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Highlights

  • OpenText completed a USD 2.275 billion divestiture of AMC business in FY24
  • It reported total revenues of USD 5.8 billion in FY24, up 28.6% year-over-year
  • Diluted earnings per share increased by 32.3%
  • Serica Energy selected OpenText for engineering information management
  • OpenText plans over USD 570 million in capital returns, including increased dividends

OpenText Corporation (NYSE: OTEX) is a company based in Canada. It provides cloud-native solutions in an integrated and flexible Information Management platform. It has a market cap of USD 8821.53mn.

In FY24, OpenText acquired important clients such as Johnson & Johnson and the California Department of Employment Development. The company finalized a USD 2.275 billion divestiture of its AMC business, reduced its debt by USD 2.0 billion, and acquired Pillr, a cybersecurity platform.

FY24 Financial Performance

OpenText reported total revenues of USD 5.8 billion, a 28.6% increase from the previous year. Its Annual Recurring Revenues reached USD 4.5 billion, up 25.4%. Cloud revenues were USD 1.8 billion, and enterprise cloud bookings rose 32.9% to USD 701 million.

The company’s diluted EPS surged by 32.3%. It achieved an adjusted EBITDA of USD 2.0 billion, with a margin of 34.1%, while investing in cloud services, security, and AI. Additionally, the company reported a return on equity (ROE) of 11.3% for FY24, compared to 3.7% in FY23.

Recent Business Update

In August, OpenText announced that Serica Energy, an independent British upstream oil and gas company, has selected OpenText Content Cloud and OpenText Extended ECM for Engineering to help manage engineering information and workflows, enhance risk management, and boost operational efficiency across project lifecycles.

Company Outlook

For FY25, OpenText aims to bolster its Information Management competitive edge, improve margins, and achieve record capital returns.

The company plans to strengthen its competitive edge with Titanium X, Aviators, and Security, aiming for up to 5% growth in cloud services. It is targeting adjusted EBITDA margins in the high 30s, with expected ranges of 33-34% for FY25, 35-36% for FY26, and 36-38% for FY27.

Additionally, it expects to return over USD 570 million to shareholders, which includes a USD 300 million share buyback and increasing dividends from USD 1.00 to USD 1.05 per share. This annual dividend increase marks the highest return in the company’s history.

Top 10 Shareholders

The top 10 shareholders of OTEX collectively own about 32.72% of the total shares. Jarislowsky Fraser, Ltd. has the largest shareholding at approximately 5.88%, followed by Harris Associates L.P. with around 4.83%, as shown in the chart below:

Stock Information

The stock price of OTEX has increased by about 1.56% in the past month. However, it has dropped by around 15.51% over the last six months. The stock reached a 52-week low of USD 27.50 and a 52-week high of USD 45.47. Currently, OTEX is trading below the average of these 52-week values.

Note 1: Past performance is not a reliable indicator of future performance.
Note 2: The reference data for all price data, currency, technical indicators, support, and resistance levels is 23 September 2024. The reference data in this report has been partly sourced from EODHD/Others.