OpenText — First Quarter Fiscal 2027 Earnings Summary

Financial Performance:

• Total revenues were $1,237 million, a 4.0% decrease year-over-year (Y/Y), or 1.7% decrease in constant currency excluding divestitures.
• Core revenues were $864 million, a 2.4% increase Y/Y, or 2.7% increase in constant currency.
• Core Cloud revenues were $339 million, an 11.2% increase Y/Y, or 11.7% increase in constant currency.
• Cloud revenues totaled $505 million, a 4.3% increase Y/Y, marking 23 consecutive quarters of cloud organic growth.
• Annual recurring revenues (ARR) were $1,040 million, a 3.0% decrease Y/Y.
• GAAP net income was $155 million, a 5.9% increase Y/Y; Non-GAAP net income was $254 million, a 4.5% decrease Y/Y.
• Diluted GAAP EPS was $0.64, a 10.3% increase Y/Y; Non-GAAP diluted EPS was $1.05, flat Y/Y.
• Adjusted EBITDA was $442 million, a 5.3% decrease Y/Y, with a margin of 35.8%.
• Operating cash flow was $172 million, a 16.6% increase Y/Y.
• Free cash flow was $139 million, a 36.8% increase Y/Y.
• GAAP gross margin was 73.2%; Non-GAAP gross margin was 76.9%.
• GAAP operating income was $251 million; Non-GAAP operating income was $403 million.

Guidance and Future Outlook:

• Management indicated the durability of the operating model enables execution of capital allocation priorities through the remainder of Fiscal 2027.
• The company plans to host an Investor Day on February 10, 2027, to discuss the outcome of the previously announced Enterprise Assessment, including strategic priorities, growth initiatives, and the financial framework.
• Forward-looking statements regarding future performance, cash generation, and capital allocation are subject to risks and uncertainties and do not constitute formal guidance.

Business Segments and Product Lines:

• Core portfolio categories include Content, Business Network, IT Operations Management (ITOM), and Cybersecurity (Enterprise).
• Aviator AI agents are infused across the core portfolio to support clients in their AI journey.
• OpenText partnered with Cohere to combine trusted data with agentic AI.
• Key client wins included Workplace Safety & Insurance Board (WSIB) in the Americas, and Commerz Real AG, Gruppo CAP, Insurance Australia Group (IAG), and Sumitomo Electric Wiring Systems Inc. in EMEA and the rest of the world.

Market and Competitive Landscape:

• Management stated that as clients move to AI, they require trusted context and connected data for reliable outcomes.
• The company highlighted a go-to-market model built around client success to support the AI journey.

Risks and Challenges:

• Total revenues declined 4.0% Y/Y, driven by a 9.0% decrease in client support revenues and an 8.0% decrease in license revenues.
• Non-GAAP net income decreased 4.5% Y/Y.
• Forward-looking statements involve risks including unanticipated costs, delays, difficulties, and the ability to develop and protect intellectual property.

Management Commentary and Tone:

• CEO Ayman Antoun stated the quarter reflects the strength of the core portfolio and value delivered to clients, emphasizing the need for trusted data in the AI era.
• CFO Steve Rai noted strong performance supported by financial and operational discipline, highlighting the completion of a $1.0 billion debt refinancing and a $300 million debt tender offer.
• Management expressed confidence in the durability of the operating model to execute capital allocation priorities.

Other Key Points:

• The company completed a $1.0 billion senior secured notes offering in October to retire outstanding 2027 notes.
• A tender offer successfully retired $300 million of outstanding 2028 notes.
• Debt was reduced by approximately $949 million over the past twelve months, resulting in a net leverage ratio of 2.55x as of September 30, 2026.
• The Board declared a quarterly non-cumulative cash dividend of $0.280 per common share, with a record date of December 4, 2026, and payment date of December 18, 2026.
• The company repurchased $23 million of common shares for cancellation during the quarter.
• Deferred revenues decreased from $1,483 million at June 30, 2026, to $1,379 million at September 30, 2026.
• Cash and cash equivalents increased to $983 million at September 30, 2026, from $956 million at June 30, 2026.