Open Text (OTEX) AI Stock Analysis

• Market Cap: $9.35B
• Dividend Yield: 3.27%
• Average Volume (3M): 801.38K
• Price to Earnings (P/E): 13.9
• Beta (1Y): 1.35
• Revenue Growth: -5.01%
• EPS Growth: 13.21%
• Country: CA
• Employees: 21,700
• Sector: Technology
• Sector Strength: 88
• Industry: Software - Application
• EPS (TTM): 1.48
• Shares Outstanding: 252,011,080
• 10 Day Avg. Volume: 1,034,107
• 30 Day Avg. Volume: 801,377
• PEG Ratio: -30.19
• Price to Book (P/B): 1.96
• Price to Sales (P/S): 1.49
• P/FCF Ratio: 11.19
• Enterprise Value/Market Cap: 1.30
• Enterprise Value/Revenue: 2.36
• Enterprise Value/Gross Profit: 3.35
• Enterprise Value/Ebitda: 7.71
• 1Y Price Target: $52.82
• Price Target Upside: 48.44% Upside
• Rating Consensus: Hold
• Number of Analyst Covering: 8
• EPS Forecast (FY): N/A
• Revenue Forecast (FY): N/A

• Rating: 72 Outperform
• Price Target: C$39.00 ▲(9.61% Upside)

Open Text's overall stock score is driven by strong financial performance and positive earnings call highlights, particularly in cloud revenue growth and improved profit margins. However, technical indicators suggest a bearish trend, and valuation metrics are fair but not compelling. The company's high leverage and challenges in certain segments, such as customer support and cybersecurity, present risks that temper the overall score.

Positive Factors

Enterprise cloud bookings

Sustained 20% growth in enterprise cloud bookings indicates stronger recurring revenue and larger, stickier customer commitments. Higher bookings velocity and rising long-term Cloud RPO support predictable ARR expansion and durable multi-year revenue visibility from enterprise customers.

High and improving margins

Very high gross margins and expanding adjusted EBITDA reflect a scalable software business and disciplined cost structure. Margin strength supports reinvestment in product, M&A, and debt reduction, improving cash generation resilience even as revenue mix shifts toward cloud.

Strong free cash flow generation

Robust free cash flow growth and high FCF-to-net-income conversion provide durable financial flexibility. Consistent FCF supports dividend payments, deleveraging plans and targeted acquisitions, reducing financial risk and enabling strategic investment without relying on equity markets.

Negative Factors

High leverage

A debt-to-equity ratio near 1.7 signals significant leverage that can constrain strategic flexibility. Elevated debt raises interest and refinancing risks, limits ability to pursue large M&A or aggressive buybacks, and heightens vulnerability if revenue growth or cash conversion slows.

Declining customer support revenue

A decline in legacy customer support revenue suggests erosion of a stable, recurring maintenance base as clients transition to cloud. This reduces near-term predictability and upsell anchoring, forcing the company to replace steady support cashflows with cloud ARR over multiple quarters.

Cybersecurity cloud weakness

Underperformance in the cybersecurity cloud component signals challenges cross-selling into a high-growth adjacent market. Failure to gain traction there limits TAM expansion, reduces diversification of cloud ARR, and could slow the pace at which cloud revenue offsets legacy declines.

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 protection solutions for defending against cyber threats, and preparing for business continuity and response in the event of a breach; digital investigation and forensic security solutions; OpenText security solutions to address information cyber resilience needs; Carbonite and Webroot products; and OpenText Information Management software platform. The company also provides eDiscovery platform that provides forensics and unstructured data analytics; OpenText Developer Cloud; key developer API services; AI and analytics that leverages structured or unstructured data; digital process automation solutions, which enables organizations to transform into digital data-driven businesses; and OpenText Digital Experience platform. In addition, it offers customer support programs, including access to software upgrades, a knowledge base, discussions, product information, and an online mechanism to post and review trouble tickets; and consulting and learning services relating to the implementation, training, and integration of its licensed product offerings, as well as cloud services. The company serves organizations, enterprise and mid-market companies, public sector agencies, small and medium-sized businesses, and direct consumers in Canada, the United States, the United Kingdom, Germany, rest of Europe, the Middle East, Africa, and internationally. It has strategic partnerships with SAP SE, Google Cloud, Amazon AWS, Microsoft Corporation, Oracle Corporation, Salesforce.com Corporation, Accenture plc, ATOS, Capgemini Technology Services SAS, Cognizant Technology Solutions U.S. Corp., Deloitte Consulting LLP, and Tata Consultancy Services. Open Text Corporation was incorporated in 1991 and is headquartered in Waterloo, Canada.

How the Company Makes Money

OpenText generates revenue primarily through the sale of software licenses, subscriptions, and professional services. Its revenue model includes a mix of one-time license fees and recurring subscription fees, particularly from its cloud-based offerings. Key revenue streams come from product licenses, maintenance and support services, and professional consulting services. The company has established significant partnerships, including collaborations with major technology firms like Microsoft and SAP, which enhance its market reach and integration capabilities. Additionally, OpenText benefits from strategic acquisitions that expand its product portfolio and customer base, further contributing to its financial growth.

Open Text Financial Statement Overview

Summary

Open Text exhibits strong revenue growth and operational efficiency, with robust gross and EBIT margins. However, high leverage could be a concern if not managed properly. The company shows strong cash flow generation, supporting its financial stability and potential for future investments.

Income Statement

Open Text demonstrates strong revenue growth with a TTM increase of 9.4%. The gross profit margin remains robust at 72.3%, indicating efficient cost management. However, the net profit margin is relatively modest at 8.4%, suggesting room for improvement in profitability. The EBIT and EBITDA margins are healthy, reflecting solid operational performance.

Balance Sheet

The company has a high debt-to-equity ratio of 1.69, indicating significant leverage, which could pose risks if not managed carefully. Return on equity is moderate at 10.6%, showing decent profitability relative to shareholder equity. The equity ratio is not explicitly calculated, but the balance sheet shows a stable asset base.

Cash Flow

Open Text's free cash flow growth is strong at 31.8%, highlighting effective cash generation. The operating cash flow to net income ratio is 0.30, indicating a solid conversion of income to cash. The free cash flow to net income ratio of 0.83 suggests efficient cash utilization relative to earnings.

Breakdown	TTM	Dec 2025	Dec 2024	Dec 2023	Dec 2022	Dec 2021
Income Statement
Total Revenue	5.17B	5.17B	5.77B	4.48B	3.49B	3.39B
Gross Profit	3.64B	3.73B	4.19B	3.17B	2.43B	2.35B
EBITDA	1.58B	1.50B	2.10B	1.27B	1.17B	1.35B
Net Income	496.49M	435.87M	465.09M	150.38M	397.09M	310.67M
Balance Sheet
Total Assets	13.48B	13.77B	14.21B	17.09B	10.18B	9.61B
Cash, Cash Equivalents and Short-Term Investments	1.09B	1.16B	1.28B	1.23B	1.69B	1.61B
Total Debt	6.63B	6.64B	6.69B	9.25B	4.47B	3.87B
Total Liabilities	9.52B	9.84B	10.01B	13.07B	6.15B	5.51B
Stockholders Equity	3.95B	3.93B	4.20B	4.02B	4.03B	4.10B
Cash Flow
Free Cash Flow	905.75M	687.40M	808.40M	655.37M	888.70M	812.45M
Operating Cash Flow	1.06B	830.62M	967.69M	779.21M	981.81M	876.12M
Investing Cash Flow	-162.10M	-153.51M	2.06B	-5.65B	-970.96M	-68.77M
Financing Cash Flow	-825.84M	-834.68M	-2.96B	4.40B	138.46M	-924.55M

Open Text Technical Analysis

• Technical Analysis Sentiment: Negative
• Last Price: 35.58
• 50DMA: Negative
• 100DMA: Negative
• 200DMA: Negative
• MACD: Positive
• RSI: Positive
• STOCH: Positive

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For TSE:OTEX, the sentiment is Negative. The current price of 35.58 is below the 20-day moving average (MA) of 41.98, below the 50-day MA of 44.49, and below the 200-day MA of 43.54, indicating a bearish trend. The MACD of -2.26 indicates Positive momentum. The RSI at 16.25 is Positive, neither overbought nor oversold. The STOCH value of 4.82 is Positive, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for TSE:OTEX.

Open Text Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
DSG	82 Outperform	C$9.30B	41.05	10.70%	―	14.55%	15.55%
KXS	78 Outperform	C$4.03B	82.08	8.24%	―	15.11%	75.40%
OTEX	72 Outperform	$9.35B	13.91	12.32%	3.27%	-5.01%	13.21%
ENGH	69 Neutral	C$1.02B	13.99	12.20%	5.69%	-0.72%	-9.27%
DCBO	63 Neutral	$723.26M	25.04	49.99%	―	16.25%	31.71%
Sector *	61 Neutral	$37.18B	12.37	-10.20%	1.83%	8.50%	-7.62%
LSPD	53 Neutral	C$2.11B	-2.30	-37.01%	―	17.23%	-435.45%