Open Text (NASDAQ:OTEX) Issues Earnings Results, Beats Estimates By $0.07 EPS

Open Text (NASDAQ:OTEX - Get Free Report) TSE: OTC announced its quarterly earnings data on Thursday. The software maker reported $1.01 earnings per share (EPS) for the quarter, beating analysts' consensus estimates of $0.94 by $0.07, Briefing.com reports. Open Text had a return on equity of 24.76% and a net margin of 9.91%.The business had revenue of $1.28 billion during the quarter, compared to analysts' expectations of $1.26 billion. During the same quarter in the previous year, the business earned $0.82 earnings per share. 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%

Shares of NASDAQ:OTEX opened at $24.73 on Friday. The company has a market cap of $5.99 billion, a P/E ratio of 12.06 and a beta of 1.04. The company has a debt-to-equity ratio of 1.57, a current ratio of 0.94 and a quick ratio of 0.94. Open Text has a 1 year low of $20.00 and a 1 year high of $39.90. The stock's fifty day moving average price is $23.08 and its 200-day moving average price is $28.75.

Open Text Announces Dividend

The firm also recently declared a quarterly dividend, which will be paid on Friday, June 19th. Stockholders of record on Friday, June 5th will be paid a $0.275 dividend. The ex-dividend date is Friday, June 5th. This represents a $1.10 annualized dividend and a dividend yield of 4.4%. Open Text's payout ratio is currently 64.71%.

Analyst Upgrades and Downgrades

Several brokerages have recently weighed in on OTEX. Royal Bank Of Canada reduced their price target on Open Text from $30.00 to $27.00 and set a "sector perform" rating for the company in a report on Friday. UBS Group set a $25.00 price target on shares of Open Text in a research note on Friday. Canadian Imperial Bank of Commerce cut their price objective on shares of Open Text from $40.00 to $37.00 and set a "neutral" rating on the stock in a research report on Friday, January 16th. Wall Street Zen upgraded shares of Open Text from a "buy" rating to a "strong-buy" rating in a research note on Saturday. Finally, Scotia decreased their target price on shares of Open Text from $50.00 to $40.00 and set a "sector outperform" rating for the company in a report on Friday. Four equities research analysts have rated the stock with a Buy rating and ten have given a Hold rating to the company. According to data from MarketBeat.com, the stock has a consensus rating of "Hold" and an average price target of $34.50.

Hedge Funds Weigh In On Open Text

Hedge funds have recently bought and sold shares of the business. Vident Advisory LLC raised its position in Open Text by 3.7% in the 4th quarter. Vident Advisory LLC now owns 15,715 shares of the software maker's stock worth $512,000 after buying an additional 555 shares during the last quarter. State of Tennessee Department of Treasury boosted its holdings in shares of 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 valued at $4,817,000 after acquiring an additional 584 shares during the last quarter. Wellington Management Group LLP grew its stake in shares of Open Text by 25.9% in the fourth quarter. Wellington Management Group LLP now owns 389,247 shares of the software maker's stock worth $12,693,000 after acquiring an additional 80,015 shares during the period. Man Group plc bought a new stake in shares of Open Text in the fourth quarter worth approximately $2,943,000. Finally, Investment Management Corp of Ontario raised its holdings in shares of Open Text by 17.0% during the fourth quarter. Investment Management Corp of Ontario now owns 156,603 shares of the software maker's stock valued at $5,102,000 after purchasing an additional 22,774 shares during the last quarter. Hedge funds and other institutional investors own 70.37% of the company's stock.

Open Text News Summary

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.

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.