OPEN TEXT CORP

Recommendation history

• Q4 2024HoldHold: OpenText delivered Q4 revenue of $1.36 billion, cloud revenue up 3%, adjusted EBITDA of $445 million, and free cash flow of $145 million, but ex-AMC revenue fell 4% as license declines continued. Fiscal 2025 guidance calls for only $5.3-$5.4 billion of revenue, or 0%-1% growth ex-AMC, alongside up to 5% organic cloud growth and 33%-34% adjusted EBITDA margins; the attractive $570 million-plus capital return and margin expansion are offset by weak near-term growth and execution risk.
• Q2 2026HoldHOLD: OpenText delivered Q2 revenue of $1.33 billion, cloud revenue growth of 3.4%, enterprise cloud bookings growth of 18%, adjusted EBITDA margin of 37.0%, and non-GAAP EPS of $1.13. The core Content business is gaining traction—content cloud revenue grew 18%—but total growth remains only 1%–2% guided for FY26, while AI monetization is unproven, other product lines lag, and the investment case depends heavily on a Q4 acceleration and successful portfolio reshaping.
• Q1 2026HoldHOLD: OpenText delivered a solid Q1, with revenue of $1.30 billion (+1.5%), cloud revenue of $485 million (+6%), adjusted EBITDA margin of 36.3%, and adjusted EPS of $1.05 (+12.9%). The bull case is accelerating Content Cloud growth (+21%) and strong RPO/bookings, but the Q2 revenue guide of $1.275-$1.295 billion, license-revenue volatility, unresolved ITOM stabilization, cybersecurity weakness, and ongoing CEO transition do not yet make this a clean buy.
• Q4 2025HoldHold: OpenText exited FY25 with strong cash generation and cloud backlog, but the FY26 outlook still implies only 1%–2% total revenue growth and 3%–4% cloud growth. The bull case is $2.5 billion of cloud RPO up 13%, bookings up 10% in FY25 with 12%–16% growth guided for FY26, and 50–100 bps of adjusted EBITDA margin expansion; the tension is that cybersecurity declined 4%, maintenance remains in decline, and the acceleration relies on unproven turnarounds in Cybersecurity and Business Network.
• Q2 2024HoldHold: OpenText delivered strong Q2 execution—$1.3B revenue (+71%), $566M adjusted EBITDA (36.9% margin), $305M free cash flow and enterprise cloud bookings up 63%—but the underlying organic growth case remains less compelling, with FY24 organic revenue growth guided to only 1%-2% and cloud revenue growth of 6%-8%. The bull case is improving Micro Focus renewals, AI-related bookings and planned deleveraging after the AMC sale; the tension is $8.5B of debt, 3.7x net leverage and an unquantified Aviator revenue opportunity whose bookings convert mainly in FY25-FY26.
• Q2 2025HoldHOLD: OpenText delivered strong Q2 profitability and cash flow—$501.5 million adjusted EBITDA, 37.6% margin, $306.7 million free cash flow—but cut FY25 revenue guidance by $130 million to $5.17-$5.27 billion. The bull case is record $250 million of cloud bookings and a $2.3 billion cloud RPO base; the key tension is that ADM and ITOM remain in decline, maintenance growth will be negative, and the promised Q4 return to organic growth is still unproven.
• Q1 2024HoldHOLD: OpenText delivered a strong Q1 with $1.43B revenue, 34.7% adjusted EBITDA margin, $495M adjusted EBITDA and 11.5% cloud growth, while reaffirming FY24 revenue of $5.85B-$5.95B and $800M-$900M free cash flow. The bull case is improving Micro Focus renewals and a potential SaaS/AI bookings inflection, but $8.9B of debt, 3.6x net leverage and unproven AI monetization keep this from being a clean buy after the call.