Open Text (OTEX) risk factors, FY2025 10-K

Risks Related to our Business and Industry

1. 01If we do not continue to develop technologically advanced products that successfully integrate with the software products and enhancements used by our customers, future revenues and our operating results may be negatively affected
2. 02Product development is a long, expensive and uncertain process, and we may terminate one or more of our development programs
3. 03Our investment in our current research and development efforts may not provide a sufficient or timely return
4. 04If our software products and services do not gain market acceptance, our operating results may be negatively affected
5. 05Failure to protect our intellectual property could harm our ability to compete effectively
6. 06Claims of infringement (including misappropriation and/or other intellectual property violation) are common in the software industry and increasing as related legal protections, including copyrights and patents, are applied to software products
7. 07Our software products and services may contain defects that could harm our reputation, be costly to correct, delay revenues and expose us to litigation
8. 08Our software products rely on the stability of infrastructure software that, if not stable, could negatively impact the effectiveness of our products, resulting in harm to our reputation and business
9. 09Risks associated with the evolving use of the Internet, including changing standards, competition and regulation and associated compliance efforts, may adversely impact our business
10. 10Unauthorized disclosures, cyber-attacks, breaches of data security and other information technology risks may adversely affect our operations
11. 11individually at the time of their occurrence. Furthermore, it is possible that the risk of cyber-attacks and other data security breaches or thefts to us or our customers may increase due to global geopolitical uncertainty, in particular such as the ongoing Russia-Ukraine and Middle East conflicts
12. 12Business disruptions, including those arising from disasters, pandemics or catastrophic events, may adversely affect our operations
13. 13Our success depends on our relationships with strategic partners, distributors and third-party service providers and any reduction in the sales efforts by distributors, cooperative efforts from our partners or service from third-party providers could materially impact our revenues
14. 14The loss of licenses to resell or use third-party software or the lack of support or enhancement of such software could adversely affect our business
15. 15Current and future competitors could have a significant impact on our ability to generate future revenues and profits
16. 16The length of our sales cycle can fluctuate significantly which could result in significant fluctuations in revenues being recognized from quarter to quarter
17. 17Our existing customers might cancel contracts with us, fail to renew contracts on their renewal dates and/or fail to purchase additional services and products, and we may be unable to attract new customers, which could adversely affect our operating results
18. 18Consolidation in the industry, particularly by large, well-capitalized companies, could place pressure on our operating margins which could, in turn, have a material adverse effect on our business
19. 19We may be unable to maintain or expand our base of SMBs and consumer customers, which could adversely affect our anticipated future growth and operating results
20. 20Our sales to government clients expose us to business volatility and risks, including government budgeting cycles and appropriations, early termination, audits, investigations, sanctions, penalties and changes in government spending and policies
21. 21Geopolitical instability, political unrest, war and other global conflicts, including the Russia-Ukraine and Middle East conflicts, have affected and may continue to affect our business
22. 22Our global operations expose us to risks associated with an evolving international trade and tariff environment, which may adversely affect our business, financial condition, and results of operations
23. 23The restructuring of certain of our operations may be ineffective, may adversely affect our business and our finances, and we may incur additional restructuring charges in connection with such actions
24. 24We must continue to manage our internal resources during periods of company growth, or our operating results could be adversely affected
25. 25If we lose the services of our executive officers or other key employees or if we are not able to attract or retain top employees, our business could be significantly harmed
26. 26Our compensation structure may hinder our efforts to attract and retain vital employees
27. 27Increasing corporate citizenship expectations, regulatory complexity, and disclosure obligations may negatively impact our business, financial performance, and reputation
28. 28We have implemented flexible remote and hybrid work models across many of our operations. As a result, we continue to be subject to the challenges and risks of having a remote work environment, as well as operational challenges and risks from having a flexible workforce

Risks Related to Acquisitions and Divestitures

1. 29Acquisitions, investments, joint ventures and other business initiatives may negatively affect our operating results
2. 30We may fail to realize all of the anticipated benefits of our acquisitions and divestitures, or those benefits may take longer to realize than expected
3. 31We may be unable to successfully integrate acquired businesses or do so within the intended timeframes, which could have an adverse effect on our financial condition, results of operations and business prospects
4. 32Loss of key personnel could impair the integration of acquired businesses, lead to loss of customers and a decline in revenues, or otherwise could have an adverse effect on our operations
5. 33Businesses we acquire may have disclosure controls and procedures and internal controls over financial reporting, cybersecurity and compliance with data privacy laws that are weaker than or otherwise not in conformity with ours

Risks Related to Laws and Regulatory Compliance

1. 34Our provision for income taxes and effective income tax rate may vary significantly and may adversely affect our results of operations and cash resources
2. 35For further details on certain tax matters relating to the Company see Note 14 “Guarantees and Contingencies” and Note 15 “Income Taxes” to the Consolidated Financial Statements included in this Annual Report on Form 10-K
3. 36legislation while the matter is in dispute. This amount is recorded within Long-term income taxes recoverable on the Consolidated Balance Sheets as of June 30, 2025
4. 37Risks associated with data privacy issues, including evolving laws and regulations and associated compliance efforts, may adversely impact our business
5. 38Certain of our products may be perceived as, or determined by the courts to be, a violation of privacy rights and related laws. Any such perception or determination could adversely affect our revenues and results of operations
6. 39AI and other machine learning technology is being integrated into some of our products, systems or solutions, which could present risks and challenges to our business

Risks Related to our Financial Condition

1. 40We may not generate sufficient cash flow to satisfy our unfunded pension obligations
2. 41Fluctuations in foreign currency exchange rates could materially affect our financial results
3. 42Our indebtedness could limit our operations and opportunities

Risks Related to Ownership of our Common Stock

1. 43Our revenues and operating results are likely to fluctuate, which could materially impact the market price of our Common Shares
2. 44Changes in the market price of our Common Shares and credit ratings of our outstanding debt securities could lead to losses for shareholders and debt holders

General Risks

1. 45Unexpected events may materially harm our ability to align when we incur expenses with when we recognize revenues
2. 46We may fail to achieve our financial forecasts due to inaccurate sales forecasts or other factors
3. 47Our international operations expose us to business, political and economic risks
4. 48We may become involved in litigation that may materially adversely affect us
5. 49The declaration, payment and amount of dividends will be made at the discretion of our Board of Directors and will depend on a number of factors
6. 50Our operating results could be adversely affected by any weakening of economic conditions
7. 51Stress in the global financial system may adversely affect our finances and operations