Open Text (news, site) released Q2/F10 (December 2009 quarter) unaudited financial results. Turns out, they are better than expected. Year-over-year (YoY) licensing revenue, for example, is up, in part, thanks to Vignette and the recently released VCM 8.
Crunching the Numbers
Compared to the prior fiscal year, most of the Q2 numbers were up:
- Total revenue: US$ 247.8 million, up 19%
- License revenue: US$ 72.7 million, up 12%
- Adjusted net income: US$ 50.1 million, or US$ 0.87 per share on a diluted basis, up 47%
- Free cash flow: US$ 28.3 million, down from US$ 41.6 million
Cash and cash equivalents balance as of December 31, 2009 was US$ 247.6 million, compared to US$ 275.8 million as of June 30, 2009. During the six months that ended December 31, 2009, the net cash paid for the Vignette acquisition was US$ 90.6 million. The pre-tax adjusted operating margin this quarter came to 28.8%.
More Restructuring Changes Coming
Heard of leadership changes and departures at Open Text? That, partially, falls into the bucket of restructuring cash payments of US$ 7 million.And more “cost savings” are coming, as Open Text’s CFO Paul J. McFeeters notes:
As part of the Vignette acquisition, we stated that we would reduce worldwide employment, continue to rationalize facilities at Open Text and Vignette. To date, we have recorded an expense within special charges of $20.6 million and expect to incur an additional charge of approximately $12 million made up of $9 million for work force reduction and $3 million for facilities.
"We had a very good quarter across the board - in all geographies and verticals," said John Shackleton, president and CEO of Open Text. "The integration of Vignette is progressing well and we are very encouraged by the synergies we see from the combined businesses."
Vignette and (formerly known as) RedDot’s significant contributions to the bottom line are coming after rather quiet couple of quarters in the Web CMS side of things at Open Text. Seasonality is one of the contributing factors here.
Next Acquisition Looming for Open Text?
While the results for Q2 look much better than those for the previous quarters, one lingering question remains: how long till the next acquisition (that the company is so good at)?
How long till Vignette’s contribution to the bottom line dwindles and it might become more difficult for Open Text to show organic growth? We will continue to watch Open Text and report our findings to you.