$134.7 million FY2026 revenue as Objective guides to at least $40 million EBITDA

Defence contract loss reshapes a strong FY2026 result

Objective Corporation Limited (ASX:OCL) finished FY2026 with the sort of headline numbers that usually command attention: revenue rose 9% to $134.7 million, net profit after tax increased 5% to $37.2 million and operating cash flow reached $49.3 million. But the more consequential figure sits beyond the year-end results. The Australian Department of Defence will not renew the Objective ECM Upgrade and Support Program, which contributed $8.252 million of revenue in FY2026, with all revenue under the agreement ending on 30 June 2026.

The annual report formalises the outcome of the Defence support contract, which had run for 25 years and whose non-renewal was previously disclosed as having no impact on FY2026 revenue or earnings. Objective said the relationship’s end was disappointing and concerning in a national defence context, while also stating that the development did not define the year.

SaaS growth continued while recurring revenue softened

SaaS revenue grew 22% year on year, extending a seven-year compound annual growth rate of 27%. The company reported annualised recurring revenue of $121 million on a constant-currency basis, although its own FY2026 commentary says ARR growth fell short of target. A second contract decision will add to the pressure: Objective discontinued a heritage support agreement with the National Heavy Vehicle Regulator shortly after year-end, reducing FY2027 ARR by $3.2 million.

The business lines were not moving at the same speed. Information Intelligence remained the largest division, with revenue up 5% to $87.9 million, but closing customer ARR fell 5% to about $81 million. Planning & Building was the standout growth engine, lifting revenue 41% to $18.5 million, while Regulatory Solutions revenue rose 7% to $25.3 million before the NHVR contract reduction.

FY2027 investment will come at a visible earnings cost

Objective expects adjusted EBITDA of at least $40 million in FY2027, compared with $51.5 million cited in the outlook discussion for FY2026. The financial highlights round FY2026 adjusted EBITDA to $52 million, a small presentation difference but one that matters when assessing the scale of the expected decline. The company attributes the forward pressure to the reduced ARR base and continued investment rather than to a stated change in its long-term strategy.

That investment spans additional Information Intelligence sales capacity, a larger Defence and National Security team, international expansion for Regulatory Solutions, more product and go-to-market resources for Objective Build in Australia, and dedicated Objective Intelligence personnel. Research and development spending reached $33.8 million, or 30% of software revenue, while intangible assets rose to $80.6 million after $17.4 million of internally generated development costs were capitalised.

Cash, dividends and buy-back provide shareholder support

The balance sheet gives Objective room to pursue that agenda. Cash stood at $92.7 million at 30 June, despite $24.8 million of dividends, $7.1 million spent on the share buy-back and $3 million of net acquisition spending. The company also completed its acquisition of Isovist, an e-planning software provider, for net cash consideration of $3 million after acquired cash.

Shareholders received a total FY2026 dividend of 26 cents per share, including a proposed 8-cent fully franked final dividend and a 5-cent unfranked final dividend. The on-market buy-back also moved from announcement to execution, with 586,963 shares bought for $7.136 million during the year and a further 439,872 shares bought for $2.541 million after balance date.

AI pipeline now has to convert into replacement growth

Objective’s strategic case rests on trusted information, secure deployment and governed AI for governments and regulated industries. The report points to new and expanded work with the Scottish Government, Tauranga City Council, North Sydney Council and Australia’s Department of Climate Change, Energy, the Environment and Water, as well as early traction in Defence and National Security. Objective Build reached 35 live New Zealand customers and launched commercially in Australia, while RegWorks v8 added AI-assisted public forms and back-office queries.

The tension is straightforward. Objective is investing into markets it describes as increasingly aligned with its strengths, but FY2027 begins with a lower recurring-revenue base and a material earnings step-down. The next test is whether new AI-led deployments, Objective Build adoption and Defence-sector wins can replace the revenue that has already disappeared before the expanded go-to-market spending becomes a burden on cash generation.