Open Text Corporation (OTEX) provides a suite of software products and services that assist organizations in finding, utilizing, and sharing business information from various devices. The company offers enterprise content management products that provide content and records management, archiving, and email management and capture solutions, as well as Core, a software as a multi-tenant cloud solution; business process management for analyzing, automating, monitoring, and optimizing structured business processes; and customer experience management products, which offer Web content management, digital asset management, customer communications management, social software, and portal.
Open Text has an interesting history of acquiring technology companies, and integrate them well.
Open Text’s latest report, for the year ended June 30,
Quarterly revenue growth 37% Year on Year.
Annually revenue growth 25% Year on Year.
This indicate the growth is accelerating.
EPS growth year over year ~ 14%.
This company is a collection of many smaller companies, as it keeps buying new companies.
Source (2017.08.03) see slides 37,38 at:
http://files.shareholder.com/downloads/AMDA-267TY1/4848735616x0x952552/96759861-D5E9-4ABC-B4D0-96207B280A9F/OpenText_Q4F17_IR_Consolidated_Deck_FINAL.pdf
A financial analysis states Open Text has 56% upside (2017.06.22)
Read at
https://seekingalpha.com/article/4083398-unknown-mid-cap-canadian-eim-developer-56-percent-upside
We are worried about its outlook, there is not much indication of its growth in the next 1 year.
In another analysis, the author emphasised that
“he (the CEO) skills in which this company excels are in deal making and operations and not in the development of software solutions that are cutting edge. ”
I imagine that all or at least a high proportion of the 35% growth the company reported was a function of the acquisitions. The company still hasn’t generated any noticeable level of organic growth, and that is surely one of the factors that is putting a cap on share valuation.
I think it is important that investors understand the company’s strategy. It is one that has been significantly refined over the years and no longer calls for the cadence of organic growth that had been the case some time ago. Based on the operational record of this company, this strategy is more likely to be realized.
Source (2017.06.11):
https://seekingalpha.com/article/4081331-open-text-oh-organic-growth-gone-much-matter?li_source=LI&li_medium=liftigniter-widget
Open Text is a fast growing software company.
Good to study further for investing into it.
“This quarter, we grew at double digit rates across all revenue lines while generating solid operating cash flow,” said OpenText
CFO
See the latest quarterly report at
http://files.shareholder.com/downloads/AMDA-267TY1/4848735616x0x941732/18BF79BF-D171-4D08-A196-3FF270C1A911/OTEX_News_2017_5_8_Financial_Releases.pdf
CEO:
. M&A is OpenText’s leading growth driver, complemented by organic
growth initiatives
• Proven approach to M&A with 57 completed acquisitions
Open Text is a fast growing software company.
Good to study further for investing into it.