In This Article:
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Total Revenue: $1.27 billion, down 2.9% year over year, down 1% excluding IP rights and DXC.
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Cloud Revenue: $463 million, up nearly 2% year over year, marking 17 consecutive quarters of organic growth.
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Adjusted EBITDA Margin: 31.5%, ahead of target range.
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Adjusted EPS: $0.82, up year over year excluding AMC divestiture.
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Free Cash Flow: $374 million, up 7% year over year, with a 30% free cash flow margin.
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Cloud Net Renewal Rate: Increased 100 basis points sequentially to 96%.
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Enterprise Bookings: $151 million, down 8.4% year over year.
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Non-GAAP Cloud Margin: Increased approximately 300 basis points to 62.7% year over year.
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Customer Support Revenue: $567 million, slightly below expectations.
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Cash Position: Ended at nearly $1.23 billion.
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Share Repurchase: 4.4 million shares repurchased for $115 million, total outstanding shares at approximately $260 million.
Release Date: May 01, 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) reported strong operational performance with an adjusted EBITDA margin of 31.5%, exceeding their target range.
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The company achieved record free cash flow of $374 million, marking a 7% increase year over year.
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Open Text Corp (NASDAQ:OTEX) is leading with an AI-first strategy, integrating AI into their operations and product offerings, which is expected to drive future growth.
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The company has a robust capital allocation strategy, focusing on reinvestment in business, dividends, and share repurchases.
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Open Text Corp (NASDAQ:OTEX) has a strong customer base with notable wins in Q3, including contracts with ABN AMRO, Japan Tobacco, and the US Air Force.
Negative Points
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Open Text Corp (NASDAQ:OTEX) experienced a revenue shortfall, ending up 50 basis points below their target range due to demand disruptions caused by tariffs.
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The company reported an 8% decline in new cloud bookings, attributed to macroeconomic disruptions.
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There was a 6.4% organic decline in the customer support business, impacted by the DXC contract and other factors.
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Open Text Corp (NASDAQ:OTEX) announced a significant restructuring plan, including a net reduction of 2,000 employees, which may indicate operational challenges.
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The company adjusted its fiscal 2025 revenue target downwards, reflecting the ongoing market volatility and unpredictability.
Q & A Highlights
Q: Can you explain the impact of tariffs on OpenText's performance this quarter compared to other companies in the sector? A: Mark Barrenechea, CEO, explained that the auto tariffs and related uncertainties significantly disrupted demand, particularly affecting sectors like auto, materials, US government, and energy. This disruption led to a $40 million to $50 million impact, with two-thirds affecting bookings and one-third impacting revenue. Despite these challenges, OpenText managed its expenses, margins, and cash flow effectively.