Here’s why the ReadyTech (ASX:RDY) share price is tumbling 7% today

What did the company announce to the market? Let’s a take a look.

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The ReadyTech Holdings Ltd (ASX: RDY) share price is sinking today following a company update regarding a government licensing project.

At the time of writing, the mission-critical software company’s shares are swapping hands for $3.15, down 6.80%.

What did ReadyTech announce?

The ReadyTech share price is falling after ReadyTech advised it was not successful in winning the government licensing project.

Last year on 11 January, ReadyTech noted that Open Office had been shortlisted for a key government contract. However, the company was not selected for the contract, meaning it will not be paid an $8 million earn-out.

Management said the government client selected an alternative option rather than its configurable Open Office offering.

The project was not included in ReadyTech’s gross opportunity pipeline. Therefore, its FY22 guidance remains unchanged.

Furthermore, the company reiterated its government and justice division is focused on innovating, developing, and delivering scalable cloud-based solutions.

ReadyTech co-founder and CEO Marc Washbourne commented:

Open Office is completely aligned with ReadyTech in its focus on configurability, not customisation, in delivering innovative, customer-centric SaaS [software-as-a-service] solutions. This cultural alignment has facilitated the integration of the two businesses and outperformance of Open Office relative to expectations.

With the business continuing to perform strongly, we are excited by the opportunities we see for the government and Justice segment, as with our education and workforce Solutions segments.

About the ReadyTech share price

It’s been a sound year for shareholders, with the ReadyTech share price having gained around 70% in the last 12 months. However, the company’s shares are down around 20% so far in 2022.

Based on today’s price, ReadyTech has a market capitalisation of $331.63 million and a price-to-earnings (P/E) ratio of 129.17.

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Motley Fool contributor Aaron Teboneras has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns and has recommended Readytech Holdings Ltd. The Motley Fool Australia has recommended Readytech Holdings Ltd. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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