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    OTEX
    Earnings call· Mar 2026(Q3 FY26)

    OPEN TEXT Q3 FY26 earnings call OTEX

    May 7, 2026 Source

    Executive summary

    OpenText Q3 FY26 — Strong Cloud Performance and Increased Guidance

    OpenText reported a strong Q3 FY26, driven by robust cloud performance and increased guidance for cloud revenue, bookings, and free cash flow. New CEO Ayman Antoun is focused on disciplined execution across the core portfolio, leveraging data management expertise for AI, and meeting diverse client cloud deployment needs. The company is also navigating a challenging divestiture market while prioritizing shareholder value.

    Highlights

    5

    • Total revenues of $1.28 billion, beating internal expectations.

    • Cloud revenue reached $493 million, up 6.6% year-over-year, marking the highest in company history.

    • Q3 adjusted EPS of $1.01, the highest Q3 in company history, up 23.2% year-over-year.

    • Year-to-date enterprise cloud bookings of $651 million, the highest Q3 year-to-date in company history.

    • Increased fiscal 2026 cloud revenue growth guidance from 3-4% to 4-5% year-over-year.

    Concerns

    5

    • Cloud net renewal rate was 95%, down slightly by 1% year-over-year.

    • Q3 free cash flow was $305 million, down 18.4% year-over-year.

    • Customer support revenue declined 0.4% in Q3.

    • Lingering impact from the U.S. government shutdown affected some contracts in the Americas.

    • Geopolitical and macro uncertainty created a more selective buyer environment for divestitures.

    Guidance & targets

    4
    CategoryTargetConfidence
    Total revenue growth
    1% to 2%
    high materiality
    High
    Cloud revenue growth
    4% to 5%
    high materiality
    High
    Enterprise cloud bookings growth
    16% to 20%
    high materiality
    High
    Free cash flow growth
    22% to 25%
    high materiality
    High

    Segment performance

    3
    SegmentRevenueYoYQoQMargin
    Total Content Business
    Largest and fastest-growing business, demonstrating strength.
    		44% of total revenues6%——
    Cloud Revenue for Content
    Leads overall cloud growth.
    		—22%——
    Core Cloud Business
    Continues to grow as clients make fundamental decisions on cloud and AI needs.
    		—12%——

    Operational metrics

    30
    Total revenues
    $1.28 billion
    Q3 FY26

    Beat expectations.

    Cloud revenue
    $493 millionup 6.6% YoY
    Q3 FY26

    Highest in company history. 21st consecutive quarter of organic cloud growth.

    Customer support revenue
    $565 milliondown 0.4%
    Q3 FY26

    Slight decline.

    Annual recurring revenue (ARR)
    $1.06 billionup 2.7% YoY
    Q3 FY26

    Consistent year-over-year as a percentage of total revenue.

    GAAP gross margin
    73.1%up 150 bps YoY
    Q3 FY26

    Driven by increase in cloud, customer support, and license gross margins, partially offset by professional services.

    Non-GAAP gross margin
    76.7%up 100 bps YoY
    Q3 FY26

    Driven by increase in cloud, customer support, and license gross margins, partially offset by professional services.

    Adjusted EBITDA
    $438 millionup 10.8%
    Q3 FY26

    Driven by cost management actions and business optimization plan.

    Adjusted EBITDA margin
    34.1%up 260 bps YoY
    Q3 FY26

    Driven by cost management actions and business optimization plan.

    GAAP net income
    $173 millionup 86% YoY
    Q3 FY26

    Largely due to sale of eDOCS and unrealized derivative gains.

    Non-GAAP net income
    $250 millionup 15.9% YoY
    Q3 FY26
    GAAP diluted EPS
    $0.70up 100% YoY
    Q3 FY26
    Non-GAAP diluted EPS
    $1.01up 23.2% YoY
    Q3 FY26

    Highest Q3 in company history.

    Cloud net renewal rate
    95%down 1% YoY
    Q3 FY26

    Consistent with annual model.

    Customer support net renewal rate
    93%up 3% YoY
    Q3 FY26
    Cloud deals greater than $1 million
    41increase of 28% YoY
    Q3 FY26
    Share buyback program
    $500 millionincreased from $300 million
    FY26

    Increased earlier this year.

    Shares repurchased and canceled
    9.7 million shares
    Q3 FY26
    Share count reduction
    6.7%YoY
    Q3 FY26
    Shares outstanding
    242.2 million shares
    Q3 FY26
    Total revenue growth
    1%YoY
    YTD FY26
    Cloud revenue growth
    5.3%YoY
    YTD FY26
    License revenue growth
    2.4%YoY
    YTD FY26
    Customer support revenue growth
    -1.1%YoY
    YTD FY26
    Professional services revenue growth
    -9.3%YoY
    YTD FY26
    Adjusted EBITDA margin
    35.8%up 110 bps
    YTD FY26
    Non-GAAP diluted EPS
    $3.19up 11.9%
    YTD FY26

    Tied with highest Q3 year-to-date figure ever in Q3 FY24.

    Business optimization plan savings
    approximately 1/3
    FY26

    Plan remains on track to realize additional savings this year.

    AI internal savings target
    $1 billion
    over 10 years

    As a result of running operations on OpenText products and infusing AI agents.

    AI internal incident restore time improvement
    50%
    current

    On the back of agentic AI capabilities.

    AI internal incident reduction
    20%
    current

    By infusing agents to predict incidents.

    Industry KPIs

    9
    MetricValueDetails
    Revenue growth6.6%%
    Arr net new arr$1.06 billionUSD
    Rpo current rpoup 5%%
    Bookings billings$651 millionUSD
    Large deal new logo metrics41deals
    Gross retention renewal rate93%%
    Operating FCF margin rule of 4034.1%%
    Ai product adoption monetization7-figure dealUSD
    Net revenue net dollar retention95%%

    Orderbook & backlog

    3
    Enterprise cloud bookings$651 millionYTD Q3 FY26

    highest Q3 year-to-date in company history

    Cloud current RPOup 5%Q3 FY26

    YoY

    Cloud long-term RPOup 19%Q3 FY26

    YoY

    Product announcements

    2
    ProductTypeDetails
    Select enterprise data and AI solutionsexpansion
    OpenText data AI platformlaunch

    Deals & partnerships

    2
    eDOCSSale of a non-core asset

    Sale of eDOCS was a factor in the increase of GAAP net income.

    VerticaSale of a non-core asset

    Divestiture expected to close shortly.

    Risks & headwinds

    5
    Cloud net renewal rate declineQ3 FY26

    95%, down 1% YoY

    Mitigation: Consistent with annual model, implying it's within expectations.

    Free cash flow decline in Q3Q3 FY26

    $305 million, down 18.4% YoY

    Mitigation: Year-to-date FCF is up; quarter-to-quarter lumpiness due to working capital and tax payments; continued cost savings and business optimizations are expected to benefit cash flow.

    Lingering impact from US government shutdownQ3 FY26

    Some contracts still not closed

    Mitigation: Management acknowledges the impact and expects to see progress.

    Geopolitical and macro uncertainty affecting divestituresOngoing

    More selective buyer environment, difficulty getting financing

    Mitigation: Being disciplined sellers, not doing 'fire sales,' waiting for improved market stability and capital markets to return to normal.

    Performance of Cybersecurity and ITOM businessesQ3 FY26

    Down a bit this quarter

    Mitigation: Management's focus on balanced execution across the portfolio, articulating value proposition, and sharp sales execution to return these businesses to growth.

    What to watch in Q4 FY26

    5

    Core business growth acceleration

    Next quarter
    CurrentCybersecurity and ITOM down a bit this quarter
    TargetReturn to growth

    Why it matters

    Essential for overall revenue growth and demonstrating balanced portfolio execution across all core segments.

    You know, cyber security and ITOM were down a bit this quarter. Do you think that it's something kind of looking out beyond this year that if they're on a kind of path of sustainable growth?

    Q&A highlights

    6

    What are your initial observations on where you see the most opportunity for growth at OpenText, strategically or operationally?

    Ayman Antoun noted the client-focused culture and strong core portfolio as strengths. Opportunities lie in enhancing ecosystem partner engagements and strengthening disciplined execution across sales, development, and capital allocation.

    “My early observations, if I were to package them into things that we would build on and continue, and this is informed by what clients and partners and colleagues have said to me so far in the last 14 days, is the culture that is client-focused.”

    asked by Richard Tse · answered by Ayman Antoun

    2 min read6 chapters

    Detailed Narrative

    01

    New CEO Priorities and Vision

    New CEO Ayman Antoun, in his 14th day on the job, outlined four guiding priorities: listen to clients, partners, colleagues, and investors; learn every aspect of the business; assess areas for improvement; and build a sustainable organic growth plan with clear KPIs. He emphasized client focus, disciplined execution, and transparency. Antoun highlighted OpenText's position as a global leader in data management, crucial for credible AI outcomes, and expressed confidence in the company's future direction.

    02

    Data Management as AI Foundation

    OpenText asserts that reliable, quality, curated, governed, integrated, and secure data is critical for credible AI outcomes. The company is uniquely positioned to manage and secure three distinct data types at scale: human-generated, machine-generated, and transactional data. This capability is seen as foundational for enterprise AI, particularly in regulated sectors where data integrity is paramount, and a strategic advantage that needs to be amplified in the marketplace.

    03

    Flexible Cloud Strategy and Client Migration

    OpenText offers clients flexibility in their cloud journey, supporting on-prem, private cloud, public cloud, sovereign cloud, or hybrid approaches. This optionality is considered a strategic advantage, meeting clients where they are rather than forcing a specific migration path. Management noted that clients are already accelerating their moves to the cloud, and OpenText has aligned its product portfolio, go-to-market, and incentives to support this ongoing transition.

    04

    Internal AI Adoption and Productivity Gains

    OpenText is leveraging its own products and AI agents internally, aiming to save $1 billion over the next 10 years by becoming 'client zero' for AI. Internal AI initiatives have already demonstrated significant benefits, including a 50% improvement in incident restore time and a 20% reduction in incident frequency. The focus is on using AI to better serve clients, enhance product offerings, and improve employee productivity.

    05

    Disciplined Divestiture Strategy

    The company is continuing its portfolio reshaping strategy but is adopting a disciplined approach to divestitures. While the Vertica divestiture is expected to close shortly, other non-core asset sales are being paused due to geopolitical and macro uncertainties, which have created a more selective buyer environment and made financing difficult. Management emphasized that they would not conduct 'fire sales' and are committed to securing the right return for shareholders.

    06

    Capital Allocation Framework

    OpenText's management team regularly discusses capital allocation with the board, considering debt reduction, dividend payouts, share repurchases, and organic growth investments. The company increased its share buyback program from $300 million to $500 million for fiscal 2026 and repurchased 9.7 million shares in Q3, reducing the share count by 6.7% year-over-year. The board maintains a disciplined approach to capital allocation in the current environment.

    AI-generated summary of the company’s earnings call. Not investment advice.