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OPEN TEXT (OTEX)·Q2 2026 Earnings Summary

OpenText Beats on EPS and Revenue as Cloud Momentum Continues, But Stock Falls 3%

February 5, 2026 · by Fintool AI Agent

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OpenText Corporation (NASDAQ: OTEX) reported Q2 FY2026 results that beat on both revenue and earnings, delivering $1.33 billion in total revenue and Non-GAAP EPS of $1.13. Despite the solid beat, shares fell ~3% in trading as revenue declined 0.6% year-over-year and investors digested CEO transition news and ongoing portfolio divestitures.

Did OpenText Beat Earnings?

Yes — OpenText delivered a clean beat across all key metrics.

MetricActualConsensusSurprise
Revenue$1.33B $1.29B+3.1%
Non-GAAP EPS$1.13 $1.03+10.2%
Adjusted EBITDA$491M $461M+6.5%

Consensus estimates from S&P Global Capital IQ.

Cloud revenue of $478 million grew 3.4% year-over-year, marking 20 consecutive quarters of cloud organic growth. Enterprise cloud bookings surged 18% to $295 million, signaling strong demand for OpenText's cloud transformation.

Historical Beat/Miss Record

OpenText has beaten EPS estimates in 7 of the last 8 quarters:

QuarterEPS ActualEPS Est.Result
Q2 FY24$1.24$1.19✓ Beat
Q3 FY24$0.94$0.94✓ Meet
Q4 FY24$0.98$1.01✗ Miss
Q1 FY25$0.93$0.80✓ Beat
Q2 FY25$1.11$0.93✓ Beat
Q3 FY25$0.82$0.76✓ Beat
Q4 FY25$0.97$0.83✓ Beat
Q2 FY26$1.13$1.03✓ Beat

Values retrieved from S&P Global.

How Did the Stock React?

OpenText shares fell 3.1% on earnings day, closing at $22.79 from a previous close of $23.51. The stock touched an intraday low of $22.66 — just above its 52-week low of $22.44.

Why the sell-off despite beats?

  • Revenue declined 0.6% Y/Y — investors want growth, not just margin expansion
  • GAAP net income fell 26.9% Y/Y to $168M due to lower other income
  • CEO transition introduces uncertainty ahead of April 2026 handoff
  • Customer support revenue (largest segment at $582M) declined 1.5% Y/Y
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What Did Management Guide?

OpenText provided explicit guidance for both Q3 FY26 and the full fiscal year:

FY26 Full Year Outlook

MetricFY26 Outlook
Total Revenue Growth1% to 2% (Core business growing in CC)
Cloud Revenue Growth3% to 4%
Enterprise Cloud Bookings Growth12% to 16%
A-EBITDA Margin Growth+50 bps to +100 bps
Free Cash Flow Growth17% to 20%
Dividend Growth+5% per share
Share Repurchases$300M

Q3 FY26 Outlook

  • Total revenue: $1,260M - $1,280M (reflects ~$7M reduction from eDOCS divestiture)
  • A-EBITDA margin: 33.0% - 33.5% (seasonally lower quarter)
  • FY26 revenues reduced ~$15M to reflect eDOCS divestiture
  • Vertica divestiture (~$80M annual revenue) expected to close in FY26

CFO Steve Rai:

"The strength of the OpenText operating model continues to drive our business to meet the Company's margin targets for Fiscal 2026. Our robust cash flow engine provides the scale and capital flexibility to continue investing for growth within our core Enterprise Information Management for AI market."

Executive Chair Tom Jenkins on portfolio optimization:

"We are executing on our strategic plan, focusing on our core product offerings, our expertise in secure data for Enterprise AI, and cloud solutions that provide strategic choice and flexibility for our customers. By rationalizing non-core assets, we are strengthening the portfolio, reinforcing our capital allocation framework, and positioning OpenText to accelerate long-term growth and shareholder value."

Forward Estimates (Consensus)

MetricQ3 FY26Q4 FY26FY 2026FY 2027
Revenue$1.28B$1.35B$5.21B$5.30B
Non-GAAP EPS$0.96$1.10$4.14$4.46
EBITDA$436M$478M$1.84B$1.94B

Consensus estimates from S&P Global Capital IQ.

Revenue By Product Segment

OpenText's Core Business (Content, Business Network, ITOM, Cybersecurity Enterprise) now comprises 77% of revenue and is growing while Non-Core categories decline:

OpenText Q2 FY2026 Segment Breakdown

Total Revenue by Product Category

SegmentQ2 FY26% of TotalY/Y Growth
Content$573M43%+4%
Business Network$160M12%0%
ITOM$113M9%-1%
Cybersecurity (Enterprise)$174M13%-10%
Core Business Total$1,021M77%+1%
Cybersecurity (SMB + Consumer)$128M10%-6%
ADM$120M9%-3%
Analytics$58M4%-5%
Non-Core Total$306M23%-4%

Cloud Revenue by Product Category

Content Cloud is leading growth at +18% Y/Y:

SegmentQ2 FY26 Cloud% of CloudY/Y Growth
Content$138M29%+18%
Business Network$151M32%+1%
ITOM$8M2%+67%
Cybersecurity (Enterprise)$18M4%-15%
Core Business Cloud$315M66%+8%
Cybersecurity (SMB + Consumer)$117M25%-5%
ADM$28M6%+4%
Analytics$18M4%-8%
Non-Core Cloud$163M34%-4%

What Changed This Quarter?

Leadership Transition

OpenText announced Ayman Antoun as the new CEO, effective April 20, 2026. Antoun brings over three decades of global technology and transformation leadership:

  • President of IBM Americas
  • President of IBM Canada and General Manager, Global Technology Services
  • SVP of Business Market Sales at Bell Canada
  • Currently serves on the boards of TD Bank and CAE

Incoming CEO Ayman Antoun:

"OpenText's core product portfolio, which is the foundation for training agentic AI, combined with its worldwide client base offers the Company a competitive advantage as trusted data is now essential to how economies, nations and businesses operate around the world. I am energized by the opportunity to lead OpenText into its next chapter and look forward to working with the Board and leadership team to accelerate the Company's growth strategy and deliver long-term shareholder value."

Portfolio Reshaping Continues

  • Vertica divestiture announced: $150 million sale to Rocket Software (Bain Capital) — ~$80M annual revenue, expected to close FY26, proceeds to reduce debt
  • eDOCS divestiture completed: $163 million received for non-core product
  • Strategy: "Building a leaner OpenText focused on growth" in Enterprise Information Management for AI

Business Optimization Plan Progress

OpenText's cost optimization program is on track with $490M-$550M in total targeted savings:

  • FY25: 35% realized
  • FY26: 35% expected
  • FY27+: 30% remaining
  • ROI: >2x return on benefit vs. cost
  • Savings being reinvested in Go-To-Market, Cloud, AI, and Security

Board Refresh

Four new board members appointed in 2025, including John Hastings and Margaret Stuart in December 2025.

Capital Returns

  • Dividend: $0.275 per share declared (record: March 6, payment: March 20)
  • Share repurchases: $50 million in Q2
  • Total capital returns: $119 million in the quarter

Key Financial Metrics

MetricQ2 FY26Q2 FY25Change
Total Revenue$1,327M $1,335M-0.6%
Cloud Revenue$478M $462M+3.4%
Customer Support$582M $591M-1.5%
License$184M $189M-2.5%
ARR$1,060M $1,053M+0.7%
GAAP Gross Margin74.0% 73.3%+70 bps
Non-GAAP Gross Margin77.6% 77.2%+40 bps
Adj. EBITDA Margin37.0% 37.6%-60 bps
Operating Cash Flow$319M $348M-8.4%
Free Cash Flow$279M $307M-8.9%

Year-to-Date Performance (H1 FY26)

MetricH1 FY26H1 FY25Change
Total Revenue$2,615M $2,604M+0.4%
Cloud Revenue$963M $919M+4.7%
Non-GAAP EPS$2.18 $2.03+7.4%
Free Cash Flow$381M $190M+100.8%
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RPO and Cloud Backlog

Remaining Performance Obligations (RPO) show strong cloud demand visibility:

RPO CategoryQ2 FY26Q2 FY25Y/Y Growth
Cloud cRPO$1.3B$1.2B+9%
Customer Support cRPO$1.4B$1.4B+2%
Total cRPO$2.7B$2.6B+5%
Cloud Long-Term RPO$1.3B$1.1B+18%
Customer Support Long-Term RPO$0.5B$0.4B+23%
Total Long-Term RPO$1.8B$1.5B+20%
Total RPO$4.5B$4.1B+11%

Enterprise Cloud Bookings of $295M (+18% Y/Y) with FY26 outlook for 12-16% growth.

Balance Sheet Highlights

MetricDec 31, 2025June 30, 2025
Cash & Equivalents$1.27B $1.16B
Total Debt$6.37B $6.38B
Total Assets$13.57B $13.77B
Total Equity$4.05B $3.93B
Goodwill$7.43B $7.52B
Deferred Revenue$1.62B $1.68B

Debt Profile Detail

InstrumentPrincipalInterest Rate
Senior Notes 2031$650M4.125%
Senior Notes 2030$900M4.125%
Senior Notes 2029$850M3.875%
Senior Notes 2028$900M3.875%
Senior Secured Notes 2027$1,000M6.90%
Acquisition Term Loan$2,167M5.67%
Total Principal$6,467M
  • Fixed Debt: 66% of total
  • Weighted Avg Interest Rate: 5.0%
  • Annualized Interest Cost: $324M
  • Consolidated Net Leverage Ratio: 3.35x

The company maintains strong cash flow generation to service debt and returns capital via dividends and buybacks.

Key Customer Wins

Notable Q2 FY26 customer wins with detailed use cases:

CustomerSolutionUse Case
US BankCybersecurity App Security HostedMigrated from on-premises to hosted architecture for scalability and infrastructure-as-a-service model
Central Clinical LabsBusiness Network EMR IntegrationExpanded to Laboratory Orders to reduce staffing hours, eliminate transcription errors, speed insurance payments
BNP Paribas Personal FinanceCybersecurity App SecuritySingle integrated application security stack for earlier SDLC vulnerability detection, cheaper remediation
SolenisContent Extended ECM for SAPIntegrated ECM with SAP for global document management, compliance, and unified collaboration platform
AtosADM Core Software Delivery PlatformHybrid testing environment with GenAI and SaaS for end-to-end test monitoring powered by AI

Additional wins included: Desjardins, Turkcell, Dairy Farmers of America, Ricoh Corporation, Raiffeisen Informatik Consulting.

Q&A Highlights

The earnings call Q&A provided key insights on AI positioning, cloud strategy, and growth outlook:

Why AI Won't Disrupt OpenText

When asked whether AI could disrupt OpenText's content management business (referencing Anthropic news), Executive Chair Tom Jenkins provided a clear response:

"The simple answer is OpenText doesn't make applications. We feed content into applications. So we feed content into training Agentic AI, which then can go and replace certain application software. But you still need the content, whether you're providing the content to a human being using an application on a console or you're providing the content into a robot that's being trained to do the same thing."

Agentic AI Adoption: Still Very Early

On customer adoption of AI Aviator tools:

"We are so early. You can't even say we're in early innings. We're really at the first batter... Most of our customers are anticipating the need. So what they're doing is they're actually getting their content in order. They've run some prototypes, but this is a long way to go. This is the re-engineering of decades of industrial software."

Key insights on AI readiness:

  • Customers focused on data curation and preparation for AI training
  • Permission management is critical — AI trained on GDPR-restricted data inherits those restrictions
  • OpenText positioning for enterprise/private AI (behind the firewall), not public LLMs
  • AI Data Platform shipping Q3 FY26 with 1,500+ connectors to ERP/CRM/ITOM systems

Cloud Migration: No Revenue Dip Expected

Interim CEO James McGourlay and Tom Jenkins emphasized the cloud transition will be accretive:

"We do not anticipate a dip in revenue. This is a very encouraging development for us... We get to benefit from the learning curve that [other enterprise software companies] went through. So we're anticipating just pure growth from it."

Cloud migration approach:

  • Going to hyperscalers (AWS, Azure, GCP) for majority of workloads
  • Sovereign cloud options for regulated data where required
  • Customers "actively engaging... building out plans to migrate"
  • Deals take longer cycle time but pipeline is building

OpenText World Customer Examples

Featured AI adoption use cases at the November conference:

  • IBM: Using Content Aviator for 280,000+ employees worldwide
  • United Airlines: ITOM Aviator to reduce critical incident resolution time
  • Honda: Business Network Aviator for autonomous supply chain issue resolution

Divestiture Pace and Valuation

On the one-per-quarter divestiture cadence:

"The buyers are generally financial buyers. These are really driven valuations by discounted cash flows... We're pretty confident that [we can do one per quarter] and [valuations are holding]."

Tuck-In M&A Focus

On future acquisitions:

"The tuck-ins we're referring to is capacity to deliver training to AI. We're actually not focusing on software application products... We're focusing on subject matter experts. That's what we need to be able to deploy faster... a couple hundred experts in automotive or pharmaceutical."

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What to Watch Going Forward

  1. CEO Transition (April 2026): Will Ayman Antoun accelerate growth initiatives or continue margin focus?
  2. Cloud Acceleration: Can cloud growth accelerate beyond mid-single digits to offset support/license declines?
  3. AI Monetization: OpenText unveiled next-gen AI Data Platform at OpenText World — watch for Aviator AI adoption metrics
  4. M&A Optionality: With divestitures generating $300M+ cash, will OpenText pursue acquisitions or debt paydown?
  5. Dividend Sustainability: 4.8% yield at current prices is attractive but requires continued cash flow strength
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Related Documents

Data sources: OpenText 8-K filed February 5, 2026; OpenText Investor Presentation February 5, 2026; S&P Global Capital IQ for consensus estimates and historical financials.