Open Text (OTEX) Stock Forecast & Price Target

Open Text Corporation anticipates a significant increase in free cash flow, forecasted to rise to $889 million next twelve months (NTM) from $682 million trailing twelve months (TTM), reflecting a robust operational performance. The company has demonstrated strong sales momentum, with a 25% year-over-year growth in cloud bookings and a solid cloud net renewal rate of 95%, indicating sustained customer retention and demand. Furthermore, Open Text has reinforced its fiscal year 2025 guidance and highlighted aspirations for continued organic growth of over 4% in the latter half of fiscal year 2025, showcasing a positive long-term outlook for the business.

Open Text Corp is facing a challenging financial outlook, as the company has issued guidance indicating a year-over-year revenue decline of 5% to 8%, which is exacerbated by the previously recognized patent settlement revenue in Q2/24. The company reported a decrease in high-value license deals and noted that cloud bookings growth has significantly slowed to 6% year-over-year, prompting a reduction in FY25 revenue guidance by $130 million. Additionally, operating cash flow in Q1 was notably negative at -$78 million, highlighting potential liquidity challenges despite achieving record cloud bookings.