Open Text Corporation (OTEX) valuation at a glance
Open Text Corporation (OTEX) trades below the fair value estimate shown here. At $23.84 versus a $28.97 estimate, that is a 22% upside.
- Price
- $23.84
- Fair value estimate
- $28.97
- Upside
- +22%
- Market cap
- $5.77B
- P/S (TTM)
- 1.1×
CompaniesOTEX
OTEX
Open Text Corporation
TechnologyEnterprise SoftwareInformation ManagementLeveredBuybackDividend
Overview
$23.84-4.4%
Market Cap
$5.77B
SEC filings
P/E (TTM)
9.0×
SEC filings
Rev Growth YoY
1.5%
+1.5%SEC filings
Gross Margin
73.7%
SEC filings
FCF Yield
14.0%
Calculated from SEC filings
Upside to FV
+21.5%
close of 1 September 2026
Conviction
4/5Enterprise information management at 9.0 times trailing GAAP earnings and a 14.0% free cash flow yield, returning 11.9% of its market value a year while retiring debt, 38% below its high.
Research Depth
ScreeningDeep ResearchFull Model
Updated 12d ago
Quality Snowflake
Overall 55/100
Value5/5
Future1/2
Past4/4
Health1/4
Dividend0/1
Each axis scores the checks for which data is available (filled = pass, hollow = no data). Computed from the sourced metrics on this page, not a third-party rating.
Thesis
Open Text sells the software that large organisations use to store, govern and retrieve their unstructured information, and the market prices it as a melting ice cube carrying too much debt. The fiscal 2026 filings show something different. Operating income rose 21.3% to $1,082.6M on revenue up 1.5%, diluted earnings per share went from $1.65 to $2.58, and the business converted $1,006.8M of operating cash flow into $807.5M of free cash after $199.3M of capital spending. Against a market value of $5,772.3M that is a 14.0% free cash flow yield. Management spent $416.4M on buybacks in the year and paid $268.4M of dividends, $1.10 a share declared, which together return 11.9% of the market capitalisation annually, and total borrowings fell from $6,371.6M at the end of December to $5,770.4M at the end of June. The reason the multiple is 9.0 times rather than 15 is the balance sheet. Net debt is $4,814.4M, 2.85 times EBITDA, the current ratio is 0.81, and goodwill and intangibles are 67.2% of total assets. What a buyer gets is a levered stub sitting on a cash-generative annuity, and the whole argument runs in both directions from there.
Bull Case
Valuation8.98 times trailing GAAP earnings and 6.27 times EV to EBITDA on borrowings, on a business with a 73.7% gross margin. The free cash flow yield on the market capitalisation is 14.0%.
Capital returnThe company bought back $416.4M of stock in fiscal 2026 and paid $268.4M of dividends, against $1.10 a share declared. Combined that is 11.9% of the market value returned in a year, of which 7.2% is buyback and 4.6% dividend.
Share countDiluted shares fell from 263.6M to 249.4M, down 5.4% in one year, and from 272.6M two years ago. The cover count went from 252.0M in October to 242.1M in July.
Operating leverageOperating income rose from $892.7M to $1,082.6M while revenue rose 1.5%, lifting the operating margin from 17.27% to 20.64%. Earnings per diluted share rose 56% to $2.58.
DeleveragingTotal borrowings fell from $6,371.6M at 31 December 2025 to $5,770.4M at 30 June 2026, a reduction of $601.2M in six months, while cash of $956.0M remained on the balance sheet. The balance sheet splits that latest figure into $5,734.5M non-current and $35.9M current.
Bear Case
LeverageNet debt of $4,814.4M is 2.85 times EBITDA and 1.20 times shareholders equity of $4,014.1M. The current ratio is 0.81, so current liabilities of $2,623.3M exceed current assets of $2,117.9M.
Asset qualityGoodwill of $7,327.4M and intangibles of $1,475.0M are 67.2% of the $13,106.5M balance sheet. Tangible book value is deeply negative, so the equity rests on the durability of acquired customer relationships rather than on assets.
Shrinking baseRevenue was $5,769.6M in fiscal 2024, $5,168.4M in fiscal 2025 and $5,246.401M in fiscal 2026. The top line is 9.1% smaller than it was two years ago, and the recovery in the latest year is 1.5%.
Quality of the margin gainThree non-operating cost lines fell alongside the margin. Acquired intangibles amortise on two separate lines, technology-based inside cost of revenues, which fell from $188.8M to $174.6M, and customer-based inside operating expenses, which fell from $321.9M to $288.6M. Together those are $47.5M. Share-based compensation fell a further $24.2M, from $104.8M to $80.6M. That is $71.7M of the $189.9M rise in operating income, so 37.7% of the improvement is the fading of acquisition accounting and a smaller equity charge rather than a better business. The remaining $118.2M is genuine.
Concentration of the outcomeBecause the equity is a stub above $4,814.4M of net debt, small changes in EBITDA move it a long way. A fall to $1,500M of EBITDA at 5.0 times leaves $11.09 a share. A rise to $1,800M at 8.5 times leaves $43.31. The leverage that makes the yield large makes the range wide.
Key Metrics
Market Cap
$5.77B
SEC filings
Enterprise Value
$10.59B
Calculated from SEC filings
Revenue (TTM)
$5.25B
SEC filings
P/E (TTM)
9.0×
SEC filings
Forward P/E
–
close of 1 September 2026
P/S (TTM)
1.1×
SEC filings
P/B
1.4×
SEC filings
EV/EBITDA
6.3×
Calculated from SEC filings
PEG
–
Calculated from SEC filings
Revenue Growth
1.5%
SEC filings
Gross Margin
73.7%
SEC filings
Operating Margin
20.6%
SEC filings
Net Margin
12.3%
SEC filings
Free Cash Flow
$808M
SEC filings
FCF Yield
14.0%
Calculated from SEC filings
Debt / Equity
1.4×
SEC filings
Current Ratio
0.8×
SEC filings
Short Interest
6.0%
Q1 fiscal 2026 Form 10-Q, cover page and condensed consolidated balance sheets
Institutional Own.
–
Q1 fiscal 2026 Form 10-Q, cover page and condensed consolidated balance sheets
Insider Own.
–
Q1 fiscal 2026 Form 10-Q, cover page and condensed consolidated balance sheets
Shares Out.
242.1M
SEC filings
Float
–
Q1 fiscal 2026 Form 10-Q, cover page and condensed consolidated balance sheets
Valuation
Price vs Fair Value
Bear$11.09
Base$28.97
Bull$43.31
Now $23.84
Bear Case
$11.09
The revenue decline resumes and EBITDA falls from $1,689.7M to $1,500M. A levered software business with a shrinking base is paid 5.0 times, giving an enterprise value of $7,500M. Less net debt of $4,814.4M, that is $2,685.6M of equity over 242.126739 million shares.
Base Case
$28.97
EBITDA holds at the $1,689.7M the trailing year produced and the market pays 7.0 times rather than the 6.27 times it pays today, which is still below where unlevered enterprise software trades. Enterprise value $11,827.9M, less net debt of $4,814.4M, is $7,013.5M over 242.126739 million shares. Deleveraging alone moves this number without any multiple change.
Bull Case
$43.31
Revenue stabilises, the cost programme holds and EBITDA reaches $1,800M. On a settled balance sheet nearer 2.5 times net debt the market pays 8.5 times, an enterprise value of $15,300M. Less net debt of $4,814.4M, that is $10,485.6M over 242.126739 million shares. This case sits above the $27.95 mean of eleven published targets.
DCF Summary
DCF awaiting Phase 2+
Discounted cash-flow model is built once research reaches the deep-research stage.
Historical Multiples
Multiple history pending
This section is being deepened.
Peer Comparison
| Ticker | Mkt Cap | P/E | P/S | EV/EBITDA | Rev Growth | Gross Mgn | Net Mgn |
|---|---|---|---|---|---|---|---|
| OTEX | $5.77B | 9.0× | 1.1× | 6.3× | +1.5% | 73.7% | 12.3% |
| RMNI | $0.49B | 67.0× | 1.1× | 14.4× | – | 60.1% | 1.7% |
| RPD | $0.81B | 36.1× | 0.9× | 25.5× | – | 69.7% | 2.6% |
Financials
| Line Item | FY2025 | FY2026 | YoY |
|---|---|---|---|
| Total revenue Still 9.1% below the $5,769.6M of fiscal 2024 | $5,168.4M | $5,246.4M | +1.5% |
| Gross profit Gross margin 72.25% to 73.74% | $3,734.3M | $3,868.5M | +3.6% |
| Operating income Margin 17.27% to 20.64% | $892.7M | $1,082.6M | +21.3% |
| Amortisation of intangibles A falling charge from earlier acquisitions, which lifts operating income without improving the business | $321.9M | $288.6M | -10.3% |
| Share-based compensation Down $24.2M, a second cost line whose decline flatters the margin | $104.8M | $80.6M | -23.1% |
| Income before taxes | $482.1M | $858.9M | +78.2% |
| Net income Net margin 8.43% to 12.26% | $435.9M | $643.0M | +47.5% |
| Diluted EPS Helped by a 5.4% smaller diluted share count | $1.65 | $2.58 | +56.4% |
| Diluted shares | 263.6M | 249.4M | -5.4% |
| Line Item | 30 Jun 2026 | Note |
|---|---|---|
| Cash and equivalents | $956.0M | Down from $1,271.4M at 31 December 2025 |
| Total borrowings | $5,770.4M | The balance sheet caption Long-term debt reads $5,734.5M, plus $35.9M shown as the current portion |
| Net debt | $4,814.4M | Borrowings less cash. Operating leases of $202.0M are excluded |
| Total assets | $13,106.5M | Of which goodwill $7,327.4M and intangibles $1,475.0M |
| Shareholders equity | $4,014.1M | Tangible book value is negative once goodwill is removed |
| Current ratio | 0.81 | Current assets $2,117.9M against current liabilities $2,623.3M |
| Line Item | FY2025 | FY2026 | YoY |
|---|---|---|---|
| Operating cash flow | $830.6M | $1,006.8M | +21.2% |
| Capital expenditure Taken from the cash flow statement for the trailing year | n/a | $199.3M | – |
| Free cash flow 14.0% of the market capitalisation | n/a | $807.5M | – |
| Share repurchases A second consecutive year near $415M | $413.3M | $416.4M | +0.8% |
Fiscal years end 30 June. Every figure below is taken from the Form 10-K for fiscal 2026 and independently confirmed against SEC XBRL company facts for CIK 0001002638. The two sources agree to the dollar on revenue, gross profit, operating income, net income, operating cash flow, cash and equity. Peer ratios are recomputed from each company's own raw statements on the same date rather than taken from a ratio feed, on the same methodology as the subject row, so the three are comparable. Two columns are exceptions. The market capitalisation comes from the feed's price and share count, and the OTEX row shows what that can cost, since the feed's share count for this company is four months stale. Revenue growth is left empty for the two peers because their fourth quarters are not tagged separately in XBRL, so a trailing year cannot be built for them on the same basis the rest of the row uses, and publishing a fiscal-year growth rate beside trailing-year ratios would repeat the stale-basis error this site has already had to correct once. FY2026 Form 10-K, consolidated financial statements ↗
Catalysts
Aug 6 '26
Earningshigh relevance
Fiscal 2026 closed with operating income up 21.3%
Revenue of $5,246.4M against $5,168.4M and operating income of $1,082.6M against $892.7M. Net income was $643.0M against $435.9M and diluted earnings per share $2.58 against $1.65. Operating cash flow was $1,006.8M.
Aug 6 '26
Balance sheethigh relevance
Debt down $601.2M in six months
Total borrowings were $5,770.4M at 30 June 2026 against $6,371.6M at 31 December 2025, being $5,734.5M non-current and $35.9M current. Cash was $956.0M against $1,271.4M, so roughly half the reduction was funded from the cash balance rather than from the year's free cash flow.
Aug 6 '26
Buybackhigh relevance
A second year of buybacks near $415M
The cash flow statement shows $416.4M paid for its own stock in fiscal 2026 after $413.3M in fiscal 2025 and $150.0M in fiscal 2024, and the capital stock note puts the value of shares actually cancelled at $415.7M, $418.3M and $152.3M across the same three years. The cover share count fell from 252.0M in October 2025 to 242.1M in July 2026.
May 7 '26
Earnings
The third quarter carried $1,254.1M of cash
Cash and equivalents were $1,254.1M at 31 March 2026 with total borrowings of $6,210.5M. The year-end position shows $298.1M of that cash used alongside operating cash flow to reduce borrowings.
Feb 5 '26
Earnings
The share count was still 250.6M in January
The second-quarter cover reported 250,602,777 shares outstanding as of 30 January 2026. By the 10-K cover on 31 July 2026 that was 242,126,739, a reduction of 8.5 million shares in six months.
Risks
| Risk | Category | Severity | Probability | Impact on Thesis |
|---|---|---|---|---|
| Net debt of $4,814.4M is 2.85 times EBITDA and the current ratio is 0.81. | Balance sheet | High | Certain | Current liabilities of $2,623.3M exceed current assets of $2,117.9M. The business generated $1,006.8M of operating cash flow in the year, so the position is serviceable out of cash flow rather than out of working capital, but it leaves no cushion if that cash flow falls. The equity trades at nine times earnings for that reason and no other. |
| Goodwill and intangibles are 67.2% of total assets. | Asset quality | High | Certain | Goodwill of $7,327.4M and intangibles of $1,475.0M sit against total assets of $13,106.5M and equity of $4,014.1M. Any impairment charge would write down equity directly, and on a revenue base that has fallen 9.1% in two years the impairment test is not a formality. |
| Revenue is 9.1% below the fiscal 2024 level. | Demand | High | Certain | The top line went from $5,769.6M to $5,168.4M to $5,246.401M. The latest year grew 1.5%, which is one year of stabilisation against two of decline. The base case on this page assumes that stabilisation holds, and nothing in the filings proves it will. |
| About 30% of the margin improvement came from two declining cost lines. | Earnings quality | medium | Certain | Acquired intangibles amortise on two lines, not one. Technology-based amortisation inside cost of revenues fell $14.2M and customer-based amortisation inside operating expenses fell $33.3M, so the amortisation relief is $47.5M rather than the $33.3M the operating expense line alone shows. With share-based compensation down a further $24.2M that is $71.7M of the $189.9M rise in operating income, or 37.7%. Amortisation runs off on a schedule set by past deals, so that portion of the margin gain repeats until the schedule ends and then stops. The other $118.2M is operating improvement. |
| Roughly half the debt reduction was funded from the cash balance. | Capital allocation | medium | Certain | Long-term debt fell $601.2M between December and June while cash fell $315.4M over the same window, from $1,271.4M to $956.0M. Drawing the cash balance down is a one-time source. Sustaining the pace of deleveraging from here has to come from free cash flow, which is $807.5M a year before the $416.4M of buybacks and the dividend. |
| The equity is a levered stub, so the outcome range is wide. | Valuation | medium | Certain | Net debt is 83% of the market capitalisation. A move in EBITDA from $1,689.7M to $1,500M at a lower multiple gives $11.09 a share and a move to $1,800M at a higher one gives $43.31. The same leverage that produces a 14% free cash flow yield produces a four-fold spread between the cases. |
| The capital return competes with the deleveraging. | Capital allocation | medium | Likely | Free cash flow of $807.5M against $416.4M of buybacks and $268.4M of dividends paid leaves $122.7M a year for debt reduction if both are maintained. Management can retire debt faster or keep returning cash, and the filings do not commit to which. |
| The 52-week range here does not match the data feed. | Data | Low | Certain | The feed reports a 52-week high of $39.90. The daily price series for the year to 1 September 2026, 251 sessions, has an intraday high of $38.70 on 15 October 2025 and a closing high of $38.49 on 28 October 2025. The page uses $38.70, so the stock is 38.4% below its high rather than the 40.3% the feed would give. The low agrees to a cent, $19.77 intraday on 9 April 2026 against the feed's $19.78. |
| No forward earnings multiple is published here, on purpose. | Data | Low | Certain | The data feed reports a forward price to earnings ratio of 5.59, which implies earnings per share of $4.26 against the $2.58 the company actually reported for fiscal 2026 under GAAP. That is a 65% increase on a business whose revenue grew 1.5%, so the figure is an adjusted earnings estimate divided into a GAAP share price. Placing it beside the trailing 8.98 would suggest the multiple nearly halves next year on the same basis, which is not what it means. The field is left empty rather than filled with a number that is not comparable. |
| The published share count from a market data feed is four months stale. | Data | Low | Certain | The feed reports 242,662,360 shares, which is the third-quarter cover count as of 1 May 2026. The 10-K cover reports 242,126,739 as of 31 July 2026 and the balance sheet 242,126,460 at 30 June 2026. This page uses the 10-K cover, so the market capitalisation here is $5,772.3M rather than the $5,785.1M the feed implies. The difference is 0.22% and it moves every per-share figure. |
Technical Snapshot
52-Week Range
$20.01$23.95$39.69
RSI (14)
47
neutral
50-Day MA
$23.93
+0.1%above
200-Day MA
$25.61
-6.5%below
Avg Vol (30d)
1.7M
+1%vs average
Support Levels
Resistance Levels
Technical inputs: SEC filings. closing prices, 252 sessions to the last close; average volume over the last 30 sessions
Ownership & Insider Activity
Institutional Holdersvia Q1 fiscal 2026 Form 10-Q, cover page and condensed consolidated balance sheets
Institutional holder details unavailable
This research record does not include a holder-level table.
Insider Activity
There were 242,126,739 shares outstanding on the fiscal 2026 Form 10-K cover as of 31 July 2026, against 242,126,460 on the balance sheet at 30 June 2026 and 252,011,071 on the first-quarter cover in October 2025, that last figure from the Q1 fiscal 2026 Form 10-Q rather than the annual report. The company states it repurchased and cancelled 14,761,123 shares for $415.7M in fiscal 2026, inclusive of 2% Canadian excise tax, which is an average of $28.16. That $415.7M is the value of the shares cancelled and differs from the $416.4M of cash the cash flow statement shows leaving the business for repurchases in the same year, which is the figure used for the yields above. The two measures are both from this filing and are not interchangeable, so the share count is divided into the one that matches it. The cover count fell by only 9,884,332 over the same window because shares were issued back out for compensation. The average paid sits 18% above the $23.84 close, and the two prior years were dearer still at $28.80 and $30.02, so the buyback has been running into a falling price rather than waiting at the bottom of it. Short interest is 5.99% of the float on the market data used here. The public float was $8.1B at 31 December 2025 on the 10-K cover, which is above the current market capitalisation because the stock has fallen since that measurement date. Minority interests are immaterial at $2.0M, so consolidated and attributable earnings are the same figure here, unlike a joint venture operator.
Detailed insider transactions unavailable
This research record does not include a transaction-level table.
Peer Comparison
| Ticker | Mkt Cap | P/E | P/S | EV/EBITDA | Rev Growth | Gross Mgn | Net Mgn |
|---|---|---|---|---|---|---|---|
| OTEX | $5.77B | 9.0× | 1.1× | 6.3× | +1.5% | 73.7% | 12.3% |
| RMNI | $0.49B | 67.0× | 1.1× | 14.4× | – | 60.1% | 1.7% |
| RPD | $0.81B | 36.1× | 0.9× | 25.5× | – | 69.7% | 2.6% |
Recognizable sector comparables. Source basis: SEC filings; lowest multiple in each column highlighted. Loss-making peers show no P/E.
Research Notes
2026-09-02FY2026 Form 10-K cross-checked against SEC XBRL company facts
Both sources agree, which is not the usual result
Revenue, gross profit, operating income, net income, operating cash flow, cash and shareholders equity were each computed twice, once from the raw statements and once from SEC XBRL company facts for CIK 0001002638. All seven agree to the dollar. Revenue $5,246,401,000, gross profit $3,868,461,000, operating income $1,082,597,000, net income $643,022,000, operating cash flow $1,006,817,000, cash $956,024,000 and equity $4,014,104,000, identical on both sides. That matters because the screen that surfaced this company reported a free cash flow yield of 23.6% from a pre-computed ratio field, against the 14.0% both primary sources support. The ratio field was wrong by 1.7 times on a name where the underlying statements were not.
2026-09-02Recomputed from the FY2026 Form 10-K
Where the margin actually came from
Operating income rose $189.9M, from $892.7M to $1,082.6M, on revenue up $78.0M. Three cost lines account for $71.7M of that. The company amortises acquired intangibles on two separate lines and only one of them sits in operating expenses. Technology-based amortisation inside cost of revenues fell from $188.8M to $174.6M and customer-based amortisation inside operating expenses fell from $321.9M to $288.6M, together $47.5M as the schedules from earlier acquisitions run off. Share-based compensation fell from $104.8M to $80.6M, a further $24.2M. None of it reflects a customer paying more or a product costing less to deliver. The remaining $118.2M is real operating improvement, a 13.2% rise on the prior year's operating income. Reading only the operating expense amortisation line would put the deal-accounting share at 30% instead of the 37.7% both lines give.
2026-09-02Recomputed from the FY2026 Form 10-K and the interim filings
How the deleveraging was funded
Total borrowings were $6,371.6M at 31 December 2025, $6,210.5M at 31 March 2026 and $5,770.4M at 30 June 2026, a reduction of $601.2M over six months. Each is the current and non-current portions together, which at the June date are $35.9M and $5,734.5M. Cash over the same period went from $1,271.4M to $1,254.1M to $956.0M, a fall of $315.4M. So slightly more than half the debt reduction was funded by running the cash balance down rather than out of the period's free cash flow. Using an over-funded balance sheet that way is legitimate and also not repeatable. From here the same pace requires roughly $600M a year of free cash flow directed at debt, against $807.5M generated and $416.4M already committed to buybacks.
2026-09-02Recomputed from the FY2026 Form 10-K
Why the scenario range is so wide
Enterprise value is the market capitalisation of $5,772.3M plus net debt of $4,814.4M, which is total borrowings of $5,770.4M, current and non-current together, less cash of $956.0M, giving $10,586.7M. Operating lease liabilities of $63.6M current and $138.4M non-current are excluded, because EBITDA is struck after rent and counting the lease as debt would charge twice for the same obligation. On the including basis enterprise value would be $10,788.7M and the EBITDA multiple 6.39 rather than 6.27. Net debt is 83% of the market capitalisation, so the equity is the thin end of the capital structure. EBITDA of $1,689.7M is operating income of $1,082.6M plus depreciation and amortisation of $607.1M. At 6.27 times today, one turn of multiple is worth about $7 a share on 242.1 million shares, which is 29% of the price. That arithmetic, not a view on the software market, is why the bear and bull cases sit four times apart.
Sources
Open Text Corporation valuation questions
Is Open Text Corporation (OTEX) stock undervalued?
Against the fair value estimate shown on this page, Open Text Corporation trades below: $23.84 today versus a $28.97 estimate, about +22%. The methodology and per-scenario sources are set out in the Valuation section. Treat it as research, not advice, and do your own homework.
What is Open Text Corporation's fair value?
The fair value estimate shown for OTEX is $28.97. Its valuation scenarios span bear $11.09, base $28.97, bull $43.31. See the Valuation section for the basis of each.
What is Open Text Corporation's market cap?
Open Text Corporation (OTEX) has a market capitalization (its market value, often searched as "net worth") of $5.77B, and an enterprise value of $10.59B.
What is the bull and bear case for OTEX?
Valuation scenarios: bull $43.31, base $28.97, bear $11.09. Each reflects a distinct set of assumptions; the drivers and sources are detailed in the Valuation section above.