OpenText Revenue Growth Accelerates as Recurring Bookings Stall
Non-GAAP profit per share climbed to $1.23 even as annual recurring revenue barely moved from a year earlier.
Open Text (OTEX) reported revenue growth that accelerated for a second straight quarter, with fiscal fourth-quarter sales rising 2.9% year-over-year to $1.349 billion, up from 2.2% growth in the prior quarter. The information-management software maker also completed a formal leadership transition, with Ayman Antoun now serving as chief executive after taking the role from interim CEO James McGourlay earlier in the year.
The revenue acceleration was driven almost entirely by a swing in license sales, which grew 24.4% year-over-year to $214.6 million after rising just 4.9% in the prior quarter. Cloud revenue, the company's largest segment, grew 6.0% to $503 million, a slight deceleration from 6.6% growth three months earlier. Customer support revenue, still the company's steadiest line, fell 4.6% to $553.8 million, a sharper decline than the 0.4% drop reported in the prior period.
Beneath the top-line acceleration, annual recurring revenue growth nearly stalled, rising just 0.2% year-over-year to $1.057 billion after growing 2.7% in the prior quarter. Enterprise cloud bookings rose 24.1% year-over-year to $295 million in the quarter and brought full-year bookings to $947 million, up 22.5%. The divergence between flat ARR and reaccelerating bookings suggests new business is being layered on faster than it is showing up in the recurring-revenue base.
Profitability metrics moved in different directions depending on the measure. GAAP net income rose to $156 million from a weak year-earlier comparison, though it declined from $173 million in the prior quarter, pulling GAAP net margin down to 11.5% from 13.5%. Adjusted EBITDA margin recovered sequentially to 37.6% from 34.1% the prior quarter, even as it remained below the 36.3% margin for the full fiscal year. Non-GAAP diluted earnings per share rose to $1.23, up 26.8% year-over-year and 21.8% from the prior quarter. Gross margin expanded for a third consecutive comparison, reaching 75.0% from 73.1% in the prior quarter and 72.3% a year earlier.
A 76% year-over-year drop in special charges, to $18.9 million from $79.7 million, was a major contributor to the improvement in operating and net income. Spending patterns also shifted: research and development expense fell 20% year-over-year to $149.1 million, while sales and marketing spend rose 10.3% to $308.4 million.
The quarter included the $150 million divestiture of the non-core Vertica database business to Rocket Software, which closed during the period and generated $149 million in proceeds along with an $11.8 million gain recorded in the quarter's cash flow and income statements. Operating cash flow rose 17.5% year-over-year to $186 million, reversing an 11.8% decline in the prior quarter, though it came in well below the prior quarter's $355 million in dollar terms. Free cash flow fell 1.6% year-over-year to $122 million, a smaller decline than the 18.4% drop reported the prior quarter, but also down sharply in dollar terms from $305 million.
Open Text repurchased shares at a record pace, spending $409 million on buybacks for the full fiscal year, including $247 million in the prior quarter alone, which helped cut diluted weighted-average share count 5.9% year-over-year to 242.6 million. The company renewed its share repurchase plan for another 12 months, through August 2027, covering up to 23.8 million shares, after repurchasing 14.3 million shares for roughly $392 million under the prior authorization. Open Text also disclosed a €105 million investment to add 400 jobs in Cork and Galway, Ireland, tied to agentic AI and sovereign cloud expansion, and named Jill Larsen to its board of directors.