The 10-second takeaway
For the quarter ended June 30 (Q4), Open Text missed estimates on revenues and met expectations on earnings per share.
Compared to the prior-year quarter, revenue grew. Non-GAAP earnings per share increased significantly. GAAP earnings per share grew significantly.
Gross margins dropped, operating margins increased, net margins grew.
Open Text notched revenue of $347.3 million. The 14 analysts polled by S&P Capital IQ predicted revenue of $360.2 million on the same basis. GAAP reported sales were 14% higher than the prior-year quarter's $305.6 million.
Source: S&P Capital IQ. Quarterly periods. Dollar amounts in millions. Non-GAAP figures are normalized by S&P Capital IQ and may vary to maintain comparability with normalized estimates.
EPS came in at $1.43. The 16 earnings estimates compiled by S&P Capital IQ predicted $1.42 per share. Non-GAAP EPS of $1.43 for Q4 were 22% higher than the prior-year quarter's $1.17 per share. GAAP EPS of $0.71 for Q4 were 407% higher than the prior-year quarter's $0.14 per share.
Source: S&P Capital IQ. Quarterly periods. Non-GAAP figures are normalized by S&P Capital IQ and may vary to maintain comparability with normalized estimates.
For the quarter, gross margin was 71.7%, 110 basis points worse than the prior-year quarter. Operating margin was 16.2%, 130 basis points better than the prior-year quarter. Net margin was 12.1%, 950 basis points better than the prior-year quarter. (Margins calculated in GAAP terms.)
Next quarter's average estimate for revenue is $347.5 million. On the bottom line, the average EPS estimate is $1.33.
Next year's average estimate for revenue is $1.45 billion. The average EPS estimate is $5.81.
The stock has a four-star rating (out of five) at Motley Fool CAPS, with 193 members out of 215 rating the stock outperform, and 22 members rating it underperform. Among 73 CAPS All-Star picks (recommendations by the highest-ranked CAPS members), 65 give Open Text a green thumbs-up, and eight 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 $71.67.
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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. The Motley Fool recommends Open Text. The Motley Fool owns shares of 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.