Open Text software license sales miss forecasts, shares fall

Wed Jul 31, 2013 6:57pm EDT
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By Garima Goel

(Reuters) - Business software maker Open Text Corp OTC.TO (OTEX.O: Quote) earned less in long-term license fees than analysts had expected in the fourth quarter, offsetting gains from its push into cloud computing.

Open Text shares were down 5 percent in post-market trading after closing at $70.53 on the Nasdaq on Wednesday.

Businesses are increasingly outsourcing their technology needs to companies that offer cheaper, nimbler products hosted in the so-called "cloud."

Traditionally, software companies sold products with expensive, perpetual licenses that were a lot harder to update and maintain.

Open Text, a Canadian supplier of software to help companies manage documents and workflows, said quarterly revenue from customers paying license fees rose 1 percent to $78.8 million.

"(The) market was looking for 5 to 10 percent growth," said Thanos Moschopoulos, an analyst with BMO Capital Markets U.S.

The license revenue business was affected by an inability to sell software licenses in North America, which along with Latin America contributed 54 percent to fourth-quarter revenue.

"Our issues in North America were a bit focused on the U.S. West as well as Canada. We had the pipeline we simply couldn't convert it," said Chief Executive Mark Barrenechea.   Continued...