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

Open Text (NASDAQ:OTEX) (TSE:OTC) issued its earnings results on Thursday. The software maker reported $1.23 earnings per share (EPS) for the quarter, topping analysts’ consensus estimates 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 business had revenue of $1.33 billion during the quarter, compared to analysts’ expectations of $1.29 billion. During the same quarter in the previous year, the business earned $0.97 EPS. The company’s revenue for the quarter was up 2.9% on a year-over-year basis.

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 Stock Down 2.8%

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

Open Text Increases Dividend

The business also recently declared a quarterly dividend, which will be paid on Friday, September 18th. Shareholders of record on Friday, September 4th will be issued a $0.28 dividend. The ex-dividend date is Friday, September 4th. This represents a $1.12 dividend on an annualized basis and a yield of 4.5%. This is a boost from Open Text’s previous quarterly dividend of $0.28. Open Text’s dividend payout ratio (DPR) is currently 53.66%.

Wall Street Analyst Weigh In

Several equities research analysts have issued reports on OTEX shares. Royal Bank Of Canada decreased their price objective on shares of Open Text from $30.00 to $27.00 and set a “sector perform” rating for the company in a research note on Friday, May 8th. National Bank Financial cut their target price on shares of Open Text from $45.00 to $33.00 and set an “outperform” rating on the stock in a research note on Wednesday, May 27th. Wall Street Zen lowered shares of Open Text from a “buy” rating to a “hold” rating in a report on Saturday. Barclays upped their price target on shares of Open Text from $25.00 to $27.00 and gave the stock an “equal weight” rating in a research report on Monday, May 11th. Finally, UBS Group increased their price target on Open Text from $25.00 to $27.00 and gave the company a “neutral” rating in a report on Friday. Three investment analysts have rated the stock with a Buy rating and eleven have given a Hold rating to the company. According to data from MarketBeat.com, the company currently has an average rating of “Hold” and an average price target of $32.46.

Institutional Inflows and Outflows

Several institutional investors and hedge funds have recently made changes to their positions in the company. CIBC Private Wealth Group LLC acquired a new stake in Open Text during the 3rd quarter valued at $33,000. WealthCollab LLC increased its stake in Open Text by 39.5% during the 2nd quarter. WealthCollab LLC now owns 1,640 shares of the software maker’s stock worth $48,000 after buying an additional 464 shares during the period. Osaic Holdings Inc. lifted its holdings in Open Text by 108.8% in the 2nd quarter. Osaic Holdings Inc. now owns 1,798 shares of the software maker’s stock worth $52,000 after buying an additional 937 shares in the last quarter. EverSource Wealth Advisors LLC lifted its holdings in Open Text by 39.7% in the 2nd quarter. EverSource Wealth Advisors LLC now owns 2,005 shares of the software maker’s stock worth $59,000 after buying an additional 570 shares in the last quarter. Finally, Barclays PLC boosted its position in Open Text by 55.5% in 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 last quarter. 70.37% of the stock is currently owned by hedge funds and other institutional investors.

Trending Headlines about Open Text

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.