OpenText Reports 13.3% Revenue Decline in Q3 Fiscal 2025, Net Income Down

OpenText Corporation reported its financial results for the third quarter of fiscal 2025, revealing a total revenue of $1.254 billion, a decrease of 13.3% compared to $1.447 billion in the same period last year. This decline was attributed primarily to the divestiture of its Application Modernization and Connectivity (AMC) business, which was sold to Rocket Software for $2.275 billion in May 2024. The company noted that the exclusion of AMC's revenue contributions significantly impacted year-over-year comparisons. Additionally, unfavorable foreign exchange rate changes further contributed to the revenue decline, with an estimated impact of $21 million.

In terms of profitability, OpenText reported a net income of $92.8 million, down from $98.3 million in the prior year, resulting in a diluted earnings per share of $0.35, compared to $0.36 in the same quarter last year. The company's gross margin also saw a slight contraction, falling to 71.6% from 73.0% year-over-year. Operating expenses decreased to $689.2 million from $828.7 million, reflecting cost-cutting measures and a reduction in workforce as part of its Business Optimization Plan, which aims to streamline operations following the acquisition of Micro Focus and the AMC divestiture.

OpenText's strategic developments included the acquisition of KineMatik Ltd. in August 2023 and Pillr in May 2024, both of which are expected to enhance its product offerings in automated business process management and cybersecurity. The company also reported a total employee headcount of approximately 21,700 as of March 31, 2025, a reduction from previous periods as part of its restructuring efforts. The company’s cloud services and subscriptions revenue increased slightly to $462.6 million, while customer support revenue decreased significantly to $567.4 million, reflecting the impact of the AMC divestiture.

Looking ahead, OpenText has expanded its Business Optimization Plan, anticipating up to $200 million in additional costs to complete strategic initiatives aimed at integrating and simplifying operations. The company expects these efforts to yield annualized savings of approximately $490 million to $550 million, with about half of these savings anticipated to be realized in fiscal 2026. OpenText remains focused on enhancing its cloud capabilities and integrating artificial intelligence into its offerings, positioning itself for future growth despite the challenges posed by geopolitical tensions and market fluctuations.