The Waterloo, Ontario-based maker of enterprise content management (ECM) software reported net income of $8.2m or the quarter, up 5% from $7.8m a year ago. Per share net income however was flat at 16 cents.
Excluding items per share net income was 52 cents, up from 31 cents a year ago.
Revenue for the quarter spiked 67% in the quarter to $175.2m. Sales were buoyed by strong license revenue growth that also jumped 84% to $59m. License growth in turn was aided by a number of large deals, including one worth more than $2 million.
Open Text is also preparing to launch a new and upgraded line of ECM products on October 24.
Analysts were expecting EPS before items of 40 cents on revenue of $165m.
CEO John Shackleton said the integration with Hummingbird, a rival ECM provider that Open Text acquired last year for $489m, has been smooth and that the company’s investments in its partner strategy are now starting to pay dividends.
He also said that the company plans to make an extra debt payment of $30m that will cut its debt to $327m in the current quarter from $390m when it acquired Hummingbird.
For the full fiscal 2007 year, Open Text earned $21.7m (43 cents EPS) on revenue up 45% to $595.7m.
Open Text did not give and guidance for its first quarter of fiscal 2008.
The strong results sent shares up nearly 13% to $22.68 in after-hours trading last Thursday.
Our View
The strength of Open Text’s Q4 means that it has successfully integrated Hummingbird’s operations. The rise in profits also shows how Open Text is starting to realize significant costs savings as result of integrating Hummingbird. With new ECM products up its sleeve likely to drive further upside in the coming year, Open Text’s valuation also remains attractive; perhaps making it an acquisition target for a larger software vendor like Microsoft or SAP that are on the lookout for an industrial-strength ECM.
