Summary
OpenText's fiscal 2025 second quarter delivered lower reported revenue alongside much stronger GAAP profitability. Total revenue was $1.335 billion, down 13.1% from the prior-year quarter. The AMC divestiture explains much of that decline. OpenText completed the divestiture for $2.275 billion in cash before taxes, fees and other adjustments, and total revenue was down 4.9% after adjusting for it. GAAP gross profit fell 13.4% to $978.0 million, and GAAP gross margin slipped to 73.3% from 73.6%. GAAP operating income moved the other way, rising 16.5% to $295.8 million, and operating margin expanded to 22.2% from 16.5%. GAAP net income attributable to OpenText climbed 510.1% to $229.9 million, and GAAP diluted EPS rose to $0.87 from $0.14.
The adjusted view was more mixed. Non-GAAP operating income was $470 million. Adjusted EBITDA was $501 million, with a 37.6% margin. Non-GAAP diluted EPS was $1.11, compared with $1.24 in the prior-year quarter. Free cash flows were $307 million, while operating cash flow slipped 0.8% to $348 million. The company returned $134 million of capital to shareholders in the quarter, made up of $68 million of dividends and $66 million of share repurchases. It also declared a quarterly dividend of $0.2625 per common share, payable March 21, 2025.
Recurring revenue trends remained mixed. Cloud services and subscriptions revenue was $462 million, up 2.7%. Annual recurring revenues were $1.053 billion, down 8.1%, or down 0.8% when adjusted for the AMC divestiture. Enterprise cloud bookings were $250 million, up 6.1%. The cloud net renewal rate was 95%, and the customer support net renewal rate was 92%. OpenText closed 51 cloud services contracts greater than $1.0 million, compared with 48 a year earlier. License activity was weaker: the company closed 60 license contracts greater than $0.5 million, including 24 greater than $1.0 million, against 83 contracts and 35 larger deals in the prior-year quarter. Current deferred revenue was $1.45 billion, down 5.4%, and capital expenditures were $41.27 million, down 8.8%.
For the first six months of fiscal 2025, total revenue was $2.60 billion, down 12.1% from the prior-year period. GAAP operating income rose 7.6% to $502.0 million. GAAP net income attributable to OpenText was $314.2 million, up 165.0%, and GAAP diluted EPS was $1.18, up from $0.44. Operating cash flow for the six months was $270.2 million, down 32.1%, largely because of tax payments tied to the AMC divestiture and working capital changes. Free cash flows for the six months were $190 million.
Management's outlook commentary focused on execution in the second half of fiscal 2025 and a stronger fiscal 2026. The next-generation platform Titanium X (Cloud Editions 25.2) is on target for fourth-quarter delivery. The company continues to point to total growth, margin expansion and free cash flow as priorities, and it invested $371.4 million, or 14.3% of revenue, in research and development on a fiscal year-to-date basis. It employed approximately 21,800 individuals as of December 31, 2024. On the risk side, customer support and license revenue remain under pressure even as cloud revenue grows. The company also flagged macroeconomic risks including inflation, tariffs, geopolitical conflicts and competition. Tax is a specific overhang. The Canada Revenue Agency has disputed transfer pricing for fiscal 2012 through 2016 and is auditing later years. OpenText said an adverse outcome could require an income tax expense of up to approximately $470 million with no immediate cash payment, reducing the value of deferred tax assets. The company strongly disagrees and is contesting the reassessments.
Forecast
Reported figures
GAAP, from SEC filings| Metric | Q2 FY2025 | Q1 FY2025 | QoQ | Q2 FY2024 | YoY |
|---|---|---|---|---|---|
| Revenue | $1.33B | $1.27B | +5.2% | $1.53B | -13.1% |
| Gross profit | $978.0M | $910.4M | +7.4% | $1.13B | -13.4% |
| Gross margin | 73.3% | 71.7% | +1.5 pp | 73.6% | -0.3 pp |
| Research & development | $180.7M | $190.7M | -5.2% | $220.2M | -17.9% |
| Sales & marketing | $273.9M | $245.9M | +11.4% | $280.3M | -2.3% |
| General & administrative | $99.4M | $106.7M | -6.9% | $173.3M | -42.7% |
| Total operating expenses | $682.2M | $704.1M | -3.1% | $875.3M | -22.1% |
| Operating income (loss) | $295.8M | $206.2M | +43.4% | $253.9M | +16.5% |
| Operating margin | 22.2% | 16.3% | +5.9 pp | 16.5% | +5.6 pp |
| Net income (loss) | $229.9M | $84.4M | +172.3% | $37.7M | +509.2% |
| Net margin | 17.2% | 6.7% | +10.6 pp | 2.5% | +14.8 pp |
| Diluted EPS | $0.87 | $0.32 | +$0.55 | $0.14 | +$0.73 |
Risks
The AMC Divestiture removed a significant revenue contributor, driving total revenue down 13.1% in the quarter and 12.1% year to date versus the prior-year periods, and total annual recurring revenue down 8.1% in the quarter. License revenue fell 34.7% in the quarter and 31.9% year to date, concentrated in customer support and license product types.
The CRA continues to dispute the company's transfer pricing methodology for Fiscal 2012 through Fiscal 2019 and is auditing Fiscal 2020. If the position is not successfully defended, the proposed adjustment could require recording income tax expense to reduce deferred tax assets by up to approximately $470 million, plus a possible cash tax impact over several future years.
License deal activity weakened, with 60 license contracts greater than $0.5 million closed in the second quarter of Fiscal 2025 versus 83 in the prior-year quarter, contributing $71.4 million versus $147.7 million. Customer support net renewal rate was 92% for the quarter ended December 31, 2024.
Operating cash flow decreased 32.1% year to date to $270.2 million, principally from a decrease in changes from working capital of $232.3 million primarily from tax payments made related to the AMC Divestiture.
The company flags potential increases or changes in U.S., Canadian or global tariff policies, escalating U.S.-Canada tensions, retaliatory measures, restrictive regulations or boycotts, inflation and higher labour costs as risks to results. Foreign exchange rate changes provided a favorable impact of $9.8 million to revenue in the quarter while revenue still declined.
Canada enacted the Global Minimum Tax Act imposing a 15.0% global minimum tax on profits, and certain other countries have enacted or are expected to enact similar legislation. The company states it is unable to predict when and how such rules will be enacted and that implementation could impact its liability for taxes.
The company continues to monitor the Russia-Ukraine and Middle East conflicts, has ceased all direct business in Russia and Belarus, and operates its Israeli-based business. It notes it cannot predict the broader consequences or expansion of these conflicts on the global economy or on its business, customers, partners and third party service providers.
SaaS KPIs
All quarters →Adjusted EBITDA
Adjusted EBITDA Margin
Enterprise Cloud Bookings
Free Cash Flow
Cloud Net Renewal Rate
Customer Support Net Renewal Rate
Summary, forecast, risks and KPIs are extracted from OPEN TEXT CORP's SEC filings for Q2 FY2025 (10-Q / 10-K and the 8-K earnings release); GAAP figures in the summary are checked against the reported XBRL data. They can contain errors; the filings are authoritative. Processed Oct 2, 2026.