their price objective on shares of Open Text from $40.00 to $33.00 and set a “sector outperform” rating for the company in a research report on Friday, August 7th. Finally, Citigroup upped their price target on shares of Open Text from $25.00 to $28.00 and gave the company a “neutral” rating in a research note on Friday, August 7th. Three research analysts have rated the stock with a Buy rating and nine have issued a Hold rating to the company’s stock. According to MarketBeat.com, the company has an average rating of “Hold” and an average target price of $30.72.

About Open Text

OpenText Corporation is a Canadian enterprise software company that develops solutions for managing, securing and exchanging business information. Its offerings help organizations organize content, automate business processes, connect with customers and partners, and manage information across cloud, on-premises and hybrid environments.

The company’s portfolio includes enterprise content management, business network and integration services, customer experience tools, cybersecurity and information governance solutions, and software for managing enterprise applications and information technology operations.