OpenText (OTEX) reported record Q4 profit with net income up 439.9% and cloud bookings up 24.1%, while flat annual recurring revenue and a 4.6% drop in support revenue leave the stock at 6.31x forward earnings.
OpenText's Q4 GAAP net income jumped 439.9% to $156 million and enterprise cloud bookings rose 24.1%, but total annual recurring revenue grew just 0.2% as customer support revenue fell 4.6%. The stock trades at 6.31x forward earnings, a multiple that prices in almost no earnings growth despite record capital returns and a 5% dividend increase.
Q4 GAAP net income jumped 439.9% to $156 million on stronger margins, with gross margin at 75.0% versus 72.3% a year earlier. Adjusted EBITDA margin held at 37.6%, even as total annual recurring revenue rose just 0.2%.
The multiple prices in almost no earnings growth ahead. Bulls point to record profit, 22 straight quarters of cloud growth and $677 million in shareholder returns; bears note flat ARR and shrinking support and services revenue.
Enterprise cloud bookings jumped 22.5% for the year to $947 million, and management is spending €105 million on agentic AI and sovereign cloud expansion in Cork and Galway. Faster conversion of those bookings into recurring revenue could lift ARR.
OpenText's fiscal Q4 net income jumped 439.9% to $156 million, but total annual recurring revenue rose just 0.2% as customer support revenue fell 4.6%. Cloud revenue climbed 6.0% to $503 million and enterprise cloud bookings jumped 24.1%, yet flat core subscriptions offset the gains. The stock trades at 6.31x forward earnings after returning a record $677 million to shareholders and raising the dividend 5%.
Q4 GAAP net income rose 439.9% to $156 million as gross margin expanded to 75.0% and adjusted EBITDA margin held at 37.6%. Cloud revenue grew, but total annual recurring revenue rose only 0.2% because support and services revenue declined.
The core subscription base is barely growing: total ARR rose 0.2% in Q4 and 1.3% for the year, while customer support revenue fell 4.6% in the quarter. Management called fiscal 2027 a 'foundation year,' pointing to steady execution rather than a growth breakout.
It returned a record $677 million to shareholders, split between $268 million in dividends and $409 million in buybacks. It also raised its dividend 5% and renewed authorization to repurchase up to 23,846,439 shares.