Open Text (NasdaqGS:OTEX) Q2 2026 Earnings call February 05, 2026 05:00 PM ET Company ParticipantsGreg Secord - Head of Investor RelationsJames McGourlay - Interim CEOSteve Rai - EVP and CFOTom Jenkins - Executive Chair and Chief Strategy OfficerConference Call ParticipantsDavid Kwan - Research Analyst in TechnologyGeorge Kurosawa - Equity Research AnalystKarl Keirstead - Managing Director and Senior Equity Research AnalystPaul Treiber - Director and Senior Equity Research AnalystThanos Moschopoulos - Manag ...

Open Text (NasdaqGS:OTEX) Q2 2026 Earnings call February 05, 2026 05:00 PM ET Company ParticipantsGreg Secord - Head of Investor RelationsJames McGourlay - Interim CEOSteve Ray - EVP and CFOTom Jenkins - Executive Chair and Chief Strategy OfficerConference Call ParticipantsDavid Kwan - Research Analyst in TechnologyGeorge Kurosawa - Equity Research AnalystKarl Keirstead - Managing Director and Senior Equity Research AnalystPaul Treiber - Director and Senior Equity Research AnalystThanos Moschopoulos - Manag ...

Open Text (NasdaqGS:OTEX) Q2 2026 Earnings call February 05, 2026 05:00 PM ET Speaker2Thank you for standing by. This is the conference operator. Welcome to the OpenText Corporation second quarter fiscal 2026 financial results conference call. As a reminder, all participants are in listen-only mode, and the conference is being recorded. After the presentation, there will be an analyst question-and-answer session. To join the question queue, you may press star then 1 on your telephone keypad. Should anyone n ...

Investor Presentation February 5, 2026 NASDAQ/TSX: OTEX Safe Harbor and IP Statement This presentation contains forward-looking statements or information (forward-looking statements) within the meaning of the Private Securities Litigation Reform Act of 1995, Section 21E of the U.S. Securities Exchange Act of 1934, as amended (the Exchange Act), Section 27A of the U.S. Securities Act of 1933, as amended, and other applicable securities laws of the United States and Canada, and is subject to the safe harbors ...

Financial Performance - Total revenue for Q2 Fiscal 2026 was $1,326.7 million, a decrease of 0.6% year-over-year, and down 2.6% after adjusting for foreign exchange impacts[218]. - Total annual recurring revenue reached $1,060.0 million, an increase of 0.7% year-over-year, but down 1.2% after adjusting for foreign exchange impacts[218]. - Cloud services and subscriptions revenue was $478.1 million, up 3.4% year-over-year, and up 1.9% after adjusting for foreign exchange impacts[218]. - GAAP-based net income attributable to OpenText was $168.1 million, down from $229.9 million in the same period last year, while Non-GAAP-based net income was $286.3 million compared to $293.3 million[225]. - GAAP-based diluted earnings per share (EPS) decreased to $0.66 from $0.87 year-over-year, while Non-GAAP diluted EPS increased slightly to $1.13 from $1.11[225]. - The company reported total revenues of $1,327,000 for the three months ended December 31, 2025[317]. - For the six months ended December 31, 2025, GAAP-based net income attributable to OpenText was $314,707, with a diluted earnings per share of $1.24[340]. - Non-GAAP-based net income for the same period was $552,553, resulting in a diluted earnings per share of $2.18[340]. Operational Efficiency - GAAP-based gross margin improved to 74.0%, compared to 73.3% in the same period last year[218]. - Non-GAAP-based gross margin increased to 77.6%, compared to 77.2% in the same period last year[218]. - Operating cash flow for the six months ended December 31, 2025, was $466.4 million, a significant increase of 72.6% compared to $270.2 million in the same period last year[225]. - The Business Optimization Plan is expected to generate annualized savings of approximately $490.0 million to $550.0 million, with 35% of these savings realized in Fiscal 2025 and an additional 35% expected in Fiscal 2026[233][234]. - Total operating expenses for the three months ended December 31, 2025, were $690.4 million, an increase of $8.3 million compared to the same period in 2024[278]. Workforce and Employment - The company employed approximately 21,300 individuals as of December 31, 2025, with 34% in the Americas, 23% in EMEA, and 43% in Asia Pacific[217]. - The company reduced its research and development labor resources by 341 employees, from 7,401 at December 31, 2024, to 7,060 at December 31, 2025[281]. - The company experienced a decrease in general and administrative labour resources by 299 employees, from 3,083 employees at December 31, 2024, to 2,784 employees at December 31, 2025[288]. Strategic Focus - The company focuses on growth in earnings and cash flows for Fiscal 2026 and 2027, with a strategic emphasis on Information Management capabilities[207]. - The company plans to redeploy capital from non-core assets to enhance focus on core Information Management for AI business[207]. - The company is committed to integrating AI and machine learning into its products and services to enhance customer value[216]. - The company is focused on expanding its AI-first Information Management offerings and pursuing tuck-in acquisitions to align capital with high-return opportunities[230]. Cash and Liquidity - Cash and cash equivalents increased to $1,271.4 million as of December 31, 2025, compared to $1,156.5 million as of June 30, 2025[225]. - Free cash flows for the three months ended December 31, 2025, amounted to $279,444, calculated as GAAP-based cash flows from operating activities of $318,659 less capital expenditures of $39,215[324]. - Cash flows used in investing activities increased by $0.4 million during the six months ended December 31, 2025, primarily due to property and equipment additions[359]. - Cash flows used in financing activities decreased by $64.3 million during the six months ended December 31, 2025, mainly due to reduced cash used for share repurchases[361]. Market and Revenue Trends - Enterprise cloud bookings reached $294.9 million, up from $249.9 million in the same period last year, indicating strong demand for cloud services[225]. - The company expects total revenues for Fiscal 2026 to grow by 1% to 2%, with cloud services and subscriptions revenues projected to increase by 3% to 4%[227]. - The Americas region accounted for 53.4% of total revenues, down from 57.4% in the previous year[243]. - There were 53 cloud services contracts greater than $1.0 million closed during the second quarter of Fiscal 2026, compared to 51 contracts in the same quarter of Fiscal 2025[249]. Foreign Currency Risks - The company is exposed to foreign currency transaction risks from intercompany transactions, which may result in realized gains or losses depending on currency exchange rates[397]. - As of December 31, 2025, a one cent change in the Canadian dollar to U.S. dollar exchange rate would have resulted in a change of $0.7 million in the mark-to-market valuation of existing foreign exchange forward contracts[398]. - A one cent change in the Euro to U.S. dollar forward exchange rate for the 5-year EUR/USD cross currency swaps would have caused a change of $5.8 million in the mark-to-market valuation[400]. - Total cash and cash equivalents denominated in foreign currencies as of December 31, 2025, amounted to $557.9 million, compared to $720.5 million as of June 30, 2025[403].

Financial Performance - Total revenues for Q2 FY'26 were $1.327 billion, a decrease of 0.6% year-over-year[7] - GAAP net income was $168 million, down 26.9% year-over-year, while Non-GAAP net income was $286 million, a decrease of 2.4% year-over-year[7] - Annual recurring revenues (ARR) totaled $1.060 billion, an increase of 0.7% year-over-year[7] - Net income for the three months ended December 31, 2025, was $168,126, a decrease of 26.8% compared to $229,906 for the same period in 2024[25] - Total comprehensive income for the six months ended December 31, 2025, was $343,421, an increase of 11.4% from $308,168 in 2024[25] - GAAP-based net income attributable to OpenText for the three months ended December 31, 2025, was $168,091, with a diluted earnings per share of $0.66[50] - Non-GAAP-based net income attributable to OpenText for the same period was $286,278, resulting in a diluted earnings per share of $1.13[50] - For the six months ended December 31, 2025, GAAP-based net income attributable to OpenText was $314,707, with a diluted earnings per share of $1.24[54] - Non-GAAP-based net income for the six months was $552,553, leading to a diluted earnings per share of $2.18[54] Revenue Breakdown - Cloud revenues reached $478 million, reflecting a growth of 3.4% year-over-year, marking 20 consecutive quarters of organic growth[7] - Quarterly enterprise cloud bookings amounted to $295 million, representing an 18.0% increase year-over-year[7] - Cloud services and subscriptions revenue increased to $478,084 for the three months ended December 31, 2025, compared to $462,306 in the prior year, reflecting a growth of approximately 3%[23] Cash Flow and Liquidity - Operating cash flows were $319 million, down 8.4% year-over-year, and free cash flows were $279 million, down 8.9% year-over-year[7] - Net cash provided by operating activities for the six months ended December 31, 2025, was $466,422 thousand, compared to $270,186 thousand for the same period in 2024, indicating an increase of approximately 72.5%[33] - Cash and cash equivalents at the end of the period on December 31, 2025, totaled $1,272,997 thousand, up from $1,124,208 thousand on December 31, 2024, reflecting an increase of about 13.2%[35] - The company reported a net cash used in financing activities of $270,787 thousand for the six months ended December 31, 2025, compared to $335,117 thousand for the same period in 2024, indicating a decrease of approximately 19.2%[33] Asset Management - Total assets decreased to $13,570,162 as of December 31, 2025, from $13,774,064 as of June 30, 2025[20] - Total current liabilities decreased to $2,504,664 as of December 31, 2025, from $2,747,054 as of June 30, 2025, showing improved liquidity[20] - The total amount of retained earnings as of December 31, 2025, was $1,971,950, an increase from $2,174,514 in 2024[31] Operational Efficiency - Adjusted EBITDA was $491 million, with a margin of 37.0%[7] - Research and development expenses for the three months ended December 31, 2025, were $158,309, down from $180,727 in the prior year, indicating a focus on cost management[23] - The company reported a GAAP-based income from operations of $291,755 for the three months, which adjusted to $455,954 on a Non-GAAP basis[51] Strategic Initiatives - OpenText announced the divestiture of Vertica for $150 million and eDOCS for $163 million, focusing on non-core asset divestiture[17] - Ayman Antoun has been appointed as the new CEO, effective April 20, 2026, to lead the company in its growth strategy[17] - OpenText unveiled a next-generation AI Data Platform for secure information management at the OpenText World user conference[17] - The company aims to leverage AI and automation in its strategy to drive future growth and innovation in its product offerings[18] - The company has proposed a divestiture of non-core assets, including Vertica, to optimize its portfolio and enhance shareholder value[18] Shareholder Returns - The company declared dividends of $0.275 per common share for the three months ended December 31, 2025, totaling $69,402[29] - The company repurchased 1,390 common shares for $9,717 during the three months ended December 31, 2025[29]

Total Revenues of $1.33B, 20 Consecutive Quarters of Cloud Organic Growth Delivers Net Income Margin of 13%, Robust Adjusted EBITDA Margin of 37.0% James McGourlay, OpenText Interim Chief Executive Officer "With strong adjusted EBITDA margin and free cash flow performance in the quarter, the strength of the OpenText operating model continues to drive our business to meet the Company's margin targets for Fiscal 2026," said Steve Rai, Executive Vice President, Chief Financial Officer. "Our robust cash flow en ...

WALTHAM, Mass., Feb. 02, 2026 (GLOBE NEWSWIRE) -- Rocket Software, a global technology leader in modernization software, today announced it has entered into a definitive agreement to acquire the Vertica analytics database from OpenText (NASDAQ: OTEX), (TSX: OTEX). Vertica is an enterprise-grade analytics database platform trusted by leading global organizations for its proven technology and industrial-strength performance for mission-critical analytical workloads. The technology sits at the center of many o ...

OpenText to Continue Focusing on Core Cloud Products for Secure, Trusted Data for Enterprise AI WATERLOO, ON, Feb. 2, 2026 /PRNewswire/ -- Open Text Corporation (NASDAQ: OTEX), (TSX: OTEX), a global leader in secure information management for AI, today announced that it has reached a definitive agreement to divest Vertica, a part of its non-core Analytics portfolio, to Rocket Software Inc., a Bain Capital portfolio company ("Rocket Software") for US$150 million in cash, before taxes, fees and other adjustme ...

Open Text Corporation (NASDAQ:OTEX) is included among the 7 Best Non-REIT Dividend Stocks to Invest in. Open Text (OTEX) Price Target Reduced by $3 Photo by Vitaly Taranov on Unsplash Open Text Corporation (NASDAQ:OTEX) develops software that helps large organizations manage information securely and put it to work across cloud, security, and AI workflows. The business leans heavily on recurring revenue from subscriptions and support, which can help smooth results when customer spending becomes uneven. ...