Open Text Beats Up on Analysts Yet Again

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Open Text (NAS: OTEX) reported earnings on Feb. 1. Here are the numbers you need to know.

The 10-second takeaway
For the quarter ended Dec. 31 (Q2), Open Text beat expectations on revenues and beat expectations on earnings per share.

Compared to the prior-year quarter, revenue increased significantly and GAAP earnings per share increased significantly.

Gross margins dropped, operating margins shrank, net margins grew.

Revenue details
Open Text tallied revenue of $321.5 million. The 19 analysts polled by S&P Capital IQ hoped for sales of $312.0 million. Sales were 20% higher than the prior-year quarter's $267.5 million.

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Source: S&P Capital IQ. Quarterly periods. Dollar amounts in millions.

EPS details
Non-GAAP EPS came in at $1.39. The 19 earnings estimates compiled by S&P Capital IQ predicted $1.22 per share on the same basis. GAAP EPS of $0.81 for Q2 were 27% higher than the prior-year quarter's $0.64 per share.

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Source: S&P Capital IQ. Quarterly periods. Figures may be non-GAAP to maintain comparability with estimates.

Margin details
For the quarter, gross margin was 73.7%, 80 basis points worse than the prior-year quarter. Operating margin was 18.8%, 220 basis points worse than the prior-year quarter. Net margin was 14.8%, 90 basis points better than the prior-year quarter.

Looking ahead
Next quarter's average estimate for revenue is $303.1 million. On the bottom line, the average EPS estimate is $1.16.

Next year's average estimate for revenue is $1.22 billion. The average EPS estimate is $4.67.

Investor sentiment
The stock has a three-star rating (out of five) at Motley Fool CAPS, with 177 members out of 198 rating the stock outperform, and 21 members rating it underperform. Among 69 CAPS All-Star picks (recommendations by the highest-ranked CAPS members), 63 give Open Text a green thumbs-up, and six 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 $71.76.

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At the time this article was published 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 ofMotley 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. Motley Fool newsletter services have recommended buying shares of Open Text. Motley Fool newsletter services have recommended writing puts in 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.

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