Given OpenText’s performance over the past year, its Q3 figures, which were released last night, were bound to be interesting given the fragile state of the global economy. And they didn't disappoint. Depending on how you look at it, profits were either down from the same period last year -- if you didn't take financial adjustments -- or up 25% if you do.
One way or another, OpenText once again had an exceptional quarter on the back of its expanding cloud services and is now in such a strong financial position that it will pay shareholders a quarterly dividend in this quarter of US$ .30 per share.
OpenText, as a result, continues its golden run for shareholders and with profits for software licenses rising 13% to US$ 69 million, its first rise in five quarters, prospects for Q4 are looking good, not only for the quarter, but also for an excellent annual performance when the figures for the entire year become visible at the end of this quarter.
Without getting caught-up in the figures too much, OpenText’s five pillar information management strategy looks like it’s starting to pay off.
Total revenues for the period were US$ 337.7 million, up 16% on the year, with cloud services contributing US$ 44.4 million to that, and license revenues up 13% to US$ 69 million.
OpenText Business Q3
In terms of business achievements, OpenText CEO Mark J. Barrenechea said that the biggest demand for its profits was in the services, technology and consumer goods industries with 8 license deals worth over US$ 1 million, and another 13 worth between US$ 500,000 and US$1 million.
Over the quarter it also announced seven new releases, including StreamServe 5.6, OpenText Archive, and OpenText Media Management 7.2. It also bought Resonate Knowledge Technologies and appointed Kevin Cochrane as Chief Marketing Officer. And then there’s the dividend that is going to make OpenText popular with investors. But it is the business plan that is delivering the goods.
While its information management strategy through technologies is well known, it is the wider strategy that is pushing the figures.
We are committed to delivering value to our stockholders through technology innovation, strategic acquisitions and now through a dividend…We generated US$ 333.1 million in operating cash flow over the last twelve months and we are running our business at record operating margins. We have always been committed to rewarding our stockholders' investments in OpenText and the Board has decided that it is the right time to declare a dividend for our stockholders,” Barrenechea said.
OpenText Business Strategy
In simple terms -- a strategy of buying the technology needed to build out and round-off its product portfolio, while pumping money back to the shareholders to keep them on board as the acquisitions mount.
Although OpenText and IBM are to different companies in scale and product range, successful business is about knowing and nurturing your market. IBM, certainly in the last quarter, hasn’t been able to do that, blaming spending restrictions in its key markets.
However, both Microsoft and Google are operating at the same level, and OpenText is selling into the same businesses that IBM does.
While for OpenText is has been another successful quarter, for IBM it may well indicate that slashing jobs in not all that will be needed this year to put its last quarter properly behind it.