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Objective Corporation (ASX:OCL) share price on watch: Big HY21 profit growth revealed

The Objective Corporation Limited (ASX: OCL) share price will be on watch today after reporting large growth in its FY21 first half result.

Strong first half of FY21

Objective Corporation has released a trading update today based on unaudited management accounts for the first half of FY21.

Revenue is expected to be 40% higher to $46.5 million. EBITDA (EBITDA explained) is expected to show growth of 74% to $11.8 million. Net profit after tax (NPAT) is expected to show an increase of 70% to $7.2 million.

Annual recurring revenue (ARR) went higher by 30% to $70.1 million. Perpetual right to use (upfront licence) fees continued to decline as a percentage of revenue, representing only 3.6% of total revenue (it was 7.4% in the first half of FY20).

The research & development (R&D) investment – which is 100% expensed – went higher by 45%. The company said that significant investing in innovation remains at the heart of its economic model. The R&D investment represented 24% of revenue.

The company finished the half-year with a cash balance of $27.7 million.

Objective Corporation said that its suite of products will be important for helping customers adjust to the new world.

Management comments

Objective CEO Tony Walls said: “Since 1 July, much energy and focus has gone into the successful integration of Itree with the Objective family; during which time we were also successful with an unprecedented number of new Regworks customers with a contract value of approximately $7.5 million. 

Another significant achievement was the go-live of the cloud Objective ECM implementation at the City of Gold Coast for 4,000 users. This milestone on such a major project for Objective was a testament to the commitment of both organisation’s people, during a period in which we worked from home and leveraged our skilled team from around the globe.

The outstanding results outlined in this trading update speak for themselves and demonstrate that we continue to build a durable business with significant underlying strength.”

Summary thoughts

Objective Corporation is a quality business and has a lot of growth potential. However, it’s also priced highly in terms of its price/earnings ratio. But most good businesses are priced highly these days. I think it could be worth a small buy today, and more accumulation on price weakness or further proof that its strategy is working.

Other ASX growth shares that are doing well could be worth a place in your portfolio such as Pushpay Holdings Ltd (ASX: PPH).

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At the time of publishing, the author of this article does not have a financial or commercial interest in any of the companies mentioned.

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