What changed in this filing

/stocks — the workspaceLOADING

Item 2. Management’s Discussion and Analysis

2025-04-30 compared with 2025-02-06 · 231 added, 184 removed, 911 unchanged (31% of the section changed)

26 unchanged sentences

(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;

(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);

4 unchanged sentences

(xxviii) divestitures and their expected impact, including in connection with the divestiture of the Application, Modernization and Connectivity (AMC) business (the AMC Divestiture) and the accompanying transition services agreement (TSA) (see Note 17 “Acquisitions and Divestitures” to our Condensed Consolidated Financial Statements for more details);

and (xxix) other matters.

(xxix) the implementation of or changes to global tariff regimes or other trade policies and the resulting uncertainty to the macroeconomic environment;

and (xxx) other matters.

In addition, any statements or information that refer to expectations, beliefs, plans, projections, objectives, performance or other characterizations of future events or circumstances, including any underlying assumptions, are forward-looking, and based on our current expectations, forecasts and projections about the operating environment, economies and markets in which we operate.

33 unchanged sentences

(xviii) increase in exposure to international business risks including the impact of geopolitical instability, political unrest, war and other global conflicts, and other geopolitical tensions, including the Russia-Ukraine and the Middle East conflicts, as we continue to increase our international operations;

(xix) adverse macroeconomic conditions, such as potential increases or changes in U.S., Canadian or global tariff policies and structures and the timing thereof, the effects of U.S.-Canada relations, including escalating tensions, imposition of tariffs, retaliatory measures, restrictive regulations or boycotts, and other trade policies, inflation, disruptions in global supply chains and increased labour costs;

(xix) adverse macroeconomic conditions, such as potential increases or changes in global tariff policies and structures and the timing thereof, the effects of global relations, including escalating tensions, imposition of tariffs, retaliatory measures, restrictive regulations or boycotts, and other trade policies, inflation, disruptions in global supply chains and increased labour costs;

(xx) inability to raise capital at all or on not unfavorable terms in the future;

27 unchanged sentences

the accompanying Notes to our Condensed Consolidated Financial Statements under Part I, Item 1 of this Quarterly Report on Form 10-Q.

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.

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.

Where we say “we”, “us”, “our”, “OpenText” or “the Company”, we mean Open Text Corporation or Open Text Corporation and its subsidiaries, as applicable.

14 unchanged sentences

Our ticker symbol on both the NASDAQ and the TSX is “OTEX.”

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.

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.

1 unchanged sentence

Quarterly Summary:

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.

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:

• Total revenue was $1,254.4 million, down 13.3% 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.

down 11.9% after factoring in the unfavorable impact of $21.0 million of foreign exchange rate changes.

• 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 8.8% after factoring in the favorable impact of $7.7 million of foreign exchange rate changes.

down 8.7% after factoring in the unfavorable impact of $16.2 million of foreign exchange rate changes.

• Cloud services and subscriptions revenue was $462.6 million, up 1.8% 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.

up 3.0% after factoring in the unfavorable impact of $5.4 million of foreign exchange rate changes.

• GAAP-based gross margin was 71.6% compared to 73.0% in the same period in the prior fiscal year.

5 unchanged sentences

• Adjusted EBITDA, a non-GAAP measure, was $395.3 million compared to $463.7 million in the same period in the prior fiscal year.

• 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%.

• 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.

• 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%.

• 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.

• 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.

• 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).

• 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).

See “Use of Non-GAAP Financial Measures” below for definitions and reconciliations of GAAP-based measures to Non-GAAP-based measures.

4 unchanged sentences

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.

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.

4 unchanged sentences

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.

16 unchanged sentences

Our growth strategy includes embedding AI in our products to empower knowledge workers to significantly raise their productivity through our offerings such as Titanium X.

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.

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.

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.

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.

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.

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.

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.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

5 unchanged sentences

The policies listed below are areas that may contain key components of our results of operations and are based on complex rules requiring us to make judgments and estimates and consequently, we consider these to be our critical accounting policies.

Some of these accounting policies involve complex situations and require a higher degree of judgment, either in the application and interpretation of existing accounting literature or in the development of estimates that affect our financial statements.

Some of these

accounting policies involve complex situations and require a higher degree of judgment, either in the application and interpretation of existing accounting literature or in the development of estimates that affect our financial statements.

The critical accounting policies which we believe are the most important to aid in fully understanding and evaluating our reported financial results include the following:

12 unchanged sentences

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

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.

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.

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.

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,

(In thousands) Three Months Ended

March 31, 2024 Nine Months Ended

March 31, 2024

Cloud services and subscriptions $ — $ —

Customer support 85,767 253,982

License 42,032 127,923

Professional service and other 5,697 15,663

Total revenues $ 133,496 $ 397,568

Transition Services Agreement

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.

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 six months ended December 31, 2024, we billed Rocket Software $12.7 million and $27.2 million, respectively, under the TSA.

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.

Three Months Ended December 31,

Six Months Ended December 31,

(In thousands) 2024 2024

Substantially all of the transition services pursuant to the TSA were completed as of the quarter ended March 31, 2025.

(In thousands) Three Months Ended

March 31, 2025 Nine Months Ended

March 31, 2025

Professional service and other cost of revenue $ 1 $ 335

3 unchanged sentences

General and administrative 3,894 26,181

10,449 22,287

$ 12,686 $ 27,205

Total $ 4,202 $ 31,407

Summary of Results of Operations

Three Months Ended December 31, Six Months Ended December 31,

Three Months Ended March 31, Nine Months Ended March 31,

(In thousands) 2025 Change

44 unchanged sentences

75.7 % 76.7 % 76.3 % 77.5 %

Net income (loss), attributable to OpenText $ 229,862 $ 37,675 $ 314,230 $ 118,576

GAAP-based EPS (loss), diluted $ 0.87 $ 0.14 $ 1.18 $ 0.44

Net income, attributable to OpenText

$ 92,805 $ 98,285 $ 407,035 $ 216,861

GAAP-based EPS, diluted

$ 0.35 $ 0.36 $ 1.53 $ 0.80

Non-GAAP-based EPS, diluted (5)

14 unchanged sentences

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.

For the quarter ended March 31, 2025, our cloud net renewal rate, excluding the impact of Carbonite Inc.

and Zix Corporation, was 96%.

Cost of Cloud services and subscriptions revenues is comprised primarily of third-party network usage fees, maintenance of in-house data hardware centers, technical support personnel-related costs and some third party royalty costs.

Three Months Ended December 31, Six Months Ended December 31,

Three Months Ended March 31, Nine Months Ended March 31,

(In thousands) 2025 Change

13 unchanged sentences

Asia Pacific 6.0 % 6.1 % 6.1 % 6.4 %

Three Months Ended December 31, 2024 Compared to Three Months Ended December 31, 2023

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.

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.

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.

Three Months Ended March 31, 2025 Compared to Three Months Ended March 31, 2024

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.

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.

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%.

Six Months Ended December 31, 2024 Compared to Six Months Ended December 31, 2023

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.

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.

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.

Nine Months Ended March 31, 2025 Compared to Nine Months Ended March 31, 2024

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.

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.

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%.

7 unchanged sentences

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.

For the quarter ended March 31, 2025, our customer support net renewal rate was 90%.

Cost of Customer support revenues is comprised primarily of technical support personnel and related costs, as well as third party royalty costs.

Three Months Ended December 31, Six Months Ended December 31,

Three Months Ended March 31, Nine Months Ended March 31,

(In thousands) 2025 Change

13 unchanged sentences

Asia Pacific 9.8 % 10.6 % 9.8 % 9.9 %

Three Months Ended December 31, 2024 Compared to Three Months Ended December 31, 2023

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.

Three Months Ended March 31, 2025 Compared to Three Months Ended March 31, 2024

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.

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.

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

1 unchanged sentence

Overall, the gross margin percentage on Customer support revenues remained stable at 89%.

Six Months Ended December 31, 2024 Compared to Six Months Ended December 31, 2023

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.

Nine Months Ended March 31, 2025 Compared to Nine Months Ended March 31, 2024

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.

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.

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.

3 unchanged sentences

Cost of License revenues consists primarily of royalties payable to third parties.

Three Months Ended December 31, Six Months Ended December 31,

Three Months Ended March 31, Nine Months Ended March 31,

(In thousands) 2025 Change

13 unchanged sentences

Asia Pacific 13.6 % 11.7 % 13.4 % 13.4 %

Three Months Ended December 31, 2024 Compared to Three Months Ended December 31, 2023

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.

Three Months Ended March 31, 2025 Compared to Three Months Ended March 31, 2024

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.

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.

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.

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.

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%.

Six Months Ended December 31, 2024 Compared to Six Months Ended December 31, 2023

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.

Nine Months Ended March 31, 2025 Compared to Nine Months Ended March 31, 2024

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.

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.

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.

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.

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.

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%.

6 unchanged sentences

The most significant components of these costs are personnel-related expenses, travel costs and third-party subcontracting.

Three Months Ended December 31, Six Months Ended December 31,

Three Months Ended March 31, Nine Months Ended March 31,

(In thousands) 2025 Change

13 unchanged sentences

Asia Pacific 14.0 % 12.8 % 13.8 % 12.5 %

Three Months Ended December 31, 2024 Compared to Three Months Ended December 31, 2023

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.

Three Months Ended March 31, 2025 Compared to Three Months Ended March 31, 2024

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 $1.0 million and an increase in Asia Pacific of $0.9 million.

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.

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.

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 increased to 27% from 24%.

Six Months Ended December 31, 2024 Compared to Six Months Ended December 31, 2023

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.

Overall, the gross margin percentage on Professional service and other revenues decreased to 24% from 25%.

Nine Months Ended March 31, 2025 Compared to Nine Months Ended March 31, 2024

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 $14.1 million and a decrease in EMEA of $5.9 million.

Cost of Professional service and other revenues decreased by $20.4 million during the six months ended December 31, 2024 as compared to the same period in the prior fiscal year.

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

Cost of Professional service and other revenues decreased by $30.4 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 $30.8 million.

1 unchanged sentence

Amortization of Acquired Technology-based Intangible Assets

Three Months Ended December 31, Six Months Ended December 31,

Three Months Ended March 31, Nine Months Ended March 31,

(In thousands) 2025 Change

2 unchanged sentences

Amortization of acquired technology-based intangible assets $ 47,199 $ (895) $ 48,094 $ 141,646 $ (54,056) $ 195,702

Amortization of acquired technology-based intangible assets decreased during the three months ended December 31, 2024 by $23.6 million as compared to the same period in the prior fiscal year.

This was primarily due to a reduction in amortization related to technology-based intangible assets from previous acquisitions becoming fully amortized and reduced amortization related to the AMC Divestiture.

Amortization of acquired technology-based intangible assets decreased during the six months ended December 31, 2024 by $53.2 million as compared to the same period in the prior fiscal year.

Amortization of acquired technology-based intangible assets decreased during the three months ended March 31, 2025 by $0.9 million as compared to the same period in the prior fiscal year.

This was primarily due to a reduction in amortization related to technology-based intangible assets from previous acquisitions becoming fully amortized.

Amortization of acquired technology-based intangible assets decreased during the nine months ended March 31, 2025 by $54.1 million as compared to the same period in the prior fiscal year.

This was primarily due to a reduction in amortization related to the AMC Divestiture and reduced amortization related to technology-based intangible assets from previous acquisitions becoming fully amortized.

Operating Expenses

Three Months Ended December 31, Six Months Ended December 31,

Three Months Ended March 31, Nine Months Ended March 31,

(In thousands) 2025 Change

24 unchanged sentences

Three Months Ended

December 31, 2024 and 2023

March 31, 2025 and 2024

Change between

Six Months Ended

December 31, 2024 and 2023

Nine Months Ended

March 31, 2025 and 2024

(In thousands)

7 unchanged sentences

Total change in research and development expenses $ (29,188) $ (96,855)

Research and development expenses decreased by $32.1 million during the three months ended December 31, 2024 as compared to the same period in the prior fiscal year.

Payroll and payroll-related benefits, which is comprised of salaries, benefits and variable short-term incentives, decreased by $16.8 million, contract labour and consulting expense decreased by $5.7 million, and share-based compensation expense decreased by $4.8 million.

Research and development expenses decreased by $29.2 million during the three months ended March 31, 2025 as compared to the same period in the prior fiscal year.

Payroll and payroll-related benefits, which is comprised of salaries, benefits and variable short-term incentives, decreased by $11.8 million, facility-related expenses decreased by $6.1 million, share-based compensation expense decreased by $5.0 million and contract labour and consulting expense decreased by $3.5 million.

Overall, our research and development expenses, as a percentage of total revenues, remained stable at 16% as compared to the same period in the prior fiscal year.

Research and development expenses decreased by $67.7 million during the six months ended December 31, 2024 as compared to the same period in the prior fiscal year.

Payroll and payroll-related benefits, which is comprised of salaries, benefits and variable short-term incentives, decreased by $38.7 million, facility-related expenses decreased by $8.9 million, contract labour and consulting decreased by $8.1 million, and share-based compensation expense decreased by $8.1 million.

Overall, our research and development expenses, as a percentage of total revenues, decreased to 14% compared to 15% for the same period in the prior fiscal year.

Our research and development labour resources decreased by 661 employees, from 8,062 employees at December 31, 2023 to 7,401 employees at December 31, 2024.

Research and development expenses decreased by $96.9 million during the nine months ended March 31, 2025 as compared to the same period in the prior fiscal year.

Payroll and payroll-related benefits, which is comprised of salaries, benefits and variable short-term incentives, decreased by $50.5 million, facility-related expenses decreased by $15.0 million, share-based compensation expense decreased by $13.1 million and contract labour and consulting decreased by $11.6 million.

Overall, our research and development expenses, as a percentage of total revenues, remained stable at 15% compared to the same period in the prior fiscal year.

Our research and development labour resources decreased by 608 employees, from 7,980 employees at March 31, 2024 to 7,372 employees at March 31, 2025.

Sales and marketing expenses consist primarily of personnel expenses and costs associated with advertising, marketing events and trade shows.

1 unchanged sentence

Three Months Ended

December 31, 2024 and 2023

March 31, 2025 and 2024

Change between

Six Months Ended

December 31, 2024 and 2023

Nine Months Ended

March 31, 2025 and 2024

(In thousands) increase (decrease) increase (decrease)

7 unchanged sentences

Credit loss expense

(2,151) 3,454

Other miscellaneous (805) (3,554)

Total change in sales and marketing expenses $ (43,648) $ (91,471)

Sales and marketing expenses decreased by $13.7 million during the three months ended December 31, 2024 as compared to the same period in the prior fiscal year.

Payroll and payroll-related benefits, which is comprised of salaries, benefits and variable short-term incentives, decreased by $19.1 million, share-based compensation expense decreased by $2.3 million, and contract labour and consulting expense decreased by $1.2 million.

These decreases were partially offset by increases in marketing expenses of $3.7 million, increases in commissions of $2.4 million and increases in credit loss expense of $2.0 million.

Overall, our sales and marketing expenses, as a percentage of total revenues, increased to 21% compared to 19% for the same period in the prior fiscal year.

Sales and marketing expenses decreased by $47.8 million during the six months ended December 31, 2024 as compared to the same period in the prior fiscal year.

Payroll and payroll-related benefits, which is comprised of salaries, benefits and variable short-term incentives, decreased by $41.8 million, share-based compensation expense decreased by $5.1 million,

facility-related expenses decreased by $3.3 million, and contract labour and consulting expenses decreased by $2.9 million.

These decreases were partially offset by increases in credit loss expense of $5.6 million and increases in commissions of $2.5 million.

Overall, our sales and marketing expenses, as a percentage of total revenues, increased to 20% compared to 19% for the same period in the prior fiscal year.

Our sales and marketing labour resources decreased by 473 employees, from 4,511 employees at December 31, 2023 to 4,038 employees at December 31, 2024.

Sales and marketing expenses decreased by $43.6 million during the three months ended March 31, 2025 as compared to the same period in the prior fiscal year.

Payroll and payroll-related benefits, which is comprised of salaries, benefits and variable short-term incentives, decreased by $21.4 million, commissions decreased by $8.8 million, share-based compensation expense decreased by $4.1 million, and facility-related expenses decreased by $2.3 million.

Overall, our sales and marketing expenses, as a percentage of total revenues, remained stable at 21% compared to the same period in the prior fiscal year.

Sales and marketing expenses decreased by $91.5 million during the nine months ended March 31, 2025 as compared to the same period in the prior fiscal year.

Payroll and payroll-related benefits, which is comprised of salaries, benefits and variable short-term incentives, decreased by $63.2 million, share-based compensation expense decreased by $9.1 million, commissions decreased by $6.3 million, facility-related expenses decreased by $5.6 million, and contract labour and consulting

expenses decreased by $4.4 million.

Overall, our sales and marketing expenses, as a percentage of total revenues, remained stable at 20% compared to the same period in the prior fiscal year.

Our sales and marketing labour resources decreased by 486 employees, from 4,520 employees at March 31, 2024 to 4,034 employees at March 31, 2025.

General and administrative expenses consist primarily of payroll and payroll related benefits expenses, related overhead, audit fees, other professional fees, contract labour and consulting expenses and public company costs.

1 unchanged sentence

Three Months Ended

December 31, 2024 and 2023

March 31, 2025 and 2024

Change between

Six Months Ended

December 31, 2024 and 2023

Nine Months Ended

March 31, 2025 and 2024

(In thousands) increase (decrease) increase (decrease)

6 unchanged sentences

Total change in general and administrative expenses $ (30,206) $ (128,595)

General and administrative expenses decreased by $73.9 million during the three months ended December 31, 2024 as compared to the same period in the prior fiscal year.

General and administrative expenses decreased by $30.2 million during the three months ended March 31, 2025 as compared to the same period in the prior fiscal year.

Other miscellaneous costs, which include professional fees such as legal, audit and tax related expenses, decreased by $16.6 million primarily driven by a reduction in costs related to IP, including the grant of certain IP rights and the resolution of certain historical IP related matters in the prior fiscal year, and reductions in other professional fees.

1 unchanged sentence

Overall, general and administrative expenses, as a percentage of total revenues, decreased to 9% compared to 10% for the same period in the prior fiscal year.

General and administrative expenses decreased by $98.4 million during the six months ended December 31, 2024 as compared to the same period in the prior fiscal year.

General and administrative expenses decreased by $128.6 million during the nine months ended March 31, 2025 as compared to the same period in the prior fiscal year.

Other miscellaneous costs, which include professional fees such as legal, audit and tax related expenses, decreased by $64.8 million primarily driven by a reduction in costs related to IP, including the grant of certain IP rights and the resolution of certain historical IP related matters in the prior fiscal year, and reductions in other professional fees.

1 unchanged sentence

Overall, general and administrative expenses, as a percentage of total revenues, decreased to 8% compared to 10% for the same period in the prior fiscal year.

Our general and administrative labour resources decreased by 345 employees, from 3,428 employees at December 31, 2023 to 3,083 employees at December 31, 2024.

Our general and administrative labour resources decreased by 507 employees, from 3,514 employees at March 31, 2024 to 3,007 employees at March 31, 2025.

Depreciation expenses:

Three Months Ended December 31, Six Months Ended December 31,

Three Months Ended March 31, Nine Months Ended March 31,

(In thousands) 2025 Change

2 unchanged sentences

Depreciation $ 32,474 $ 365 $ 32,109 $ 96,524 $ (3,091) $ 99,615

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.

Depreciation expenses, as a percentage of total revenue, remained stable for the three and six months ended December 31, 2024 at 2% as compared to the same periods in the prior fiscal year.

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.

Depreciation expenses decreased during the nine months ended March 31, 2025 by $3.1 million compared to the same period in the prior fiscal year.

Depreciation expenses, as a percentage of total revenue, remained stable for the nine months ended March 31, 2025 at 3% as compared to the same period in the prior fiscal year.

Amortization of acquired customer-based intangible assets:

Three Months Ended December 31, Six Months Ended December 31,

Three Months Ended March 31, Nine Months Ended March 31,

(In thousands) 2025 Change

2 unchanged sentences

Amortization of acquired customer-based intangible assets $ 79,683 $ (21,158) $ 100,841 $ 242,235 $ (92,723) $ 334,958

Amortization of acquired customer-based intangible assets decreased during the three and six months ended December 31, 2024 by $32.9 million and $71.6 million, respectively, 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 and reduced amortization related to the AMC Divestiture.

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.

Amortization of acquired customer-based intangible assets decreased during the nine months ended March 31, 2025 by $92.7 million, as compared to the same period in the prior fiscal year.

This was primarily due to a reduction in amortization related to the AMC Divestiture and reduced amortization related to customer-based intangible assets from previous acquisitions becoming fully amortized.

Special charges (recoveries):

3 unchanged sentences

In certain limited situations, if the planned activity does not need to be implemented, or an expense lower than anticipated is paid out, we record a recovery of the originally recorded expense to Special charges (recoveries).

Three Months Ended December 31, Six Months Ended December 31,

Three Months Ended March 31, Nine Months Ended March 31,

(In thousands) 2025 Change

2 unchanged sentences

Special charges (recoveries) $ 3,854 $ (15,707) $ 19,561 $ 66,228 $ (21,293) $ 87,521

Special charges (recoveries) decreased by $38.9 million during the three months ended December 31, 2024 over the comparative period.

Special charges (recoveries) decreased by $15.7 million during the three months ended March 31, 2025 over the comparative period.

This was primarily due to a decrease in restructuring costs related to the Micro Focus Acquisition of $9.6 million and a decrease in divestiture costs of $6.9 million, partially offset by an increase related to the Business Optimization Plan of $2.3 million, as compared to the same period in the prior fiscal year.

Special charges (recoveries) decreased by $5.6 million during the six months ended December 31, 2024 as compared to the same period in the prior fiscal year.

Restructuring costs related to the Micro Focus Acquisition decreased by $52.6 million, other miscellaneous charges decreased by $4.1 million and divestiture costs decreased by $2.8 million, partially offset by an increase in restructuring costs of $54.9 million related to the Business Optimization Plan, as compared to the same period in the prior fiscal year.

Special charges (recoveries) decreased by $21.3 million during the nine months ended March 31, 2025 as compared to the same period in the prior fiscal year.

Restructuring costs related to the Micro Focus Acquisition decreased by $62.3 million, divestiture costs decreased by $9.7 million and other miscellaneous charges decreased by $4.9 million, partially offset by an increase in restructuring costs of $57.1 million related to the Business Optimization Plan, as compared to the same period in the prior fiscal year.

For more details on Special charges (recoveries), see Note 16 “Special Charges (Recoveries)” to our Condensed Consolidated Financial Statements.

1 unchanged sentence

The components of other income (expense), net were as follows:

Three Months Ended December 31, Six Months Ended December 31,

Three Months Ended March 31, Nine Months Ended March 31,

(In thousands) 2025 Change

6 unchanged sentences

(9,836) (26,507) 16,671 10,778 14,329 (3,551)

Realized losses on derivatives

not designated as hedges (2)

(10,380) (10,380) — (10,380) (10,380) —

OpenText share in net income (loss) of equity investees (3)

1,644 2,479 (835) 3,637 22,650 (19,013)

Gain on AMC Divestiture (3)

Adjustment to gain on AMC Divestiture (4)

— — — (4,175) (4,175) —

Loss on debt extinguishment (5)

— 10,803 (10,803) — 10,803 (10,803)

Other miscellaneous income (expense) 263 (848) 1,111 631 1,544 (913)

2 unchanged sentences

(1) Represents the unrealized gains (losses) on our derivatives not designated as hedges related to the Micro Focus Acquisition (see Note 15 “Derivative Instruments and Hedging Activities” to our Condensed Consolidated Financial Statements for more details).

(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).

(3) Represents our share in net income (loss) of equity investees, which approximates fair value and subject to volatility based on market trends and business conditions, based on our interest in certain investment funds in which we are a limited partner.

1 unchanged sentence

(4) Represents final settlement of working capital and other adjustments (see Note 17 “Acquisitions and Divestitures” to our Condensed Consolidated Financial Statements for more details).

(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.

Interest and Other Related Expense, Net

Interest and other related expense, net is primarily comprised of interest paid and accrued on our debt facilities, offset by interest income earned on our cash and cash equivalents.

Three Months Ended December 31, Six Months Ended December 31,

Three Months Ended March 31, Nine Months Ended March 31,

(In thousands) 2025 Change

13 unchanged sentences

We operate in several tax jurisdictions and are exposed to various foreign tax rates.

Three Months Ended December 31, Six Months Ended December 31,

Three Months Ended March 31, Nine Months Ended March 31,

(In thousands) 2025 Change

3 unchanged sentences

$ 10,842 $ 4,814 $ 6,028 $ 63,618 $ 39,184 $ 24,434

The Company’s effective tax rate for the three months ended December 31, 2024 increased to a provision of 18.1% compared to a provision of 17.6% for the three months ended December 31, 2023.

The Company’s effective tax rate for the three months ended December 31, 2024 differs from the Canadian statutory rate of 26.5% primarily due to tax benefits related to a net decrease in unrecognized tax benefits, foreign tax credits, research and development credits, and a change in valuation

allowance, partially offset by disallowed share-based compensation deductions and foreign source income inclusion in the U.S.

The Company’s effective tax rate for the three months ended December 31, 2023 differs from the Canadian statutory rate primarily due to tax benefits related to foreign tax credits, research and development credits, partially offset by U.S.

Base Erosion and Anti-Abuse Tax (BEAT).

The Company’s effective tax rate for the six months ended December 31, 2024 increased to a provision of 14.4% compared to a provision of 13.4% for the six months ended December 31, 2023.

The Company’s effective tax rate for the six months ended December 31, 2024 differs from the Canadian statutory rate of 26.5% primarily due to tax benefits related to a net decrease in unrecognized tax benefits, foreign tax credits, research and development credits, and a change in valuation allowance, partially offset by disallowed share-based compensation deductions and foreign source income inclusion in the U.S.

The Company’s effective tax rate for the six months ended December 31, 2023 differs from the Canadian statutory rate primarily due to tax benefits related to foreign tax credits, research and development credits, partially offset by U.S.

The Company’s effective tax rate for the three months ended March 31, 2025 increased to a provision of 10.5% compared to a provision of 5.8% for the three months ended March 31, 2024.

The Company’s effective tax rate for the three months ended March 31, 2025 differs from the Canadian statutory rate of 26.5% primarily due to tax benefits related to foreign tax

credits, research and development credits, and the effect of foreign rate differences, partially offset by withholding taxes, foreign source income inclusion in the U.S.

and a net increase in unrecognized tax benefits.

The Company’s effective tax rate for the three months ended March 31, 2024 differs from the Canadian statutory rate primarily due to tax benefits related to change in valuation allowance, foreign tax credits, and research and development credits, partially offset by U.S.

Base Erosion and Anti-Abuse Tax (BEAT), withholding taxes, and an increase to uncertain tax positions.

The Company’s effective tax rate for the nine months ended March 31, 2025 increased to a provision of 13.5% compared to a provision of 10.1% for the nine months ended March 31, 2024.

The Company’s effective tax rate for the nine months ended March 31, 2025 differs from the Canadian statutory rate of 26.5% primarily due to tax benefits related to a net decrease in unrecognized tax benefits, foreign tax credits, research and development credits, partially offset by withholding taxes and foreign source income inclusion in the U.S.

The Company’s effective tax rate for the nine months ended March 31, 2024 differs from the Canadian statutory rate primarily due to tax benefits related to foreign tax credits, research and development credits, and a change in valuation allowance, partially offset by U.S.

BEAT and withholding taxes.

Numerous countries have agreed to a statement in support of the Organization for Economic Co-Operation and Development model rules that propose a global minimum tax rate of 15.0% for companies with revenue above €750.0 million, calculated on a country-by-country basis, and E.U.

4 unchanged sentences

however, it is possible that the implementation of relevant legislation could impact our liability for taxes.

As of the three and six months ended December 31, 2024, the impact of the global minimum tax is not material.

As of the three and nine months ended March 31, 2025, the impact of the global minimum tax is not material.

For information on certain potential tax contingencies, including the Canada Revenue Agency (CRA) matter, see Note 12 “Guarantees and Contingencies” and Note 13 “Income Taxes” to our Condensed Consolidated Financial Statements, as well as Part I, Item 1A, “Risk Factors” in our Annual Report on Form 10-K for Fiscal 2024.

33 unchanged sentences

Reconciliation of selected GAAP-based measures to Non-GAAP-based measures

for the three months ended December 31, 2024

for the three months ended March 31, 2025

(In thousands, except for per share data)

Three Months Ended December 31, 2024

Three Months Ended March 31, 2025

GAAP-based Measures GAAP-based Measures

41 unchanged sentences

(8) Reconciliation of GAAP-based net income to Non-GAAP-based net income:

Three Months Ended December 31, 2024

Three Months Ended March 31, 2025

Per share diluted

11 unchanged sentences

Reconciliation of Adjusted EBITDA

Three Months Ended December 31, 2024

Three Months Ended March 31, 2025

GAAP-based net income, attributable to OpenText

9 unchanged sentences

Reconciliation of selected GAAP-based measures to Non-GAAP-based measures

for the three months ended December 31, 2023

for the three months ended March 31, 2024

(In thousands, except for per share data)

Three Months Ended December 31, 2023

Three Months Ended March 31, 2024

GAAP-based Measures GAAP-based Measures

41 unchanged sentences

(8) Reconciliation of GAAP-based net income to Non-GAAP-based net income:

Three Months Ended December 31, 2023

Three Months Ended March 31, 2024

Per share diluted

11 unchanged sentences

Reconciliation of Adjusted EBITDA

Three Months Ended December 31, 2023

Three Months Ended March 31, 2024

GAAP-based net income, attributable to OpenText

9 unchanged sentences

Reconciliation of selected GAAP-based measures to Non-GAAP-based measures

for the six months ended December 31, 2024

for the nine months ended March 31, 2025

(In thousands, except for per share data)

Six Months Ended December 31, 2024

Nine Months Ended March 31, 2025

GAAP-based Measures GAAP-based Measures

41 unchanged sentences

(8) Reconciliation of GAAP-based net income to Non-GAAP-based net income:

Six Months Ended December 31, 2024

Nine Months Ended March 31, 2025

Per share diluted

11 unchanged sentences

Reconciliation of Adjusted EBITDA

Six Months Ended December 31, 2024

Nine Months Ended March 31, 2025

GAAP-based net income, attributable to OpenText

9 unchanged sentences

Reconciliation of selected GAAP-based measures to Non-GAAP-based measures

for the six months ended December 31, 2023

for the nine months ended March 31, 2024

(In thousands, except for per share data)

Six Months Ended December 31, 2023

Nine Months Ended March 31, 2024

GAAP-based Measures GAAP-based Measures

41 unchanged sentences

(8) Reconciliation of GAAP-based net income to Non-GAAP-based net income:

Six Months Ended December 31, 2023

Nine Months Ended March 31, 2024

Per share diluted

11 unchanged sentences

Reconciliation of Adjusted EBITDA

Six Months Ended December 31, 2023

Nine Months Ended March 31, 2024

GAAP-based net income, attributable to OpenText

11 unchanged sentences

(In thousands)

As of December 31, 2024 Change

As of March 31, 2025 Change

increase (decrease) As of June 30, 2024

5 unchanged sentences

(1) Restricted cash is classified under the Prepaid expenses and other current assets and Other assets line items on the Condensed Consolidated Balance Sheets (see Note 7 “Prepaid Expenses and Other Assets” to our Condensed Consolidated Financial Statements for more details).

Six Months Ended December 31,

Nine Months Ended March 31,

(In thousands)

11 unchanged sentences

For more details, see “Long-term Debt and Credit Facilities” below.

As of December 31, 2024, we have recognized a deferred income tax liability of $16.8 million (June 30, 2024—$15.9 million) on taxable temporary differences related to the undistributed earnings of certain non-United States subsidiaries and planned periodic repatriations from certain German subsidiaries, that will be subject to withholding taxes upon distribution.

As of March 31, 2025, we have recognized a deferred income tax liability of $18.1 million (June 30, 2024—$15.9 million) on taxable temporary differences related to the undistributed earnings of certain non-United States subsidiaries and planned periodic repatriations from certain German subsidiaries, that will be subject to withholding taxes upon distribution.

Cash flows from operating activitie s

Cash flows provided by operating activities decreased by $127.6 million during the six months ended December 31, 2024, as compared to the same period in the prior fiscal year principally related to a decrease in changes from working capital of $232.3 million primarily from tax payments made related to the AMC Divestiture, offset by an increase in net income after the impact of non-cash items of $104.7 million.

During the second quarter of Fiscal 2025 we had a days sales outstanding (DSO) of 43 days, as compared to our DSO of 47 days during the second quarter of Fiscal 2024.

The per day impact of our DSO in the second quarter of Fiscal 2025 and Fiscal 2024 on our cash flows was $14.8 million and $17.1 million, respectively.

Cash flows provided by operating activities decreased by $110.0 million during the nine months ended March 31, 2025, as compared to the same period in the prior fiscal year principally related to a decrease in changes from working capital of $216.3 million primarily from tax payments made related to the AMC Divestiture, offset by an increase in net income after the impact of non-cash items of $106.3 million.

During the third quarter of Fiscal 2025 we had a days sales outstanding (DSO) of 43 days, as compared to our DSO of 45 days during the third quarter of Fiscal 2024.

The per day impact of our DSO in the third quarter of Fiscal 2025 and Fiscal 2024 on our cash flows was $13.9 million and $16.1 million, respectively.

In arriving at DSO, we exclude contract assets as these assets do not provide an unconditional right to the related consideration from the customer.

Cash flows from investing activities

Our cash flows from investing activities are primarily on account of acquisitions and additions of property and equipment.

Cash flows used in investing activities decreased by $13.0 million during the six months ended December 31, 2024, as compared to the same period in the prior fiscal year primarily due to a decrease in consideration paid for an acquisition and other investing activities of $21.9 million, partially offset by a payment of $11.7 million due to working capital net settlement on AMC Divestiture.

Cash flows from investing activities are primarily on account of acquisitions and additions of property and equipment.

Cash flows used in investing activities decreased by $5.2 million during the nine months ended March 31, 2025, as compared to the same period in the prior fiscal year primarily due to a decrease in additions for property and equipment of $10.3 million and a decrease in consideration paid for an acquisition and other investing activities of $16.2 million, partially offset by a payment of $11.7 million due to working capital net settlement on the AMC Divestiture and a payment of $10.4 million related to the termination of certain of our outstanding 5-year EUR/USD cross currency swaps.

Cash flows from financing activities

1 unchanged sentence

These inflows are typically offset by scheduled and non-scheduled repayments of our long-term debt financing and, when applicable, the payment of dividends and/or repurchases of our Common Shares.

Cash flows used in financing activities decreased by $197.8 million during the six months ended December 31, 2024 as compared to the same period in the prior fiscal year.

Cash flows used in financing activities decreased by $199.6 million during the nine months ended March 31, 2025 as compared to the same period in the prior fiscal year.

This is primarily due to the net impact of the following activities:

(i) $532.5 million decrease in repayments of long-term debt and the Revolver;

(ii) $21.9 million due to net change in TSA obligation driven by cash collections on behalf of Rocket Software related to certain transition services performed by the Company related to the AMC Divestiture;

(iii) $1.7 million reduction in debt issuance costs.

(ii) $1.7 million reduction in debt issuance costs.

The decrease in cash flows used in financing activities above were partially offset by the following increases:

1 unchanged sentence

(ii) $31.1 million related to lower proceeds from the issuance of Common Shares for the exercise of options and the OpenText ESPP;

(iii) $4.0 million related to increase in dividends paid to shareholders.

(iii) $15.3 million due to a net change in TSA obligations driven by cash collections on behalf of Rocket Software related to certain transition services performed by the Company related to the AMC Divestiture;

(iv) $4.7 million related to increase in dividends paid to shareholders.

Cash Dividends

During the three and six months ended December 31, 2024, we declared and paid cash dividends of $0.2625 and $0.525 per Common Share, respectively, in the aggregate amount of $68.3 million and $137.4 million, respectively (three and six months ended December 31, 2023—$0.25 and $0.50 per Common Share, respectively, in the aggregate amount of $66.4 million and $133.4 million, respectively).

During the three and nine months ended March 31, 2025, we declared and paid cash dividends of $0.2625 and $0.7875 per Common Share, respectively, in the aggregate amount of $67.9 million and $205.3 million, respectively (three and nine months ended March 31, 2024—$0.25 and $0.75 per Common Share, respectively, in the aggregate amount of $67.3 million and $200.7 million, respectively).

Future declarations of dividends and the establishment of future record and payment dates are subject to final determination and discretion of the Board.

3 unchanged sentences

On May 6, 2024, we used a portion of the net proceeds from the AMC Divestiture to prepay in full the outstanding principal balance of $940 million under Term Loan B, at which point all remaining commitments under Term Loan B were reduced to zero and Term Loan B was terminated.

For the three and six months ended December 31, 2024, we did not record any interest expense relating to Term Loan B (three and six months ended December 31, 2023—$17.3 million and $34.5 million, respectively).

As of December 31, 2024, we had senior notes outstanding, with maturities starting in 2027 and extending through 2031 with a total carrying value of $4.300 billion.

For the three and nine months ended March 31, 2025, we did not record any interest expense relating to Term Loan B (three and nine months ended March 31, 2024—$17.1 million and $51.6 million, respectively).

As of March 31, 2025, we had senior notes outstanding, with maturities starting in 2027 and extending through 2031 with a total carrying value of $4.300 billion.

The senior notes bear interest at rates between 3.875% and 6.90%, in each case payable semi-annually in arrears.

5 unchanged sentences

Borrowings under the Acquisition Term Loan currently bear a floating rate of interest equal to Term SOFR (as defined in the Acquisition Term Loan) plus an applicable margin of 1.75%.

As of December 31, 2024, the balance outstanding under the Acquisition Term Loan was $2.203 billion.

As of March 31, 2025, the balance outstanding under the Acquisition Term Loan was $2.194 billion.

On December 19, 2023, we amended our $750 million committed revolving credit facility (the Revolver) to, among other things, extend the Revolver's maturity date to December 19, 2028.

There were no outstanding borrowings under the Revolver as of December 31, 2024.

There were no outstanding borrowings under the Revolver as of March 31, 2025.

Borrowings under the Revolver are secured by a first charge over substantially all of our assets, on a pari passu basis with the Acquisition Term Loan and our senior secured notes due 2027.

8 unchanged sentences

On July 31, 2024, in order to align our share repurchase plan to our fiscal year, the Board approved the early termination of the Fiscal 2024 Repurchase Plan and authorized a new share repurchase plan (the Fiscal 2025 Repurchase Plan), pursuant to which we may purchase for cancellation in open market transactions, from time to time over the 12 month period commencing on August 7, 2024 until August 6, 2025, if considered advisable, up to an aggregate of $300 million of our common shares on the TSX (as part of a Fiscal 2025 NCIB, defined below), NASDAQ and/or alternative trading systems in Canada and/or the United States, if eligible, subject to applicable law and stock exchange rules.

On March 13, 2025, we increased the authorized limit of the Fiscal 2025 Repurchase Plan by $150 million to $450 million and established an automatic share purchase plan (ASPP).

The price that we are authorized to pay for Common Shares in open market transactions is the market price at the time of purchase or such other price as is permitted by applicable law or stock exchange rules.

The Fiscal 2025 Repurchase Plan will be effected in accordance with Rule 10b-18 of the Exchange Act.

During the three and six months ended December 31, 2024, we repurchased and cancelled 2,212,971 and 4,862,102 Common Shares for $67.1 million and $153.6 million, respectively, inclusive of 2% Canadian excise taxes recorded.

During the three and six months ended December 31, 2023, we did not repurchase any Common Shares.

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.

During the three and nine months ended March 31, 2025, we repurchased and cancelled 4,350,716 and 9,212,818 Common Shares for $116.7 million and $270.3 million, respectively, inclusive of 2% Canadian excise taxes recorded.

During the three and nine months ended March 31, 2024, we did not repurchase any Common Shares.

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.

Normal Course Issuer Bid

On April 30, 2024, the Company established a Normal Course Issuer Bid (the Fiscal 2024 NCIB) in order to provide it with a means to execute purchases over the TSX as part of the overall Fiscal 2024 Repurchase Plan.

The TSX approved the Company’s notice of intention to commence the Fiscal 2024 NCIB, pursuant to which the Company could purchase Common Shares over the TSX for the period commencing on May 7, 2024 until May 6, 2025 in accordance with the TSX's normal course issuer bid rules, including that such purchases were to be made at prevailing market prices or as otherwise permitted.

prices or as otherwise permitted.

Under the rules of the TSX, the maximum number of Common Shares that could have been purchased in this period was 13,643,472 (representing 5% of the Company’s issued and outstanding Common Shares as of April 26, 2024), and the maximum number of Common Shares that could be purchased on a single day was 138,175 Common Shares, which is 25% of 552,700 (the average daily trading volume for the Common Shares on the TSX for the six months ended March 31, 2024), subject to certain exceptions for block purchases, and subject in any case to the volume and other limitations under Rule 10b-18 of the Exchange Act.

On July 31, 2024, the Company voluntarily terminated the Fiscal 2024 NCIB and established a new normal course issuer bid (the Fiscal 2025 NCIB) in order to provide it with a means to execute purchases over the TSX as part of the overall Fiscal 2025 Repurchase Plan.

The TSX approved the Company’s notice of intention to commence the Fiscal 2025 NCIB, pursuant to which the Company may purchase Common Shares over the TSX for the period commencing on August 7, 2024 until August 6, 2025 in accordance with the TSX's normal course issuer bid rules, including that such purchases were to be made at prevailing

market prices or as otherwise permitted.

Under the rules of the TSX, the maximum number of Common Shares that may be purchased in this period is 21,179,064 (representing 10% of the Company’s public float (calculated in accordance with TSX rules) as of July 24, 2024, less the 5,073,913 Common Shares purchased under the Fiscal 2024 Repurchase Plan), and the maximum number of Common Shares that can be purchased on a single day is 138,175 Common Shares, which is 25% of 552,700 (the average daily trading volume for the Common Shares on the TSX for the six months ended March 31, 2024), subject to certain exceptions for block purchases, and subject in any case to the volume and other limitations under Rule 10b-18 of the Exchange Act.

Commitments and Contractual Obligations

As of December 31, 2024, we have entered into the following contractual obligations with minimum payments for the indicated fiscal periods as follows:

As of March 31, 2025, we have entered into the following contractual obligations with minimum payments for the indicated fiscal periods as follows:

Payments due between

(In thousands)

Total January 1, 2025 - June 30, 2025 July 1, 2025 - June 30, 2027 July 1, 2027 - June 30, 2029 July 1, 2029 and beyond

Total April 1, 2025 - June 30, 2025 July 1, 2025 - June 30, 2027 July 1, 2027 - June 30, 2029 July 1, 2029 and beyond

Long-term debt obligations (1)

25 unchanged sentences

We strongly disagree with the CRA’s positions and believe the reassessments of Fiscal 2012, Fiscal 2013, Fiscal 2014, Fiscal 2015 and Fiscal 2016 (including any penalties) are without merit, and we are continuing to contest these reassessments.

The CRA has audited Fiscal 2017, Fiscal 2018 and Fiscal 2019 on a basis that we strongly disagree with and are contesting.

The CRA issued notices of reassessment in respect of Fiscal 2017, Fiscal 2018 and Fiscal 2019 on a basis consistent with its proposal to reduce the available depreciable basis of assets in Canada.

We filed notices of objection regarding the reassessments.

The CRA has audited Fiscal 2017, Fiscal 2018, Fiscal 2019 and Fiscal 2020 on a basis that we strongly disagree with and are contesting.

The CRA issued notices of reassessment in respect of Fiscal 2017 through Fiscal 2020 on a basis consistent with its proposal to reduce the available depreciable basis of assets in Canada.

We filed notices of objection regarding the reassessments for Fiscal 2017 through Fiscal 2020.

We intend to file a notice of objection against the assessment for Fiscal 2020.

If we are ultimately unsuccessful in defending our position, the estimated impact of the proposed adjustment could result in us recording an income tax expense, with no immediate cash payment, to reduce the stated value of our deferred tax assets of up to approximately $470 million.

1 unchanged sentence

We strongly disagree with the CRA’s position for Fiscal 2017 through Fiscal 2020 and intend to vigorously defend our original filing position.

We are not required to provisionally pay any cash amounts to the CRA as a result of the reassessment in respect of Fiscal 2017 through Fiscal 2019 due to utilization of available tax attributes;

however, for Fiscal 2020 and, to the extent the CRA reassesses subsequent fiscal years on a similar basis, we may make certain minimum payments required under Canadian legislation.

We will continue to vigorously contest the adjustments to our taxable income and any penalty and interest assessments, as well as any reduction to the basis of our depreciable property.

1 unchanged sentence

Accordingly, as of the date of this Quarterly Report on Form 10-Q, we have not recorded any accruals in respect of these reassessments or proposed reassessment in our Condensed Consolidated Financial Statements.

The CRA is currently auditing Fiscal 2020.

Refer to Note 12 “Guarantees and Contingencies” to our Condensed Consolidated Financial Statements for more details.

2 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis