Open Text Corporation (OTEX): PESTLE Analysis [Nov-2025 Updated]

You're looking for a clear map of the risks and opportunities facing Open Text Corporation (OTEX) right now, and honestly, the PESTLE framework is the best lens for that. As a seasoned analyst, I see the near-term picture dominated by the AI race and the persistent pressure of global data regulation. Here is the breakdown you need, grounded in the late 2025 environment.

The core takeaway is this: OpenText is executing a tough pivot-shedding legacy assets while accelerating its AI and cloud strategy-but global economic and political headwinds are making the transition more volatile. The company reported full Fiscal Year 2025 Total Revenues of $5.168 billion, with Cloud Revenues growing to $1.856 billion, so the shift is happening, but the external environment will dictate the speed and profitability of the next stage.

Political Factors: Geopolitical Pressure and Compliance

Increased scrutiny on US-based tech firms operating in China and the EU is a constant headwind. Plus, geopolitical instability is defintely slowing down major government digital transformation contracts, forcing longer sales cycles. For OpenText, this means higher compliance costs for its global operations. US and EU government mandates are increasingly favoring specific cloud security standards, which is a tailwind for the company's Titanium X platform, but it requires continuous, expensive certification. Trade policies and tariffs also impact hardware and data center costs, which directly affects the gross margin of their cloud services.

Economic Factors: Interest Rates and Currency Risk

High interest rates are forcing corporate clients to delay large, non-essential IT projects, especially for on-premise license sales, which dropped to $125.8 million in Q1 FY2025. This pressure is why OpenText is focusing on Annual Recurring Revenues (ARR), which hit $4.191 billion for FY2025. The strong US dollar is eroding the value of international revenue; for context, Europe, Middle East, and Africa (EMEA) and Asia Pacific accounted for about 42.6% of Q1 FY2025 revenue, so currency fluctuations matter a lot. Inflationary pressure is increasing costs for cloud infrastructure and specialized talent, but Enterprise Information Management (EIM) spending remains resilient in regulated sectors like finance and healthcare, helping maintain an Adjusted EBITDA margin of 34.5% in FY2025.

Sociological Factors: The AI Ethics and Talent War

Global demand for secure, hybrid work solutions is driving EIM product adoption, specifically in content and experience management. But honestly, the intense competition for AI and Cloud engineering talent in major tech hubs is a huge operational cost. OpenText must pay a premium to staff its AI-driven Titanium X platform development. There's a growing customer expectation for transparent digital ethics and AI governance, meaning OpenText must build ethical guardrails into products like OpenText Aviator. Finally, the shift to a digital-first customer experience requires better content management tools, which is a clear growth opportunity for their core content business, which represented 40% of total revenue in FY2025.

Technological Factors: The Generative AI Mandate

The rapid integration of Generative AI (e.g., OpenText Aviator) is now a core competitive necessity. The company is embedding 15 Aviator AI products and over 100 AI Agents across its portfolio. Accelerating enterprise migration to public and hybrid cloud models is a major driver; Cloud Revenues grew 2.0% to $1.856 billion in FY2025. Constant, sophisticated cybersecurity threats demand higher investment in product security, especially in their Cybersecurity segment, which is 25% of total revenue. OpenText is also under pressure to modernize legacy EIM platforms to support microservices architecture, a long, capital-intensive process.

Legal Factors: Data Sovereignty and Antitrust

Expanding global data sovereignty and privacy laws, such as GDPR and CCPA, are increasing compliance costs across the board. The company's recent divestiture of the AMC business, which brought in $2.275 billion in cash, helps deleverage, but antitrust and merger review risk remains a factor for future large-scale acquisitions, especially in Europe. Intellectual property (IP) disputes over AI-generated content and training data sets are an emerging risk that could lead to costly litigation. Stricter software liability rules for mission-critical enterprise systems mean OpenText must invest more in quality assurance and indemnification policies.

Environmental Factors: The Green IT Imperative

Increased customer and investor demand for verifiable Green IT and sustainable cloud solutions is now a procurement checkpoint for large enterprise deals. OpenText faces pressure to report Scope 3 emissions, including the energy footprint of its data center partners like Google Cloud and Amazon Web Services. The energy consumption of large language models (LLMs) is becoming a key operational concern that clients will ask about. Moving towards carbon-neutral data center operations is no longer optional; it's a client mandate for many of the 99 of the top 100 global companies OpenText serves.

Next Step: Finance and Strategy teams should draft a one-page risk mitigation plan for the 42.6% of revenue exposed to non-Americas currency fluctuation and regulatory changes by the end of next week.

Open Text Corporation (OTEX) - PESTLE Analysis: Political factors

You are operating in a highly politicized environment where national security and data sovereignty (control over data by a nation) are directly impacting your revenue streams. The key takeaway for Open Text Corporation is that compliance costs are rising, but adherence to mandates like FedRAMP creates a defensible moat around your core government and regulated enterprise cloud business, which generated $1.856 billion in Cloud revenues in Fiscal Year 2025.

Increased scrutiny on US-based tech firms operating in China and EU.

The geopolitical 'de-risking' trend between the US and China, combined with the European Union's push for digital sovereignty, is forcing a strategic re-evaluation of your global footprint. This scrutiny is not just about market access; it's about the underlying technology and data location. For a company with a Fiscal Year 2025 total revenue of $5.168 billion, exposure to these major economic blocs is significant, even without a precise geographic revenue split available in public filings. Honestly, you need to assume that every dollar earned in the EU or Asia-Pacific is now subject to a higher political risk premium.

The core political risks here center on mandatory data localization, which means you cannot simply serve all global customers from a single US or Canadian data center. You must build and operate separate cloud instances in specific countries, which increases capital expenditure and operational complexity. This is a defintely a high-cost reality.

Geopolitical instability slowing down major government digital transformation contracts.

Geopolitical instability, particularly in Eastern Europe and the Middle East, is causing governments to delay or slow down non-essential digital transformation (DX) projects, prioritizing national security spending instead. This is manifesting as 'demand volatility' in the broader enterprise software market. For Open Text Corporation, this means longer sales cycles for large, multi-year Enterprise Information Management (EIM) and Content Cloud deals. While your Annual Recurring Revenue (ARR) for FY2025 was robust at $4.191 billion, the new Enterprise Cloud Bookings of $773 million are constantly under pressure from government budget freezes or reallocations to defense and cyber-resilience projects.

Here's how the instability impacts the sales pipeline:

• Budget shifts to immediate security/defense, delaying multi-year EIM contracts.
• Increased due diligence (vetting) of foreign software vendors.
• Currency volatility in non-US markets complicates long-term contract pricing.

US and EU government mandates favoring specific cloud security standards.

Compliance with government-mandated cloud security frameworks is now a prerequisite for large public sector contracts, turning a regulatory burden into a competitive advantage for those who invest early. In the US, the FedRAMP (Federal Risk and Authorization Management Program) authorization is non-negotiable for federal cloud services. Similarly, the EU is advancing its EUCS (Cybersecurity Certification Scheme for Cloud Services), which is expected to include strong digital sovereignty requirements, potentially mandating that data be processed and stored by EU-based entities with no foreign legal access.

This creates a high barrier to entry for smaller competitors but favors established players like Open Text Corporation that can fund the multi-million-dollar compliance and audit processes. The investment is clearly paying off in the Cloud business, which grew by 2.0% in FY2025 to $1.856 billion in revenue, largely driven by the demand for secure, compliant solutions.

Trade policies and tariffs impacting hardware and data center costs.

The ongoing trade disputes, particularly between the US and China, are directly increasing the operational expense (OpEx) and capital expenditure (CapEx) for your cloud infrastructure. The US administration imposed a baseline reciprocal tariff of 10% on all imports as of April 2025, with tariffs on certain Chinese-origin technology goods, including server components and networking gear, reaching as high as 145% (additive) in some cases. This is not a software problem, but a hardware one.

Here's the quick math: a significant portion of the hardware (servers, switches, storage arrays) used to build out your global data centers and power your $1.856 billion cloud business is sourced from, or contains components from, these tariff-affected supply chains. An increase of even 10-20% on server costs, as seen in the industry for HPE ProLiant servers due to tariffs, directly erodes the margin on your cloud services. You need to factor this tariff risk into your Fiscal 2026 CapEx budget and accelerate supply chain diversification away from high-risk regions.

Open Text Corporation (OTEX) - PESTLE Analysis: Economic factors

High interest rates forcing corporate clients to delay large, non-essential IT projects.

The persistent high-interest-rate environment in fiscal year 2025 clearly acted as a headwind, causing many corporate clients to tighten their capital expenditure (CapEx) budgets and defer large, non-essential IT transformation projects. This macroeconomic pressure contributed to Open Text Corporation's overall total revenue decline of 3.0% year-over-year when adjusted for the divestiture of the Application Modernization and Connectivity (AMC) business.

You see this impact most clearly in the company's overall performance, even as the core cloud business showed resilience. The management specifically cited 'demand volatility' and 'significant uncertainty' in the market during the third quarter of Fiscal 2025. For a company with substantial debt from acquisitions, the high-rate environment also creates a direct cost drag: the Interest and other related expense, net for the fourth quarter of Fiscal 2025 was approximately $81.1 million.

This is a cash flow killer.

Strong US dollar eroding the value of international revenue, which is substantial.

Open Text Corporation operates on a truly global scale, serving customers in over 180 countries and counting 99 of the top 100 global companies among its clientele. This substantial international exposure means a strong US dollar (USD) immediately translates into a lower reported USD value for revenue generated in foreign currencies like the Euro or Canadian Dollar.

While the full foreign exchange (FX) impact on the total $5.168 billion in FY2025 revenue is complex, we can see the direct erosion in the cloud segment: Cloud Services and Subscriptions revenue grew by 2.0% in FY2025, but this growth would have been slightly higher at 2.1% if not for the unfavorable impact of foreign exchange rate changes. That's a direct loss of reported revenue from currency translation alone, and it's a constant management challenge.

Inflationary pressure increasing costs for cloud infrastructure and specialized talent.

Inflationary pressure, particularly for the specialized resources Open Text Corporation needs, remains a key risk. This includes the rising cost of cloud infrastructure from major providers and the intense competition for top engineering and AI talent. The company's response to this is a massive, multi-year efficiency drive.

The Business Optimization Plan, which was expanded in Fiscal 2025, is a direct countermeasure to rising operating costs. This plan is expected to generate total annualized savings of between $490 million and $550 million when fully implemented. The company is also strategically restructuring its workforce to manage talent costs, announcing plans to cut 1,200 jobs while simultaneously reinvesting the savings to create 800 new roles focused on high-growth areas like AI, sales, and engineering. This is a clear trade-off: cut legacy costs to fund future-proof talent.

Here's the quick math on the cost-saving initiative:

Enterprise Information Management (EIM) spending remains resilient in regulated sectors.

Despite the broader economic slowdown, core Enterprise Information Management (EIM) spending, which is Open Text Corporation's bread and butter, is proving resilient, especially in highly regulated industries. Companies in finance, healthcare, and government simply cannot delay compliance-driven projects or risk management upgrades, even when capital is expensive.

This resilience is evident in the company's Annual Recurring Revenues (ARR), which were $4.191 billion in FY2025, and the Cloud Revenues, which reached $1.856 billion with a 2.0% year-over-year growth. This continuous, mission-critical demand is why the cloud segment has achieved 18 consecutive quarters of organic growth. The core Content Management business, which is highly critical for compliance and records management, represents the largest portion of the revenue mix at 40%.

The shift to the cloud is defintely still happening.

• Content Management is 40% of total revenue.
• Cloud Revenues grew 2.0% in FY2025.
• Enterprise cloud bookings surged 32% in Q4 FY2025.

Open Text Corporation (OTEX) - PESTLE Analysis: Social factors

You're seeing a massive, permanent shift in how people work and what they expect from the technology they use, and for Open Text Corporation, this translates into both a huge market opportunity and a serious talent risk. The social environment of 2025 is defined by the hybrid work model, the demand for ethical AI, and a digital-first customer experience (CX) that requires flawless Enterprise Information Management (EIM). We are past the point of treating these as trends; they are the new operating standard.

Honestly, the biggest social factor is that employees and customers alike are demanding better digital tools, but they won't tolerate a loss of privacy or trust to get them. Open Text Corporation is positioned well with its AI-driven Titanium X platform, but the competition for the people who build that platform is brutal.

Global demand for secure, hybrid work solutions driving EIM product adoption.

The hybrid work model is now the global baseline, not a temporary fix. About 83% of workers worldwide prefer a hybrid arrangement, blending remote and in-office time. This shift creates immense demand for secure, cloud-based tools that manage content and workflows seamlessly across locations, which is Open Text Corporation's core business.

The global hybrid workplace market is projected to see a Compound Annual Growth Rate (CAGR) of 15.65% through 2033, which is a massive tailwind. Open Text Corporation is capitalizing on this with its cloud services, which generated $1.856 billion in revenue for Fiscal Year 2025, a 2.0% year-over-year increase. The Q4 2025 cloud bookings surge of 32% is defintely a direct result of organizations prioritizing secure, flexible EIM solutions to support their distributed workforces.

Intense competition for AI and Cloud engineering talent in major tech hubs.

Open Text Corporation operates globally, employing 21,400 employees across 42 countries, but the fight for specialized talent is concentrated in major tech hubs like San Francisco and Seattle, which house approximately 407,000 and 160,660 IT professionals, respectively. The company is making key investments in cloud, security, and Artificial Intelligence (AI), which are the most competitive talent sectors.

This is a major risk. Open Text Corporation needs top-tier AI and cloud engineers to continue innovating platforms like the AI-driven Titanium X. If hiring takes 14+ days longer than competitors, product velocity will slow down. The company must compete not just on salary but on mission and flexibility against giants and well-funded startups in these same hubs.

Growing customer expectation for transparent digital ethics and AI governance.

Public trust in technology, especially AI, is low; a 2024 survey found only 23% of American consumers trust businesses to handle AI responsibly. This forces companies like Open Text Corporation to move beyond compliance and into proactive ethical governance. Customers, especially the 120K+ enterprise customers Open Text Corporation serves, are demanding transparency.

Open Text Corporation is addressing this head-on with its AI Bill of Obligations, which commits the company to principles like transparency and accountability. This commitment is a strategic differentiator, not just a policy document, because over 90% of consumers prefer transparent AI. Furthermore, executive sentiment supports this, with 58% of leaders reporting that Responsible AI boosts Return on Investment (ROI) and efficiency.

Shift to digital-first customer experience requiring better content management tools.

The social expectation for a seamless, personalized digital experience is now non-negotiable. This means content management tools must be fast, personalized, and available across all channels (omni-channel). Open Text Corporation's product roadmap directly reflects this pressure, focusing on the customer experience.

The July 2025 launch of Cloud Editions (CE) 25.3 introduced key tools for this shift:

• MyAviator: A secure, AI-powered personal assistant designed to accelerate knowledge workers.
• Core Communications: A Software-as-a-Service (SaaS) platform for creating personalized and compliant customer communications at scale.
• Core Content: Now Premium Qualified for SAP S/4HANA Public Cloud, providing a cloud-first platform for content collaboration and AI insights.

This focus is critical because 55% of business leaders believe Responsible AI, which is embedded in these new tools, directly enhances customer experience. The market is moving fast, so Open Text Corporation's continuous AI-first product releases are essential to keep pace with evolving customer expectations. Open Text Corporation is betting that embedding AI into the core of content management will be the key to delivering the speed and personalization customers now expect.

Open Text Corporation (OTEX) - PESTLE Analysis: Technological factors

The technology landscape for Open Text Corporation is defined by a race to embed Generative AI (GenAI) into every product while simultaneously accelerating a massive, multi-year cloud migration for its core enterprise customers. You need to see this not just as a cost center, but as a critical, non-negotiable investment to stay relevant, especially since the entire information management space is undergoing a foundational shift right now.

OpenText's response is its 'AI-first strategy,' which is driving the entire product roadmap, but the execution risk is high.

Rapid integration of Generative AI (e.g., OpenText Aviator) is now a core competitive necessity.

The biggest technological opportunity-and threat-is Generative AI. OpenText has been aggressive, launching the OpenText AI Data Platform (AIDP) and Aviator Studio in November 2025, which act as a governed framework to deploy secure AI agents (Aviators) across enterprise workflows.

This isn't a small side project; it's a central pillar. The company already has 15 Aviator AI products and over 100+ AI Agents embedded across its portfolio. The market is responding, too: the cloud AI pipeline showed a 20% year-over-year growth in Q1 Fiscal Year 2025, which is a strong leading indicator of future revenue. To drive adoption, OpenText is even including the Aviator entry tier with the OT 26.1 upgrade for Content Management, Service Management, and Communications Management at no additional fee. That's a smart move to get the tech into the hands of its 120,000+ enterprise customers.

Here's the quick math on the AI-driven focus:

Accelerating enterprise migration to public and hybrid cloud models.

Cloud transformation is the engine for OpenText's recurring revenue. The company's financial performance in Fiscal Year 2025 clearly shows this shift. Cloud revenues hit $1.856 billion, reflecting a +2.0% year-over-year growth. More importantly, the future pipeline is strong: enterprise cloud bookings for the full year reached $773 million, up +10.1% year-over-year.

This is a marathon, not a sprint, but the momentum is clear. OpenText has now delivered 18 consecutive quarters of cloud organic growth. In Q4 FY2025, cloud revenue made up about 36.2% of total revenue, and management is guiding for this mix to continue expanding. They are a multi-cloud player, which is essential for large enterprises that need to integrate with Amazon Web Services, Microsoft, and Google Cloud simultaneously.

Constant, sophisticated cybersecurity threats demanding higher investment in product security.

Cybersecurity is no longer a niche product line; it's a foundational requirement for all Enterprise Information Management (EIM). For OpenText, the Cybersecurity segment is substantial, contributing 25% of total revenue in Fiscal Year 2025. The challenge is that this segment is highly competitive and requires constant investment to keep up with evolving threats.

The company's Adjusted EBITDA of $1.784 billion for FY2025 was achieved while making key investments in cloud, security, and AI. Still, the Cybersecurity business segment saw a negative 4% growth rate in Q4 FY2025, which is a red flag you need to watch. Management expects to turn that back to growth, but it shows the pressure is real. You defintely can't afford to slow down here.

• Cybersecurity revenue share: 25% of total FY2025 revenue.
• Q4 FY2025 growth rate: Negative 4%.
• Action: Must reinvest heavily to return to growth.

Need to modernize legacy EIM platforms to support microservices architecture.

The core of OpenText's business is its legacy Enterprise Information Management (EIM) platforms, like Documentum, which are robust but built on older, on-premise architectures. The strategic imperative for 2025 is to modernize these platforms to a microservices (Cloud-Native) architecture, which allows for faster updates, better scalability, and easier AI integration.

The push is to move customers to the Content Cloud, where the modernization can unlock significant efficiency gains. For example, a Forrester study found that organizations using the full capabilities of the Content Cloud can achieve 95% time savings per business process. What this estimate hides, though, is the difficulty and cost of migrating a decades-old, highly customized on-premise system. OpenText's 2025 strategy focuses on a hybrid approach, adding cloud and AI features to the existing core, but critics point out that relying on the legacy architecture can still be a bottleneck for true cloud-native agility.

The goal is to retire obsolete applications and consolidate aging information as a foundational step for AI readiness, which is a massive undertaking.

Open Text Corporation (OTEX) - PESTLE Analysis: Legal factors

The legal landscape for Open Text Corporation in 2025 is dominated by the twin pressures of global data regulation and the emerging liability framework for AI and mission-critical software. For a company with an estimated annual revenue scale of around $4.5 billion, even a minor regulatory misstep can translate into a massive financial hit, so compliance is a top-line strategic concern.

Honestly, the biggest legal risk isn't a single lawsuit; it's the compounding cost of continuous, global compliance across dozens of jurisdictions. That's the real headwind.

Expanding global data sovereignty and privacy laws (e.g., GDPR, CCPA) increasing compliance costs.

You're facing a patchwork of increasingly aggressive data privacy laws. The European Union's General Data Protection Regulation (GDPR) and the California Consumer Privacy Act (CCPA), plus its expansion, the CPRA, are just the start. Many countries are now implementing data sovereignty laws, requiring certain data to be stored and processed within national borders. This forces Open Text Corporation to invest heavily in geographically segmented cloud infrastructure and complex data mapping tools.

Here's the quick math: GDPR fines can reach up to 4% of a company's total global annual revenue. Based on the company's scale, a maximum fine could exceed $180 million. Plus, the average annual compliance cost for a large enterprise like Open Text Corporation is projected to be in the tens of millions of dollars, simply to maintain the necessary data governance frameworks and audit trails.

• Increase compliance spending by 15% year-over-year.
• Maintain regional data centers to meet sovereignty rules.
• Risk significant fines for non-compliance.

Antitrust and merger review risk for future large-scale acquisitions.

Open Text Corporation has historically grown through large-scale acquisitions, most recently the $6 billion purchase of Micro Focus. While that deal is closed, the regulatory environment for tech mergers is much stricter now. Global antitrust regulators, particularly the US Federal Trade Commission (FTC) and the European Commission (EC), are scrutinizing deals more closely for potential market power abuses, especially in enterprise software where consolidation is common.

Any future acquisition of a company with over $1 billion in annual revenue will face a longer, more intrusive review process. Regulators are increasingly demanding structural remedies, like divestitures (selling off parts of the acquired business), which can erode the deal's strategic value. This increased scrutiny slows down the company's primary growth engine and adds millions in legal fees to the transaction costs.

Intellectual property (IP) disputes over AI-generated content and training data sets.

The rise of Generative AI, which Open Text Corporation is integrating into its Content Cloud platform, has created a massive legal gray area around Intellectual Property. The core risk is two-fold: the IP status of the output and the legality of the input (the training data).

The company could face class-action lawsuits arguing that its AI models were trained on copyrighted data without proper licensing or compensation. Also, the content generated by its AI tools might not be legally protectable by the customer, creating liability for Open Text Corporation. This is defintely a high-stakes area. The outcome of a few key US court cases in 2025 will set precedents that could either validate or completely upend the company's AI strategy, potentially requiring a complete retraining of models at a cost of millions of dollars per model.

Stricter software liability rules for mission-critical enterprise systems.

A significant legal challenge is the move toward stricter liability for software defects, particularly in mission-critical systems. The European Union's proposed Cyber Resilience Act (CRA), expected to be fully implemented by 2025/2026, will impose mandatory cybersecurity requirements and increase liability for manufacturers of digital products, including enterprise software.

This means Open Text Corporation will bear greater legal responsibility for security vulnerabilities or functional defects that cause financial or operational harm to a customer. If a flaw in an Open Text Corporation enterprise resource planning (ERP) or content management system (CMS) causes a major customer outage, the company's liability exposure increases dramatically beyond standard contractual limits. This necessitates a substantial increase in quality assurance (QA) and security testing budgets, plus a review of all standard customer contracts to manage the newly imposed legal risk.

Open Text Corporation (OTEX) - PESTLE Analysis: Environmental factors

Increased customer and investor demand for verifiable Green IT and sustainable cloud solutions.

The market pressure for verifiable Green IT (Information Technology) and sustainable cloud solutions is no longer a niche concern; it is a core investment and procurement criterion. OpenText Corporation is responding by directly integrating sustainability into its value proposition, recognizing that the non-people related element accounts for approximately 80 percent of its global power consumption. For the 2025 fiscal year (FY25), OpenText reported total energy consumption of 123,143 MWh, a significant reduction from 149,861 MWh in FY24, demonstrating tangible progress in operational efficiency.

This focus isn't just internal; it's a customer-facing product feature. OpenText products help clients reduce their own carbon footprint by eliminating Redundant, Obsolete, and Trivial (ROT) data, which can represent 30 to 50 percent of enterprise storage. By eliminating ROT data, customers can reduce their carbon footprint in cloud migration efforts by up to two metric tons of CO2 per terabyte of data. This clear, measurable value is what financially-literate decision-makers demand.

Pressure to report Scope 3 emissions, including the energy footprint of its data center partners.

The biggest environmental challenge for a cloud and software company is Scope 3 emissions-the indirect emissions across the value chain, especially those from purchased services like public cloud usage. OpenText has committed to a science-based emissions target of 50% reduction by 2030 and net-zero by 2040 for Scope 1, 2, and 3 emissions from a fiscal year 2022 baseline. This commitment itself puts immense pressure on reporting and vendor management.

For FY25, OpenText reported its total Scope 3 emissions (market-based) at 69,318 tonnes of CO2e (carbon dioxide equivalent), which makes up the majority of its total carbon footprint. This is a reduction from the 81,575 tonnes of CO2e reported in FY24. The key is that the company is actively measuring and reporting the most difficult categories, including the energy footprint of its data center partners, which fall under Purchased Goods and Services and Fuel-and-energy-related activities.

Energy consumption of large language models (LLMs) becoming a key operational concern.

OpenText is an 'AI-first' company, having dramatically expanded its Aviator AI capabilities in FY25. This strategic move directly exposes the company to the rapidly escalating energy demands of large language models (LLMs). While a typical text-based AI query might consume around 0.34 watt-hours of electricity, more advanced models can consume significantly more, and the sheer volume of daily queries quickly scales the problem.

The inference stage-the actual running of the AI models for customer use-can quickly overtake the energy used for training the model. OpenText's operational focus must now include 'GreenOps'-a practice that integrates carbon footprint data into IT operations management decisions, alongside cost (FinOps). This means every new feature in the Aviator platform must be evaluated not just for performance, but for its kilowatt-hour consumption.

Moving towards carbon-neutral data center operations to meet client mandates.

The move toward carbon-neutral data center operations is a non-negotiable for large enterprise clients, especially those operating under the European Green Deal. OpenText is tackling this through a massive international data center consolidation project, retiring legacy facilities in favor of more energy-efficient, cloud-hosted SaaS deployment options. This is a smart business move, defintely reducing both costs and environmental impact.

The results of these efforts are clear in the FY25 numbers. The total Scope 1 (direct) and Scope 2 (purchased electricity) emissions, which cover OpenText's own operational control, dropped to 42,676 tonnes of CO2e (market-based) in FY25 from 57,218 tonnes of CO2e in FY23. That's a reduction of over 25% in two years, putting them well on track for their 2030 goal.

• Reduce absolute Scope 1 & 2 GHG emissions by 25.4% from FY23 to FY25.
• Achieved total energy consumption reduction to 123,143 MWh in FY25.
• Prioritize cloud migration, as shifting a one-megawatt data center to a major cloud provider can reduce carbon emissions by 400 to 1,000 metric tons per year.