Last Update 30 Mar 26
Fair value Decreased 24%Mr. Market Threw a Tantrum. The Toll Bridge Got Wider.
Six months ago, we valued Objective Corp at A$17.68 per share. Today it trades at A$11.50. The stock got cheaper. The business got better. That's the kind of math I like.
What Changed
The business kept compounding. In the first half of FY26, revenue grew 9% to A$66.7 million. Adjusted EBITDA grew faster, 11% to A$25.9 million, which tells you the operating leverage is kicking in exactly as we expected. Total Annualised Recurring Revenue hit A$120 million. Every single dollar of software revenue now comes from subscriptions. The transition is complete. This is an annuity machine.
The balance sheet got even fatter. Net cash stands at A$95.1 million. Zero debt. For a company with an A$1.1 billion market cap, that's nearly 9% of the entire enterprise sitting in the vault doing nothing but giving management optionality. That's a fortress. When other companies are refinancing at punitive rates, Objective Corp is writing cheques from petty cash.
*ROIC >30%, zero debt, 100% subscription revenue. Source: OCL FY25 Annual Report & 1HY26 Half-Year Financial Statements.*
The UK beachhead is real. Six months ago, we flagged the UK as a catalyst. It's materialising. Objective RegWorks has been deployed with the UK Gambling Commission, a genuine proof of concept in a market multiple times the size of Australia. The Scottish Government is running Objective Nexus across 18,500 users. These aren't pilots. These are roots going deep into foreign soil.
Planning & Building exploded. This segment grew ARR 31% in FY25 to A$18.2 million. They bolted on Isovist, a New Zealand planning software firm, for NZ$5.46 million, the kind of surgical, bolt-on acquisition a disciplined allocator makes when the opportunity sits squarely in their circle of competence.
*Three segments, each reinforcing the others. Planning & Building grew 31%, watch this space. Source: OCL FY25 Annual Report.*
What Spooked the Market
The stock has fallen ~20% over the past twelve months, largely because ARR growth in 1HY26 came in at 12%, short of management's aspirational 15% target. The share price hit a 52-week low of A$11.50 while the ASX 200 rallied 11%.
Peter Lynch called this "the Street's attention span", the business is executing on a multi-decade government digitisation cycle, and the market is grading it on a single half-year.
For context: TechnologyOne, the closest ASX peer, trades at ~65x earnings. Objective Corp trades at ~30x. Both sell mission-critical software to governments. Both have deep switching costs. One is priced for perfection. The other is priced like it might have a problem. It doesn't.
*Same sector, same government customers, same switching costs. Half the multiple. Source: Market data as of March 30, 2026.*
What This Means for Our Thesis
The thesis is intact and strengthened. The competitive moat hasn't narrowed — ROIC still exceeds 30%, which is empirical proof that customers aren't leaving and pricing power is real. The 100% subscription transition eliminates the lumpiness that made this harder to value years ago. And the UK market represents a growth runway that wasn't priced in six months ago and certainly isn't priced in today.
Updated Valuation
We've upgraded our methodology from a simple 5-year EV/EBITDA multiple to a rigorous 10-year DCF model, which is now appropriate given the fully recurring revenue base. The DCF conservatively adjusts for capitalised R&D by treating it as capital expenditure, ensuring the free cash flow baseline is not flattered by accounting choices.
*Three scenarios from a 10-year DCF with WACC 9.0%. Target Buy = 25% Margin of Safety applied to Base Case. Source: Author's model.*
At A$11.50, the stock trades at a 14% discount to base-case fair value. That's interesting but not yet compelling under strict discipline. Our target entry — requiring a 25% margin of safety — sits at A$10.03 per share. We're patient. The best investments are the ones you wait for.
*The old fair value of A$17.68 used a simpler 5-year EV/EBITDA methodology. The new A$13.38 reflects more conservative assumptions and a more rigorous 10-year DCF model. The business is better. Our discipline is tighter. Both are good things.*-
IMPORTANT DISCLAIMER: This narrative update is based on information available as of March 30, 2026. It is not financial advice. All financial data and company developments must be independently verified before any investment decision is considered.
Data Sources: OCL FY25 Annual Report, OCL 1HY26 Half-Year Financial Statements, ASX market data (March 30, 2026), TechnologyOne (ASX: TNE) market data (March 30, 2026).
There's a company in Sydney that makes the software local councils use to approve your building permit, the system federal regulators use to track compliance, and the platform 18,500 Scottish Government workers use to manage classified documents every day. You've never heard of it. You've probably interacted with its output without knowing.
Objective Corporation is the plumbing behind modern government in Australia, New Zealand, and increasingly the United Kingdom. When a regulator issues a licence, when a council approves a development application, when a department publishes policy — Objective's software is probably running underneath.
Nobody brags about owning the company that digitises building approvals in Brisbane. That's the appeal. The business does something essential, does it better than anyone else, and makes it nearly impossible for customers to walk away.
Total revenue reached A$123.5 million in FY25. Every dollar of software revenue is now subscription-based — the multi-year transition from lumpy licence fees is done. Annualised Recurring Revenue stands at A$120 million, growing at double digits. Net profit hit A$35.4 million. Return on invested capital exceeds 30%. The balance sheet holds A$95.1 million in net cash and zero debt.
The founder, Tony Walls, has run this company for 35 years and owns 65.5% of it. When two-thirds of the shares are held by the person who built the thing, you don't spend much time worrying about incentive alignment.
*ROIC >30%. Zero debt. 100% subscription revenue. A$95.1M in cash. A$46.3M operating cash flow. Source: OCL FY25 Annual Report & 1HY26 Half-Year Financial Statements.*
Why Customers Don't Leave
Once Objective's software is embedded in a government department — handling classified records, managing regulatory compliance, processing building applications — replacing it means operational chaos. These systems carry security accreditations like Australia's IRAP. They're woven into processes thousands of public servants depend on every morning. The cost of switching isn't just money. It's years of disruption no bureaucracy will volunteer for.
Think of it as a toll bridge. Every document that passes through reinforces the dependency. Every new module a department adopts adds another lane. The subscription fee gets collected with the regularity of a utility bill.
Where the Growth Comes From
Objective doesn't sell one product and move on. It gets into a government department and cross-sells. Content management leads to regulatory compliance (RegWorks), which leads to planning and building approvals (Trapeze, Build). Three segments feeding each other:
*Content Solutions is the foundation. Planning & Building is the fastest mover. Regulatory Solutions is the UK entry point. Source: OCL FY25 Annual Report.*
- Content Solutions: A$85.1M ARR, growing 12%. The core — Objective Nexus (records compliance), Objective Connect (secure file sharing), Objective Keystone (document publishing).
- Regulatory Solutions: A$16.9M ARR, growing 17%. RegWorks and Reach digitise licensing and enforcement for regulators across child safety, environment, and gambling.
- Planning & Building: A$18.2M ARR, growing 31%. Trapeze and Build give municipal planners and building surveyors digital tools for assessment and approval. Augmented by the Isovist acquisition (NZ$5.46M, July 2025).
The 31% growth in Planning & Building has structural legs. When a council adopts the software, every developer and architect interacting with that council has to use the same interface. It creates a localised lock-in that spreads council by council.
Australia and New Zealand are home turf. The UK is where this gets materially bigger. RegWorks is live with the UK Gambling Commission. Nexus is deployed across the Scottish Government. The UK public sector is multiples the size of Australia's. Even partial replication of the domestic playbook extends the growth runway by a decade.
Assumptions
I project ARR compounding at 11.5% for the next five years — below the 12% delivered in 1HY26. Contractual stickiness, cross-selling, and early UK traction support this.
EBITDA margins should hold around 38.5%. The company puts ~28-30% of software revenue back into R&D. It capitalises about half of that, which flatters reported margins. Our valuation corrects for this by treating all R&D as if it were expensed up front.
*Three scenarios, 9.0% WACC. Capitalised R&D treated as capex in all cases. Source: Author's DCF model.*
What Could Go Wrong
The multiple, not the business. At ~30x earnings, the market wants sustained double-digit growth. If ARR permanently settles in the single digits, the stock re-rates to 15-20x. The company would still be profitable and cash-generative — you'd just hold a cheaper stock for a while.
Microsoft. SharePoint and Microsoft 365 are everywhere. If Redmond bundles "good enough" compliance tools into existing platforms, Objective's advantage narrows. The counter: governments have learned the hard way that "good enough" falls apart when a regulator needs an auditable trail in court. Objective built exactly that. Microsoft hasn't.
Tony Walls. 65.5% ownership is great alignment until you think about what happens if he steps back. The business should run without any one person, but market confidence is partly tied to his presence. Succession planning is the one gap in the story.
Geography. Heavy reliance on the Australian and New Zealand public sectors. Austerity budgets or procurement shifts in either market would hurt. UK expansion helps diversify, but it's still early.
Price and Patience
*Both sell government software. OCL trades at roughly half the multiple of its closest ASX peer. Source: Market data as of March 30, 2026.*
At A$11.50, the stock is 14% below our base-case fair value of A$13.38. Not enough. For this quality of business, I want a 25% discount before buying.
Target buy price: A$10.03.
At that price I'm getting a business with 30%+ returns on capital, A$95 million in cash, no debt, a founder with two-thirds of the equity, and government customers who can't realistically leave. That's a toll bridge at a discount.
If it never gets there, I move on. No called strikes.
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DISCLAIMER: Based on information available as of March 30, 2026. Not financial advice. All data must be independently verified before any investment decision.
Sources: OCL FY25 Annual Report, OCL 1HY26 Half-Year Financial Statements, ASX market data (March 30, 2026), TechnologyOne (ASX: TNE) market data (March 30, 2026). Fair value estimates from author's 10-year DCF model.
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Disclaimer
The user tripledub holds no position in ASX:OCL. Simply Wall St has no position in any of the companies mentioned. Simply Wall St may provide the securities issuer or related entities with website advertising services for a fee, on an arm's length basis. These relationships have no impact on the way we conduct our business, the content we host, or how our content is served to users. The author of this narrative is not affiliated with, nor authorised by Simply Wall St as a sub-authorised representative. This narrative is general in nature and explores scenarios and estimates created by the author. The narrative does not reflect the opinions of Simply Wall St, and the views expressed are the opinion of the author alone, acting on their own behalf. These scenarios are not indicative of the company's future performance and are exploratory in the ideas they cover. The fair value estimates are estimations only, and does not constitute a recommendation to buy or sell any stock, and they do not take account of your objectives, or your financial situation. Note that the author's analysis may not factor in the latest price-sensitive company announcements or qualitative material.
