In morning trade the Objective Corporation Limited (ASX: OCL) share price has been on fire.
At the time of writing, the information technology software and services provider's shares are up 11% to a record high of $14.49
Why is the Objective share price rocketing higher?
The catalyst for this strong gain has been the release of its first half guidance this morning.
According to the release, based on unaudited management accounts, Objective is expecting to report a 40% increase in revenue to $46.5 million for the half.
And thanks to margin expansion, the company is guiding to a 74% increase in earnings before interest, tax, depreciation and amortisation (EBITDA) to $11.8 million.
Also growing strongly during the half was its annual recurring revenue (ARR). The company's ARR grew 30% year on year to $70.1 million. Positively, upfront licence fees have continued to decline as a percentage of revenue and now represent only 3.6% of its total revenues. This is down from 7.4% a year earlier.
At the end of the period, Objective had a cash balance of $27.7 million. This takes into account the $18.4 million the company paid to acquire Itree and its dividend payments of $6.6 million. In addition to this, the company made an $11.1 million investment in research and development during the half, up 45% from $7.7 million a year earlier.
Management commentary.
Objective's CEO, Tony Walls, revealed that the company has been battling tough trading conditions because of the pandemic.
He commented: "As expected, operating conditions in the first half of the 2021 financial year have been challenging for all of us due to the impacts of COVID-19. At Objective, our priority has been in supporting our employees and customers around the globe."
"Despite these challenges, we have great confidence in our future and we are well placed to transition to the new normal that the world will adapt to in due course. Objective's suite of products will be critical in assisting our customers to do the same. With this conviction, we have continued to invest in our team to capture the opportunities that lie ahead," he added.
