Open Text Corporation (OTEX) saw its shares surge 8.03% in after-hours trading on Thursday, following the release of its fiscal second-quarter 2025 earnings results. The company's strong financial performance and continued cloud growth appear to be the primary drivers behind the stock's impressive gains.

The information management software provider reported quarterly revenue of $1.335 billion, beating analyst estimates of $1.32 billion. While total revenue declined 13.1% year-over-year, this was primarily due to the divestiture of the company's Artificial Mining and Comprehension (AMC) business. Adjusting for this divestiture, revenue decreased by a more modest 4.9%.

A key highlight from Open Text's Q2 results was the continued growth in its cloud business. Cloud services and subscription revenue rose 2.7% year-over-year to $462 million, representing the 16th consecutive quarter of organic growth in this segment. Cloud now accounts for 35% of the company's total revenue, underscoring its successful transition to a cloud-based model.

Additionally, Open Text reported strong profitability metrics, with an adjusted EBITDA margin of 37.6% and free cash flow of $307 million. The company's CEO, Mark J. Barrenechea, attributed the robust operating model and focus on operational discipline and margin expansion as key factors driving these results.

Looking ahead, Open Text remains optimistic about its growth prospects, particularly in the areas of cloud, artificial intelligence (AI), and security. The company's next-generation platform, Titanium X, is scheduled for release in Q4 and is expected to further integrate cloud, security, and AI capabilities, enabling customers to adapt to the evolving multi-cloud ecosystem.