Snapshot
Open Text Corp reported $1.33B of revenue in Q2 2026, up -0.6% year over year, with diluted EPS of $0.66 and an operating margin of 22.0%.
- Revenue
- $1.33B
- YoY growth
- +-0.6%
- Diluted EPS
- $0.66
- Operating margin
- 22.0%
$1.33B
Revenue
+-0.6%
YoY growth
$0.66
Diluted EPS
22.0%
Operating margin
01 Key takeaways
What management said
- •In this past week, we announced that we had entered into an agreement to divest Vertica to Rocket Software for $150,000,000.
- •We ended off the quarter with a solid performance beating our own expectations on total revenues, Adjusted EBITDA margin, and adjusted EPS.
- •However, I would like to highlight that in Q2, we generated total revenues of approximately $1,330,000,000 led by overall cloud growth of 3.4% year-over-year.
- •We continue to see strong enterprise cloud bookings of $295,000,000 or growth of 18% year-over-year.
- •And if you look specifically at cloud revenue for content, it grew 18% year-over-year.
- •Content, which is our largest and fastest-growing business, continues to demonstrate strength, and it also leads to our cloud growth.
- •There is no change to our F26 revenue target of 1%-2% growth year-over-year.
- •I would like to turn to some of our customer wins in the quarter that highlight the growth trajectory of our core business.
- •Turning to our FY26 outlook, as I mentioned, we are reaffirming our total revenue growth of 1%-2% year-on-year.
- •Our expectation for FY26 year-on-year customer support and ARR growth, as well as enterprise cloud bookings, also remain unchanged.
- •To summarize, we are really excited about our cloud growth in our core product groups, especially in Content, our largest and fastest-growing business.
- •OpenText maintains a strong financial position, and I am very optimistic about the strategy we're executing to pivot the company to higher growth with a solid margin and free cash flow profile.
What went well
- •Beat own expectations on total revenues, adjusted EBITDA margin, and adjusted EPS; 20th consecutive quarter of organic cloud growth
- •Enterprise cloud bookings of $295 million, up 18% year-over-year, with 53 cloud deals larger than $1 million and total cloud RPO up 13.7%
- •Content Cloud revenue grew 18% year-over-year; total content business (43% of total revenues) grew 4.5%; core business growing at roughly twice the pace of total revenues
- •Announced Vertica divestiture to Rocket Software for $150 million and closed eDOCS divestiture for $163 million, with proceeds used to reduce debt
- •Strong customer wins including U.S. Bank, Solenis, and BNP Paribas, plus marquee OpenText World references from IBM, United Airlines, and Honda using Aviator solutions
- •Half-year free cash flow of $381 million, up sharply from $190 million in the prior-year period; named permanent CEO Ayman Antoun
What went wrong
- •Adjusted EBITDA of $491 million (37.0% margin) was down 2.1% in dollars and 60 basis points, driven by investment in the sales team and commissions
- •GAAP net income of $168 million was down 26.9% year-over-year, largely due to FX on acquisition-related derivatives
- •Free cash flow of $279 million in the quarter was down 8.9% year-over-year
- •Customer support revenue of $582 million was down 1.5%; professional services revenue declined 10.2% year-to-date
- •Cybersecurity enterprise was more challenged this quarter (flat), facing a tough compare against a strong Q2 fiscal 2025
Guidance changes
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Performance breakdown
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Earnings call themes & trends
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