Objective Corp reported results this morning. From their presentation:

I think this was a solid result for OCL with them hitting their ARR target of 15% growth following a strong 2H.

Software revenue is now at 100% subscription which should drive further growth. Revenue growth was a bit subdued compared to last year but this should increase substantially in the coming FY given that ARR for each segment grew by more than 10% each which should see this reflected in revenue growth for the coming year.

Cash flow perhaps on the weaker side with less cash receipts compared to last year, may be related to their transition to 100% subscription model. However the cash on hand is still very strong and management did say they may take the opportunity for further bolt on acquisitions.

Haven't had a chance to listen to the earnings call yet but will go through it when/if the recording is up.

Disc: Held IRL and on Strawman.

Objective Corporation Limited (OCL) reported 1H FY25 results last week. From their presentation:

Results were probably a little weak although they still believe they are on track to hit their target of 15% ARR growth by the end of FY25. Cash flow was also on the weaker side with cash receipts less than pcp but this may be related to the timing of cash payments as a result of the transition to SaaS.

The report also did state that they may look at some non-organic growth opportunities given their balance sheet flexibility and have been doing some due diligence on a few opporunities.

Given that this company has historically been run very well under CEO Tony Walls I'm happy to chalk this half down as an odd weaker half and will wait until the full year results for further analysis.

Disc: Held IRL and on Strawman.

Objective Corporation released their FY24 results this morning. From their presentation:

Overall a solid result headlined by a very strong cash flow compared to FY23. On my numbers FCF came in around $37.5m compared to $20m in FY23.

Remember that OCL changed their accounting policy to only expense 50% of R&D in the P&L which makes the comparison of NPAT between the 2 periods a bit misleading. However, on a like for like basis, I have NPAT using the old method of accounting of around $27.2m which is still 29% higher than FY23 ($21.1m).

In his letter to shareholders, CEO Tony Walls indicated that although they did not quite reach their targets of 15% growth in ARR, they were also more efficient in deployment of their services which in term lead to a decrease in costs. They attributed this miss to a softening in economic conditions in NZ. They do think that going forward, a 15% growth in ARR is the target.

Disc: Held IRL and on Strawman.

Objective Corp reported last week. From their presentation:

Remember that OCL changed accounting policies in terms of expensing R&D. Changing from expensing 100% to 50%.

In 1H FY24, total R&D spend for $13.557m with $7.2m being expensed through the P&L. On a comparative basis, NPBT would have been around $13.3m compared to $10.7m in 1H FY23 had the R&D expense been expensed in the period. NPAT would be around flat only due to an increased tax expense in the current period.

Personally I thought this result was pretty good although I think it will be better to wait until the full year results for a better comparison given the seasonality of OCL's customers (public sector customers usually pay during the 2H).

In the shareholder letter from CEO Tony Walls, the outlook provided was strong with management targeting ARR growth of 15%. They also provided an update in regards to potential acquisitions with them having done some due diligence on a few potential candidates but ultimately deciding to focus on building the business organically.

Disc: Held IRL and on Strawman.

Forgot to do a Straw for the results which came out a few weeks ago and saw no one else had done one either.

Another solid HY result for OCL. Results from their presentation below:

NPAT came in slightly above what they guided for in January but this was excluding $1.4m which they had to pay as part of a NZCC Settlement so reported NPAT was around 8.6m which is only a 20% increase compared to PCP.

I am willing to maintain my valuation from January of $12.30 as I believe this is a high quality company that is still growing its top and bottom line at good rates however the current price is still a bit rich for me so am waiting patiently for a good entry point.

Disc: Not held