Open Text Corporation (OTEX) has reported a 68.72 percent plunge in profit for the quarter ended Mar. 31, 2017. The company has earned $21.62 million, or $0.08 a share in the quarter, compared with $69.12 million, or $0.28 a share for the same period last year. Revenue during the quarter surged 34.64 percent to $593.13 million from $440.54 million in the previous year period. Gross margin for the quarter contracted 338 basis points over the previous year period to 64.51 percent. Total expenses were 89 percent of quarterly revenues, up from 79.90 percent for the same period last year. That has resulted in a contraction of 910 basis points in operating margin to 11 percent.
Operating income for the quarter was $65.26 million, compared with $88.57 million in the previous year period.
“It was a milestone quarter for OpenText as revenues reached $600 million with 36% year-over-year growth (in CC) and operating cash flow grew 46% quarter-over-quarter,” said OpenText chief executive officer, Mark J. Barrenechea. “We are a market leader in Enterprise Software for Digital Transformation and customers are responding favorably to our expanded portfolio of customer experience management, vertical content solutions, and discovery offerings. We have invested approximately $2.4 billion in acquisitions over the last twelve months, and while the financial benefits are evident in our quarterly results, they are yet to be fully realized.”
Operating cash flow declines
Open Text Corporation has generated cash of $336.77 million from operating activities during the nine month period, down 17.17 percent or $69.83 million, when compared with the last year period. The company has spent $2,158.52 million cash to meet investing activities during the nine month period as against cash outgo of $81.57 million in the last year period.
Cash flow from financing activities was $992.54 million for the nine month period as against cash outgo of $141.68 million in the last year period.
Cash and cash equivalents stood at $449 million as on Mar. 31, 2017, down 48.83 percent or $428.40 million from $877.40 million on Mar. 31, 2016.
Working capital turns negative
Working capital of Open Text Corporation has turned negative to $219.70 million on Mar. 31, 2017 from positive $645.88 million on Mar. 31, 2016. Current ratio was at 0.81 as on Mar. 31, 2017, down from 2.06 on Mar. 31, 2016.
Days sales outstanding went down to 51 days for the quarter compared with 59 days for the same period last year.
Debt increases substantially
Open Text Corporation has witnessed an increase in total debt over the last one year. It stood at $2,621.56 million as on Mar. 31, 2017, up 65.71 percent or $1,039.56 million from $1,582 million on Mar. 31, 2016. Total debt was 35.27 percent of total assets as on Mar. 31, 2017, compared with 35.76 percent on Mar. 31, 2016. Debt to equity ratio was at 0.75 as on Mar. 31, 2017, down from 0.83 as on Mar. 31, 2016.
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