Interesting to see AFIC purchasing Objective. Sold Wisetech on governance concerns.

Saw this on LinkedIn. Looks like a first win in the UK for their RegWorks product acquired from Itree several years ago.

We’re delighted to welcome the Gambling Commission to the Objective family!

The Commission has selected specialist SaaS regulatory platform, Objective RegWorks, to help digitise and futureproof its regulatory practices across Great Britain.

The partnership will:

- Deliver a flexible and integrated case management solution to support the end-to-end digital journey for gambling licence applicants.

- Modernise and automate processes to reduce regulatory burden and operational costs.

- Futureproof digital activities to support the Commission’s evolving needs

Objective corp is no doubt a very high-quality company with a very aligned CEO who owns a significant portion of the business. Historically, Objective corp has bought back its Shares on market at a very opportune time and they are currently going through a buyback program that intends to buy 10% of outstanding shares on market. Does that mean management thinks business isn't valued appropriately by the market?

So I have analyzed OCL's FY2013 to FY2022 results and put some of my FY2023 and FY2024expected figures to see

Objective Revenue and Free CF graph tells how the company has performed and what my expectation for the next 2 years.

Let's see how market sentiment has shifted for this company.

Now, Even for my projection revenue and Net profit for FY23 and FY24, I give Price/Sales = 8 and PE = 40 valuation comes in between $9.13 and $11.32 ( Not sure if the market will give this valuation in the future - but OCL is a very high-quality company run by high-quality management with recurring revenue serviced to very defensive customers and expensing 100% of R&D (~20% of Revenue) deserve premium )

So I am a bit baffled that Objective is buying back its share in the range of ~$12.00 - $12.80. It will be interesting to see how the next couple of years unfold and will give us insight as to how to value such a company.

PS: I has similar thought when $PME were buying back their shares at ~$25 in 2019. look at it today - even in a bear market, it returned 100%.

Objective announced that they are expecting slowdown in revenue growth and margin compression for fy23 and i am not sure if this is going to be the story of FY23 for the most companies.. but it does look increasingly that way or this is probably because of Objective's strategic direction of offloading implementation to partners instead of inhouse for scale.?

Objective is very high quality company with very aligned founder in Tony. Although it is trading on very high multiple for single digit growth but again they are expensing 100% of their R&D.

Short term pain ahead for long term gain? May be one to watch out and dust off valuation for potential opportunity ?

Objective Corp is a capital light, founder led business with a long history of delivering outstanding shareholder returns.

Clients tend to be highly sticky governement departments. Around half of revenue recurring in nature. Indeed the business appears to be rather defensive (sales and earnings grew over the GFC) and is extrenely capital light. That enables the business to fund growth (it has a long history of significant -- and fully expensed -- R&D) as well as return a good deal of profit back to shareholders (Payout ratio tends to be between 50% and 75%)

The founder and CEO owns the vast majority of shares, is strongly aligned to shareholder interests and has many decades of experience as a successful capital allocator.

The company has no net debt and strong operating cash flows.

Shares are quite illiquid, but certainly one to consider for a long term hold.