Canada’s technology sector continues to hang tough in 2023 and outperform the broader market after coming from a severe selloff in 2022. The year-to-date gain is 25.04% compared to the TSX’s +6.48%. Individually, a pair of AI stocks are red hot and seems poised to deliver superior gains this year and beyond.
Watch out for Open Text (TSX:OTEX) and Docebo (TSX:DCBO) this month, given their positive returns of 31.07% and 14.98% thus far. The former is scaling in a growing Information Management market, while the latter is uses artificial intelligence to transform e-learning.
Leading information management platform
Open Text provides comprehensive and scalable cloud-based solutions that tackle today’s demanding business challenges and complex digital transformation programs. The $14.12 billion Software-as-a-Service (SaaS) company has five clouds catering to various industries.
In the second quarter (Q2) of fiscal 2023 (three months that ended December 31, 2022), total revenue and annual recurring revenue (ARR) increased 2.4% and 3.6% year over year to $897 million and $725 million. Notably, net income soared 192.77% to $258.48 million versus Q2 fiscal 2022.
Its chief executive officer (CEO) and chief technology officer Mark J. Barrenechea said, “Open Text delivered a superb second quarter with strong cloud bookings and revenues, establishing our eighth consecutive quarter of cloud organic and ARR organic growth in constant currency.”
Open Text bought Micro Focus International, a leading mission-critical software technology and services provider, early this year. Management expanded its offerings with Micro Focus products, including Cybersecurity, Application Automation and Modernization, AI & Analytics, and Digital Operations Management.
Barrenechea said, “This new generation of Information Management software will help organizations accelerate their digital transformation and drive growth while reducing costs.” Open Text’s executive vice president and chief financial officer Madhu Ranganathan added, “We enter 2023 with tremendous momentum and an expanded Information Management market.
Open Text is not only a dividend-paying tech stock but also a Dividend Aristocrat. It earned the status owing to 10 consecutive years of dividend increases. At $52.21 per share, the dividend yield is a decent 2.47%. Management intends to maintain its dividend program as it believes in returning value to its shareholders. However, any dividend declaration is at the discretion of the board of directors.
AI-powered learning platform
Corporate e-learning solutions were “nice to have” before but are now a core strategy of most organizations. Docebo transitioned from an open-source model into a cloud-based SaaS platform model in 2012. Today, the $1.69 billion AI-powered learning management company is transforming corporate e-learning into a competitive advantage for enterprises.
Docebo Learn LMS, a cloud-based learning platform, is one of the learnings suites. The cloud platform also includes an AI-based learning content creation tool (Docebo Shape) and an off-the-shelf learning content that partners with content specialists (Docebo Content).
According to management, Docebo will keep embracing new technologies, as it seeks to redefine the way that modern workforces learn. In 2022, total revenue (subscription and professional services) rose 37.1% year over year to US$142.9 million, while net income reached US$7 million compared to a net loss of US$13.6 million in 2021.
Claudio Erba, Docebo’s founder and CEO, said, “Our focus remains on driving long-term growth and profitability across economic cycles, supported by continued innovation.” This tech stock trades at $51.44 per share.
Open Text and Docebo should rise to prominence in the years ahead. Both AI companies will become highly valuable in the markets they serve.