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Open Text
(TSX:OTEX)
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Rating:70Outperform
Price Target:
C$38.00
▲(9.01% Upside)
Action:Upgraded
Date:08/10/26
The score is driven primarily by strong and improving profitability with solid cash generation, partially offset by leverage and uneven revenue/FCF momentum. Valuation is a clear positive (low P/E and high dividend yield), while technicals are moderately supportive but not fully bullish given the stock remains below the 200-day average. Earnings-call guidance is balanced: positive cloud/AI and deleveraging trends, but near-term top-line and margin/FCF headwinds from reinvestment and softer renewal/support metrics.
Positive Factors
Recurring Cloud Growth
Sustained organic cloud expansion supports a larger recurring revenue base and deeper customer integration. Strong cloud deals, CRPO growth and FY27 cloud guidance indicate continued demand beyond a single reporting period.
Negative Factors
Weak Top-Line Growth
Low overall growth indicates a mature or uneven demand profile despite cloud expansion. Flat-to-down FY27 guidance may constrain operating leverage and suggests that portfolio changes and weaker legacy areas remain meaningful headwinds.
Read all positive and negative factors
Positive Factors
Negative Factors
Recurring Cloud Growth
Sustained organic cloud expansion supports a larger recurring revenue base and deeper customer integration. Strong cloud deals, CRPO growth and FY27 cloud guidance indicate continued demand beyond a single reporting period.
Read all positive factors
Open Text (OTEX) vs. iShares MSCI Canada ETF (EWC)
Market Cap
C$8.02B
Dividend Yield4.61%
Average Volume (3M)1.21M
Price to Earnings (P/E)5.3
Beta (1Y)1.14
Revenue Growth0.54%
EPS Growth54.92%
CountryCA
Employees19,900
SectorTechnology
Sector Strength88
IndustrySoftware - Application
Share Statistics
EPS (TTM)2.58
Shares Outstanding242,126,740
10 Day Avg. Volume1,161,441
30 Day Avg. Volume1,207,296
Financial Highlights & Ratios
PEG Ratio0.17
Price to Book (P/B)1.37
Price to Sales (P/S)1.05
P/FCF Ratio6.81
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
C$39.23Price Target Upside12.55% Upside
Rating ConsensusHold
Number of Analyst Covering7
EPS Forecast (FY)5.49
Revenue Forecast (FY)C$7.24B
Open Text Business Overview & Revenue Model
Company Description
Open Text Corporation specializes in the creation, development, promotion, and distribution of sophisticated information management software and solutions. Their extensive portfolio includes vital content services; a robust business network facili...
How the Company Makes Money
OpenText primarily makes money by selling enterprise software subscriptions and related services. Its core revenue model is anchored in recurring fees from term subscriptions for cloud/SaaS and for software that customers deploy in their own envir...
Open Text Earnings Call Summary
Earnings Call Date:Aug 06, 2026
(Q4-2026)
| % Change Since: |
Next Earnings Date:Oct 29, 2026
Earnings Call Sentiment Positive
The call conveyed positive operational momentum—particularly in cloud growth, AI (Aviator) traction, improved margins, healthy cash generation and meaningful debt reduction—alongside a deliberate multi-hundred-million dollar reinvestment plan in sales, partners and R&D for FY27. Near-term headwinds include modest overall revenue growth, declines in customer support and professional services, a dip in cloud net renewal rate, the ongoing impact of divestitures on comparables, and guidance that reflects conservative top-line expectations and margin moderation due to investments. On balance, the company is positioning for longer-term, AI-driven growth while accepting near-term reinvestment and divestiture-related noise.Positive Updates
Cloud Revenue and Momentum
Q4 cloud revenue of $503M, up 6.0% year-over-year (4.3% constant currency); core cloud revenue $341M, up 10.7% y/y (8.9% CC). Company reported 22nd consecutive quarter of organic cloud growth, closed 64 cloud deals > $1M in Q4 (up 49% y/y), and cloud CRPO up 10% y/y.
Negative Updates
Modest Top-Line Growth and Conservative Near-Term Guidance
Overall revenue growth was modest: CEO cited top-line up 1% y/y; CFO reported Q4 total revenues $1.35B up 2.9% y/y (0.9% CC) and full-year revenues $5.2B up 1.5% y/y (down 1.1% CC). Fiscal 2027 revenue guidance is flat to slightly down on a reported basis (-2% to -1%) and 0%–1% in constant currency (excluding divestitures).
Read all updates
Q4-2026 Updates
Positive
Negative
Cloud Revenue and Momentum
Q4 cloud revenue of $503M, up 6.0% year-over-year (4.3% constant currency); core cloud revenue $341M, up 10.7% y/y (8.9% CC). Company reported 22nd consecutive quarter of organic cloud growth, closed 64 cloud deals > $1M in Q4 (up 49% y/y), and cloud CRPO up 10% y/y.
Read all positive updates
Company Guidance
Open Text guided fiscal 2027 total revenue of $5.135–$5.185 billion (reported down 2% to 1%, ~ $30 million FX headwind; 0%–1% constant currency ex‑divestitures), core revenue growth of +2%–+3% in constant currency (each of the four core businesses to grow; ~ $25M of the FX headwind on core), core cloud revenue growth of +8%–+10% in constant currency (≈ $5M FX headwind), adjusted EBITDA margin of 32%–33% (down from FY26 adj. EBITDA 36.3% as the company will invest $100M–$200M, weighted to go‑to‑market and R&D), free cash flow of $625M–$725M, Q1 revenue of $1.22B–$1.25B with a Q1 adjusted EBITDA margin of 32%–33%, plans to add >300 quota‑carrying sellers, expects cloud bookings to grow ~30%+, and reiterated capital priorities (debt reduction, organic growth investments, dividends—$0.28/share declared—and buybacks) while noting net leverage of ~2.75x after $649M of fiscal ’26 debt paydown.Open Text Financial Statement Overview
Summary
Income Statement
74
Positive
Balance Sheet
62
Positive
Cash Flow
68
Positive
| Breakdown | Jun 2026 | Jun 2025 | Jun 2024 | Jun 2023 | Jun 2022 |
|---|---|---|---|---|---|
Income Statement | |||||
| Total Revenue | 5.25B | 5.17B | 5.77B | 4.48B | 3.49B |
| Gross Profit | 3.87B | 3.73B | 4.19B | 3.17B | 2.43B |
| EBITDA | 1.82B | 1.50B | 2.10B | 1.27B | 1.17B |
| Net Income | 643.02M | 435.87M | 465.09M | 150.38M | 397.09M |
Balance Sheet | |||||
| Total Assets | 13.11B | 13.77B | 14.21B | 17.09B | 10.18B |
| Cash, Cash Equivalents and Short-Term Investments | 956.02M | 1.16B | 1.28B | 1.23B | 1.69B |
| Total Debt | 5.97B | 6.64B | 6.69B | 9.25B | 4.47B |
| Total Liabilities | 9.09B | 9.84B | 10.01B | 13.07B | 6.15B |
| Stockholders Equity | 4.01B | 3.93B | 4.20B | 4.02B | 4.03B |
Cash Flow | |||||
| Free Cash Flow | 807.52M | 687.40M | 808.40M | 655.37M | 888.70M |
| Operating Cash Flow | 1.01B | 830.62M | 967.69M | 779.21M | 981.81M |
| Investing Cash Flow | 117.18M | -153.51M | 2.06B | -5.65B | -970.96M |
| Financing Cash Flow | -1.32B | -834.68M | -2.96B | 4.40B | 138.46M |
Open Text Technical Analysis
Neutral
34.86
Price Trends
33.02
Positive
31.96
Positive
34.52
Negative
Market Momentum
0.03
Positive
48.20
Neutral
17.63
Positive
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 34.86 is above the 20-day moving average (MA) of 33.51, above the 50-day MA of 33.02, and above the 200-day MA of 34.52, indicating a neutral trend. The MACD of 0.03 indicates Positive momentum. The RSI at 48.20 is Neutral, neither overbought nor oversold. The STOCH value of 17.63 is Positive, 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 47 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 |
|---|---|---|---|---|---|---|---|
80 Outperform | C$9.35B | 38.29 | 11.26% | ― | 11.62% | 19.63% | |
74 Outperform | C$4.82B | 40.91 | 20.88% | ― | 15.99% | 252.03% | |
74 Outperform | C$886.80M | 12.45 | 11.97% | 7.48% | -4.08% | -7.65% | |
70 Outperform | C$8.02B | 5.30 | 28.29% | 4.61% | 0.54% | 54.92% | |
69 Neutral | C$856.04M | 20.76 | 113.64% | ― | 11.23% | 65.79% | |
61 Neutral | $37.18B | 12.37 | -10.20% | 1.83% | 8.50% | -7.62% | |
60 Neutral | C$1.94B | -15.01 | -6.60% | ― | 10.59% | 84.91% |
* Technology Sector Average
TSE:OTEX
Open Text
33.12
-11.63
-25.98%
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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.