The 10-second takeaway
For the quarter ended Sep. 30 (Q1), Open Text missed estimates on revenues and beat expectations on earnings per share.
Compared to the prior-year quarter, revenue grew and GAAP earnings per share dropped significantly.
Gross margins dropped, operating margins increased, net margins shrank.
Open Text booked revenue of $326.2 million. The 16 analysts polled by S&P Capital IQ hoped for revenue of $334.8 million on the same basis. GAAP reported sales were 13% higher than the prior-year quarter's $288.0 million.
Source: S&P Capital IQ. Quarterly periods. Dollar amounts in millions. Non-GAAP figures may vary to maintain comparability with estimates.
EPS came in at $1.31. The 18 earnings estimates compiled by S&P Capital IQ anticipated $1.17 per share. GAAP EPS of $0.33 for Q1 were 45% lower than the prior-year quarter's $0.60 per share.
Source: S&P Capital IQ. Quarterly periods. Non-GAAP figures may vary to maintain comparability with estimates.
For the quarter, gross margin was 70.3%, 170 basis points worse than the prior-year quarter. Operating margin was 15.2%, 330 basis points better than the prior-year quarter. Net margin was 6.0%, 610 basis points worse than the prior-year quarter.
Next quarter's average estimate for revenue is $359.1 million. On the bottom line, the average EPS estimate is $1.39.
Next year's average estimate for revenue is $1.42 billion. The average EPS estimate is $5.28.
The stock has a three-star rating (out of five) at Motley Fool CAPS, with 189 members out of 211 rating the stock outperform, and 22 members rating it underperform. Among 68 CAPS All-Star picks (recommendations by the highest-ranked CAPS members), 59 give Open Text a green thumbs-up, and nine give it a red thumbs-down.
Of Wall Street recommendations tracked by S&P Capital IQ, the average opinion on Open Text is outperform, with an average price target of $66.00.
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Seth Jayson had no position in any company mentioned here at the time of publication. You can view his stock holdings here. He is co-advisor of Motley Fool Hidden Gems, which provides new small-cap ideas every month, backed by a real-money portfolio. The Motley Fool owns shares of Open Text and is short Open Text. Motley Fool newsletter services recommend Open Text. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.