Open Text Corp (NASDAQ: OTEX)

Sector: Technology Industry: Software - Application CIK: 0001002638
Market Cap 6.17 Bn
P/B 1.53
P/E 14.13
P/S 1.19
ROIC (Qtr) 7.00
Div Yield % 4.44
Rev 1y % (Qtr) -0.58
Total Debt (Qtr) 6.59 Bn
Debt/Equity (Qtr) 1.63
Add ratio to table...

About

OpenText Corp, commonly known by its ticker symbol OTEX, operates in the information management industry, providing solutions that enable digital businesses of all sizes to become more intelligent, connected, secure, and responsible. The company's extensive Information Management platform and services cater to various market segments, including global enterprises, small and medium-sized businesses (SMBs), governments, and consumers worldwide. OpenText's primary business activities revolve around providing comprehensive information management solutions....

Read more

Investment thesis

Bull case

  • Healthy cash reserves of 1.27B provide 12.41x coverage of short-term debt 102.45M, demonstrating strong liquidity position and minimal refinancing risk.
  • Operating cash flow of 1.03B provides exceptional 5736.61x coverage of minority interest expenses 179000, showing strong core operations.
  • Operating cash flow of 1.03B provides strong 12.25x coverage of stock compensation 83.83M, indicating sustainable incentive practices.
  • Robust free cash flow of 878.47M exceeds capital expenditure of 148.39M by 5.92x, indicating strong organic growth funding capability.
  • Cash position of 1.27B provides exceptional 7102.65x coverage of minority interest expenses 179000, indicating strong liquidity.

Bear case

  • Operating cash flow of 1.03B barely covers its investment activities of (153.90M), with a coverage ratio of -6.67, indicating heavy reliance on external financing for growth which may not be sustainable in a tighter credit environment.
  • Investment activities of (153.90M) provide weak support for R&D spending of 711.95M, which is -0.22x, suggesting potentially insufficient investment in innovation relative to other capital deployment.
  • Operating cash flow of 1.03B provides thin coverage of dividend payments of (270.88M) with a -3.79 ratio, suggesting potential dividend sustainability issues if operational performance deteriorates.
  • Operating cash flow of 1.03B provides insufficient coverage of deferred revenue obligations of 1.62B, which is 0.63x, raising concerns about future service delivery capabilities.
  • Free cash flow of 878.47M represents just -24.50x of debt issuance (35.85M), suggesting concerning reliance on leverage rather than internal cash generation for growth.

Product and Service Breakdown of Revenue (2025)

Geographical Breakdown of Revenue (2025)

Peer comparison

Companies in the Software - Application
S.No. Ticker Company Market Cap P/E P/S Total Debt (Qtr)
1 SAP Sap Se 235.43 Bn 27.31 5.44 9.50 Bn
2 SHOP Shopify Inc. 147.12 Bn 119.52 12.73 0.19 Bn
3 UBER Uber Technologies, Inc 147.10 Bn 14.63 2.83 12.08 Bn
4 CRM Salesforce, Inc. 122.20 Bn 594.48 15.45 11.14 Bn
5 INTU Intuit Inc. 113.93 Bn 178.01 32.63 6.78 Bn
6 ADBE Adobe Inc. 111.00 Bn 15.57 4.67 6.65 Bn
7 NOW ServiceNow, Inc. 109.54 Bn 62.67 8.25 2.40 Bn
8 ADP Automatic Data Processing Inc 86.44 Bn 20.41 4.07 4.37 Bn

Industry comparisons

Current Valuation Value Ind Avg Percentile
EV to Assets EV to Assets 0.86 2.08
EV to Cash from Ops. EV/CFO 11.40 11.38
EV to Debt EV to Debt 1.78 47.67
EV to EBIT EV/EBIT 14.00 6.78
EV to EBITDA EV/EBITDA 7.36 7.15
EV to Free Cash Flow [EV/FCF] EV/FCF 13.33 14.44
EV to Market Cap EV to Market Cap 1.90 -8.88
EV to Revenue EV/Rev 2.26 4.04
Price to Book Value [P/B] P/B 1.53 3.65
Price to Earnings [P/E] P/E 14.13 -117.75
Dividend Metrics Value Ind Avg Percentile
Dividend Coverage Ratio Div Coverage (Qtr) 1.61 -4.05
Dividend Payout Ratio % Div Payout % (Qtr) 62.50 4.38
Dividend per Basic Share Div per Share (Qtr) 1.08 0.15
FCF Dividend Payout Ratio % FCF Div Payout % (Qtr) 30.84 2.48
Interest Coverage Int. cover (Qtr) 2.61 -43.57
Growth Metrics Value Ind Avg Percentile
Capex Growth (1y) % Capex 1y % (Qtr) 5.55 -222.46
Cash and Equivalents Growth (1y) % Cash & Equiv 1y % (Qtr) 13.29 281.53
Dividend Growth (1y) % Div 1y % (Qtr) 4.88 1.78
EBIAT Growth (1y) % EBIAT 1y % (Qtr) -24.64 -327.55
EBITDA Growth (1y) % EBITDA 1y % (Qtr) -0.73 30.09
EBIT Growth (1y) % EBIT 1y % (Qtr) -38.60 -213.00
EBT Growth (1y) % EBT 1y % (Qtr) -46.19 -86.84
EPS Growth (1y) % EPS 1y % (Qtr) -30.08 108.58
FCF Growth (1y) % FCF 1y % (Qtr) 28.62 6.29
Gross Profit Growth (1y) % Gross Profit 1y % (Qtr) -4.23 94.58
Liquidity Ratios Value Ind Avg Percentile
Asset Utilization Ratio Asset Util Ratio (Qtr) 0.38 0.58
Cash Payout Ratio Cash Payout (Qtr) 0.23 0.02
Cash Ratio Cash Ratio (Qtr) 0.51 3.78
Current Ratio Curr Ratio (Qtr) 0.94 8.27
Debt to Equity Ratio Debt/Equity (Qtr) 1.63 0.14
Interest Cover Ratio Int Coverage (Qtr) 2.61 -43.57
Times Interest Earned Times Interest Earned (Qtr) 2.61 -43.57
Profitability Value Ind Avg Percentile
EBITDA Margin % EBITDA Margin % (Qtr) 28.50 -105.03
EBIT Margin % EBIT Margin % (Qtr) 16.15 -130.16
EBT Margin % EBT Margin % (Qtr) 9.96 -121.17
Gross Margin % Gross Margin % (Qtr) 72.70 58.37
Net Profit Margin % Net Margin % (Qtr) 8.40 -126.13