Summary
OpenText reported fiscal 2026 third quarter revenue of $1,282.5 million, up 2.2% from the prior-year quarter. Strip out a favourable $54.6 million swing from foreign exchange rates and the top line was down 2.1%. Gross margin improved to 73.1%, up 1.5 percentage points, and gross profit rose 4.3% to $937.27 million. Amortization of acquired technology intangibles declined, and the gross margin on cloud services and subscriptions climbed to 64% from 62%.
Operating income moved the other way. It came in at $201.21 million, down 3.8%, and operating margin slipped to 15.7%, down 1.0 percentage point. Special charges drove the swing: they rose by $70.0 million, including $58.3 million of added restructuring costs tied to the Business Optimization Plan and $9.7 million of divestiture costs. Research and development expense fell on restructuring and other savings initiatives, while sales and marketing expense rose on higher headcount and commissions.
Net income attributable to OpenText was $172.65 million, up 86.0%, and diluted EPS was $0.70, up 100.0%. Other income included a $64.3 million gain on divestitures, partly offset by a $5.3 million loss on debt extinguishment from term loan prepayments. The effective tax rate rose to 16.6% from 10.5%. Through nine months, revenue was $3.90 billion, up 1.0%; operating income was $762.92 million, up 7.3%; net income was $487.36 million, up 19.7%; and diluted EPS was $1.94, up 26.8%. Year-to-date gross margin was 73.3%, up 1.1 percentage points, and operating margin was 19.6%, up 1.1 percentage points. Non-GAAP diluted EPS was $1.01 against $0.82, and adjusted EBITDA was $437.9 million against $395.3 million.
Cloud services and subscriptions revenue grew 6.6% to $492.9 million, or 3.2% after currency, and accounted for 38.4% of total revenue. Total annual recurring revenue was $1,057.8 million, up 2.7% but down 1.4% in constant currency. Cloud net renewal rate eased to 95% from 96%, while the customer support net renewal rate improved to 93% from 90%. Enterprise cloud bookings reached $196.0 million, up from $151.2 million, and the company closed 41 cloud services contracts above $1.0 million against 32 a year earlier. Customer support revenue fell $2.5 million to $564.8 million. License revenue rose 4.9% to $145.1 million, while professional services fell 7.4% to $79.6 million. EMEA revenue rose $47.4 million to $467.5 million and the Americas fell $17.6 million to $702.2 million.
Cash generation was uneven. Operating cash flow for the quarter was $354.59 million, down 11.8%, but the nine-month total of $821.02 million was up 22.1%, helped by prior-year tax payments that did not repeat. Capital expenditures were $49.72 million for the quarter, up 75.0%. Free cash flow, a non-GAAP measure, was $304.9 million against $373.8 million. Cash and cash equivalents stood at $1,254.1 million at March 31, 2026, versus $1,156.5 million at June 30, 2025. OpenText repurchased 9,679,300 common shares for $251.7 million and paid a quarterly dividend of $0.275 per share. Current deferred revenue slipped 1.2% to $1.51 billion.
Portfolio reshaping continued. The eDOCS divestiture closed on January 12, 2026 for $163.0 million, and the proceeds prepaid the same amount of the Acquisition Term Loan. The proposed $150.0 million sale of Vertica to Rocket Software, announced February 2, 2026, was expected to close during fiscal 2026. The Business Optimization Plan has incurred $215.0 million of costs against an expected total of up to $260.0 million, with annualized savings targeted at $490.0 million to $550.0 million. About 35% of those savings were realized in fiscal 2025 and another 35% is expected in fiscal 2026. Ayman Antoun was appointed chief executive officer, succeeding interim chief executive James McGourlay, who became president and chief client officer.
Management's updated full fiscal 2026 outlook, published May 7, 2026, calls for total revenue growth of 1% to 2%, cloud services and subscriptions growth of 4% to 5%, adjusted EBITDA margin expansion of 50 to 100 basis points, free cash flow growth of 22% to 25% and enterprise cloud bookings growth of 16% to 20%. The revenue outlook absorbs $30 million of lower second-half revenue from the two divestitures, split evenly between eDOCS and Vertica. The biggest overhang is tax. OpenText continues to contest Canada Revenue Agency reassessments that, if lost, could require an income tax charge reducing deferred tax assets by up to approximately $470 million. Tariff policy, currency swings and the leadership handover add further execution risk.
Forecast
Reported figures
GAAP, from SEC filings| Metric | Q3 FY2026 | Q2 FY2026 | QoQ | Q3 FY2025 | YoY |
|---|---|---|---|---|---|
| Revenue | $1.28B | $1.33B | -3.3% | $1.25B | +2.2% |
| Gross profit | $937.3M | $982.2M | -4.6% | $898.3M | +4.3% |
| Gross margin | 73.1% | 74.0% | -1.0 pp | 71.6% | +1.5 pp |
| Research & development | $171.2M | $158.3M | +8.1% | $197.3M | -13.3% |
| Sales & marketing | $282.6M | $288.0M | -1.9% | $260.1M | +8.7% |
| General & administrative | $108.7M | $110.1M | -1.3% | $115.7M | -6.1% |
| Total operating expenses | $736.1M | $690.4M | +6.6% | $689.2M | +6.8% |
| Operating income (loss) | $201.2M | $291.8M | -31.0% | $209.1M | -3.8% |
| Operating margin | 15.7% | 22.0% | -6.3 pp | 16.7% | -1.0 pp |
| Net income (loss) | $172.8M | $168.1M | +2.8% | $92.9M | +86.0% |
| Net margin | 13.5% | 12.7% | +0.8 pp | 7.4% | +6.1 pp |
| Diluted EPS | $0.70 | $0.66 | +$0.04 | $0.35 | +$0.35 |
| Net retention rate | 95.0% | — | — | — | — |
Risks
The Canada Revenue Agency has issued notices of reassessment for Fiscal 2012 through Fiscal 2021 disputing the company's transfer pricing methodology and depreciable asset basis. If OpenText is ultimately unsuccessful, the proposed adjustment could require an income tax expense, with no immediate cash payment, to reduce the stated value of deferred tax assets by up to approximately $470 million.
Cloud net renewal rate decreased to 95% in the quarter ended March 31, 2026 from 96% in the quarter ended March 31, 2025, excluding Carbonite and Zix. Enterprise-based customers contribute approximately 90% of total revenues, so declining renewal on the core base is a materially leveraged retention risk.
The company completed the eDOCS divestiture on January 12, 2026 and reached a definitive agreement to divest Vertica for $150.0 million, with the transaction expected to close during Fiscal 2026. Fiscal 2026 total revenue growth guidance includes $30 million of lower revenues in the second half of Fiscal 2026, of which $15 million is from eDOCS and $15 million from Vertica.
Trade tensions among the United States, Canada, China, the European Union and others have led to the dissolution of trade agreements and imposition of tariffs and other restrictive measures. OpenText cannot predict future trade policy, whether digital goods and services will be subject to tariffs, or the impact on the macroeconomic environment and its customers.
Total revenue growth in the quarter was offset by decreases in the Cybersecurity (Enterprise), Cybersecurity (SMB & Consumer), ITOM and Analytics product categories, even as total revenue rose 2.2% in the quarter ended March 31, 2026. Several core product categories are contracting while reported growth is narrowing on a constant-currency basis.
Effective April 20, 2026, Ayman Antoun was appointed Chief Executive Officer, succeeding interim CEO James McGourlay, who was appointed President, Chief Client Officer. The leadership transition follows a period of interim leadership, and research and development and general and administrative labour resources decreased to 6,613 and 2,699 employees at March 31, 2026 from 7,372 and 3,007 at March 31, 2025.
Special charges (recoveries) increased by $70.0 million in the quarter ended March 31, 2026 versus the prior-year quarter, primarily due to $58.3 million of higher Business Optimization restructuring costs and $9.7 million of higher divestiture costs. As of March 31, 2026, $215.0 million of the up to approximately $260.0 million expected Business Optimization Plan costs had been incurred.
SaaS KPIs
All quarters →Adjusted EBITDA
Adjusted EBITDA Margin
Non-GAAP Gross Margin
Enterprise Cloud Bookings
Cloud Services Contracts > $1.0M
Annual Recurring Revenue (ARR)
Summary, forecast, risks and KPIs are extracted from OPEN TEXT CORP's SEC filings for Q3 FY2026 (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 1, 2026.