Open Text Corporation (OTEX) experienced a 5.01% plummet in its stock price during Friday's intraday trading session, despite reporting better-than-expected earnings results for the first quarter of fiscal 2025.

While the company exceeded expectations for adjusted EBITA and adjusted EPS, indicating sustained efficiency gains, investors appeared concerned about the company's weak cloud revenue growth and negative cash flow figures.

Despite achieving record enterprise cloud bookings, up 10% year-over-year, Open Text's cloud revenue growth was subdued at only 1.3%, reflecting typical seasonality. This lackluster performance in the high-growth cloud segment raised questions about the company's ability to execute its cloud transition strategy effectively.

Furthermore, the company reported negative operating cash flow of $77.8 million and negative free cash flow of $117.1 million for the quarter, impacted by a one-time tax payment. These negative cash flow figures raised concerns about the company's ability to fund its growth initiatives and maintain financial flexibility.

While Open Text reaffirmed its fiscal 2025 revenue and free cash flow targets, the company acknowledged challenges in the developer segment, requiring further work to drive growth in this area. Investors may have been cautious about the company's ability to overcome these challenges and achieve its long-term growth objectives.

Overall, the mixed earnings report, with strong efficiency gains offset by weak cloud growth and cash flow issues, appears to have contributed to Open Text's stock price decline on Friday, as investors reassessed the company's growth prospects and risk profile.