Shares of an Ontario-based software company came under pressure after reporting nearly flat revenue and a year-over-year decline in profit, as investors weighed mixed results alongside broader concerns about artificial intelligence reshaping the software landscape.
BNN Bloomberg spoke with Steve Enders, software research analyst at Citi Research, about how the company’s core content management business, recent divestitures and positioning around AI are influencing investor sentiment.
Key Takeaways
- Profit declined year over year while revenue was nearly flat, highlighting ongoing volatility in software spending.
- Timing of large deals and tougher comparisons in legacy licensing continue to create uneven quarterly results.
- Divestitures are expected to play a bigger role in future quarters as the company streamlines its portfolio.
- Investors remain cautious about how generative AI tools could disrupt traditional software models.
- Confidence in free cash flow visibility and execution remains a key factor for improving sentiment.
Read the full transcript below:
ANDREW: At least one software company saw its shares recover slightly this week. Let’s take a look at OpenText. The Ontario-based information management company came under pressure yesterday. It is heavily exposed to cloud computing, which is where investors see growth. Let’s find out what the latest earnings mean for investors. We’re joined by Steve Enders, software research analyst at Citi Research. Steve, thanks very much for joining us.
OpenText is often described as a company that helps corporations manage vast amounts of data, sometimes for regulatory purposes. There might be an email that turns out to be important. To update us, is that still accurate? How does the company make money?
STEVE: Yeah, I think that’s probably a good place to start. At its core, the company is really strong in information management and content management, helping customers manage their content in a secure and governed way.
Over the past decade, the company has expanded significantly through acquisitions. It acquired a number of assets from companies such as Micro Focus, which pushed it beyond its original core. But today, content management remains central. Around that, you have security, data analytics and the business network segment, but everything is still centred on managing and sharing content.
ANDREW: The stock is up a little bit in the premarket. We’ve seen a rally in some battered technology names, including OpenText. Has it been caught up in concerns that tools from companies such as Anthropic could erode its core business?
STEVE: Yeah, I think that’s very much a concern in the market. We’re seeing that broadly across software right now. There are still questions about what the future looks like for many of these companies, even in areas that might seem more secure, such as infrastructure.
OpenText is trying to frame itself as enabling the next wave of software — helping customers manage agents and build those solutions going forward. It’s still early days for its Aviator solution, but that is a key focus. The company believes it is well positioned to potentially capture opportunities tied to what it calls an agentic workforce in the future.
ANDREW: Revenue was nearly flat year over year. Was that because of divestitures?
STEVE: I think that impact comes more into play in future quarters. The company just closed its first major divestiture this quarter, so that won’t show up until fiscal third-quarter results. That said, it has influenced the company’s guidance.
There is also some volatility within the core business, particularly around the licensing side of the on-premise business, which is facing tougher comparisons. Some deals were pulled into the second quarter, which affects the third-quarter outlook. That timing creates volatility and makes it harder to see exactly when revenue will come through, which impacts year-over-year growth rates.
ANDREW: What would you say is the company’s secret sauce? Is there something unique about its technology?
STEVE: The company is very strong in content management, both organically and through acquisitions such as Documentum, which it acquired nearly a decade ago. It has some of the best assets in content management, particularly around security and governance.
It also has strong relationships, including a deep partnership with SAP, where it performs well within that ecosystem. The focus remains on the content management layer, which then extends into other use cases, such as security, supply chain management and contract sharing. That data could be increasingly valuable as companies look to train AI tools and software agents in the future.
ANDREW: We’re tight for time, but Bloomberg data shows there are 10 holds and only three buys on the stock, and you’re currently neutral. What would you want to see before turning more constructive?
STEVE: A lot of it comes down to having more confidence in the forward outlook. That includes clarity around planned divestitures, better visibility into free cash flow progression and more consistent execution overall.
If we get a clearer line of sight on those factors and greater confidence that the company can manage current headwinds — including concerns around AI’s longer-term impact — that would go a long way toward improving sentiment.
ANDREW: Steve, thank you very much for joining us. That’s Steve Enders, software research analyst at Citi Research.
---
This BNN Bloomberg summary and transcript of the Feb. 6, 2026 interview with Steve Enders are published with the assistance of AI. Original research, interview questions and added context was created by BNN Bloomberg journalists. An editor also reviewed this material before it was published to ensure its accuracy and adherence with BNN Bloomberg editorial policies and standards.
