OPEN TEXT CORP
For the period ended Mar 31, 2025. Filed Apr 30, 2025.
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A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Mar 31, 2025 · Filed Apr 30, 2025
OTEX$24.85-4.9%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2024-12-31; filed 2025-02-06.
0001002638-25-000021
Item 2. Management's Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2025-03-31; filed 2025-04-30.
0001002638-25-000040
Item 2. Management's Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 233 previous paragraphs and 242 current paragraphs.
137 unchanged; 85 reworded; 18 added; 8 removed; 3 previous and 2 current paragraphs rearranged.
Tables are not compared: 32 previous and 33 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (18)
Current report
•Total revenue was $1,254.4 million, down 13.3% compared to the same period in the prior fiscal year; down 11.9% after factoring in the unfavorable impact of $21.0 million of foreign exchange rate changes.
Current report
•GAAP-based gross margin was 71.6% compared to 73.0% in the same period in the prior fiscal year.
Current report
•Non-GAAP-based gross margin was 75.7% compared to 76.7% in the same period in the prior fiscal year.
Current report
•GAAP-based net income attributable to OpenText was $92.8 million compared to $98.3 million in the same period in the prior fiscal year.
Current report
•Non-GAAP-based net income attributable to OpenText was $215.8 million compared to $257.0 million in the same period in the prior fiscal year.
Current report
We conduct business globally and are subject to a complex and evolving international trade environment. Recent trade tensions among major economies, including the United States, Canada, China, the European Union and others, have led to the imposition of tariffs and other restrictive measures. These tariffs do not currently include software, services, intangibles, and other digital services; however, we cannot predict future trade policy or tariffs, including the impact or timing thereof, or whether such services will be subject to any form of tariffs or other restrictions in the future. We also cannot predict the impact that such tariffs and other restrictive measures will have on the macroeconomic environment or to our customers, which could impact our business and our results of operations.
Current report
Further, on April 29, 2025, the Board approved an expansion of our previously announced Business Optimization Plan to complete strategic initiatives, integration and simplification following the Micro Focus acquisition, AMC Divestiture and other growth and innovation plans including the deployment of AI and automation.
Current report
We expect up to approximately $200.0 million of additional costs to be incurred to complete this final phase of the Business Optimization Plan, bringing the combined plan up to approximately $260.0 million. As of March 31, 2025, $57.1 million of the original $60.0 million has been recorded within Special charges (recoveries) within the Condensed Consolidated Statements of Income to date. The entire Business Optimization Plan is expected to be substantially completed by the second quarter of Fiscal 2027.
Current report
This expansion includes costs associated with workforce reduction due to automation, centralization and simplification, and corresponding facility costs related to a reduction of our real estate footprint globally. On an overall basis, the expansion is expected to result in a total net reduction of approximately 2,000 positions, an increase of approximately 1,600 positions from the previously announced plan. Facility costs include the accelerated amortization associated with the abandonment of right of use assets, the write-off of fixed assets, and other related variable lease and exit costs.
Current report
The expanded Business Optimization Plan along with other savings initiatives, when fully implemented, is expected to generate total annualized savings of approximately $490.0 million to $550.0 million, an increase of $340.0 million to $400.0 million on an annualized basis. Of this, approximately 50% will be realized in Fiscal 2026, with the remaining annualized benefit to be realized in Fiscal 2027. See Note 23 “Subsequent Events” to our Condensed Consolidated Financial Statements for additional details on the expansion of the Business Optimization Plan.
Current report
Customer support revenues decreased by $124.1 million or 17.9% during the three months ended March 31, 2025 as compared to the same period in the prior fiscal year; down 16.4% after factoring in the unfavorable impact of $10.8 million of foreign exchange rate changes. The decrease was primarily due to the exclusion of customer support revenue contributions as a result of the AMC Divestiture. Geographically, the overall change was attributable to a decrease in Americas of $63.8 million, a decrease in EMEA of $42.8 million and a decrease in Asia Pacific of $17.5 million.
Current report
Customer support revenues decreased by $331.5 million or 15.9% during the nine months ended March 31, 2025 as compared to the same period in the prior fiscal year; down 15.5% after factoring in the unfavorable impact of $7.9 million of foreign exchange rate changes. The decrease was primarily due to the exclusion of customer support revenue contributions as a result of the AMC Divestiture. Geographically, the overall change was attributable to a decrease in Americas of $213.6 million, a decrease in EMEA of $84.7 million and a decrease in Asia Pacific of $33.2 million.
Current report
Depreciation expenses increased during the three months ended March 31, 2025 by $0.4 million as compared to the same period in the prior fiscal year. Depreciation expenses, as a percentage of total revenue, increased for the three months ended March 31, 2025 to approximately 3% as compared to 2% for the same period in the prior fiscal year.
Current report
(5)During the three and nine months ended March 31, 2024, we recognized a loss on debt extinguishment of $10.8 million related to the acceleration and recognition of unamortized debt discount and issuance costs resulting from the optional repayments of the Acquisition Term Loan in Fiscal 2024.
Current report
for the nine months ended March 31, 2025
Current report
for the nine months ended March 31, 2024
Current report
On March 13, 2025, the Company established the ASPP with its broker to facilitate repurchases of Common Shares. Under the terms of the ASPP, the Company’s broker will be permitted to make purchases at its sole discretion based on parameters set by the Company in accordance with TSX rules, applicable law and the terms of the ASPP, during periods when the Company would ordinarily not be permitted to make purchases, whether due to regulatory restriction or customary self-imposed blackout periods. Outside of such periods, Common Shares can be purchased based on management’s discretion, in compliance with TSX rules and applicable law. All purchases of Common Shares made under the ASPP will be included in determining the number of Common Shares purchased under the NCIB.
Current report
Additionally, as of March 31, 2025, we recorded an accrual and a corresponding charge to retained earnings of $30.1 million, representing the estimated value of Common Shares expected to be repurchased following the fiscal quarter ended March 31, 2025 pursuant to the ASPP.
Removed paragraphs (8)
Previous report
•Total revenue was $1,334.5 million, down 13.1% compared to the same period in the prior fiscal year; down 13.7% after factoring in the favorable impact of $9.8 million of foreign exchange rate changes.
Previous report
•GAAP-based gross margin was 73.3% compared to 73.6% in the same period in the prior fiscal year.
Previous report
•Non-GAAP-based gross margin was 77.2% compared to 78.6% in the same period in the prior fiscal year.
Previous report
•GAAP-based net income attributable to OpenText was $229.9 million compared to $37.7 million in the same period in the prior fiscal year.
Previous report
•Non-GAAP-based net income attributable to OpenText was $293.3 million compared to $338.5 million in the same period in the prior fiscal year.
Previous report
Customer support revenues decreased by $105.2 million or 15.1% during the three months ended December 31, 2024 as compared to the same period in the prior fiscal year; down 15.9% after factoring in the favorable impact of $5.4 million of foreign exchange rate changes. The decrease was primarily due to the exclusion of customer support revenue contributions as a result of the AMC Divestiture. Geographically, the overall change was attributable to a decrease in Americas of $73.4 million, a decrease in EMEA of $21.6 million and a decrease in Asia Pacific of $10.1 million.
Previous report
Customer support revenues decreased by $207.4 million or 14.9% during the six months ended December 31, 2024 as compared to the same period in the prior fiscal year; down 15.1% after factoring in the favorable impact of $2.9 million of foreign exchange rate changes. The decrease was primarily due to the exclusion of customer support revenue contributions as a result of the AMC Divestiture. Geographically, the overall change was attributable to a decrease in Americas of $149.8 million, a decrease in EMEA of $41.8 million and a decrease in Asia Pacific of $15.7 million.
Previous report
Depreciation expenses decreased during the three and six months ended December 31, 2024 by $1.5 million and $3.5 million, respectively, compared to the same periods in the prior fiscal year.
Reworded paragraphs (85)
Previous wording
When used in this report, the words “anticipates”, “expects”, “intends”, “plans”, “believes”, “seeks”, “estimates”, “may”, “could”, “would”, “might”, “will” and other similar language, as they relate to Open Text Corporation (OpenText or the Company), are intended to identify forward-looking statements under applicable securities laws. Specific forward-looking statements in this report include, but are not limited to, statements regarding: (i) our focus in the fiscal years beginning July 1, 2024 and ending June 30, 2025 (Fiscal 2025) and July 1, 2025 and ending June 30, 2026 (Fiscal 2026) on growth in earnings and cash flows; (ii) creating value through investments in broader Information Management capabilities; (iii) our future business plans and operations, strategic goals and business planning process, including the Company’s business optimization plan announced in July 2024 (the Business Optimization Plan); (iv) business trends; (v) distribution; (vi) the Company’s presence in the cloud and in growth markets; (vii) product and solution developments, enhancements and releases, the timing thereof and the customers targeted; (viii) the Company’s financial condition, results of operations and earnings; (ix) the basis for any future growth and for our financial performance; (x) declaration of quarterly dividends; (xi) future tax rates, including Canada's newly enacted global minimum tax act; (xii) the changing regulatory environment; (xiii) annual recurring revenues; (xiv) research and development and related expenditures; (xv) our building, development and consolidation of our network infrastructure; (xvi) competition and changes in the competitive landscape; (xvii) our management and protection of intellectual property and other proprietary rights; (xviii) existing and foreign sales and exchange rate fluctuations; (xix) cyclical or seasonal aspects of our business; (xx) capital expenditures; (xxi) potential legal and/or regulatory proceedings, including the Company's expected refund of the State Aid charging notice relating to the CJEU's judgment on the ruling of the European Commission; (xxii) acquisitions and their expected impact, including our ability to realize the benefits expected from the acquisitions and to successfully integrate the assets we acquire or utilize such assets to their full capacity, including in connection with the acquisition of Micro Focus International Limited, formerly Micro Focus International plc, and its subsidiaries (Micro Focus) (see Note 17 “Acquisitions and Divestitures” to our Condensed Consolidated Financial Statements for more details); (xxiii) tax audits; (xxiv) the expected impact of the Russia-Ukraine and Middle East conflicts on our business;(xxv) expected costs of the restructuring and business optimization plans; (xxvi) targets regarding greenhouse gas emissions, waste diversion, energy consumption and Equity, Diversity and Inclusion (ED&I) initiatives; (xvii) integration of Micro Focus, resulting syne…
Excerpt shortened here; the source contains the full paragraph.
Current wording
When used in this report, the words “anticipates”, “expects”, “intends”, “plans”, “believes”, “seeks”, “estimates”, “may”, “could”, “would”, “might”, “will” and other similar language, as they relate to Open Text Corporation (OpenText or the Company), are intended to identify forward-looking statements under applicable securities laws. Specific forward-looking statements in this report include, but are not limited to, statements regarding: (i) our focus in the fiscal years beginning July 1, 2024 and ending June 30, 2025 (Fiscal 2025) and July 1, 2025 and ending June 30, 2026 (Fiscal 2026) on growth in earnings and cash flows; (ii) creating value through investments in broader Information Management capabilities; (iii) our future business plans and operations, strategic goals and business planning process, including the Company’s business optimization plan announced in July 2024 (the Business Optimization Plan); (iv) business trends; (v) distribution; (vi) the Company’s presence in the cloud and in growth markets; (vii) product and solution developments, enhancements and releases, the timing thereof and the customers targeted; (viii) the Company’s financial condition, results of operations and earnings; (ix) the basis for any future growth and for our financial performance; (x) declaration of quarterly dividends; (xi) future tax rates, including Canada's newly enacted global minimum tax act; (xii) the changing regulatory environment; (xiii) annual recurring revenues; (xiv) research and development and related expenditures; (xv) our building, development and consolidation of our network infrastructure; (xvi) competition and changes in the competitive landscape; (xvii) our management and protection of intellectual property and other proprietary rights; (xviii) existing and foreign sales and exchange rate fluctuations; (xix) cyclical or seasonal aspects of our business; (xx) capital expenditures; (xxi) potential legal and/or regulatory proceedings; (xxii) acquisitions and their expected impact, including our ability to realize the benefits expected from the acquisitions and to successfully integrate the assets we acquire or utilize such assets to their full capacity, including in connection with the acquisition of Micro Focus International Limited, formerly Micro Focus International plc, and its subsidiaries (Micro Focus) (see Note 17 “Acquisitions and Divestitures” to our Condensed Consolidated Financial Statements for more details); (xxiii) tax audits; (xxiv) the expected impact of the Russia-Ukraine and Middle East conflicts on our business;(xxv) expected costs of the restructuring and business optimization plans; (xxvi) targets regarding greenhouse gas emissions, waste diversion, energy consumption and Equity, Diversity and Inclusion (ED&I) initiatives; (xvii) integration of Micro Focus, resulting synergies and timing thereof; (xxviii) divestitures and their expected impact, including in connection with the divestiture of the Application, Moderni…
Excerpt shortened here; the source contains the full paragraph.
Previous wording
Forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause our actual results, performance or achievements to differ materially from the anticipated results, performance or achievements expressed or implied by such forward-looking statements. The risks and uncertainties that may affect forward-looking statements include, but are not limited to: (i) our inability to realize successfully any anticipated synergy benefits from the acquisition of Micro Focus (Micro Focus Acquisition); (ii) the actual and potential impacts of the use of cash and incurrence of indebtedness, including the granting of security interests related to such debt; (iii) the change in scope and size of our operations as a result of the Micro Focus Acquisition and the AMC Divestiture; (iv) the uncertainty around expectations related to Micro Focus’ business prospects; (v) integration of acquisitions and related restructuring efforts, including the quantum of restructuring charges and the timing thereof; (vi) the possibility that we may be unable to successfully integrate the assets we acquire or fail to utilize such assets to their full capacity and not realize the benefits we expect from our acquired portfolios and businesses, including the acquisition of Micro Focus; (vii) the potential for the incurrence of or assumption of debt in connection with acquisitions, its impact on future operations and on the ratings or outlooks of rating agencies on our outstanding debt securities, and the possibility of not being able to generate sufficient cash to service all indebtedness; (viii) the possibility that the Company may be unable to meet its future reporting requirements under the Exchange Act, and the rules promulgated thereunder, or applicable Canadian securities regulation; (ix) the risks associated with bringing new products and services to market; (x) fluctuations in currency exchange rates (including as a result of the impact of any policy changes resulting from trade and tariff disputes) and the impact of mark-to-market valuation relating to associated derivatives; (xi) delays in the purchasing decisions of the Company’s customers; (xii) competition the Company faces in its industry and/or marketplace; (xiii) the final determination of litigation, tax audits (including tax examinations in Canada, the United States or elsewhere) and other legal proceedings; (xiv) potential exposure to greater than anticipated tax liabilities or expenses, including with respect to changes in Canadian, United States or international tax regimes; (xv) the possibility of technical, logistical or planning issues in connection with the deployment of the Company’s products or services; (xvi) the continuous commitment of the Company’s customers; (xvii) demand for the Company’s products and services; (xviii) increase in exposure to international business risks including the impact of geopolitical instability, political unrest, war and other global conflict…
Excerpt shortened here; the source contains the full paragraph.
Current wording
Forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause our actual results, performance or achievements to differ materially from the anticipated results, performance or achievements expressed or implied by such forward-looking statements. The risks and uncertainties that may affect forward-looking statements include, but are not limited to: (i) our inability to realize successfully any anticipated synergy benefits from the acquisition of Micro Focus (Micro Focus Acquisition); (ii) the actual and potential impacts of the use of cash and incurrence of indebtedness, including the granting of security interests related to such debt; (iii) the change in scope and size of our operations as a result of the Micro Focus Acquisition and the AMC Divestiture; (iv) the uncertainty around expectations related to Micro Focus’ business prospects; (v) integration of acquisitions and related restructuring efforts, including the quantum of restructuring charges and the timing thereof; (vi) the possibility that we may be unable to successfully integrate the assets we acquire or fail to utilize such assets to their full capacity and not realize the benefits we expect from our acquired portfolios and businesses, including the acquisition of Micro Focus; (vii) the potential for the incurrence of or assumption of debt in connection with acquisitions, its impact on future operations and on the ratings or outlooks of rating agencies on our outstanding debt securities, and the possibility of not being able to generate sufficient cash to service all indebtedness; (viii) the possibility that the Company may be unable to meet its future reporting requirements under the Exchange Act, and the rules promulgated thereunder, or applicable Canadian securities regulation; (ix) the risks associated with bringing new products and services to market; (x) fluctuations in currency exchange rates (including as a result of the impact of any policy changes resulting from trade and tariff disputes) and the impact of mark-to-market valuation relating to associated derivatives; (xi) delays in the purchasing decisions of the Company’s customers; (xii) competition the Company faces in its industry and/or marketplace; (xiii) the final determination of litigation, tax audits (including tax examinations in Canada, the United States or elsewhere) and other legal proceedings; (xiv) potential exposure to greater than anticipated tax liabilities or expenses, including with respect to changes in Canadian, United States or international tax regimes; (xv) the possibility of technical, logistical or planning issues in connection with the deployment of the Company’s products or services; (xvi) the continuous commitment of the Company’s customers; (xvii) demand for the Company’s products and services; (xviii) increase in exposure to international business risks including the impact of geopolitical instability, political unrest, war and other global conflict…
Excerpt shortened here; the source contains the full paragraph.
Previous wording
All dollar and percentage comparisons made herein refer to the three and six months ended December 31, 2024 compared with the three and six months ended December 31, 2023, unless otherwise noted.
Current wording
All dollar and percentage comparisons made herein refer to the three and nine months ended March 31, 2025 compared with the three and nine months ended March 31, 2024, unless otherwise noted.
Previous wording
As of December 31, 2024, we employed a total of approximately 21,800 individuals. Of the total 21,800 individuals we employed as of December 31, 2024, 7,600 or 35% are in the Americas, 4,800 or 22% are in EMEA and 9,400 or 43% are in Asia Pacific. Currently, we have employees in 42 countries enabling strong access to multiple talent pools while ensuring reach and proximity to our customers. See “Results of Operations” below for our definitions of geographic regions.
Current wording
As of March 31, 2025, we employed a total of approximately 21,700 individuals. Of the total 21,700 individuals we employed as of March 31, 2025, 7,500 or 35% are in the Americas, 4,800 or 22% are in EMEA and 9,400 or 43% are in Asia Pacific. Currently, we have employees in 42 countries enabling strong access to multiple talent pools while ensuring reach and proximity to our customers. See “Results of Operations” below for our definitions of geographic regions.
Previous wording
During the second quarter of Fiscal 2025 we saw the following activity, as compared to the second quarter of Fiscal 2024, which includes the results of the AMC Business prior to the AMC Divestiture, which has an impact on period-over-period comparisons. See “Divestiture of AMC Business” under “Results of Operations”, below for more details:
Current wording
During the third quarter of Fiscal 2025 we saw the following activity, as compared to the third quarter of Fiscal 2024, which includes the results of the AMC Business prior to the AMC Divestiture, which has an impact on period-over-period comparisons. See “Divestiture of AMC Business” under “Results of Operations”, below for more details:
Previous wording
•Total annual recurring revenue, which we define as the sum of cloud services and subscriptions revenue and customer support revenue, was $1,052.9 million, down 8.1% compared to the same period in the prior fiscal year; down 8.8% after factoring in the favorable impact of $7.7 million of foreign exchange rate changes.
Current wording
•Total annual recurring revenue, which we define as the sum of cloud services and subscriptions revenue and customer support revenue, was $1,030.0 million, down 10.1% compared to the same period in the prior fiscal year; down 8.7% after factoring in the unfavorable impact of $16.2 million of foreign exchange rate changes.
Previous wording
•Cloud services and subscriptions revenue was $462.3 million, up 2.7% compared to the same period in the prior fiscal year; up 2.2% after factoring in the favorable impact of $2.4 million of foreign exchange rate changes.
Current wording
•Cloud services and subscriptions revenue was $462.6 million, up 1.8% compared to the same period in the prior fiscal year; up 3.0% after factoring in the unfavorable impact of $5.4 million of foreign exchange rate changes.
Previous wording
•GAAP-based earnings per share (EPS), diluted, was $0.87 compared to $0.14 in the same period in the prior fiscal year.
Current wording
•GAAP-based earnings per share (EPS), diluted, was $0.35 compared to $0.36 in the same period in the prior fiscal year.
Previous wording
•Non-GAAP-based EPS, diluted, was $1.11 compared to $1.24 the same period in the prior fiscal year.
Current wording
•Non-GAAP-based EPS, diluted, was $0.82 compared to $0.94 the same period in the prior fiscal year.
Previous wording
•Adjusted EBITDA, a non-GAAP measure, was $501.5 million compared to $566.3 million in the same period in the prior fiscal year.
Current wording
•Adjusted EBITDA, a non-GAAP measure, was $395.3 million compared to $463.7 million in the same period in the prior fiscal year.
Previous wording
•Operating cash flow was $270.2 million for the six months ended December 31, 2024 compared to $397.8 million in the same period in the prior fiscal year, down 32.1%.
Current wording
•Operating cash flow was $672.4 million for the nine months ended March 31, 2025 compared to $782.5 million in the same period in the prior fiscal year, down 14.1%.
Previous wording
•Cash and cash equivalents were $1,122.2 million as of December 31, 2024, compared to $1,280.7 million as of June 30, 2024.
Current wording
•Cash and cash equivalents were $1,278.0 million as of March 31, 2025, compared to $1,280.7 million as of June 30, 2024.
Previous wording
•Enterprise cloud bookings were $249.9 million, compared to $235.5 million in the same period in the prior fiscal year. We define Enterprise cloud bookings as the total value from cloud services and subscription contracts entered into in the period that is new, committed and incremental to our existing contracts, entered into with our enterprise-based customers.
Current wording
•Enterprise cloud bookings were $151.2 million, compared to $165.1 million in the same period in the prior fiscal year. We define Enterprise cloud bookings as the total value from cloud services and subscription contracts entered into in the period that is new, committed and incremental to our existing contracts, entered into with our enterprise-based customers.
Previous wording
•During the three months ended December 31, 2024, we repurchased and cancelled 2,212,971 Common Shares for $67.1 million, inclusive of 2% Canadian excise taxes recorded (nil in the three months ended December 31, 2023).
Current wording
•During the three months ended March 31, 2025, we repurchased and cancelled 4,350,716 Common Shares for $116.7 million, inclusive of 2% Canadian excise taxes recorded (nil in the three months ended March 31, 2024).
Previous wording
On May 1, 2024, the Company completed the AMC Divestiture for $2.275 billion in cash before taxes, fees and other adjustments. Working capital adjustments were finalized during the quarter ended December 31, 2024. For the three and six months ended December 31, 2023, the results of the AMC business were recorded and presented within our Condensed Consolidated Financial Statements. See Note 17 “Acquisitions and Divestitures” to our Condensed Consolidated Financial Statements for more details.
Current wording
On May 1, 2024, the Company completed the AMC Divestiture for $2.275 billion in cash before taxes, fees and other adjustments. Working capital adjustments were finalized during the quarter ended December 31, 2024. For the three and nine months ended March 31, 2024, the results of the AMC business were recorded and presented within our Condensed Consolidated Financial Statements. See Note 17 “Acquisitions and Divestitures” to our Condensed Consolidated Financial Statements for more details.
Previous wording
We continue to monitor the geopolitical conflicts and diplomatic tensions around the world, including the Russia-Ukraine and Middle East conflicts. We have ceased all direct business in Russia and Belarus. We continue to operate our Israeli-based business and support our employees in the region. While our operations within these locations are not material and we do not expect these geopolitical conflicts to have a material adverse effect on our overall business, results of operations or financial condition, it is not possible to predict the broader consequences or broader expansion of these conflicts, including adverse effects on the global economy, on our business and operations as well as those of our customers, partners and third party service providers. For more information, see Part I, Item 1A “Risk Factors” and Part II, Item 7 “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included in our Annual Report on Form 10-K for Fiscal 2024.
Current wording
We continue to monitor the geopolitical conflicts and diplomatic tensions around the world, including the Russia-Ukraine and Middle East conflicts. We have ceased all direct business in Russia and Belarus. We continue to operate our Israeli-based business and support our employees in the region. While our operations within these locations are not material and we do not expect these geopolitical conflicts to have a material adverse effect on our overall business, results of operations or financial condition, it is not possible to predict the broader consequences or broader expansion of these conflicts, including adverse effects on the global economy, on our business and operations as well as those of our customers, partners and third party service providers. See also “Outlook for Remainder of Fiscal 2025” for significant tariff and trade developments. For more information, see Part I, Item 1A “Risk Factors” and Part II, Item 7 “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included in our Annual Report on Form 10-K for Fiscal 2024.
Previous wording
We are committed to continuous innovation. Our investments in research and development (R&D) push product innovation, increasing the value of our offerings to our existing customer base and new customers, which includes Global 10,000 companies (G10K), SMBs and consumers. The G10K are the world’s largest companies, ranked by estimated total revenues, as well as the world’s largest governments and global organizations. More valuable products, coupled with our established global partner program, lead to greater distribution and cross-selling opportunities which further help us to achieve organic growth. On a fiscal year-to-date basis, we have invested $371.4 million or 14.3% of revenue in R&D expense, which is in line with our target spend for R&D expense this fiscal year.
Current wording
We are committed to continuous innovation. Our investments in research and development (R&D) push product innovation, increasing the value of our offerings to our existing customer base and new customers, which includes Global 10,000 companies (G10K), SMBs and consumers. The G10K are the world’s largest companies, ranked by estimated total revenues, as well as the world’s largest governments and global organizations. More valuable products, coupled with our established global partner program, lead to greater distribution and cross-selling opportunities which further help us to achieve organic growth. On a fiscal year-to-date basis, we have invested $568.8 million or 14.7% of revenue in R&D expense, which is in line with our target spend for R&D expense this fiscal year.
Previous wording
We will continue to closely monitor the potential impacts of inflation with respect to wages, services and goods, concerns regarding any potential recession, higher interest rates, potential increases or changes in U.S., Canadian or global tariff policies and structures and other trade policies, financial market volatility, the Russia-Ukraine and Middle East conflicts and other geopolitical disputes on our business. See Part II, Item 1A “Risk Factors” herein and Part I, Item 1A, “Risk Factors” in our Annual Report on Form 10-K for Fiscal 2024.
Current wording
We will continue to closely monitor the potential impacts of inflation with respect to wages, services and goods, concerns regarding any potential recession, higher interest rates, potential increases or changes in global tariff policies and structures and other trade policies, financial market volatility, the Russia-Ukraine and Middle East conflicts and other geopolitical disputes on our business. See Part II, Item 1A “Risk Factors” herein and Part I, Item 1A, “Risk Factors” in our Annual Report on Form 10-K for Fiscal 2024.
Previous wording
December 31, 2023 was impacted by the recent divestiture of our AMC business, the results of which were excluded from those of OpenText beginning May 1, 2024. As such, AMC business operating results were included in the consolidated operating results for the three and six months ended December 31, 2023, but were not included in the consolidated operating results for the three and six months ended December 31, 2024.
Current wording
On May 1, 2024, the Company completed the sale of its AMC business to Rocket Software. The AMC business was comprised of the legacy OpenText connectivity business and the legacy Micro Focus AMC business. The comparability of our operating results for the three and nine months ended March 31, 2025 as compared to the three and nine months ended March 31, 2024 was impacted by the recent divestiture of our AMC business, the results of which were excluded from those of OpenText beginning May 1, 2024. As such, AMC business operating results were included in the consolidated operating results for the three and nine months ended March 31, 2024, but were not included in the consolidated operating results for the three and nine months ended March 31, 2025.
Previous wording
Our total revenues decreased by $200.4 million and $356.8 million, primarily across license and customer support product types in the three and six months ended December 31, 2024, respectively, relative to the three and six months ended December 31, 2023, primarily due to the exclusion of revenue contributions from the AMC business, partially offset by a favorable impact of $5.6 million and $9.8 million, respectively, of foreign exchange rate changes. The AMC business contributed $131.2 million and $264.0 million, respectively, to our total revenues during the three and six months ended December 31, 2023, of which $84.1 million and $168.2 million, respectively, related to customer support revenues, $41.6 million and $85.8 million, respectively, related to license revenues, and $5.5 million and $10.0 million, respectively, related to professional services and other revenue.
Current wording
Our total revenues decreased by $192.8 million and $549.6 million, primarily across license and customer support product types in the three and nine months ended March 31, 2025, respectively, relative to the three and nine months ended March 31, 2024, primarily due to the exclusion of revenue contributions from the AMC business, and the unfavorable impact of $21.0 million and $15.4 million, respectively, of foreign exchange rate changes. The following table illustrates the revenues contributed by the AMC business during the three and nine months ended March 31, 2024,
Previous wording
In connection with the AMC Divestiture, we entered into a TSA with Rocket Software, whereby we will provide certain transition services to Rocket Software for up to 24 months from May 1, 2024. These transition service costs are reimbursable by Rocket Software. During the three and six months ended December 31, 2024, we billed Rocket Software $12.7 million and $27.2 million, respectively, under the TSA. The following table illustrates the financial statement impact of these TSA reimbursements, which have been recorded as an offset to the respective costs incurred, within our Condensed Consolidated Statements of Income.
Current wording
In connection with the AMC Divestiture, we entered into a TSA with Rocket Software, whereby we agreed to provide certain transition services to Rocket Software for up to 24 months from May 1, 2024. These transition service costs are reimbursable by Rocket Software. During the three and nine months ended March 31, 2025, we billed Rocket Software $4.2 million and $31.4 million, respectively, under the TSA. The following table illustrates the financial statement impact of these TSA reimbursements, which have been recorded as an offset to the respective costs incurred, within our Condensed Consolidated Statements of Income. Substantially all of the transition services pursuant to the TSA were completed as of the quarter ended March 31, 2025.
Previous wording
Beginning with the quarter ended September 30, 2024, we have disclosed the cloud renewal rate on a net basis (cloud net renewal rate). For the quarter ended December 31, 2024, our cloud net renewal rate, excluding the impact of Carbonite Inc. and Zix Corporation, was 95%. This rate includes increases and decreases in renewed contract values driven by product mix, volume and consumption, and changes for price adjustments relating to renewed contract values, which were not part of the historical calculation of the cloud renewal rate.
Current wording
Beginning with the quarter ended September 30, 2024, we have disclosed the cloud renewal rate on a net basis (cloud net renewal rate). This rate includes increases and decreases in renewed contract values driven by product mix, volume and consumption, and changes for price adjustments relating to renewed contract values, which were not part of the historical calculation of the cloud renewal rate. For the quarter ended March 31, 2025, our cloud net renewal rate, excluding the impact of Carbonite Inc. and Zix Corporation, was 96%.
Previous wording
Cloud services and subscriptions revenues increased by $12.2 million or 2.7% during the three months ended December 31, 2024 as compared to the same period in the prior fiscal year; up 2.2% after factoring in the favorable impact of $2.4 million of foreign exchange rate changes. Geographically, the overall change was attributable to an increase in Americas of $7.2 million, an increase in EMEA of $4.8 million and an increase in Asia Pacific of $0.2 million.
Current wording
Cloud services and subscriptions revenues increased by $8.1 million or 1.8% during the three months ended March 31, 2025 as compared to the same period in the prior fiscal year; up 3.0% after factoring in the unfavorable impact of $5.4 million of foreign exchange rate changes. Geographically, the overall change was attributable to an increase in EMEA of $11.0 million partially offset by a decrease in Americas of $2.9 million.
Previous wording
There were 51 cloud services contracts greater than $1.0 million that closed during the second quarter of Fiscal 2025, compared to 48 contracts during the second quarter of Fiscal 2024.
Current wording
There were 32 cloud services contracts greater than $1.0 million that closed during the third quarter of Fiscal 2025, compared to 28 contracts during the third quarter of Fiscal 2024.
Previous wording
Cost of Cloud services and subscriptions revenues decreased by $7.9 million during the three months ended December 31, 2024 as compared to the same period in the prior fiscal year. This was primarily due to a decrease in third-party network usage fees of $6.9 million and a decrease in labour-related costs of $1.2 million. Overall, the gross margin percentage on Cloud services and subscriptions revenues increased to 63% from 60%.
Current wording
Cost of Cloud services and subscriptions revenues decreased by $12.2 million during the three months ended March 31, 2025 as compared to the same period in the prior fiscal year. This was primarily due to a decrease in third-party network usage fees of $7.3 million and a decrease in labour-related costs of $5.1 million. Overall, the gross margin percentage on Cloud services and subscriptions revenues increased to 62% from 59%.
Previous wording
Cloud services and subscriptions revenues increased by $18.2 million or 2.0% during the six months ended December 31, 2024 as compared to the same period in the prior fiscal year; up 1.9% after factoring in the favorable impact of $0.7 million of foreign exchange rate changes. Geographically, the overall change was attributable to an increase in EMEA of $13.8 million, an increase in Americas of $4.8 million and a decrease in Asia Pacific of $0.4 million.
Current wording
Cloud services and subscriptions revenues increased by $26.3 million or 1.9% during the nine months ended March 31, 2025 as compared to the same period in the prior fiscal year; up 2.3% after factoring in the unfavorable impact of $4.7 million of foreign exchange rate changes. Geographically, the overall change was attributable to an increase in EMEA of $24.8 million, an increase in Americas of $1.9 million, partially offset by a decrease in Asia Pacific of $0.5 million.
Previous wording
There were 74 cloud services contracts greater than $1.0 million that closed during the first six months of Fiscal 2025, compared to 69 contracts during the first six months of Fiscal 2024.
Current wording
There were 106 cloud services contracts greater than $1.0 million that closed during the first nine months of Fiscal 2025, compared to 97 contracts during the first nine months of Fiscal 2024.
Previous wording
Cost of Cloud services and subscriptions revenues decreased by $4.0 million during the six months ended December 31, 2024 as compared to the same period in the prior fiscal year. This was due to a decrease in labour-related costs of $9.9 million, partially offset by an increase in third-party network usage fees of $5.4 million. Overall, the gross margin percentage on Cloud services and subscriptions revenues increased to 62% from 61%.
Current wording
Cost of Cloud services and subscriptions revenues decreased by $16.2 million during the nine months ended March 31, 2025 as compared to the same period in the prior fiscal year. This was due to a decrease in labour-related costs of $15.0 million, and a decrease in third-party network usage fees of $1.8 million. Overall, the gross margin percentage on Cloud services and subscriptions revenues increased to 62% from 60%.
Previous wording
Beginning with the quarter ended September 30, 2024, we have disclosed the customer support renewal rate on a net basis (customer support net renewal rate). For the quarter ended December 31, 2024, our customer support net renewal rate was 92%. This rate includes increases in renewed contract values driven by volume and consumption, and excludes reductions driven by shifts from customer support renewals where customers migrate to other product types, which were not part of the historical calculation of the customer support renewal rate.
Current wording
Beginning with the quarter ended September 30, 2024, we have disclosed the customer support renewal rate on a net basis (customer support net renewal rate). This rate includes increases in renewed contract values driven by volume and consumption, and excludes reductions driven by shifts from customer support renewals where customers migrate to other product types, which were not part of the historical calculation of the customer support renewal rate. For the quarter ended March 31, 2025, our customer support net renewal rate was 90%.
Previous wording
Cost of Customer support revenues decreased by $10.7 million during the three months ended December 31, 2024 as compared to the same period in the prior fiscal year. This was primarily due to a decrease in labour-related costs of $10.4 million over the comparative period. Overall, the gross margin percentage on Customer support revenues remained stable at 89%.
Current wording
Cost of Customer support revenues decreased by $12.9 million during the three months ended March 31, 2025 as compared to the same period in the prior fiscal year. This was primarily due to a decrease in labour-related costs of $11.5 million over the comparative period. Overall, the gross margin percentage on Customer support revenues remained stable at 89%.
Previous wording
Cost of Customer support revenues decreased by $23.2 million during the six months ended December 31, 2024 as compared to the same period in the prior fiscal year. This was primarily due to a decrease in labour-related costs of $22.3 million over the comparative period. Overall, the gross margin percentage on Customer support revenues remained stable at 89%.
Current wording
Cost of Customer support revenues decreased by $36.1 million during the nine months ended March 31, 2025 as compared to the same period in the prior fiscal year. This was primarily due to a decrease in labour-related costs of $33.8 million over the comparative period. Overall, the gross margin percentage on Customer support revenues remained stable at 89%.
Previous wording
License revenues decreased by $100.3 million or 34.7% during the three months ended December 31, 2024 as compared to the same period in the prior fiscal year; down 34.9% after factoring in the favorable impact of $0.6 million of foreign exchange rate changes. The decrease was primarily driven by license revenues in the prior fiscal year relating to the grant of certain IP rights and the exclusion of license revenue contributions as a result of the AMC Divestiture. Geographically, the overall change was attributable to a decrease in Americas of $45.3 million, a decrease in EMEA of $37.9 million and a decrease in Asia Pacific of $17.1 million.
Current wording
License revenues decreased by $62.0 million or 30.9% during the three months ended March 31, 2025 as compared to the same period in the prior fiscal year; down 29.6% after factoring in the unfavorable impact of $2.7 million of foreign exchange rate changes. The decrease was primarily driven by the exclusion of license revenue contributions as a result of the AMC Divestiture and license revenues in the prior fiscal year relating to the grant of certain IP rights. Geographically, the overall change was attributable to a decrease in Americas of $35.5 million, a decrease in EMEA of $22.1 million and a decrease in Asia Pacific of $4.4 million.
Previous wording
During the second quarter of Fiscal 2025, we closed 60 license contracts greater than $0.5 million, of which 24 contracts were greater than $1.0 million, contributing $71.4 million of License revenues. This was compared to 83 license contracts greater than $0.5 million during the second quarter of Fiscal 2024, of which 35 contracts were greater than $1.0 million, contributing $147.7 million of License revenues.
Current wording
During the third quarter of Fiscal 2025, we closed 51 license contracts greater than $0.5 million, of which 19 contracts were greater than $1.0 million, contributing $52.2 million of License revenues. This was compared to 55 license contracts greater than $0.5 million during the third quarter of Fiscal 2024, of which 23 contracts were greater than $1.0 million, contributing $92.3 million of License revenues.
Previous wording
Cost of License revenues increased by $0.4 million during the three months ended December 31, 2024 as compared to the same period in the prior fiscal year. Overall, the gross margin percentage on License revenues decreased to 97% from 98%.
Current wording
Cost of License revenues increased by $0.7 million during the three months ended March 31, 2025 as compared to the same period in the prior fiscal year. Overall, the gross margin percentage on License revenues decreased to 95% from 97%.
Previous wording
License revenues decreased by $147.5 million or 31.9% during the six months ended December 31, 2024 as compared to the same period in the prior fiscal year; down 32.0% after factoring in the favorable impact of $0.5 million of foreign exchange rate changes. The decrease was primarily driven by the exclusion of license revenue contributions as a result of the AMC Divestiture and license revenues in the prior fiscal year, relating to the grant of certain IP rights. Geographically, the overall change was attributable to a decrease in Americas of $76.3 million, a decrease in EMEA of $48.1 million and a decrease in Asia Pacific of $23.2 million.
Current wording
License revenues decreased by $209.5 million or 31.6% during the nine months ended March 31, 2025 as compared to the same period in the prior fiscal year; down 31.3% after factoring in the unfavorable impact of $2.2 million of foreign exchange rate changes. The decrease was primarily driven by the exclusion of license revenue contributions as a result of the AMC Divestiture and license revenues in the prior fiscal year relating to the grant of certain IP rights. Geographically, the overall change was attributable to a decrease in Americas of $111.8 million, a decrease in EMEA of $70.1 million and a decrease in Asia Pacific of $27.6 million.
Previous wording
During the first six months of Fiscal 2025, we closed 99 license contracts greater than $0.5 million, of which 39 contracts were greater than $1.0 million, contributing $111.0 million of License revenues. This was compared to 134 license contracts greater than $0.5 million during the first six months of Fiscal 2024, of which 56 contracts were greater than $1.0 million, contributing $211.6 million of License revenues.
Current wording
During the first nine months of Fiscal 2025, we closed 150 license contracts greater than $0.5 million, of which 58 contracts were greater than $1.0 million, contributing $163.2 million of License revenues. This was compared to 189 license contracts greater than $0.5 million during the first nine months of Fiscal 2024, of which 79 contracts were greater than $1.0 million, contributing $303.9 million of License revenues.
Previous wording
Cost of License revenues increased by $3.2 million during the six months ended December 31, 2024 as compared to the same period in the prior fiscal year. Overall, the gross margin percentage on License revenues decreased to 96% from 98%.
Current wording
Cost of License revenues increased by $3.9 million during the nine months ended March 31, 2025 as compared to the same period in the prior fiscal year. Overall, the gross margin percentage on License revenues decreased to 95% from 97%.
Previous wording
Professional service and other revenues decreased by $7.1 million or 7.1% during the three months ended December 31, 2024 as compared to the same period in the prior fiscal year; down 8.6% after factoring in the impact of foreign exchange rate changes. The decrease was primarily due to the exclusion of professional services revenue contributions as a result of the AMC Divestiture. Geographically, the overall change was attributable to a decrease in Americas of $6.9 million, a decrease in EMEA of $1.0 million and an increase in Asia Pacific of $0.9 million.
Current wording
Professional service and other revenues decreased by $14.8 million or 14.7% during the three months ended March 31, 2025 as compared to the same period in the prior fiscal year; down 12.6% after factoring in the unfavorable impact of foreign exchange rate changes. The decrease was primarily due to the exclusion of professional services revenue contributions as a result of the AMC Divestiture. Geographically, the overall change was attributable to a decrease in Americas of $6.9 million, a decrease in EMEA of $7.1 million and a decrease in Asia Pacific of $0.8 million.
Previous wording
Cost of Professional service and other revenues decreased by $7.4 million during the three months ended December 31, 2024 as compared to the same period in the prior fiscal year. This was primarily due to a decrease in labour-related costs of $7.8 million. Overall, the gross margin percentage on Professional service and other revenues increased to 27% from 24%.
Current wording
Cost of Professional service and other revenues decreased by $10.0 million during the three months ended March 31, 2025 as compared to the same period in the prior fiscal year. This was primarily due to a decrease in labour-related costs of $10.1 million. Overall, the gross margin percentage on Professional service and other revenues decreased to 24% from 25%.
Previous wording
Professional service and other revenues decreased by $20.1 million or 9.9% during the six months ended December 31, 2024 as compared to the same period in the prior fiscal year; down 10.6% after factoring in the impact of foreign exchange rate changes. The decrease was partially due to the exclusion of professional services revenue contributions as a result of the AMC Divestiture over the comparative period. Geographically, the overall change was attributable to a decrease in Americas of $14.1 million and a decrease in EMEA of $5.9 million.
Current wording
Professional service and other revenues decreased by $34.9 million or 11.5% during the nine months ended March 31, 2025 as compared to the same period in the prior fiscal year; down 11.3% after factoring in the unfavorable impact of foreign exchange rate changes. The decrease was partially due to the exclusion of professional services revenue contributions as a result of the AMC Divestiture over the comparative period. Geographically, the overall change was attributable to a decrease in Americas of $21.0 million, a decrease in EMEA of $13.1 million and a decrease in Asia Pacific of $0.8 million
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Rearranged current paragraphs (2)
Current report — wording carried from elsewhere
Amortization of acquired customer-based intangible assets decreased during the three months ended March 31, 2025 by $21.2 million, as compared to the same period in the prior fiscal year. This was primarily due to a reduction in amortization related to customer-based intangible assets from previous acquisitions becoming fully amortized.
Current report — wording carried from elsewhere
(2)Represents the realized gains (losses) from the early termination of cross currency swaps on our derivatives not designated as hedges related to the Micro Focus Acquisition (see Note 15 “Derivative Instruments and Hedging Activities” for more details).
Rearranged previous paragraphs (3)
Previous report — wording carried elsewhere
On May 1, 2024, the Company completed the sale of its AMC business to Rocket Software. The AMC business was comprised of the legacy OpenText connectivity business and the legacy Micro Focus AMC business. The comparability of our operating results for the three and six months ended December 31, 2024 as compared to the three and six months ended
Previous report — wording carried elsewhere
for the six months ended December 31, 2024
Previous report — wording carried elsewhere
for the six months ended December 31, 2023