Objective (ASX:OCL) reported its first-half FY2026 results with management emphasizing continued subscription-led growth, expanding cloud adoption and what it described as a growing opportunity to deliver AI-driven productivity gains for government and regulated-industry customers.
Financial snapshot and subscription mix
Chief executive Tony Walls and chief financial officer Ben Tregoning said the company has completed its transition to 100% subscription-based software revenue, with subscription revenue growth of 13% in the first half. Management also highlighted an accelerating shift to cloud, noting that 24% of subscription revenue was on cloud and that SaaS revenue grew 24%.
- Revenue: $67 million
- ARR: $120 million
- Adjusted EBITDA: $26 million
- Adjusted EBITDA margin: 40%
- Operating cash flow: $22 million (up 72% on the prior comparable period)
- Net profit after tax: $19 million
- Cash balance: $95 million (after dividends and the acquisition of Isovist)
- Interim dividend: $0.13 per share (unfranked)
Walls also pointed to the company’s “Rule of 40” metric, saying Objective’s combination of adjusted EBITDA margin and ARR growth equated to more of a “Rule of 50” outcome in the half (40% margin plus 12% ARR growth, as presented).
AI positioning: productivity, records, and cost control
Walls spent a significant portion of the presentation outlining how the company sees AI affecting its business. While acknowledging that AI-assisted coding tools are improving developer efficiency, he argued “coding is a really small part” of what makes up an enterprise SaaS provider and said domain expertise, systems architecture and end-to-end customer delivery remain critical.
Objective framed AI’s primary near-term value as productivity for customers, particularly in environments where records management, workflow traceability, access control and auditability are required. Walls said Objective’s software is underpinned by “systems of record” and “systems of workflow record,” which he believes positions the company to support “private AI” use cases and to reduce the risk of “hallucination” by querying “highly cleansed records.” He also emphasized the need for “systems of AI record,” including what data was used for inference, whether users had access privileges to that information, and audit records of AI-generated answers.
Management highlighted Objective Intelligence (OI), described as a central AI layer connecting Objective applications to model and service providers. Walls said the platform is model-agnostic and designed for cost control, citing an example where the company “processed 4 billion tokens at an aggregate cost of AUD 4,000.” He added that OI also includes on-prem AI capability using local GPUs, though that element was not shown in the core infographic presented.
Walls said Objective is already delivering AI outcomes for customers, citing use cases including support for an inquiry for a large customer in Scotland and data cleansing for Microsoft Copilot for the Welsh Government, along with private retrieval-augmented generation (RAG) and redaction-based implementations.
Business line performance and operational highlights
Objective reported growth across its three operating lines, with management providing percentage growth rates versus the first half last year: Information Intelligence (formerly content solutions) up 23%, Planning and Building up 38% (helped by the IsoPlan acquisition), and Regulatory Solutions up 14%.
Information Intelligence: Walls said sales revenue rose 5% while ARR grew 10%. He described accelerating migration from on-premises deployments to the Nexus Cloud platform, noting more than 20,000 users and presenting customer case studies showing cloud “uplift” outcomes of about 1.5x to 2.5x versus on-prem economics, with management suggesting the average was “north of certainly the 2x case.” The company also discussed AI work in 3Sixty, new features in Objective Connect including digital signatures and tag-based access control (which Walls said has supported entry into export control markets), and continued development in Objective Keystone focused on climate-related disclosure and fund management documentation.
Planning and Building: Objective said sales revenue increased 39% and ARR rose 29%. Walls highlighted rapid migration in New Zealand ahead of a June 30 sunset date for “GoGet,” saying 40 councils are live on “Builder and Migration,” representing more than 50% of New Zealand councils by number. The company said it moved all councils to an aligned pricing model from June 30. For Australia, Walls said Objective Build is on track for go-live “at the end of next month,” and that foundation partners have expanded beyond New South Wales to include Queensland, Victoria and Western Australia. He also said Isovist has been rapidly integrated and described it as another example of the company’s M&A “playbook.” Remote inspections were also rolling out across New Zealand, with Walls citing the first 15 councils either going live or contracting.
Regulatory Solutions: The company said sales revenue rose 8% and ARR increased 9%, with Walls characterizing performance as “slightly softer with a bias to the second half.” He highlighted recent IRAP certification in Australia as supportive of federal government pipeline opportunities. Objective also noted the UK Gambling Commission go-live as its first high-profile reference site in the UK for RegWorks, and pointed to engagement with other gambling regulators internationally. Additional examples included the New Zealand Firearms Registry receiving positive community feedback and the Victorian Social Services Regulator achieving 98% of registrations online within statutory timelines.
Outlook: ARR growth range, onboarding pace, and R&D stance
Looking ahead, management reiterated its longer-term ARR growth target of 15% but said current ARR growth is tracking 10% to 14% on a constant-currency basis. Walls said the company is taking a more conservative approach to onboarding new Build Australia customers in Q4, prioritizing successful implementations for the first three customers—described as a “First Five” concept adapted to “first 3” for Build Australia—rather than pushing for maximum Q4 ARR. He described this as “a slight slowdown to speed up in FY27.”
On R&D, Objective reported spending $17 million, up 28%, with R&D at 28% of software revenue (down from around 30% previously). Walls said the company is not planning to cut R&D due to AI coding tools; instead, it expects to use productivity gains from AI-assisted development to deliver a backlog of innovation faster “with the same team.”
In Q&A, management acknowledged foreign exchange headwinds, with Tregoning saying currency movement was a negative impact worth “a bit over AUD 1 million” in the first half and potentially similar in the second half, contributing to the company’s decision to emphasize constant-currency metrics.
Walls also addressed two items raised by analysts: a small increase in churn (including churn among some Objective Connect customers due to a missing capability that has since been built) and one or two material “move to the cloud” opportunities that management said “should have closed in H1” but did not, with Walls saying he lacked confidence on timing for closure in the second half.
About Objective (ASX:OCL)
Objective Corporation Limited, together with its subsidiaries, supplies information technology software and services in Australia and internationally. It offers Objective 3Sixty to discover, organize, and manage enterprise information; Objective Nexus, a SaaS based solution providing records compliance, enterprise scale information management, and process automation; Objective Inform, which provides document management, records management, office 365, SharePoint governance, reporting insights, and drawings management solutions; Objective Keyplan, an end-to-end solution for the planning policy process; Objective ECM, an information management and process automation solution; Objective Connect, a secure external file sharing application; Objective Redact, a redaction software for security conscious organizations; and Objective GOV365.
