Open Text (OTEX) Q2 2026 earnings summary

Executive summary

• Q2 FY26 revenue was $1.33B, down 0.6% year-over-year, with cloud revenue up 3.4% to $478M and enterprise cloud bookings up 18% to $295M.

• Annual recurring revenue reached $1.06B, representing about 80% of total revenue, with a stable cloud net renewal rate of 95%.

• Net income was $168M (12.7% margin), down 26.9% year-over-year; adjusted EBITDA was $491M (37.0% margin).

• Leadership transition announced with Ayman Antoun appointed CEO, and divestitures of Vertica for $150M and eDOCS for $163M completed.

• Focused on core, faster-growing content cloud and AI businesses, with strong customer engagement and positive feedback on new AI solutions.

Financial highlights

• GAAP gross margin was 74.0%, non-GAAP gross margin 77.6%, both improved year-over-year.

• Adjusted EBITDA margin was 37.0% for the quarter; free cash flow was $279M, down 8.9% year-over-year.

• Non-GAAP net income was $286M, down 2.4% year-over-year; non-GAAP diluted EPS was $1.13, up 1.8%.

• License revenue fell 2.5% to $184M; professional services and other revenue dropped 11% to $83M.

• Cash and cash equivalents stood at $1.27B as of December 31, 2025.

Outlook and guidance

• FY26 total revenue growth expected at 1–2%, with cloud services and subscriptions growth of 3–4%.

• Q3 revenue guidance is $1.26B–$1.28B, reflecting the eDOCS divestiture.

• Adjusted EBITDA margin expected to expand by 50–100 bps; free cash flow growth forecasted at 17–20%.

• Enterprise cloud bookings projected to grow 12–16% year-over-year.

• Guidance includes a $15M revenue reduction in the second half of FY2026 due to the eDOCS divestiture.