Open Text Corp. (TSE:OTEX)
TSX:OTEX
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Open Text
(TSX:OTEX)
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Rating:69Neutral
Price Target:
C$37.00
▲(15.05% Upside)
Action:Reiterated
Date:05/09/26
The score is driven primarily by solid underlying financial performance (strong margins and improved profitability, but still meaningful leverage) and attractive valuation (low P/E with a strong dividend). Technicals are mixed with only modest near-term momentum versus a weaker long-term trend, while the earnings call adds support via raised cloud/bookings/free-cash-flow targets despite some cash flow and legacy-revenue pressures.
Positive Factors
High recurring revenue / ARR
An ARR base of $1.06B representing 82% of revenue creates predictable, subscription-driven cash flows and revenue visibility. This recurring mix reduces topline volatility, supports reinvestment in cloud/AI, and underpins durable margins and valuation of core offerings over time.
Negative Factors
Sizable absolute debt load
A $6.4B absolute debt position, while improved from prior years, constrains financial flexibility. Elevated leverage raises interest and refinancing risk, limits capacity for big strategic M&A or larger buybacks, and could pressure capital allocation if macro or cashflow weakens.
Read all positive and negative factors
Positive Factors
Negative Factors
High recurring revenue / ARR
An ARR base of $1.06B representing 82% of revenue creates predictable, subscription-driven cash flows and revenue visibility. This recurring mix reduces topline volatility, supports reinvestment in cloud/AI, and underpins durable margins and valuation of core offerings over time.
Read all positive factors
Open Text (OTEX) vs. iShares MSCI Canada ETF (EWC)
Market Cap
C$7.55B
Dividend Yield3.27%
Average Volume (3M)1.51M
Price to Earnings (P/E)8.1
Beta (1Y)1.27
Revenue Growth-0.86%
EPS Growth-16.61%
CountryCA
Employees21,700
SectorTechnology
Sector Strength88
IndustrySoftware - Application
Share Statistics
EPS (TTM)2.05
Shares Outstanding242,662,350
10 Day Avg. Volume1,252,808
30 Day Avg. Volume1,505,464
Financial Highlights & Ratios
PEG Ratio-30.19
Price to Book (P/B)1.96
Price to Sales (P/S)1.49
P/FCF Ratio11.19
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
C$38.17Price Target Upside18.68% Upside
Rating ConsensusHold
Number of Analyst Covering9
EPS Forecast (FY)5.79
Revenue Forecast (FY)C$7.15B
Open Text Business Overview & Revenue Model
Company Description
Open Text Corporation engages in the designs, develops, markets, and sells information management software and solutions. It offers content services; business network that manages data within the organization and outside the firewall; security and...
How the Company Makes Money
OpenText primarily makes money by selling enterprise software and related services that help organizations manage content and information flows and secure users, endpoints, and digital identities.
Key revenue streams include:
1) Software subscrip...
Open Text Earnings Call Summary
Earnings Call Date:May 07, 2026
(Q3-2026)
| % Change Since: |
Next Earnings Date:Jul 30, 2026
Earnings Call Sentiment Positive
The call conveyed predominantly positive momentum driven by strong cloud and content performance, record cloud revenue and bookings, margin expansion, improved EPS, and raised cloud/bookings/free cash flow outlooks. Key challenges noted include a Q3 free cash flow dip, declines in professional services and modest support revenue pressure, some segment/regional softness (notably U.S. government-related delays), and timing/uncertainty around non-core asset divestitures. Management emphasized disciplined execution, AI/data platform positioning, and capital allocation prudence.Positive Updates
Total Revenue and Record Cloud Quarter
Total revenues of ~$1.28B in Q3 FY26; cloud revenue reached $493M, up 6.6% year-over-year and the highest quarterly cloud revenue in company history. Q3 marks the 21st consecutive quarter of organic cloud growth.
Negative Updates
Q3 Free Cash Flow Decline
Q3 free cash flow of $305M was down 18.4% year-over-year despite strong YTD cash performance, indicating some quarter-level working capital or timing impacts.
Read all updates
Q3-2026 Updates
Positive
Negative
Total Revenue and Record Cloud Quarter
Total revenues of ~$1.28B in Q3 FY26; cloud revenue reached $493M, up 6.6% year-over-year and the highest quarterly cloud revenue in company history. Q3 marks the 21st consecutive quarter of organic cloud growth.
Read all positive updates
Company Guidance
Management reiterated FY‑26 revenue guidance of 1–2% growth (after ~ $30M of divestitures) while raising key targets: cloud revenue growth was increased to 4–5% YoY (from 3–4%), enterprise cloud bookings growth to 16–20% YoY (from 12–16%), and free cash flow growth to 22–25% YoY (from 17–20%); they expect to realize roughly one‑third more this year of the $490–$550M business‑optimization savings. Management pointed to supporting metrics — Q3 total revenue $1.28B, cloud revenue $493M (+6.6%), content cloud +22% YoY, ARR $1.06B (+2.7%), 41 cloud deals >$1M (+28%), cloud current RPO +5% YoY and cloud long‑term RPO +19% YoY — and reiterated disciplined capital allocation (buyback increased to $500M, dividend maintained) and opportunistic timing for divestitures.Open Text Financial Statement Overview
Summary
Income Statement
72
Positive
Balance Sheet
58
Neutral
Cash Flow
63
Positive
| Breakdown | TTM | Jun 2025 | Jun 2024 | Jun 2023 | Jun 2022 | Jun 2021 |
|---|---|---|---|---|---|---|
Income Statement | ||||||
| Total Revenue | 5.17B | 5.17B | 5.77B | 4.48B | 3.49B | 3.39B |
| Gross Profit | 3.57B | 3.73B | 4.19B | 3.17B | 2.43B | 2.35B |
| EBITDA | 1.57B | 1.50B | 2.10B | 1.27B | 1.17B | 1.35B |
| Net Income | 511.74M | 435.87M | 465.09M | 150.38M | 397.09M | 310.67M |
Balance Sheet | ||||||
| Total Assets | 13.33B | 13.77B | 14.21B | 17.09B | 10.18B | 9.61B |
| Cash, Cash Equivalents and Short-Term Investments | 1.26B | 1.16B | 1.28B | 1.23B | 1.69B | 1.61B |
| Total Debt | 6.42B | 6.64B | 6.69B | 9.25B | 4.47B | 3.87B |
| Total Liabilities | 9.37B | 9.84B | 10.01B | 13.07B | 6.15B | 5.51B |
| Stockholders Equity | 3.97B | 3.93B | 4.20B | 4.02B | 4.03B | 4.10B |
Cash Flow | ||||||
| Free Cash Flow | 808.53M | 687.40M | 808.40M | 655.37M | 888.70M | 812.45M |
| Operating Cash Flow | 978.12M | 830.62M | 967.69M | 779.21M | 981.81M | 876.12M |
| Investing Cash Flow | -6.84M | -153.51M | 2.06B | -5.65B | -970.96M | -68.77M |
| Financing Cash Flow | -1.02B | -834.68M | -2.96B | 4.40B | 138.46M | -924.55M |
Open Text Technical Analysis
Neutral
32.16
Price Trends
32.07
Positive
37.53
Negative
41.81
Negative
Market Momentum
-0.34
Negative
54.83
Neutral
87.46
Negative
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For TSE:OTEX, the sentiment is Neutral. The current price of 32.16 is above the 20-day moving average (MA) of 30.72, above the 50-day MA of 32.07, and below the 200-day MA of 41.81, indicating a neutral trend. The MACD of -0.34 indicates Negative momentum. The RSI at 54.83 is Neutral, neither overbought nor oversold. The STOCH value of 87.46 is Negative, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Neutral sentiment for TSE:OTEX.
Open Text Risk Analysis
Open Text disclosed 49 risk factors in its most recent earnings report. Open Text reported the most risks in the "Finance & Corporate" category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
Open Text Peers Comparison
UnderperformOutperform
Sector (61)
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
79 Outperform | C$3.84B | 24.17 | 19.72% | ― | 16.06% | 744.14% | |
76 Outperform | C$683.16M | -77.25 | 90.79% | ― | 11.83% | 57.19% | |
72 Outperform | C$910.67M | 14.62 | 12.17% | 5.69% | -2.18% | -18.24% | |
71 Outperform | C$8.01B | 34.64 | 10.76% | ― | 13.08% | 14.82% | |
69 Neutral | C$7.55B | 8.13 | 12.93% | 3.27% | -0.86% | -16.61% | |
61 Neutral | $37.18B | 12.37 | -10.20% | 1.83% | 8.50% | -7.62% | |
56 Neutral | C$1.67B | -12.26 | -44.56% | ― | 14.98% | -500.11% |
* Technology Sector Average
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Open Text
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-17.94%
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Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.