Summary
OpenText's fiscal 2025 third quarter produced total revenue of $1,254.4 million, down 13.3% from the prior-year quarter. Two forces drove the decline. The AMC divestiture removed $133.5 million of revenue that had been in the year-ago period, and foreign exchange cost another $21.0 million. Adjusted for the AMC sale, revenue fell 4.5%. Cloud services and subscriptions was the only product line to expand, rising 1.8% and marking a 17th consecutive quarter of cloud organic growth. Customer support revenue dropped 17.9%, and license revenue fell 30.9%. Nine-month revenue of $3,857.9 million was down 12.5%.
Annual recurring revenue of $1,030.0 million slipped 10.1%, or 8.7% in constant currency, while enterprise cloud bookings reached $151.2 million, down 8.4%. Renewal behavior held up. The cloud net renewal rate was 96% excluding Carbonite and Zix, and the customer support net renewal rate was 90%. Days sales outstanding improved to 43 days from 45 in the prior-year quarter.
Profitability was mixed. Gross profit was $898.3 million, and the gross margin of 71.6% was down 1.3 percentage points. Operating income eased 7.9% to $209.1 million, but the operating margin of 16.7% was up 1.0 point because costs fell faster than revenue. GAAP net income attributable to OpenText was $92.8 million, down 5.6%, and diluted EPS was $0.35, down 2.8%. Non-GAAP results were weaker. Non-GAAP net income fell 16.0% to $215.8 million, and non-GAAP diluted EPS was $0.82, down 12.8%. Adjusted EBITDA of $395.3 million carried a 31.5% margin.
Cash generation was the clear bright spot. Operating cash flow rose 4.6% to $402.2 million, and free cash flow, a non-GAAP measure, grew 7.4% to $374 million. Capital expenditures fell 22.2% to $28.4 million. The nine-month view is less flattering. Operating cash flow of $672.4 million was down 14.1%, pressured by tax payments tied to the AMC divestiture. Even so, nine-month operating income of $711.1 million rose 2.5%, net income of $407.0 million climbed 87.7%, and diluted EPS of $1.53 nearly doubled. Deferred revenue, current portion, stood at $1,526.8 million, down 3.6%.
Management used the quarter to announce the final phase of its Business Optimization Plan. The expansion adds up to roughly $200 million of costs and lifts the combined plan to about $260 million. It targets a total net reduction of about 2,000 positions, an increase of about 1,600 from the earlier plan. OpenText now expects total annualized savings of $490 million to $550 million, with roughly half realized in fiscal 2026 and the remainder in fiscal 2027. The plan should be substantially complete by the second quarter of fiscal 2027. As of March 31, 2025, $57.1 million of the original $60.0 million had run through special charges. Research and development spending of $568.8 million was 14.7% of revenue, in line with the target for the fiscal year. The company returned $183 million of capital, including $68 million of dividends and $115 million of buybacks, and declared a quarterly dividend of $0.2625 per share. It also raised the authorized limit of its fiscal 2025 repurchase plan by $150 million to $450 million.
Risks are easy to name. Management flagged demand volatility and persistent tariff uncertainty, which could weigh on customer spending. The Canada Revenue Agency continues to contest the company's transfer pricing, and an adverse outcome could force an income tax charge of up to about $470 million against deferred tax assets with no immediate cash payment. With license and customer support revenue shrinking, the burden of defending margins falls on cost cuts and cloud growth, leaving the revenue trajectory as the central question for the rest of fiscal 2025.
Forecast
Reported figures
GAAP, from SEC filings| Metric | Q3 FY2025 | Q2 FY2025 | QoQ | Q3 FY2024 | YoY |
|---|---|---|---|---|---|
| Revenue | $1.25B | $1.33B | -6.0% | $1.45B | -13.3% |
| Gross profit | $898.3M | $978.0M | -8.2% | $1.06B | -14.9% |
| Gross margin | 71.6% | 73.3% | -1.7 pp | 73.0% | -1.3 pp |
| Research & development | $197.3M | $180.7M | +9.2% | $234.0M | -15.7% |
| Sales & marketing | $260.1M | $273.9M | -5.0% | $296.2M | -12.2% |
| General & administrative | $115.7M | $99.4M | +16.5% | $145.9M | -20.7% |
| Total operating expenses | $689.2M | $682.2M | +1.0% | $828.7M | -16.8% |
| Operating income (loss) | $209.1M | $295.8M | -29.3% | $227.1M | -7.9% |
| Operating margin | 16.7% | 22.2% | -5.5 pp | 15.7% | +1.0 pp |
| Net income (loss) | $92.9M | $229.9M | -59.6% | $98.3M | -5.6% |
| Net margin | 7.4% | 17.2% | -9.8 pp | 6.8% | +0.6 pp |
| Diluted EPS | $0.35 | $0.87 | -$0.52 | $0.36 | -$0.01 |
Risks
Total revenue fell 13.3% to $1,254.4 million in the quarter and 12.5% year to date, driven primarily by the exclusion of the divested AMC business and a $21.0 million unfavorable foreign exchange impact in the quarter. License revenue dropped 30.9% in the quarter, reflecting both the AMC Divestiture and prior-year IP rights grants that did not recur.
The Canada Revenue Agency has reassessed OpenText's transfer pricing and depreciable basis for Fiscal 2012 through Fiscal 2020. If unsuccessful, the proposed adjustment could result in an income tax expense reducing deferred tax assets by up to approximately $470 million, with a corresponding cash tax impact over future years.
Management flagged uncertainty from escalating trade tensions and potential tariffs among the United States, Canada, China and the European Union, noting that while these measures do not currently cover software and digital services, future policy could subject them to tariffs or restrictions and pressure customer spending.
The Board expanded the Business Optimization Plan, adding up to approximately $200.0 million of costs (total plan approximately $260.0 million) and roughly 2,000 net position reductions, expected to be substantially complete by the second quarter of Fiscal 2027. Execution and realized savings targets of $490.0 million to $550.0 million carry delivery risk.
The filing repeatedly cites risks tied to realizing anticipated synergies from the Micro Focus Acquisition, successfully integrating acquired assets to full capacity, and the change in scope and size of operations following the acquisition and AMC Divestiture, including transition services obligations under the TSA.
OpenText frames its growth strategy around embedding AI in products (such as Titanium X) and deploying AI and automation, implying competitive pressure to innovate and modernize toward cloud-native offerings to defend its Information Management market position.
Foreign exchange movements materially affected results, with total revenue down 11.9% after factoring in $21.0 million of unfavorable FX in the quarter and annual recurring revenue down 8.7% after a $16.2 million unfavorable FX impact. Realized losses of $10.4 million on terminated cross currency swaps also weighed on other income.
SaaS KPIs
All quarters →Adjusted EBITDA
Adjusted EBITDA Margin
Non-GAAP Gross Margin
Enterprise Cloud Bookings
Free Cash Flow
Cloud Services Contracts > $1.0M
Non-GAAP Operating Income
Annual Recurring Revenue (ARR)
Cloud Net Renewal Rate
Customer Support Net Renewal Rate
Summary, forecast, risks and KPIs are extracted from OPEN TEXT CORP's SEC filings for Q3 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.