Open Text (OTEX) AI Stock Analysis

• Market Cap: $11.37B
• Dividend Yield: 3.27%
• Average Volume (3M): 914.44K
• Price to Earnings (P/E): 19.6
• Beta (1Y): 1.43
• Revenue Growth: -7.77%
• EPS Growth: -1.03%
• Country: CA
• Employees: 21,700
• Sector: Technology
• Sector Strength: 86
• Industry: Software - Application
• EPS (TTM): 1.33
• Shares Outstanding: 254,316,700
• 10 Day Avg. Volume: 1,176,376
• 30 Day Avg. Volume: 914,436
• PEG Ratio: N/A
• Price to Book (P/B): N/A
• Price to Sales (P/S): N/A
• P/FCF Ratio: N/A
• Enterprise Value/Market Cap: 1.56
• Enterprise Value/Revenue: 3.43
• Enterprise Value/Gross Profit: 4.75
• Enterprise Value/Ebitda: 11.82
• 1Y Price Target: $47.54
• Price Target Upside: 6.69% Upside
• Rating Consensus: Hold
• Number of Analyst Covering: 10

• Rating: 70 Outperform
• Price Target: C$48.00 ▲(7.72% Upside)

Open Text's overall stock score is driven by a positive earnings call outlook and strong technical indicators. While financial performance shows some challenges, the company's strategic initiatives in AI and cloud, along with reasonable valuation metrics, support a favorable investment case.

Positive Factors

Financial Performance

Q2/25 results were above consensus, showing a beat in revenue and EBITDA.

Valuation

OTEX's valuation is considered undemanding given its recurring revenue profile and profitability.

Negative Factors

Guidance

Q3/25 guidance was below expectations, indicating organic growth challenges.

Market Catalysts

There is a lack of a clear catalyst to drive value stocks like OTEX higher.

Product Portfolio

OTEX reduced its FY2025 guidance due to incremental weakness within the ADM and ITOM product portfolios.

Open Text Business Overview & Revenue Model

Company Description

Open Text Corporation (OTEX) is a leading global enterprise information management (EIM) company headquartered in Waterloo, Ontario, Canada. The company operates in sectors including software development, cloud services, and enterprise solutions. Open Text provides a comprehensive suite of products and services that enable businesses to manage, secure, and leverage their digital information. Core offerings include content management, business process management, customer experience management, and cybersecurity solutions.

How the Company Makes Money

Open Text Corporation generates revenue primarily through the sale of software licenses, subscription services, and professional services. The company's revenue model includes upfront fees for traditional on-premises software licenses and recurring revenue from cloud-based subscriptions and managed services. Open Text also earns money from maintenance and support services, ensuring ongoing customer engagement and system updates. Professional services, including consulting, implementation, and training, provide additional revenue streams. Strategic partnerships and acquisitions also play a significant role in expanding the company's market reach and product offerings, contributing to its overall earnings.

Open Text Financial Statement Overview

Summary

Open Text's financial performance shows strengths in operational efficiency and cash generation, but faces challenges with revenue growth and high leverage. The company maintains solid profitability margins and cash flow ratios, crucial for sustaining operations in the competitive software industry.

Income Statement

Open Text's income statement reveals a mixed performance. The company has maintained a strong gross profit margin of over 70% in recent years, indicating effective cost management. However, the net profit margin has declined to 8.43% in 2025 from 11.37% in 2022, reflecting challenges in converting revenue into profit. The revenue growth rate has turned negative in 2025, suggesting a potential slowdown in business expansion. Despite these challenges, the EBIT and EBITDA margins remain healthy, showcasing operational efficiency.

Balance Sheet

The balance sheet shows a high debt-to-equity ratio of 1.69 in 2025, indicating significant leverage which could pose financial risk if not managed properly. The return on equity has been relatively stable around 11%, suggesting consistent profitability relative to shareholder investment. The equity ratio stands at 28.5%, reflecting a moderate level of equity financing. Overall, the balance sheet highlights the need for careful debt management to maintain financial stability.

Cash Flow

Cash flow analysis indicates a decline in free cash flow growth, with a significant drop of 300.2% in 2025. The operating cash flow to net income ratio is 0.30, suggesting that cash generation from operations is not fully covering net income, which could impact liquidity. However, the free cash flow to net income ratio remains strong at 82.76%, indicating that the company is still generating substantial cash relative to its net income.

Breakdown	TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement
Total Revenue	5.17B	5.17B	5.77B	4.48B	3.49B	3.39B
Gross Profit	3.73B	3.73B	4.19B	3.17B	2.43B	2.35B
EBITDA	1.50B	1.50B	2.10B	1.26B	1.18B	1.33B
Net Income	435.87M	435.87M	465.09M	150.38M	397.09M	310.67M
Balance Sheet
Total Assets	13.77B	13.77B	14.21B	17.09B	10.18B	9.61B
Cash, Cash Equivalents and Short-Term Investments	1.16B	1.16B	1.28B	1.23B	1.69B	1.61B
Total Debt	6.64B	6.64B	6.69B	9.25B	4.47B	3.87B
Total Liabilities	9.84B	9.84B	10.01B	13.07B	6.15B	5.51B
Stockholders Equity	3.93B	3.93B	4.20B	4.02B	4.03B	4.10B
Cash Flow
Free Cash Flow	687.40M	687.40M	808.40M	655.37M	888.70M	812.45M
Operating Cash Flow	830.62M	830.62M	967.69M	779.21M	981.81M	876.12M
Investing Cash Flow	-153.51M	-153.51M	2.06B	-5.65B	-970.96M	-68.77M
Financing Cash Flow	-834.68M	-834.68M	-2.96B	4.40B	138.46M	-924.55M

Open Text Technical Analysis

• Technical Analysis Sentiment: Positive
• Last Price: 44.56
• 50DMA: Positive
• 100DMA: Positive
• 200DMA: Positive
• MACD: Negative
• RSI: Neutral
• STOCH: Negative

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For TSE:OTEX, the sentiment is Positive. The current price of 44.56 is above the 20-day moving average (MA) of 42.11, above the 50-day MA of 40.59, and above the 200-day MA of 39.12, indicating a bullish trend. The MACD of 1.25 indicates Negative momentum. The RSI at 64.20 is Neutral, neither overbought nor oversold. The STOCH value of 88.41 is Negative, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for TSE:OTEX.

Open Text Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
OTEX	70 Outperform	$11.37B	19.58	10.73%	3.27%	-7.77%	-1.03%
Sector *	61 Neutral	$35.62B	8.22	-10.94%	1.88%	8.86%	-10.36%
DSGX	―	$8.52B	59.94	10.66%	―	―	―
KXS	70 Outperform	C$5.43B	156.48	5.93%	―	15.81%	22.17%
EGHSF	―	$898.92M	16.14	13.26%	4.87%	―	―
LSPD	52 Neutral	C$2.27B	―	-36.64%	―	18.75%	-386.84%
DCBO	―	$899.39M	42.81	55.53%	―	―	―

Open Text Corporate Events

OpenText Appoints New Board Member for Strategic Growth

OpenText Corporation has appointed Fletcher Previn, Senior VP and CIO of Cisco Systems, to its board of directors, highlighting the company’s focus on refreshing its board with diverse skill-sets. Previn brings over 20 years of IT experience, including a significant tenure at IBM, and is expected to contribute to OpenText’s growth and modernization strategies.