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Open Text's head office in Waterloo, Ont. (Kevin Van Paassen/The Globe and Mail)
Open Text's head office in Waterloo, Ont. (Kevin Van Paassen/The Globe and Mail)

Open Text posts higher profit, but misses forecasts Add to ...

Open Text Corp., a Canadian business software company, posted a 12 per cent rise in quarterly adjusted profit Wednesday and said recent acquisitions would help its global growth.

But the earnings missed the average analyst estimate and its Nasdaq-listed shares fell more than 7 per cent in after-hours trade.

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The Waterloo, Ont.-based company made $79.6-million (U.S.) from licensing – a measure of future demand – up 16 per cent from a year earlier but below all but one of the nine analysts polled by Reuters. Its overall profit also fell short.

Open Text reported an adjusted net profit of $61.5-million, or $1.05 a share, on revenue of $285.5-million in its fourth quarter ended June 30.

That was up from a year-earlier profit $54.9-million, or 95 cents a share, on revenue of $240-million.

Analysts had on average expected Open Text to earn $1.12 a share on revenue of $283.9-million, according to Thomson Reuters I/B/E/S.

Net income before stripping out amortization of acquired intangible assets, share-based compensation and other costs almost halved to $28.6-million.

Open Text paid about $260-million to acquire business process management company Global 360 in July. At the time, Open Text said its second large buy in five months would not add to fourth quarter results.

Some analysts worry that the two companies have overlapping businesses, which could weigh on Open Text’s margins, though its operating margin actually improved from the previous quarter.

In February, Open Text said it would pay $182-million to buy smaller competitor MetaStorm to aid its push into mobile applications.

Open Text has the second-largest share of the market for enterprise content management systems after International Business Machines Corp. Its partners include tech infrastructure vendors SAP AG, Microsoft Corp. and Oracle Corp.

Open Text’s Nasdaq-listed shares closed down 4.7 per cent at $57.47 just ahead of the earnings release and fell to $53.17 after the close.

Its Toronto-listed shares slipped 1.5 per cent to $57.76 (Canadian) before the results.

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