Open Text (NASDAQ:OTEX) Posts Earnings Results, Beats Expectations By $0.07 EPS

Open Text (NASDAQ:OTEX) (TSE:OTC) posted its quarterly earnings results on Thursday. The software maker reported $1.01 earnings per share for the quarter, beating analysts’ consensus estimates of $0.94 by $0.07, Briefing.com reports. Open Text had a net margin of 9.91% and a return on equity of 24.76%. The company had revenue of $1.28 billion for the quarter, compared to the consensus estimate of $1.26 billion. During the same period last year, the company posted $0.82 EPS. The firm’s quarterly revenue was up 2.2% compared to the same quarter last year.

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

• Cloud and Content momentum: Company reported a record Q3 cloud revenue of $493M with Content cloud up 22% YoY, ARR of $1.06B, 41 deals >$1M (up 28%), and $651M enterprise cloud bookings YTD—driving the core business growth.
• Improving profitability and cash generation: Q3 non‑GAAP EPS of $1.01 (a Q3 record), adjusted EBITDA margin of 34.1% and YTD free cash flow of $686M (highest Q3 YTD), plus an increased FCF growth outlook to 22%–25%.
• Full‑year revenue outlook unchanged: FY26 total revenue guidance remains 1%–2% growth after ~ $30M of divestiture adjustments, while management raised cloud revenue guidance to 4%–5% and enterprise cloud bookings to 16%–20%.
• Divestiture timing and market constraints: Vertica is expected to close soon, but other non‑core asset sales are being delayed or done selectively due to geopolitical and financing headwinds, as management avoids “fire sales.”
• New CEO focus and AI roadmap: Ayman Antoun (14 days in) set four priorities—listen, learn, assess, build—emphasizing client‑first execution, core portfolio focus and using OpenText as “client zero” to scale AI and realize productivity gains.

Open Text Trading Up 4.4%

NASDAQ:OTEX traded up $1.04 during mid-day trading on Friday, hitting $24.73. 5,153,457 shares of the company’s stock were exchanged, compared to its average volume of 1,739,512. The company has a 50 day simple moving average of $23.08 and a 200-day simple moving average of $28.75. The company has a current ratio of 0.94, a quick ratio of 0.94 and a debt-to-equity ratio of 1.57. Open Text has a fifty-two week low of $20.00 and a fifty-two week high of $39.90. The firm has a market capitalization of $5.99 billion, a P/E ratio of 12.06 and a beta of 1.04.

Open Text Dividend Announcement

The firm also recently announced a quarterly dividend, which will be paid on Friday, June 19th. Investors of record on Friday, June 5th will be given a dividend of $0.275 per share. The ex-dividend date is Friday, June 5th. This represents a $1.10 annualized dividend and a yield of 4.4%. Open Text’s dividend payout ratio (DPR) is currently 64.71%.

Institutional Inflows and Outflows

Several hedge funds have recently added to or reduced their stakes in the company. Vident Advisory LLC raised its holdings in Open Text by 3.7% during the 4th quarter. Vident Advisory LLC now owns 15,715 shares of the software maker’s stock worth $512,000 after purchasing an additional 555 shares during the last quarter. State of Tennessee Department of Treasury raised its holdings in Open Text by 0.4% during the 4th quarter. State of Tennessee Department of Treasury now owns 147,862 shares of the software maker’s stock worth $4,817,000 after purchasing an additional 584 shares during the last quarter. Wellington Management Group LLP raised its holdings in Open Text by 25.9% during the 4th quarter. Wellington Management Group LLP now owns 389,247 shares of the software maker’s stock worth $12,693,000 after purchasing an additional 80,015 shares during the last quarter. Man Group plc bought a new position in Open Text during the 4th quarter worth approximately $2,943,000. Finally, Investment Management Corp of Ontario raised its holdings in Open Text by 17.0% during the 4th quarter. Investment Management Corp of Ontario now owns 156,603 shares of the software maker’s stock worth $5,102,000 after purchasing an additional 22,774 shares during the last quarter. Institutional investors own 70.37% of the company’s stock.

Wall Street Analysts Forecast Growth

A number of research firms have recently weighed in on OTEX. Canadian Imperial Bank of Commerce reduced their price target on shares of Open Text from $40.00 to $37.00 and set a “neutral” rating on the stock in a research note on Friday, January 16th. Raymond James Financial cut their target price on shares of Open Text from $42.00 to $35.00 and set an “outperform” rating on the stock in a research report on Friday. Wall Street Zen upgraded shares of Open Text from a “buy” rating to a “strong-buy” rating in a research report on Saturday. Scotiabank cut their target price on shares of Open Text from $50.00 to $40.00 and set a “sector outperform” rating on the stock in a research report on Friday. Finally, Barclays cut their target price on shares of Open Text from $30.00 to $25.00 and set an “equal weight” rating on the stock in a research report on Monday, April 20th. Four analysts have rated the stock with a Buy rating and ten have given a Hold rating to the company’s stock. According to data from MarketBeat.com, the stock presently has a consensus rating of “Hold” and an average target price of $34.50.

Key Headlines Impacting Open Text

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

• Positive Sentiment: Open Text reported fiscal Q3 results that beat expectations, with EPS of $0.95 vs. $0.94 expected and revenue of $1.28 billion vs. $1.26 billion expected. Revenue rose 2.2% year over year, which can help reassure investors about business stability. Open Text earnings report
• Positive Sentiment: The company also highlighted cloud revenue growth of 6.6% and strong profitability metrics, including a 34.1% adjusted EBITDA margin and $0.70 of diluted EPS, which support the view that core operations remain healthy. OpenText Q3 financial results
• Positive Sentiment: Open Text declared a quarterly dividend of $0.275 per share, signaling continued shareholder returns and helping attract income-oriented investors.
• Neutral Sentiment: The company updated FY2026 revenue guidance to $5.2 billion-$5.3 billion, roughly in line with consensus, suggesting management is not seeing a major change in the outlook.
• Neutral Sentiment: Open Text also announced that Ayman Antoun officially joined as CEO, which adds a leadership-change angle that investors may watch but has not yet clearly changed the fundamentals.
• Negative Sentiment: Several analysts lowered price targets on Open Text, including Raymond James to $35 from $42, Scotia to $40 from $50, and Citigroup to $25 from $26. While ratings were not cut broadly, the target reductions may pressure sentiment near term. Analyst ratings update
• Negative Sentiment: Investors may also be weighing mixed underlying cash flow trends from the quarter, including weaker operating cash flow and higher capital spending, which could limit enthusiasm despite the earnings beat.

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.