GET DAILY SIGNALSOpen Text (OTEX) Q1 Fiscal 2027 Results: Cloud Revenue Rises 4.3% While Legacy Lines Weigh on Totals
Key Takeaways
- Open Text reported first quarter fiscal 2027 revenue of $1.237 billion, down 4.0% year over year, reflecting divestitures and softness in legacy product lines.
- GAAP diluted EPS rose to $0.64 from $0.58 a year earlier, while non-GAAP diluted EPS held flat at $1.05.
- Total cloud revenue grew 4.3% to $505 million, marking a 23rd consecutive quarter of organic cloud growth, led by Content Cloud's 20.7% advance.
- Adjusted EBITDA reached $442 million, a 35.8% margin, exceeding management's expectations for the quarter.
- Free cash flow jumped 36.8% year over year to $139 million, and the company reaffirmed its full-year fiscal 2027 outlook.
Earnings Context and Why It Matters
Open Text's first quarter of fiscal 2027, ended September 30, 2026, provided the first clear view of how the enterprise software company is executing its shift toward cloud and AI while handling the decline in legacy on-premises businesses. The results matter because they show whether higher-growth core cloud offerings can offset falling client support, license, and professional services revenue. I was also watching whether cost discipline would hold profitability steady as management prepares to increase growth spending later in the year. With a multi-year growth plan scheduled for the Investor Day on February 10, 2027, this quarter offered an early read on the company's path forward.
Reported Results
Open Text posted total revenue of $1.237 billion, down 4.0% from $1.288 billion in the prior-year quarter. The drop came mainly from divestitures and contraction in non-core areas: client support revenue fell 9% to $534 million, license revenue dropped 8% to $124 million, and professional services and other revenue declined 11% to $73 million. I also checked this using Tickeron’s AI Screener to see how the stock compares to others in the industry.
GAAP net income attributable to Open Text rose 5.9% to $155 million, with diluted EPS of $0.64, up from $0.58. Non-GAAP diluted EPS stayed at $1.05. The company reported adjusted EBITDA of $442 million, a 35.8% margin that beat its own targets, and non-GAAP operating income of $403 million. GAAP gross margin improved 40 basis points to 73.2%.
Cloud stood out again. Total cloud revenue increased 4.3% to $505 million, extending a 23-quarter streak of organic growth. Core revenue rose 2.4% to $864 million, and core cloud revenue climbed 11.2% to $339 million. Operating cash flow grew 16.6% to $172 million, and free cash flow rose 36.8% to $139 million. Management reaffirmed its full-year fiscal 2027 outlook and declared a quarterly dividend of $0.28 per share.
Market Reaction and Investor Sentiment
Sentiment around the results was mixed, reflecting a company whose headline revenue is still contracting even as its core cloud business accelerates. The profit beat came more from cost discipline, a lower share count, and reduced interest expense than from operating growth, with GAAP operating income actually declining year over year. Investors also noted that management reclassified $116 million of quarterly revenue from core to non-core, and that large cloud deals above $1 million grew only 6% versus 49% in the prior quarter. While cloud RPO rose 7% and cloud CRPO advanced 12%, softness in IT Operations Management and cybersecurity within the core portfolio kept the market cautious heading into the February Investor Day.
Forward Outlook and Key Factors to Monitor
Looking ahead, investors will focus on whether Open Text can deliver on its target of 2% to 3% year-over-year core revenue growth in constant currency while increasing growth investments in the second half of fiscal 2027. Management expects these investments, weighted toward the back half of the year, to support stronger core product growth.
Profitability remains a key watch item. The company's fiscal 2027 adjusted EBITDA margin outlook of 32% to 33%, down from 36.3% in fiscal 2026, implies meaningful margin compression as spending ramps. Investors should monitor whether cloud CRPO momentum converts into sustained revenue growth and whether every core product category, including ITOM and cybersecurity, returns to growth as management has committed.
Balance sheet developments also matter. After the quarter, Open Text refinanced its 2027 notes with $1.0 billion in new debt, tendered $300 million of 2028 notes, and extended its revolving credit facility. The February 10 Investor Day, where management plans to present its multi-year growth plan, is the next major catalyst for the OTEX stock.
Using Tickeron’s AI Screener in My Research
I often turn to Tickeron’s AI Screener when evaluating names like Open Text and the broader software sector. The tool helps me quickly filter thousands of stocks and ETFs by technical patterns, fundamentals, trends, and AI-driven signals, which can surface ideas and comparisons more efficiently than manual work. It has become a regular part of how I scan for opportunities and assess relative performance.
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Contributor
Sergey Savastiouk, Ph.D. has a degree in Applied Mathematics from Moscow University and has extensive experience as an entrepreneur, investor, manager, and mathematician. His professional expertise is in applied mathematics, mathematical modeling, system and pattern analysis, and software and hardware system integration. He has served as the CEO of several hi-tech start-up companies and nonprofit organizations, which has given him proven capabilities in business strategy for high-tech start-up companies, market assessment, company formation, team building, product development, marketing, and sales. He has published numerous articles in journals and magazines on related fields. As a retail investor, he spent 15 years developing his proprietary trading and quantitative algorithms (now Tickeron’s A.I.), which brought him significant returns in trading the stock market. His current work and goal in founding Tickeron is to bring professional, sophisticated stock market analysis capabilities to retail investors via an easy-to-use interface.
Momentum Indicator for OTEX turns negative, indicating new downward trend
OTEX saw its Momentum Indicator move below the 0 level on November 03, 2026. This is an indication that the stock could be shifting in to a new downward move. Traders may want to consider selling the stock or exploring put options. Tickeron's A.I.dvisor looked at 91 similar instances where the indicator turned negative. In 61 of the 91 cases, the stock moved further down in the following days. The odds of a decline are at 67%.
Technical Analysis (Indicators)
Bearish Trend Analysis
The 10-day RSI Indicator for OTEX moved out of overbought territory on October 29, 2026. This could be a bearish sign for the stock. Traders may want to consider selling the stock or buying put options. Tickeron's A.I.dvisor looked at 31 similar instances where the indicator moved out of overbought territory. In 14 of the 31 cases, the stock moved lower in the following days. This puts the odds of a move lower at 45%.
The Moving Average Convergence Divergence Histogram (MACD) for OTEX turned negative on November 02, 2026. This could be a sign that the stock is set to turn lower in the coming weeks. Traders may want to sell the stock or buy put options. Tickeron's A.I.dvisor looked at 52 similar instances when the indicator turned negative. In 30 of the 52 cases the stock turned lower in the days that followed. This puts the odds of success at 58%.
Following a 3-day decline, the stock is projected to fall further. Considering past instances where OTEX declined for three days, the price rose further in 50 of 62 cases within the following month. The odds of a continued downward trend are 64%.
OTEX broke above its upper Bollinger Band on October 15, 2026. This could be a sign that the stock is set to drop as the stock moves back below the upper band and toward the middle band. You may want to consider selling the stock or exploring put options.
Bullish Trend Analysis
The Stochastic Oscillator demonstrated that the ticker has stayed in the oversold zone for 1 day, which means it's wise to expect a price bounce in the near future.
OTEX moved above its 50-day moving average on October 12, 2026 date and that indicates a change from a downward trend to an upward trend.
The 10-day moving average for OTEX crossed bullishly above the 50-day moving average on October 15, 2026. This indicates that the trend has shifted higher and could be considered a buy signal. In 9 of 12 past instances when the 10-day crossed above the 50-day, the stock continued to move higher over the following month. The odds of a continued upward trend are 75%.
The 50-day moving average for OTEX moved above the 200-day moving average on October 19, 2026. This could be a long-term bullish signal for the stock as the stock shifts to an upward trend.
Following a +4.49% 3-day Advance, the price is estimated to grow further. Considering data from situations where OTEX advanced for three days, in 210 of 330 cases, the price rose further within the following month. The odds of a continued upward trend are 64%.
The Aroon Indicator entered an Uptrend today. In 146 of 221 cases where OTEX Aroon's Indicator entered an Uptrend, the price rose further within the following month. The odds of a continued Uptrend are 66%.
Fundamental Analysis (Ratings)
The Tickeron Price Growth Rating for this company is 46 (best 1 - 100 worst), indicating steady price growth. OTEX’s price grows at a higher rate over the last 12 months as compared to S&P 500 index constituents.
The Tickeron Seasonality Score of 50 (best 1 - 100 worst) indicates that the company is fair valued in the industry. The Tickeron Seasonality score describes the variance of predictable price changes around the same period every calendar year. These changes can be tied to a specific month, quarter, holiday or vacation period, as well as a meteorological or growing season.
The Tickeron SMR rating for this company is 53 (best 1 - 100 worst), indicating strong sales and a profitable business model. SMR (Sales, Margin, Return on Equity) rating is based on comparative analysis of weighted Sales, Income Margin and Return on Equity values compared against S&P 500 index constituents. The weighted SMR value is a proprietary formula developed by Tickeron and represents an overall profitability measure for a stock.
The Tickeron Valuation Rating of 56 (best 1 - 100 worst) indicates that the company is fair valued in the industry. This rating compares market capitalization estimated by our proprietary formula with the current market capitalization. This rating is based on the following metrics, as compared to industry averages: P/B Ratio (1.604) is normal, around the industry mean (-2.611). P/E Ratio (10.306) is within average values for comparable stocks, (15.348). Projected Growth (PEG Ratio) (1.410) is also within normal values, averaging (2.824). Dividend Yield (0.042) settles around the average of (0.067) among similar stocks. P/S Ratio (1.113) is also within normal values, averaging (70.854).
The Tickeron PE Growth Rating for this company is 91 (best 1 - 100 worst), pointing to worse than average earnings growth. The PE Growth rating is based on a comparative analysis of stock PE ratio increase over the last 12 months compared against S&P 500 index constituents.
The Tickeron Profit vs. Risk Rating rating for this company is 100 (best 1 - 100 worst), indicating that the returns do not compensate for the risks. OTEX’s unstable profits reported over time resulted in significant Drawdowns within these last five years. A stable profit reduces stock drawdown and volatility. The average Profit vs. Risk Rating rating for the industry is 94, placing this stock worse than average.
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General Information
a provider of comprehensive suite of information management software products
Industry PackagedSoftware