Open Text 2025 Q4 Earnings Sharp Drop in Net Income Amid Revenue Decline

Open Text (OTEX) reported its fiscal 2025 Q4 earnings on Aug 7, 2025, with results that fell short of expectations, marked by significant declines in both revenue and net income. The company’s financial performance missed key metrics, with a notable drop in profitability. Open Text provided conservative guidance for FY2026, reflecting cautious optimism amid ongoing challenges.

Revenue
Open Text’s total revenue declined by 3.8% year-over-year to $1.31 billion in Q4 2025, compared to $1.36 billion in the same period in 2024. The company’s performance was impacted by a large divestiture, contributing to the overall revenue contraction. Despite the decline, the firm highlighted a 32% surge in cloud bookings, particularly driven by demand for its AI-powered Titanium X platform.

Earnings/Net Income
The company’s earnings took a significant hit, with EPS plummeting 87.8% to $0.11 in Q4 2025 from $0.93 in Q4 2024. Similarly, net income dropped by 88.4% to $28.88 million, compared to $248.27 million in the prior year. These figures reflect a challenging quarter for profitability, with declining margins despite some bright spots in cloud demand.

Price Action
Shares of Open Text have faced downward pressure, with a 3.83% drop during the latest trading day, a 4.38% decline over the past full trading week, and a 6.79% drop month-to-date. Investors have responded negatively to the disappointing earnings report and mixed guidance.

Post-Earnings Price Action Review
Following the earnings release, the performance of a strategy buying Open Text shares after the revenue drop and holding for 30 days yielded a 11.56% return over the past three years. However, this underperformed the benchmark, which returned 61.23%, resulting in an excess return of -49.67%. The strategy had a maximum drawdown of 0.00%, a Sharpe ratio of 0.22, and a volatility of 18.98%, indicating a relatively low-risk but subpar return profile.

CEO Commentary
OpenText CEO & CTO Mark J. Barrenechea emphasized the company’s strong Q4 cloud performance, noting a 32% surge in cloud bookings driven by the AI-driven Titanium X platform. For FY25, the company achieved 13% cloud RPO growth, 2.0% cloud revenue growth, a 34.5% adjusted EBITDA margin, and $683 million in capital returns. While the company reported a negative 3% total growth excluding the large divestiture, Barrenechea expressed confidence in AI, cloud, and security as key growth areas for FY2026.

Guidance
Looking ahead, OpenText expects 3% to 4% cloud revenue growth and 1% to 2% total revenue growth for FY2026. The company also announced a 5% increase in its dividend per share, with a quarterly payout of $0.2750 per share.

Additional News
In the week surrounding the earnings report, Nigerian news outlet Punch reported on various local events, including political tensions and legal actions. The ex-Abia State deputy governor resigned from the PDP, and there was a call for an investigation into the detention of activist Sowore. In business, Stanbic IBTC announced a savings promotion that awarded N23 million to 148 customers. Nigeria’s economic landscape remained in focus as African leaders proposed a three-year plan to reduce capital costs and RMRDC called for a 60% cut in raw material imports.