OpenText’s latest quarter holds two stories that don’t agree with each other. Revenue for the fiscal first quarter, which ended September 30, fell 4.0% to $1.237 billion. Core cloud revenue, meanwhile, rose 11.2% to $339 million. The company reported both on November 5.
The split comes from how OpenText sorts its business. Core operations grew 2.4% to $864 million, while the non-core remainder dropped 16.1% to $372 million. Inside the core, Content did the heavy lifting, up 9.4% to $523 million, and Business Network barely moved. IT Operations Management and enterprise Cybersecurity each slid more than 12%. Cloud mirrors that pattern: Content cloud jumped 20.7% to $163 million, yet non-core cloud shrank 7.4%.
Recurring revenue offers mixed comfort. Cloud services and subscriptions grew 4.3% to $505 million, but client support fell 9.0% to $534 million, so annual recurring revenue slipped 3.0% to $1.040 billion. Even so, it made up 84.1% of sales, because recurring income shra nk more slowly than everything else. License revenue fell 8.0%, and professional services fell 11.0%.
Profit tells a third story. Operating income dropped 7.1% to $251 million, but net income rose 5.9% to $155 million, and earnings per share climbed to $0.64 from $0.58. Lower interest costs, a swing in other income and fewer shares outstanding explain the gap, not stronger operations. OpenText bought back $23 million of stock this quarter. Adjusted EBITDA fell 5.3% to $442 million.
Cash looked better. Operating cash flow rose 16.6% to $172 million and free cash flow gained 36.8% to $139 million, helped by lower capital spending. After quarter-end, the company sold $1.0 billion of senior secured notes to retire its 2027 notes, and a tender trimmed another $300 million of 2028 debt. Net leverage sat at 2.55 times.
For the second quarter, OpenText forecasts revenue of $1.260 billion to $1.290 billion. Its full-year plan calls for core growth of 2% to 3% and core cloud growth of 8% to 10%.
The open question is arithmetic. Can a faster-growing core outrun a shrinking remainder before the shrinkage drags results down?
