Open Text (NASDAQ:OTEX) Posts Earnings Results

Key Points

• EPS beat and strong cloud momentum: Open Text slightly beat EPS estimates with $0.95 vs. $0.94 consensus and reported a record Q3 cloud revenue of $493M, with Content cloud up 22% YoY, ARR of $1.06B and $651M in enterprise cloud bookings YTD.
• Improving profitability and cash generation: Q3 non‑GAAP EPS was $1.01, adjusted EBITDA margin reached 34.1%, YTD free cash flow was $686M (a Q3 YTD high), and management raised its FCF growth outlook to 22%–25%.
• Guidance and strategic shifts: FY26 total revenue guidance was left unchanged at 1%–2% growth while cloud revenue guidance was raised to 4%–5% and enterprise cloud bookings to 16%–20%; however, planned divestitures are being delayed or done selectively amid geopolitical and financing headwinds as new CEO Ayman Antoun focuses on core execution and scaling AI initiatives.

Open Text (NASDAQ:OTEX - Get Free Report) TSE: OTC announced its earnings results on Thursday. The software maker reported $0.95 earnings per share (EPS) for the quarter, topping analysts' consensus estimates of $0.94 by $0.01, Zacks reports. Open Text had a net margin of 8.42% and a return on equity of 23.60%.

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 Price Performance

Shares of NASDAQ OTEX traded up $0.66 during trading hours on Thursday, hitting $23.69. 3,501,947 shares of the stock were exchanged, compared to its average volume of 1,979,819. Open Text has a 1-year low of $20.00 and a 1-year high of $39.90. The company has a debt-to-equity ratio of 1.57, a quick ratio of 0.94 and a current ratio of 0.94. The company has a market cap of $5.74 billion, a PE ratio of 13.94 and a beta of 1.04. The company's fifty day simple moving average is $23.08 and its two-hundred day simple moving average is $28.75.

Institutional Inflows and Outflows

Several institutional investors have recently modified their holdings of the stock. Vident Advisory LLC lifted its holdings in shares of Open Text by 3.7% during the fourth 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 period. State of Tennessee Department of Treasury lifted its holdings in shares of Open Text by 0.4% during the fourth 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 period. Wellington Management Group LLP lifted its holdings in shares of Open Text by 25.9% during the fourth 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 period. Man Group plc acquired a new position in shares of Open Text during the fourth quarter worth $2,943,000. Finally, Investment Management Corp of Ontario lifted 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 worth $5,102,000 after purchasing an additional 22,774 shares during the period. 70.37% of the stock is currently owned by institutional investors and hedge funds.

Wall Street Analysts Forecast Growth

A number of research analysts have issued reports on OTEX shares. Citigroup decreased their target price on shares of Open Text from $36.00 to $26.00 and set a "neutral" rating on the stock in a research report on Friday, February 6th. Raymond James Financial decreased their target price on shares of Open Text from $48.00 to $42.00 and set an "outperform" rating on the stock in a research report on Friday, February 6th. Barclays reduced their price target 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. UBS Group set a $26.00 price target on shares of Open Text in a research report on Friday, February 6th. Finally, Royal Bank Of Canada reduced their price target on shares of Open Text from $33.00 to $30.00 and set a "sector perform" rating on the stock in a research report on Friday, February 6th. Three equities research analysts have rated the stock with a Buy rating and ten have given a Hold rating to the stock. According to data from MarketBeat.com, Open Text currently has a consensus rating of "Hold" and a consensus target price of $36.00.

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.

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