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

by · The Markets Daily

Open Text (NASDAQ:OTEX – Get Free Report) (TSE:OTC) posted its quarterly earnings data on Thursday. The software maker reported $1.23 earnings per share 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 firm had revenue of $1.33 billion during the quarter, compared to analysts’ expectations of $1.29 billion. During the same quarter last year, the firm earned $0.97 EPS. The business’s quarterly revenue 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 Performance

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 stock has a fifty day moving average of $23.05 and a 200 day moving average of $23.61. The company has a quick ratio of 0.94, a current ratio of 0.94 and a debt-to-equity ratio of 1.56. The firm has a market capitalization of $6.04 billion, a PE ratio of 9.67 and a beta of 1.03. Open Text has a twelve month low of $19.77 and a twelve month high of $39.90.

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 issued a $0.28 dividend. This is an increase from Open Text’s previous quarterly dividend of $0.28. The ex-dividend date of this dividend is Friday, September 4th. This represents a $1.12 annualized dividend and a dividend yield of 4.5%. Open Text’s payout ratio is currently 53.66%.

Key Stories Impacting 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.

Institutional Investors Weigh In On Open Text

A number of hedge funds and other institutional investors have recently made changes to their positions in the company. FIL Ltd increased its holdings in shares of Open Text by 5.7% during the 4th quarter. FIL Ltd now owns 12,155,000 shares of the software maker’s stock valued at $395,853,000 after purchasing an additional 655,000 shares in the last quarter. First Trust Advisors LP boosted its holdings in Open Text by 27.3% during the fourth quarter. First Trust Advisors LP now owns 11,493,714 shares of the software maker’s stock worth $374,394,000 after buying an additional 2,466,264 shares in the last quarter. The Manufacturers Life Insurance Company grew its position in Open Text by 11.7% during 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 during the period. Dimensional Fund Advisors LP increased its holdings 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 increased its holdings in Open Text by 76.8% in the fourth quarter. Morgan Stanley now owns 2,884,381 shares of the software maker’s stock valued at $93,973,000 after buying an additional 1,253,405 shares in the last quarter. Institutional investors and hedge funds own 70.37% of the company’s stock.

Wall Street Analyst Weigh In

A number of equities research analysts have commented on the company. Barclays increased their price target on Open Text from $25.00 to $27.00 and gave the company an “equal weight” rating in a research note on Monday, May 11th. National Bank Financial cut their price objective on shares of Open Text from $45.00 to $33.00 and set an “outperform” rating on the stock in a report on Wednesday, May 27th. Wall Street Zen lowered shares of Open Text from a “buy” rating to a “hold” rating in a research report on Saturday. Scotiabank set a $33.00 target price on shares of Open Text in a research report on Friday. Finally, UBS Group lifted their price objective on shares of Open Text from $25.00 to $27.00 and gave the stock a “neutral” rating in a research note on Friday. Three 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, the stock has a consensus rating of “Hold” and a consensus target price of $32.46.

Get Our Latest Stock Report on OTEX

About Open Text

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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.

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