OpenText Revenue Turns Negative After Two Growth Quarters

The Tip Desk · November 11, 2026 · 3 min read

First-quarter revenue was $1.237 billion, down 4.0% from a year earlier, as client support, license and professional services all contracted.

Open Text Corporation (OTEX) reported first-quarter fiscal 2027 revenue of $1.237 billion, down 4.0% from a year earlier, reversing the 2.9% year-over-year increase in the fourth quarter of fiscal 2026 and the 2.2% increase in the third quarter.

The data-management company said the decline was 1.7% in constant currency excluding divestitures. Cloud services and subscriptions still rose, but the rest of the mix moved the other way.

Cloud services and subscriptions were $505 million, up 4.3% from a year earlier, the 23rd consecutive quarter of cloud organic growth after 6.0% growth in the fourth quarter and 6.6% in the third. Client support fell to $534 million, down 9.0%. License revenue was $124 million, down 8.0%. Professional service and other dropped to $73 million, down 11.0%. Annual recurring revenues, the sum of cloud services and subscriptions and client support, declined to $1.040 billion, down 3.0% from a year earlier.

Core revenues, which include Content, Business Network, IT Operations Management and Cybersecurity, were $864 million, up 2.4% from a year earlier, or 2.7% in constant currency. Core Cloud revenues were $339 million, up 11.2%, or 11.7% in constant currency.

GAAP gross margin was 73.2% and non-GAAP gross margin 76.9%, up 40 basis points from 72.8% and 76.5% a year earlier. GAAP operating income fell to $251 million, down 7.1%. Non-GAAP operating income was $403 million, down 6.7%. Special charges were $33.3 million in the three months ended September 30, 2026, versus $20.1 million a year earlier.

GAAP net income attributable to OpenText rose to $155 million, up 5.9%, for diluted earnings of $0.64 a share, up 10.3%. Non-GAAP net income was $254 million, down 4.5%, and non-GAAP diluted EPS held at $1.05, unchanged from a year earlier. Adjusted EBITDA declined to $442 million, down 5.3%, with a margin of 35.8%.

Operating cash flow rose to $172 million, up 16.6%, and free cash flow rose to $139 million, up 36.8%. Cash and cash equivalents were $983 million at September 30, 2026.

Chief Executive Officer Ayman Antoun said the quarter reflected the strength of the core portfolio and that, as clients move to AI, they need trusted context and connected data. He said Aviator AI agents are infused across the core portfolio. Chief Financial Officer Steve Rai said performance was supported by continued financial and operational discipline.

Following the quarter, OpenText completed a $1.0 billion senior secured notes offering in October 2026, using proceeds to retire outstanding 2027 notes, and paid down $300 million of 2028 notes through a tender offer. Including debt repaid in October, the company said it has reduced debt by approximately $949 million over the past twelve months. Net leverage was 2.55 times as of September 30, 2026.

OpenText repurchased $23 million of common shares for cancellation in the quarter. The board declared a cash dividend of $0.280 a share on November 3, 2026, with a December 4 record date and December 18 payment date. The company intends to host an Investor Day on February 10, 2027, in Toronto, where Antoun and the executive team will discuss the outcome of a previously announced Enterprise Assessment, including strategic priorities, growth initiatives and the financial framework.