Open Text profit falls on US$76-million restructuring charge

OpenText CEO and CTO Mark Barrenechea speaks at the Open Government Partnership Global Summit in Ottawa on Wednesday, May 29, 2019.Justin Tang/The Canadian Press

Enterprise software company Open Text Corp. spent US$76-million on restructuring and continuing payments in its latest quarter as it merged new acquisitions into its business and began closing half its offices.

Open Text of Waterloo, Ont., is one of Canada’s biggest tech companies, selling software to large businesses and governments with an increasing focus on cloud services. It had a market capitalization of $16.58-billion at the end of trading Thursday. It said last quarter that between previously announced restructuring and the success of its pandemic work-from-home policy, it would close half of the offices it has added globally in its years-long acquisition spree.

In the most recent quarter, the company said costs from these plans, as well as a major 2019 acquisition, dragged its profit down 63 per cent year-over-year. Though revenue rose – by 10 per cent to US$826.6-million – its profit fell 63 per cent to US$26.4-million or 10 US cents a share from US$72-million or 27 US cents.

The quarter, which ended June 30, marked the end of Open Text’s 2020 fiscal year. Because of often-uneven quarterly results, the company has long said that investors should focus on its full fiscal year for the best picture of its financial health.

Open Text’s revenue for fiscal 2020 grew 8.4 per cent, to US$3.1-billion. The full-year profit attributable to the company, however, fell 18 per cent to US$234.2-million in fiscal 2020, from US$285.5-million in fiscal 2019.

The company purchased Boston-based cloud security firm Carbonite last November for US$800-million, and Montreal secure-information-exchange company XMedius in March for US$75-million.

The pandemic will not dissuade Open Text from scooping up other companies, chief executive officer Mark Barrenechea said on a conference call with analysts Thursday evening. “We will continue to acquire businesses that deepen and strengthen our platform,” he said.

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