Tuesday, December 14, 2021

An International Equity holding: OpenText Corporation (OTEX, $51.42): “OpenText Outset” By: Tyler Gantz, AIM Student at Marquette University

 OpenText Corporation (OTEX, $51.42): “OpenText Outset”

 By: Tyler Gantz, AIM Student at Marquette University

Disclosure: The AIM Equity Fund currently holds this position. This article was written by myself, and it expresses my own opinions. I am not receiving compensation for it, and I have no business relationship with any company whose stock is mentioned in this article.


  • OpenText Corporation (NASDAQ:OTEX) engages in the design, development, marketing and sales of enterprise information management software and solutions. It includes customer software management, digital process automation and many other technology solutions including consulting/learning services.
  • OTEX announced on November 8th, 2021, that they will be acquiring Zix Corporation, Inc. This is just one of four acquisitions that OTEX has completed over the last three years.
  • With the recent supply chain shortages, businesses of all sizes are turning to the OpenText Business Network Cloud
  • OTEX has recently integrated new solutions for manufactures through their OpenText Compliant e-Invoicing
  • Released recent Q1 results reflecting a cloud-first strategy

Key points: OpenText Corporation has seen a 12% Revenue CAGR over the last 8 years with 81% of that revenue reoccurring annually. With this steady stream of revenue, OTEX is looking to expand their reach and they did just that with the recent acquisition of Zix Corporation.

Zix Corp is a leader in SaaS-based email encryption, threat protection and compliance cloud solutions. OpenText CEO & CTO Mark J. Barrenechea, who has been with the company since 2012, touched on the definite agreement to acquire Zix Corp. Barrenechea said that they will be integrating Zix, as well as other acquisitions products to create a powerhouse data protection and threat management system. This all points to OpenText pursuing a constant growth and innovating their products in an industry that demands it.

OpenText Corp is also looking to expand their cloud-based services. In their most recent earnings report, OpenText touches on their focus of a cloud company expecting revenue from those services to increase 4% in the next fiscal year. Overall, their Q1 report showed revenues beating the estimate as well as other metrics including EBITDA.

The new OpenText Compliant e-Invoicing for manufacturing will help automate invoicing for global manufacturers. It will also empower OpenText’s customers to accelerate cash flow, reduce costs, and help meet government mandates across 48 countries. If you are looking for more information on this and other OpenText products, attend OpenText World 2021 virtually November 16-18!

With the supply chain having a strain on businesses, OpenText is seeing more customers turn to them for help. OTEX has recently been named a leader in IDC MarketScape for supply chain commerce for the second consecutive year. OpenText reaches over one million companies and processed about 26 billion transactions per year. Customers turn to OpenText because they offer a unified integration platform that gives companies the ability to send and receive vital information.

What has the stock done lately?

After the news broke of the new acquisition, OTEX saw an increase in stock price to the highest this month of $52.22, before dropping back down where it sits at $51.42 on November 12th. Overall, throughout the past month, OTEX has seen a price increase of about 2%.

Past Year Performance: OpenText Corp has increased 21.48% in value over the last year. This increase is aided by the markets returning to pre-pandemic prices as well as OTEX adapting to their industry. They peaked in September with a price of $55.25 but they are on the move to reach a similar price soon. 

1 Year Stock Chart vs. Benchmark

Source: FactSet

My Takeaway

With the reliance on data only increasing, more businesses will need support to organize, find, utilize and share business information. All of which OpenText can help them with. OTEX has been able to sustain growth and I see no reason for this to stop. With their organic revenue increasing and with the recent acquisitions, I believe that OpenText has more room to grow and has the possibility to have record high stock prices in the near future.

1 Month Stock Chart

Source: FactSet