Open Text Corp (NASDAQ: OTEX)

Sector: Technology Industry: Software - Application CIK: 0001002638
Market Cap 8.50 Bn
P/B 2.15
P/E 17.07
P/S 1.64
ROIC (Qtr) 7.13
Div Yield % 4.07
Rev 1y % (Qtr) 1.51
Total Debt (Qtr) 6.63 Bn
Debt/Equity (Qtr) 1.68

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....

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Price action

Investment thesis

Bull case

  • Healthy cash reserves of 1.09B provide 9.92x coverage of short-term debt 109.62M, demonstrating strong liquidity position and minimal refinancing risk.
  • Operating cash flow of 1.06B provides exceptional 5618.02x coverage of minority interest expenses 188000, showing strong core operations.
  • Operating cash flow of 1.06B provides strong 11.36x coverage of stock compensation 92.96M, indicating sustainable incentive practices.
  • Robust free cash flow of 905.75M exceeds capital expenditure of 150.44M by 6.02x, indicating strong organic growth funding capability.
  • Cash position of 1.09B provides exceptional 5782.36x coverage of minority interest expenses 188000, indicating strong liquidity.

Bear case

  • Operating cash flow of 1.06B barely covers its investment activities of (162.10M), with a coverage ratio of -6.52, indicating heavy reliance on external financing for growth which may not be sustainable in a tighter credit environment.
  • Investment activities of (162.10M) provide weak support for R&D spending of 734.37M, which is -0.22x, suggesting potentially insufficient investment in innovation relative to other capital deployment.
  • Operating cash flow of 1.06B provides thin coverage of dividend payments of (270.68M) with a -3.90 ratio, suggesting potential dividend sustainability issues if operational performance deteriorates.
  • Cash reserves of 1.09B provide limited coverage of acquisition spending of (11.69M), which is -93.02x, suggesting aggressive expansion might strain liquidity if market conditions deteriorate.
  • Operating cash flow of 1.06B provides insufficient coverage of deferred revenue obligations of 1.56B, which is 0.68x, raising concerns about future service delivery capabilities.

Geographical Breakdown of Revenue (2025)

Product and Service 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 288.31 Bn 34.60 6.72 10.73 Bn
2 CRM Salesforce, Inc. 248.32 Bn 34.38 6.16 11.14 Bn
3 SHOP Shopify Inc. 212.27 Bn 119.19 19.85 1.12 Bn
4 INTU Intuit Inc. 180.73 Bn 43.89 9.30 6.78 Bn
5 UBER Uber Technologies, Inc 178.38 Bn 10.72 3.60 12.19 Bn
6 NOW ServiceNow, Inc. 146.98 Bn 84.91 11.60 2.40 Bn
7 ADBE Adobe Inc. 144.48 Bn 20.77 6.23 6.64 Bn
8 ADP Automatic Data Processing Inc 108.20 Bn 26.16 5.18 9.77 Bn

Industry comparisons

Current Valuation Value Ind Avg Percentile
EV to Assets EV to Assets 1.04 2.65
EV to Cash from Ops. EV/CFO 13.24 13.37
EV to Debt EV to Debt 2.11 57.69
EV to EBIT EV/EBIT 15.44 19.12
EV to EBITDA EV/EBITDA 8.76 15.00
EV to Free Cash Flow [EV/FCF] EV/FCF 15.44 14.69
EV to Market Cap EV to Market Cap 1.65 -92.28
EV to Revenue EV/Rev 2.70 4.60
Price to Book Value [P/B] P/B 2.15 4.26
Price to Earnings [P/E] P/E 17.07 -136.90
Dividend Metrics Value Ind Avg Percentile
Dividend Coverage Ratio Div Coverage (Qtr) 1.84 -3.95
Dividend Payout Ratio % Div Payout % (Qtr) 55.30 4.25
Dividend per Basic Share Div per Share (Qtr) 1.06 0.15
FCF Dividend Payout Ratio % FCF Div Payout % (Qtr) 29.74 2.52
Interest Coverage Int. cover (Qtr) 2.79 -52.32
Growth Metrics Value Ind Avg Percentile
Capex Growth (1y) % Capex 1y % (Qtr) 6.60 -259.78
Cash and Equivalents Growth (1y) % Cash & Equiv 1y % (Qtr) 8.68 9,763.58
Dividend Growth (1y) % Div 1y % (Qtr) 4.94 1.61
EBIAT Growth (1y) % EBIAT 1y % (Qtr) 1.42 -263.15
EBITDA Growth (1y) % EBITDA 1y % (Qtr) -1.35 56.46
EBIT Growth (1y) % EBIT 1y % (Qtr) -23.39 -225.15
EBT Growth (1y) % EBT 1y % (Qtr) -19.70 -86.10
EPS Growth (1y) % EPS 1y % (Qtr) 10.98 123.84
FCF Growth (1y) % FCF 1y % (Qtr) 32.87 -36.82
Gross Profit Growth (1y) % Gross Profit 1y % (Qtr) -7.87 95.08
Liquidity Ratios Value Ind Avg Percentile
Asset Utilization Ratio Asset Util Ratio (Qtr) 0.38 0.58
Cash Payout Ratio Cash Payout (Qtr) 0.22 0.02
Cash Ratio Cash Ratio (Qtr) 0.44 3.75
Current Ratio Curr Ratio (Qtr) 0.87 8.16
Debt to Equity Ratio Debt/Equity (Qtr) 1.68 0.17
Interest Cover Ratio Int Coverage (Qtr) 2.79 -52.32
Times Interest Earned Times Interest Earned (Qtr) 2.79 -52.32
Profitability Value Ind Avg Percentile
EBITDA Margin % EBITDA Margin % (Qtr) 29.80 -100.06
EBIT Margin % EBIT Margin % (Qtr) 17.47 -164.24
EBT Margin % EBT Margin % (Qtr) 11.21 -116.94
Gross Margin % Gross Margin % (Qtr) 72.50 58.20
Net Profit Margin % Net Margin % (Qtr) 9.60 -121.65