In This Article:
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Revenue: $1.27 billion in Q1, within the range of $1.25 billion to $1.3 billion.
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Adjusted EBITDA: 35% in Q1, reflecting operational efficiency.
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Adjusted EPS: $0.93, exceeding expectations.
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Cloud Revenue: $457 million, up 1.3% year over year.
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Cloud Bookings: $133.5 million, up 10.3% year over year.
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ARR (Annual Recurring Revenue): $1.052 billion, down 1.1% when adjusted for divestiture.
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GAAP Net Income: $84.4 million, with a 32% diluted EPS.
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GAAP Gross Margin: 71.7%, up from 71.4% year over year.
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Non-GAAP Gross Margin: 75.8%, reflecting investments in AI and cloud infrastructure.
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Operating Cash Flow: Negative $77.8 million, impacted by onetime tax payment.
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Free Cash Flow: Negative $117.1 million in Q1.
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Net Renewal Rate (NRR): 94% for the cloud business.
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Share Buyback: 7.72 million shares repurchased at an average price of $30.43.
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Fiscal '25 Revenue Target: $5.3 billion to $5.4 billion.
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Fiscal '25 Free Cash Flow Target: $575 million to $625 million.
Release Date: February 06, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
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Open Text Corp (NASDAQ:OTEX) exceeded expectations in adjusted EBITA and adjusted EPS for Q1 fiscal 2025.
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The company reported a 35% year-over-year growth in adjusted EBITA, showcasing sustained efficiency gains.
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Open Text Corp (NASDAQ:OTEX) achieved its largest Q1 of enterprise cloud bookings in history, up 10% year-over-year.
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The company reaffirmed its fiscal 2025 targets, projecting total revenues of $5.3 billion to $5.4 billion.
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Open Text Corp (NASDAQ:OTEX) is making strong investments in its enterprise and SMB go-to-market strategies, enhancing customer success and strategic partnerships.
Negative Points
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Q1 total revenue of $1.269 billion was down 11% year-over-year, or down 1.8% when adjusted for the AMC divestiture.
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The company reported negative $77.8 million in operating cash flows and negative $117.1 million in free cash flows for the quarter.
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Q2 is expected to be a tougher year-over-year comparison due to the large AMC contribution and license revenue from IP rights in the previous year.
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Cloud revenue growth was subdued in Q1, with only a 1.3% increase, reflecting typical seasonality.
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The company faces challenges in the developer segment, requiring further work to drive growth in this area.
Q & A Highlights
Q: Can you provide insights into the current demand environment and any shifts in deal activity? A: Mark Barrenechea, CEO, stated that the demand environment is stable despite global volatility. The company anticipates a stronger second half due to the upcoming release of Titanium X, their largest software and cloud release. They are also seeing increased demand for their new SMB platform and security offerings.