The head of Open Text Corp. says the software company plans to return close to $600 million to its shareholders in the form of dividends and buybacks in the 2025 fiscal year.
“We’re going to have a record year here in 2025 of capital return,” Mark Barrenechea, CEO and CTO of Open Text, told BNN Bloomberg in a Friday morning interview.
The Waterloo-based company reported its full 2024 fiscal year earnings on Thursday, which totalled US$465.1 million, up from $150.4 million the previous year, while revenues rose 29 per cent to $5.8 billion.
Barrenechea said the company’s plan to return more free cash flow to investors comes down to a decision to reinvest in Open Text and the development of new and improved products, which will drive growth down the line.
“We look at where we’re investing our money; it starts in our products, and we’re expecting mid-single-digit organic growth from our cloud here in the new fiscal year, driven by our business clouds… so first, we’re investing in our products,” he said.
“Second… over the next few years, we see our margins and free cash flows going up, so we feel it’s a good time given when we assess the cost of our capital and we assess the returns from our investments… the highest return on our dollars is to return it to shareholders.”
Barrenechea said demand “remains reasonable” for Open Text’s cloud services despite many businesses still struggling with high costs, elevated interest rates and inflationary pressures.
He said there remain a number of economic “caution signals,” especially around projected gross domestic product (GDP) growth in Europe and North America, adding that “enterprises are spending, but they are deeply prioritizing very impactful projects.”
With files from The Canadian Press