Summary
OpenText finished Fiscal 2026 with fourth-quarter revenue of $1.35 billion, up 2.9% from the prior-year quarter. GAAP operating income of $319.7 million rose 76.1%, and GAAP net income of $155.7 million rose 439.9%. Gross margin climbed to 75.0%, up 2.7 percentage points, and operating margin reached 23.7%, up 9.8 percentage points. Operating expenses fell year over year even though sales and marketing spending increased. A swing in other income and expense and a far smaller special charges line did much of the work on the bottom line.
The full fiscal year reads differently, with slower top-line growth and a cleaner cost structure. Revenue was $5.25 billion, up 1.5%. GAAP net income was $643.0 million, up 47.5%, and diluted EPS was $2.58, up 56.4%. GAAP operating income reached $1.08 billion, up 21.3%, with an operating margin of 20.6%, up 3.4 percentage points. Gross margin for the year was 73.7%, up 1.5 percentage points. Annual recurring revenue was $4.246 billion, up 1.3%, and enterprise cloud bookings for the year were $947 million, up 22.5%.
Cash generation strengthened over the year but came under pressure in the final quarter on a year over year basis. Operating cash flow was $185.8 million in the quarter, up 17.5%, and $1.01 billion for the year, up 21.2%. Capital expenditures were $63.8 million in the quarter, up 86.5%, and $199.3 million for the year, up 39.2%. Free cash flow, which the company defines as operating cash flow less capital expenditures, was $122.0 million in the quarter, down 1.6%, and $807.5 million for the year, up $120.1 million. Deferred revenue, current portion only, was $1.48 billion, down 2.1% from a year earlier, a soft signal on near-term billings. Management said it met all of its Fiscal 2026 outlook metrics other than free cash flow and tied that gap to the timing of payments at the end of the period.
Portfolio shaping continued. OpenText closed the $150 million sale of Vertica to Rocket Software on May 11, 2026, after the $163 million divestiture of eDOCS in January 2026, and put the proceeds toward debt repayment. Fourth-quarter enterprise cloud bookings were $295 million, up 24.1%. Adjusted EBITDA for the year was $1.903 billion at a 36.3% margin, and non-GAAP diluted EPS was $4.42, up 15.7%. Non-GAAP net income attributable to OpenText was $299 million in the quarter, up 19.7%.
Guidance issued August 6, 2026 covers the full fiscal year 2027. On a constant currency basis, the company targets total revenue growth of 2% to 3% from its Content, Business Network, ITOM and Cybersecurity (Enterprise) product categories, with cloud revenue growth from those same categories of 8% to 10%. Adjusted EBITDA margin guidance is 32% to 33%, and free cash flow guidance is $625 million to $725 million. Management calls Fiscal 2027 a foundation year, with spending aimed at expanding sales capacity, deepening ecosystem partnerships and investing in the core portfolio. It also flagged that an enterprise assessment now under way could lead to adjusted outlook metrics.
Capital returns stayed active. The board declared a quarterly dividend of $0.28 per common share, payable September 18, 2026 to holders of record on September 4, 2026, and the company renewed a repurchase plan for up to 23,846,439 common shares, 10% of its public float, running from August 12, 2026 to August 11, 2027. Under the prior plan it repurchased 14,273,800 shares for about $392 million at an average price of US$27.49. Risks named in the filing include tariffs and shifting trade policy, geopolitical conflicts such as Russia-Ukraine and the Middle East, currency swings, delayed client purchasing decisions and tax audits. The Business Optimization Plan has consumed $223.9 million of an expected total of up to roughly $260.0 million and is targeted to deliver $490 million to $550 million in annualized savings, with about 70% realized across Fiscal 2025 and 2026 and the balance expected in Fiscal 2027.
Forecast
Reported figures
GAAP, from SEC filings| Metric | Q4 FY2026 | Q3 FY2026 | QoQ | Q4 FY2025 | YoY |
|---|---|---|---|---|---|
| Revenue | $1.35B | $1.28B | +5.2% | $1.31B | +2.9% |
| Gross profit | $1.01B | $937.3M | +7.9% | $947.7M | +6.7% |
| Gross margin | 75.0% | 73.1% | +1.9 pp | 72.3% | +2.7 pp |
| Research & development | $149.1M | $171.2M | -12.9% | $187.2M | -20.3% |
| Sales & marketing | $308.4M | $282.6M | +9.1% | $279.6M | +10.3% |
| General & administrative | $112.0M | $108.7M | +3.1% | $106.0M | +5.7% |
| Total operating expenses | $691.8M | $736.1M | -6.0% | $766.1M | -9.7% |
| Operating income (loss) | $319.7M | $201.2M | +58.9% | $181.6M | +76.1% |
| Operating margin | 23.7% | 15.7% | +8.0 pp | 13.8% | +9.8 pp |
| Net income (loss) | $155.7M | $172.8M | -9.9% | $28.9M | +439.1% |
| Net margin | 11.5% | 13.5% | -1.9 pp | 2.2% | +9.3 pp |
| Diluted EPS | $0.62 | $0.70 | -$0.08 | $0.11 | +$0.51 |
| Net retention rate | 94.0% | 95.0% | -1.0 pp | — | — |
Risks
Competitors may use AI tools to generate software code that replicates the functions of OpenText's data management products or to offer solutions that bypass OpenText altogether, and the actual and perceived disruption from AI has already negatively impacted the valuation of software company stocks, including OpenText's Common Shares. Management frames the business as providing the secure data foundation in the AI stack, making competitive displacement by AI-native alternatives a direct threat to demand.
Total revenue for Fiscal 2026 was $5,246.4 million, up 1.5% compared to the prior fiscal year, but down 0.5% after excluding the favourable impact of $136.0 million of foreign currency exchange rates and adjusting for divested eDOCS and Vertica revenues. Total annual recurring revenue was $4,246.0 million, up 1.3%, but down 1.2% after excluding the favourable impact of $105.7 million of foreign exchange rate changes, with decreases in the Cybersecurity (Enterprise), Cybersecurity (SMB & Consumer) and Analytics product categories.
In the fourth quarter of Fiscal 2026 the company launched an end-to-end enterprise assessment covering go-to-market strategy, portfolio composition, sales and marketing enablement and execution model, which may lead to divestitures, workforce changes and additional restructuring charges. OpenText states that as a result of the assessment its outlook metrics, or the categories in which they are presented, may be adjusted or removed, making period-to-period comparisons of results more difficult for investors and analysts.
A significant portion of revenue depends on the installed client base, and service contracts are generally renewable at the client's option with no mandatory payment obligations. As clients transition from perpetual license and support arrangements to cloud subscriptions, revenue recognition shifts from upfront to ratable, and cancellation, non-renewal or failure to purchase additional products would reduce revenue; deferred revenue (current portion) was $1.48 billion for FY2026 Q4, down 2.1% versus the prior-year quarter.
The length of the sales cycle can fluctuate significantly because licensing decisions often involve a comprehensive implementation across the client's network, requiring significant resource commitment. Delays in a client's decision or implementation shift the timing of revenue recognition, and management notes pipeline estimates are an unreliable predictor of actual sales activity, particularly given actual and perceived disruptions from AI and weakened economic conditions.
Escalating trade tensions among the United States, China, Canada, the EU and others have resulted in tariffs, export controls and other restrictive measures. Although these have primarily targeted physical goods, OpenText cannot predict whether additional tariffs or non-tariff barriers will apply to digital goods and services, or whether cross-border data flow, digital services taxation or intellectual property transfer frameworks will be expanded, any of which could increase costs or limit the ability to sell in certain markets.
As of June 30, 2026, credit facilities consisted of a $2.23 billion Acquisition Term Loan and a $750 million committed revolving credit facility that is currently undrawn, alongside $4.3 billion in aggregate principal amount of senior notes outstanding across 2027 through 2031 maturities. The Acquisition Term Loan and Revolver include restrictive covenants and a maximum consolidated net leverage ratio, and failure to comply could result in default and all or part of outstanding borrowings becoming immediately due and payable.
OpenText has experienced attempts by third parties to identify and exploit product and services vulnerabilities and penetrate or bypass its security measures. The development and proliferation of AI applications may increase exposure to cyber-attacks, with threat actors using generative AI to develop more automated and harder to detect attack methods such as deepfakes and AI-generated phishing, and the deployment of agentic AI systems with access to infrastructure and data could expand the attack surface if controls prove inadequate.
The Russia-Ukraine and Middle East conflicts and other geopolitical disputes raise risks of volatile financial markets, adverse changes in trade and tariff policies, supply chain disruptions and increased cybersecurity threats. OpenText has ceased all direct business in Russia and Belarus, and sanctions and export controls compliance could impact fulfilment of contracts with clients and partners doing business in affected areas and future revenue from those parties and countries.
SaaS KPIs
All quarters →Adjusted EBITDA
Adjusted EBITDA Margin
Non-GAAP Gross Margin
Enterprise Cloud Bookings
Free Cash Flow
Non-GAAP Operating Income
Summary, forecast, risks and KPIs are extracted from OPEN TEXT CORP's SEC filings for Q4 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 2, 2026.