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

Open Text (NASDAQ:OTEX) (TSE:OTC) released its quarterly earnings results on Thursday. The software maker reported $1.23 EPS for the quarter, beating the consensus estimate of $1.02 by $0.21, Briefing.com reports. Open Text had a net margin of 12.26% and a return on equity of 25.80%. The business had revenue of $1.33 billion for the quarter, compared to the consensus estimate of $1.29 billion. During the same period in the prior year, the company posted $0.97 earnings per share. Open Text’s 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 Price Performance

Shares of OTEX traded down $0.72 during midday trading on Friday, hitting $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 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 has a one year low of $19.77 and a one year high of $39.90. The stock has a market capitalization of $6.04 billion, a price-to-earnings ratio of 9.67 and a beta of 1.03. The company’s fifty day simple moving average is $23.05 and its two-hundred day simple moving average is $23.61.

Open Text Increases Dividend

The firm also recently declared a quarterly dividend, which will be paid on Friday, September 18th. Stockholders of record on Friday, September 4th will be paid a $0.28 dividend. This represents a $1.12 annualized dividend and a dividend yield of 4.5%. The ex-dividend date is Friday, September 4th. This is a positive change from Open Text’s previous quarterly dividend of $0.28. Open Text’s dividend payout ratio is 53.66%.

Analyst Ratings Changes

OTEX has been the subject of a number of analyst reports. Scotia dropped their price target 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. Barclays lifted their price objective on Open Text from $25.00 to $27.00 and gave the company an “equal weight” rating in a report on Monday, May 11th. Royal Bank Of Canada cut their target price 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. National Bank Financial reduced their target price on Open Text from $45.00 to $33.00 and set an “outperform” rating on the stock in a report on Wednesday, May 27th. Finally, Weiss Ratings restated a “hold (c-)” rating on shares of Open Text in a research report on Wednesday, June 24th. Three investment analysts have rated the stock with a Buy rating and eleven have assigned a Hold rating to the company. According to MarketBeat.com, Open Text presently has an average rating of “Hold” and a consensus target price of $32.46.

Institutional Trading of Open Text

Large investors have recently bought and sold shares of the business. FIL Ltd lifted its holdings in shares of Open Text by 5.7% in the fourth quarter. FIL Ltd now owns 12,155,000 shares of the software maker’s stock worth $395,853,000 after acquiring an additional 655,000 shares during the last quarter. First Trust Advisors LP lifted its stake in Open Text by 27.3% in the 4th quarter. First Trust Advisors LP now owns 11,493,714 shares of the software maker’s stock valued at $374,394,000 after purchasing an additional 2,466,264 shares during the last quarter. The Manufacturers Life Insurance Company boosted its position in Open Text by 11.7% in the fourth quarter. The Manufacturers Life Insurance Company now owns 10,734,420 shares of the software maker’s stock valued at $349,978,000 after buying an additional 1,122,320 shares in the last quarter. Dimensional Fund Advisors LP boosted its position in Open Text by 28.8% in the fourth quarter. Dimensional Fund Advisors LP now owns 3,340,334 shares of the software maker’s stock valued at $108,833,000 after buying an additional 747,756 shares in the last quarter. Finally, Morgan Stanley grew its stake in shares of Open Text by 76.8% during the fourth quarter. Morgan Stanley now owns 2,884,381 shares of the software maker’s stock worth $93,973,000 after buying an additional 1,253,405 shares during the last quarter. 70.37% of the stock is owned by institutional investors and hedge funds.

Open Text News Summary

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.

Open Text Company Profile

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.