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Open Text profit beats estimates on cloud services

By Ankur Banerjee

(Reuters) - Canadian business software company Open Text Corp's adjusted quarterly profit handily beat estimates, as its expansion into cloud computing services began to pay off, although revenue from licenses fell short of its expectations.

Open Text expanded its presence in cloud computing earlier this year when it bought EasyLink Services International Corp for $232 million.

Cloud computing services accounted for $44.9 million of the company's total revenue of $326.2 million in the first quarter ended September 30. Open Text did not report any revenue from cloud services in the year-earlier period.

"We are moving more and more services into the cloud this quarter," Chief Executive Mark Barrenechea told Reuters.

Open Text's products help companies and government agencies manage compliance and other information.

The company's net income fell to $19.4 million, or 33 cents per share, in the first quarter, from $35 million, or 60 cents per share, a year earlier, largely because of an income tax provision of $16.2 million.

The company, whose partners include Microsoft Corp and Oracle Corp, earned $1.31 per share on an adjusted basis. Revenue rose 13 percent.

Analysts on average had expected an adjusted profit of $1.17 per share on revenue of $334.3 million, according to Thomson Reuters I/B/E/S.

Licensing revenue, a measure of future demand, fell 14 percent to $55.7 million in the quarter.

"It's certainly a slower start to the year on licenses than we expected" said Barrenechea, who took as CEO in early January.

"We are still looking to grow our licenses year-over-year this fiscal year," he said.

Shares of Open Text, which is headquartered in Waterloo, Ontario, have risen 15 percent in the past three months. The stock closed at C$53.68 on the Toronto Stock Exchange on Wednesday.

(Reporting by Ankur Banerjee in Bangalore; Editing by Saumyadeb Chakrabarty and Ted Kerr)

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