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WATERLOO, ON - OpenText™ (NASDAQ:OTEX), (TSX:OTEX), a global leader in information management software and services with a market capitalization of $6.53 billion, has expanded its share repurchase program, announcing an increase of $150 million, bringing the total to $450 million. According to InvestingPro analysis, the company appears undervalued based on its Fair Value metrics, while maintaining an attractive dividend yield of 4.15%. The company’s normal course issuer bid (NCIB), which allows for the purchase and cancellation of its common shares, retains the maximum number of shares at 21,179,064, as previously sanctioned by the Toronto Stock Exchange (TSX).
The enhancement reflects OpenText’s confidence in its business model and its commitment to delivering shareholder value, supported by impressive gross profit margins of 76.16% and a modest P/E ratio of 10.23. The NCIB has been active since August 7, 2024, and is set to conclude on August 6, 2025, unless the maximum share repurchase limit is reached beforehand. As of now, OpenText has bought and canceled about 8.9 million shares at an approximate total value of $258 million.
To facilitate the repurchase of shares, especially during periods when the company typically would not be active in the market due to regulatory restrictions or self-imposed blackout periods, OpenText has established an automatic share purchase plan (ASPP) with its broker. The ASPP, which adheres to TSX rules and applicable laws, will become operational on March 14, 2025, and will continue until either the NCIB limit is met, it reaches its end date in August 2025, or if the company decides to terminate the plan earlier.
The transactions under the ASPP will be included in the NCIB count, and the company affirms it currently holds no material undisclosed information. OpenText’s move to augment its share repurchase program underscores its belief in the company’s ability to generate robust margins and cash flows.
This announcement is based on a press release statement from OpenText. The company is recognized as a frontrunner in offering comprehensive solutions for business cloud, artificial intelligence, and technology needs, helping organizations tackle intricate global challenges. For more information on OpenText’s financial strategies and offerings, interested parties can visit the company’s website. For comprehensive financial analysis and additional insights, investors can access detailed metrics and 12 more exclusive ProTips through InvestingPro, which offers a complete research report on OpenText among its coverage of 1,400+ US stocks.
In other recent news, OpenText has announced significant leadership changes with the appointment of Chadwick Westlake as the new Chief Financial Officer and Savinay Berry as the Chief Product Officer. Westlake, who will assume his role in March 2025, brings extensive experience from EQB Inc. and Scotiabank, and is expected to focus on driving growth and shareholder value. Meanwhile, Berry, previously with Vonage, will spearhead product innovation and growth, emphasizing AI and secure data management. Additionally, UBS initiated coverage on OpenText with a Neutral rating, citing concerns about the company’s revenue growth prospects despite customer satisfaction with its product offerings. UBS noted that the company is experiencing mostly flat renewals, which raises questions about its near-term revenue trajectory. The firm described OpenText’s valuation as reasonable but not compelling, and expressed a cautious stance until there is more confidence in the company’s growth profile. OpenText’s recent innovations, such as Titanium X and Cloud, are part of its strategy to maintain competitive advantage. These developments reflect ongoing efforts to align with strategic objectives and enhance market position.
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