For most investors of ASX-listed tech shares, 2022 has been a year you'd prefer to erase from the memory bank. However, I believe the heavy-handed selling has produced a number of opportunities in the process.
The information technology sector has been hit the hardest by a flurry of headwinds this year. It's understandable that investors might take the foot off the gas of loss-making investments as liquidity dries up and the cost of capital surges.
Though, it seems high-quality and profitable businesses have also been tossed to the wayside amid the panic to exit anything tech-related. In my eyes, one such ASX tech share that has succumbed to this situation is Objective Corporation Limited (ASX: OCL).
Here's why I believe this company could be a beast in a decade's time.
Image source: Getty Images
Like buying TechnologyOne more than a decade ago
When I look at Objective Corp, I see many similarities to enterprise software giant TechnologyOne Ltd (ASX: TNE). Both companies were founded in 1987, both offer a suite of software solutions for government and private enterprises, and both have long been committed to reinvesting 20% of annual revenue into research and development.
Where the two begin to differ is the scale of their respective businesses today. Objective Corp currently holds a market capitalisation of $1.36 billion, whereas TechnologyOne touts a valuation of $3.78 billion.
Likewise, the financials of Objective Corp are dwarfed by those of TechnologyOne. In FY22, the smaller ASX tech share achieved revenue of $107 million and net profit after tax (NPAT) of $21 million. Meanwhile, its larger peer recorded $339 million in revenue and $78 million in NPAT in the latest trailing 12-month period.
However, if we flick back to a full-year report from TechnologyOne in 2010, the financials look very similar to the current day Objective Corp:
| Metric | FY2010 TechnologyOne | FY2022 Objective Corp |
| Revenue | $135.8 million | $107 million |
| % growth | 11% | 12% |
| NPAT | $17.8 million | $21 million |
| % growth | 14% | 30% |
| R&D investment | $27.2 million | $25 million |
| Subscription-based revenue % | 48% | 73% |
I suspect that Objective Corp is replicating the strategy that paved the way to TechnologyOne's major software-as-a-service success. Since 2010, the Brisbane-based software company has returned more than 1,200% for shareholders.
Why this ASX tech share has been sold down
The reality is that the Objective Corp share price has been pummelled to the tune of 28% in 2022. Despite the sell-off, the company's price-to-earnings (P/E) ratio remains at an above-average 70 times earnings. By comparison, TechnologyOne currently trades on a P/E of around 49 times.
In my opinion, the increased transition to cloud-based products and recurring revenue will gradually reduce Objective Corp's operating expenses. In turn, earnings could experience strong growth and begin to make the company's valuation much more attractive.
For those reasons, this is an ASX tech share I personally believe makes for a compelling investment.
