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what it is
Open Text sells the software big companies use to store, find, secure, and manage piles of documents and data.
how it gets paid
Last year Open Text made $5.2B in revenue. Customer Support was the main engine at $2.44B, or 47% of sales.
why growth slowed
Revenue fell 10.4% last year. Timely open text shares are down roughly 23% in value over the past three months.
what just happened
The quarter looked loud, but the market heard the $0.66 EPS miss against a $0.90 estimate.
At a glance
B++ balance sheet — above average — nothing keeping you up at night
40/100 earnings predictability — expect surprises
18.3x trailing p/e — priced about right
3.8% dividend yield — cash in your pocket every quarter
9.0% return on capital — nothing to write home about
xvary composite: 66/100 — average
What they do
Open Text sells the software big companies use to store, find, secure, and manage piles of documents and data.
This business wins because once your company runs its records, workflows, and compliance files through Open Text, switching is painful. Customer support is 47% of revenue, or about $2.44 billion on a $5.2 billion base, which tells you a lot of customers keep paying after the first sale. That recurring mix gives you stickier revenue than a one-time software shop.
How they make money
$5.2B
annual revenue · their business grew -10.4% last year
Customer Support
$2.44B
1.5%
Cloud Services
$1.66B
+1.5%
Licenses
$0.73B
10.4%
Professional Services
$0.36B
10.2%
The products that matter
enterprise software and subscriptions
Enterprise Software & Subscriptions
$2.6B revenue · 4.2% growth
this is effectively the whole company in the snapshot data. it produced $2.6B in revenue, and the current growth signal is just 4.2%, so execution matters more than storytelling.
the whole story
Key numbers
$6.3B
long-term debt
That debt equals 45% of capital, so your upside case has to survive a very real balance-sheet burden.
22.0%
EPS growth
Projected earnings growth is 22.0% versus 7.0% projected sales growth, which means the thesis leans hard on margin gains, not just selling more software.
3.8%
dividend yield
You are getting paid while you wait, and that yield is more than a full percentage point above the institutional median cited in the research notes.
9.0%
return on capital
Return on capital → profit earned on the money already invested → so what: this is a decent software business, not a machine printing elite returns.
Financial health
B++
strength
- balance sheet grade B++ — above average financial health
- risk rank 3 — safer than 50% of stocks
- price stability 65 / 100
- long-term debt $6.3B (45% of capital)
- net profit margin 12.8% — keeps 13 cents of every dollar in revenue
- return on equity 16% — $0.16 profit for every $1 investors have put in
B++ — functional but not a standout on the balance sheet.
Total return vs. market
You invested $10,000 in OTEX 3 years ago → it's now worth $10,160.
The index would have given you $14,770.
source: institutional data · total return
What just happened
missed estimates
The quarter looked loud, but the market heard the $0.66 EPS miss against a $0.90 estimate.
Latest-quarter revenue was $2.6 billion, up 97% vs. prior year, and gross margin was 73.4%. But Yahoo Finance consensus shows EPS missed by 26.67%, which is why the headline growth did not settle the argument.
$2.6B
revenue
$0.66
eps
73.4%
gross margin
the number that mattered
The key number was the 26.67% EPS miss, because a stock with leverage and a turnaround story does not get much patience when profits come in light.
-
the top line missed our mark and improved only modestly vs. prior year, while share profits came in ahead of expectations, jumping more than 80% from the previous-year tally.indeed, the bottom line performance was driven by stronger margins stemming from the company’s business optimization plan, as well as aggressive stock repurchase activity of late. on balance, we are shaving $125 million from our current fiscal year revenue estimate, to $5.7 billion, but are adding a nickel to our earnings call, to $2.95 per share. client wins and strategic partnerships should support a top-line recovery over the pull to late decade. key customer wins in the latest stanza include wegmans food markets, national grid usa service, optiv security, and the australia department of health, to name just a few. meanwhile, the company recently strengthened its relationship with google to accelerate ai solutions in data privacy and cloud infrastructure, utilizing google’s gemini models and vertex ai. moreover, the company’s content management platform is now certified and available on sap’s latest public cloud edition.
-
the stock price has cooled a bit since our late october review.
-
timely open text shares are down roughly 23% in value over the past three months.
-
the dividend yield now exceeds the institutional data median by more than a full percentage point.
-
thus, total return potential over the 3 to 5-year window is enticing at the recent quotation.
source: company earnings report, 2026
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What could go wrong
the #1 risk is debt-heavy retention in a cloud-native software market.
med
cloud-native competitors keep winning the next budget cycle
open text still serves sticky customers, but newer rivals pitch simpler, cleaner cloud stacks. when growth is 4.2%, you do not have much cushion for share loss.
all $2.6B of reported revenue sits inside this same enterprise software story. there is no separate high-growth segment here to bail out the quarter.
med
$6.3B of long-term debt limits how forgiving the market will be
debt equals 45% of capital. that is manageable when earnings hold up and much less fun when revenue stalls, integrations drag, or refinancing gets expensive.
a software company with an average balance-sheet grade and mediocre predictability does not get endless second chances from investors.
med
the margin story keeps working while the demand story stays weak
the latest quarter showed EPS improving faster than revenue. that can work for a while. it cannot be the whole thesis forever.
if cost cuts and buybacks keep outrunning organic demand, the 18.3x trailing multiple stops looking conservative and starts looking generous.
$6.3B of debt equals 45% of capital, and the snapshot points to one core software business supporting the full revenue base. if retention weakens, the whole model feels it.
source: institutional data · regulatory filings · risk analysis
Pay attention to
earnings
next report: april 29, 2026
you want to see whether revenue momentum looks cleaner than the current 4.2% growth signal.
metric
the gap between $2.6B trailing revenue and the $6B fy2026 estimate
that spread is too wide to ignore. if the next few quarters do not support the rebound, the forward case gets harder to defend.
trend
whether EPS keeps outrunning sales
profit improved faster than revenue in the last update. you want more demand doing the work and less dependence on optimization math.
risk
debt as a share of capital
$6.3B of long-term debt is 45% of capital. if that number does not trend down, the dividend and valuation carry more weight than they should.
Analyst rankings
short-term outlook
top 20%
momentum score 2. in human-speak, analysts think OTEX can outperform most stocks over the next year.
risk profile
average
stability score 3 — not a bunker stock, not a chaos stock.
chart momentum
top 20%
technical score 2 — the ranking says the setup looks better than the recent 3-month price action might suggest.
earnings predictability
40 / 100
earnings predictability is weak. translation: expect more variance here than you would from a steadier software name.
source: institutional data
Institutional activity
institutions have been net buying for 3 consecutive quarters — 152 buyers vs. 114 sellers in 3q2025. total institutional holdings: 0.2B shares. net buying for 3 quarters.
source: institutional data
Price targets
3-5 year target range
$24
$47
$30
current price
$36
target midpoint · +19% from current · 3-5yr high: $65 (+115% · 24% ann'l return)
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