One-glance verdict
Undervalued
$71.66 our estimate vs market $27.95
Wall Street consensus: $27.95 (-61.0% lower than our fair-value estimate)
61% below our estimate, below the bear case
Fundamentals snapshot
Open Text Corporation
OTEX · NMS · Technology · Software - Application
Current price
$27.95
52-week range
$19.78 - $39.81
Market cap
$6.78B
Balance sheet
Stretched
3.45x Stretched
Net debt $5.01B. Interest coverage shows how many times profit covers the interest bill.
What stands out
3 Rewards
0 Risks
3 rewards · 0 risks
- Reward Revenue grew 1.5% last year.
- Reward Free cash flow was positive in 10/10 years.
- Reward Trades at 10.8x P/E vs peer median 22.5x (51.8% cheaper).
What this company does
Open Text Corporation
Open Text provides software that acts like a highly advanced, digital filing cabinet, helping large companies and governments manage and secure their vast amounts of information. The company makes most of its money from cloud subscriptions, which creates recurring revenue (a predictable, repeating stream of income, similar to a Netflix plan). This is important because as businesses rely more on data and artificial intelligence, they need Open Text's tools to keep their information organized and safe.
How the company got here
Open Text was founded in 1991, spinning out of a University of Waterloo project that created search technology for the Oxford English Dictionary. The company has grown significantly over the years, largely by acquiring other software companies to expand its offerings. Key acquisitions include GXS for business-to-business integration, Carbonite for data protection and cybersecurity, and Documentum, a major competitor in content management. Its largest acquisition was the $6 billion purchase of British software firm Micro Focus in 2023, which significantly expanded its product portfolio and customer base.
What it actually does
Open Text provides what it calls 'information management' software and services to large organizations, including corporations and government agencies. Think of it as a digital librarian and security guard for a company's vast and often messy collection of data, like emails, documents, and business records. Its tools help companies find, use, share, and protect their information securely and efficiently. The company offers its software through the cloud (accessible over the internet) and also for installation on a customer's own servers.
Content Cloud
This is Open Text's core business, helping companies manage all of their unstructured content, which is just a technical term for everyday business information like documents, emails, and videos. Its software allows employees to collaborate on projects, manage records to meet legal requirements, and find the information they need to do their jobs. Customers pay for this through subscriptions to their cloud services or by licensing (buying the rights to use) the software. This segment is a foundational part of the company's business.
Business Network Cloud
This segment helps companies connect and exchange information with their suppliers and customers electronically. It's like a private, secure network for businesses to manage their supply chain (the entire process of making and selling goods, from getting raw materials to delivering the final product). For example, it helps automate the sending and receiving of purchase orders and invoices. Companies pay subscription fees to access and use this network, which helps them operate more efficiently.
Cybersecurity Cloud
Through acquisitions like Carbonite, Webroot, and parts of Micro Focus, Open Text offers a range of products to protect businesses from cyber threats. This includes services like data backup and recovery in case of a system failure, email security to block phishing attacks, and endpoint protection, which secures employee computers and mobile devices. Customers pay recurring fees for these security services to safeguard their critical information and operations.
Experience Cloud
This part of the business helps companies manage how they communicate with their customers. It provides tools for creating personalized marketing campaigns, sending out mass communications like bills or account statements, and managing a customer's entire digital journey with a brand. The goal is to create a smooth and consistent experience for customers across different channels, like web, mobile, and email. Businesses subscribe to these services to improve customer loyalty and sales.
IT Operations Management
Acquired through the Micro Focus deal, this segment provides software that helps a company's Information Technology (IT) department manage and monitor their complex computer systems. These tools can automate routine IT tasks, track the performance of applications, and ensure that all systems are running smoothly. This helps businesses reduce downtime and operate more efficiently. Customers typically pay licensing and ongoing support fees for this software.
What management is betting on now
Open Text's main focus is on integrating its massive Micro Focus acquisition and selling its new, broader range of products to its combined customer base. A major priority is artificial intelligence (AI), with the company embedding its 'Aviator' AI technology across all its business clouds to help customers analyze their data and automate tasks. The company is also concentrating on growing its cloud-based revenues and using cash from selling off non-essential business units to pay down debt.
Price history
How the share price has moved
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Earnings history
Last 8 quarters — what happened
Click any quarter to read the call summary and what the numbers say.
FY2025 Q1
$-117.12M
FY2025 Q2
$306.72M
FY2025 Q3
$373.83M
FY2025 Q4
$123.97M
FY2026 Q1
$101.23M
FY2026 Q2
$279.44M
FY2026 Q3
$304.87M
FY2026 Q4
$121.97M
Revenue
$1.35B
Net income
$155.66M
Diluted EPS
0.64
Operating cash flow
$185.80M
Free cash flow
$121.97M
Fetching…
Sources
Revenue
$1.28B
Net income
$172.65M
Diluted EPS
0.70
Operating cash flow
$354.59M
Free cash flow
$304.87M
Fetching…
Sources
Revenue
$1.33B
Net income
$168.09M
Diluted EPS
0.66
Operating cash flow
$318.66M
Free cash flow
$279.44M
Fetching…
Sources
Revenue
$1.29B
Net income
$146.62M
Diluted EPS
0.58
Operating cash flow
$147.76M
Free cash flow
$101.23M
Fetching…
Sources
Revenue
$1.31B
Net income
$28.83M
Diluted EPS
0.11
Operating cash flow
$158.19M
Free cash flow
$123.97M
Fetching…
Sources
Revenue
$1.25B
Net income
$92.81M
Diluted EPS
0.35
Operating cash flow
$402.24M
Free cash flow
$373.83M
Fetching…
Sources
Revenue
$1.33B
Net income
$229.86M
Diluted EPS
0.87
Operating cash flow
$347.99M
Free cash flow
$306.72M
Fetching…
Sources
Revenue
$1.27B
Net income
$84.37M
Diluted EPS
0.32
Operating cash flow
$-77.81M
Free cash flow
$-117.12M
Fetching…
Sources
Is it cheap or expensive?
Fair value $71.66 vs current price $27.95
Wall Street consensus is the average analyst price target: $27.95 (-61.0% lower than our fair-value estimate).
Our most-likely fair value is $71.66 a share — about 156.4% above today's price of $27.95, so the stock currently looks cheap (undervalued).
Is it drowning in debt?
Stretched
Net debt $5.0B. Interest coverage 3.5x.
Net debt
$5.01B
Interest coverage
3.45x
Open Text Corporation's profit covers its interest bill about 3.5 times over. which is weaker than most peers shown here.
Stretched
Worse cushion
Baseline
Better cushion
OTEX
BASELINE
Open Text Corporation
Total debt $5.97B Interest coverage 3.45x This is the baseline the peer rows are being compared against.
Total debt $128.81B Interest coverage 50.88x +1,373% vs OTEX Carries about 14.7x more debt cushion than OTEX.
Total debt $67.14B Interest coverage 6.46x +87% vs OTEX Carries about 1.9x more debt cushion than OTEX.
Total debt $6.79B Interest coverage 33.10x +858% vs OTEX Carries about 9.6x more debt cushion than OTEX.
Total debt $555.14M Interest coverage 7.78x +125% vs OTEX Carries about 2.3x more debt cushion than OTEX.
Total debt $69.03M Interest coverage 221.32x +6,306% vs OTEX Carries about 64.1x more debt cushion than OTEX.
What you should know
The case for and against OTEX
3 Rewards
0 Risks
Rewards
-
Revenue grew 1.5% last year.
-
Free cash flow was positive in 10/10 years.
-
Trades at 10.8x P/E vs peer median 22.5x (51.8% cheaper).
Risks
The numbers
All the key metrics, grouped by purpose
Tap any ? icon to learn what it means.
Valuation
How expensive the stock looks
P/E (TTM)
10.83x
Forward P/E
6.52x
P/B
1.65x
P/S
1.29x
EV/EBITDA
7.13x
PEG ratio
1.02x
Profitability
How much profit each dollar creates
Gross margin
77.1%
Operating margin
24.1%
Net margin
12.3%
ROE
16.2%
ROA
5.6%
Health
Liquidity and balance-sheet strength
Debt / equity
1.49x
Current ratio
0.81x
Quick ratio
0.72x
Total debt
$5.97B
Total cash
$960.85M
Growth
How the business has been compounding
Revenue TTM
$5.25B
Revenue 5Y CAGR
10.7%
EPS TTM
2.58
EPS 5Y CAGR
20.9%
Cash flow
How much cash the business throws off
Operating CF TTM
$1.01B
Free CF TTM
$807.52M
FCF margin
15.4%
Dividend
Shareholder payout
Yield
4.0%
Payout ratio
42.6%
Last ex-div date
2026-09-04