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 ...

Core Viewpoint - OpenText Corporation has completed the divestiture of its on-premise solution eDOCS to NetDocuments Software, Inc. for $163 million, with plans to use the proceeds to reduce outstanding debt [1][2]. Group 1: Transaction Details - The divestiture of eDOCS is part of OpenText's strategy to divest non-core assets and focus on its core business for long-term value creation [2]. - The transaction amount is $163 million in cash before taxes, fees, and other adjustments [1]. Group 2: Strategic Intent - OpenText aims to sharpen its focus on growing its core business, which is expected to accelerate long-term value creation [2]. - The company intends to utilize the net proceeds from the divestiture specifically for debt reduction [2]. Group 3: Company Overview - OpenText is recognized as a global leader in secure information management for AI, helping organizations manage their data effectively [3]. - The company's technologies are designed to convert data into contextual information, forming a knowledge base for AI applications [3].

Core Insights - OpenText Corporation reported total revenues of $1.29 billion for the first quarter of Fiscal 2026, reflecting a year-over-year increase of 1.5% [6][5] - The company achieved a GAAP net income of $147 million, which is a significant increase of 73.8% year-over-year, and a non-GAAP net income of $266 million, up 7.0% year-over-year [6][5] - Cloud revenues reached $485 million, marking a 6.0% increase year-over-year, and the company has experienced 19 consecutive quarters of organic growth in its cloud business [6][5] Financial Performance - Total revenues for Q1 FY'26 were $1,288 million, compared to $1,269 million in Q1 FY'25, resulting in a 1.5% increase [5][6] - Cloud services and subscriptions revenue was $485 million, up 6.0% year-over-year, while customer support revenue decreased by 1.5% to $587 million [5][6] - Annual recurring revenues (ARR) stood at $1.071 billion, reflecting a 1.8% increase year-over-year [5][6] Profitability Metrics - The company reported a GAAP EPS of $0.58, which is an increase of 81.3% compared to $0.32 in the previous year [7][6] - Non-GAAP EPS was $1.05, up 12.9% from $0.93 year-over-year [7][6] - Adjusted EBITDA was $467 million, with a margin of 36.3% [6][5] Cash Flow and Shareholder Returns - Operating cash flows were $148 million, while free cash flows reached $101 million, representing increases of 289.9% and 186.4% year-over-year, respectively [6][7] - The company repurchased $100 million of common shares during the quarter [6][5] - A cash dividend of $0.275 per common share was declared, with a record date of December 5, 2025 [9] Strategic Developments - OpenText is focusing on enhancing shareholder value through growth in its core Information Management for AI business and divesting non-core assets, including the on-premise solution eDOCS [2][15] - The company is committed to operational efficiencies through its Business Optimization Plan, which is currently underway [2][15] - OpenText aims to strengthen its position in the AI market and plans to showcase its innovation roadmap at the upcoming OpenText World User Conference [2][15]

Core Viewpoint - OpenText Corporation has reached a definitive agreement to divest its on-premise solution eDOCS, part of its Analytics portfolio, to NetDocuments for US$163 million in cash, aligning with its strategy to focus on core business areas and reduce debt [1][2][3]. Summary by Sections Transaction Details - The divested business, eDOCS, is part of OpenText's Analytics product group, primarily serving legal professionals, and generated approximately US$30 million in annual revenue for the fiscal year ending June 30, 2025 [2]. - The transaction is expected to close by early 2026, pending customary approvals and closing conditions [4]. Strategic Implications - The divestiture supports OpenText's strategy to enhance shareholder value by rationalizing non-core assets and focusing on secure information management for AI, which is seen as a driver for future revenue growth [3]. - The proceeds from the sale will be utilized to reduce the company's outstanding debt, reinforcing its capital allocation framework [2][3]. Transition and Integration - Under the agreement, all software, customer contracts, associated services, and employees related to eDOCS will be integrated into NetDocuments, ensuring a seamless transition for users [4].