Good morning, everyone, and welcome to the Objective Corporation, our first half of FY 2026 financial results presentation. I'm Tony Walls, CEO, and with me is Ben Tregoning, our CFO. First of all, it's always good to start off with our mission statement: outstanding GovTech driving stronger communities and nations. Of course, really, have an appreciation for the marketplace that we serve, which is not only empowering digital government, but also regulated industries with a suite of mission-critical applications that collect, protect, govern the proprietary public sector data that we all depend upon. It's also worthwhile pointing out that this is a slide that we've been running for some time now, many years. It talks about our 2,000-plus customer relationships and calls out our 20-year customers, as well as a selection of our 10-year customers.
Equally, I think you'll see at the full year, we're now starting to get into that mode where, in fact, we've got some 30-year customers coming along as well. Look, clearly, they're not on the same software from 30 years ago. We've been on an incredible journey with so many of our customers, and this is a testament to the ongoing value that we create for them. The agenda for this morning is, first of all, we'll talk about the financial summary, we'll talk about AI and the opportunity for Objective. I'm sure you're all eager to hear about that. I'll go through a business line overview for each of our lines of business and then conclude with an update with our outlook. First of all, some of the key numbers.
This is a new style of presentation for us, but I think it really calls out the strength of what the organization is achieving today. We've made that transition, I guess over the last number of years, to being 100% subscription-based software revenue, with 13% subscription revenue growth in the first half, 24% of that being on cloud, with SaaS revenue growth at 24%, and adjusted EBITDA margin of 40%. If we look at that across each of the lines of business, Information Intelligence, our renamed content solutions line of business, which you will have heard from about previously, at 23%, Planning and Building, 38%, helped along by the IsoPlan acquisition, and Regulatory Solutions up 14%, all since the first half last year.
If we convert that into raw financial numbers, revenue of $67 million, ARR breaking through to $120 million, adjusted EBITDA of $26 million, operating cash flow, a strong improvement of 72% on PCP at $22 million. Net profit after tax of $19 million, our R&D of $17 million, up 28%, sorry, now at 28% of software revenue, which I'll talk to in a couple of slides time. Cash of $95 million after an interim and final dividend, plus the acquisition of Isovist. Again, reflecting that strong cash generation, and a strong interim dividend of $0.13 per share, that's unfranked.
A chart that some of you will have seen before is really looking at how the SaaS revenue has really driven our growth. I think what this illustrates more than anything else is that we've had compound annual growth rate over the past seven years of 28%. I think that's gives everyone a really strong sense of how we've been able to drive the success of the business. Non-recurring revenue, compound annual of 2%, which I guess just reflects the strength in the SaaS growth, and USP remaining that sort of, or sustaining that CAGR of 2% over that same period of time.
Also called out for the very first time, that USP has actually come down very slightly, reflecting that strong growth rate in the SaaS of last year, AUD 34 million, to this year being AUD 42 million, a very strong jump. Equally, many of you will have seen this chart before, and for year-on-year growth rate over the past five years, if you look at the investment that we've made, AUD 140 million of the AUD 324 million has been made in the past five years. 43% of the total revenue of all time since listing has happened in the last five years. We think that sort of really demonstrates our commitment.
Our customers love the commitment that we have to R&D, still representing 28% of software revenue. That's down slightly, a couple of percentage points. I'll talk to that in a couple of moments' time. I think this sort of really just reflects the strong commitment that we have to all the things that are going on from an innovation perspective. Again, there's lots of people in financial markets talk about the Rule of 40. You can see here that our Rule of 40 calculation is in fact more a Rule of 50, and we've had really strong profitable growth in line with our strategic plan. 40% of the adjusted EBITDA margin plus 12% ARR growth.
Again, no presentation on financials would be complete without talking about our flywheel of innovation. We've consistently shown that this model works. Again, we've shown great investment in this half. I'll talk to some of the non-R&D investments that we've been making when we get to the line of business review. We're delivering outstanding software as normal, which is enabling us to deliver this outstanding customer experience, and the financial performance is allowing us to continue our investment in not only innovation, but also go-to-market and customer support activities. That flywheel is well and truly alive today. If we move on and talk about the AI opportunity, it's quite substantive, and let's reflect on that over the next couple of slides.
There's been a lot written in the press, and media in general, whether you're a podcast subscriber or a YouTube viewer, everywhere you've looked in the past, probably two months, there's been a lot said about the death of SaaS. I think, look, from certainly an Objective perspective, and I could probably say this on behalf of all enterprise software vendors, really, there's a lot more to SaaS than just lines of code, and the coding that's happening. We've called out the broad range of things that make up a SaaS company here, just for you to consider.
Certainly, there's no doubt that, like most progressive organizations, we are using AI IDEs or Integrated Development Environments, such as Cloud Code, things like Open Code, which is the one that we've more recently standardized on for the near term, that are really driving great opportunities for efficiency for the coding part of our operations. You can see here from the broad range of things that are in that we do as a SaaS solution provider, coding is a really small part, and whilst we're benefiting from the productivity, and there's no doubt that coding has changed forever, it is but a small part of what we deliver for end-to-end customers.
I'll take questions on this a little bit later on in terms of what we're doing for those that are interested. I think, you know, you embrace AI in terms of the coding aspect of what you're doing as a software organization, or fundamentally, you are going to be challenged. As you can see here, just so many things make up the core part of what we do. More than anything else, domain expertise, systems architecture, these are all sort of really core to the products that we deliver, independent of all the other ancillary pieces that make up SaaS. The permanent demand drivers. I've spoken about these before with respect to what drives our opportunity. There's this rising expectation, ever-rising expectation and increased scrutiny around what our customers do.
There's community expectations around government that's at an all-time high. There's a lot of effective regulation compliance that needs to take place, and that often comes at a high cost. And efficiency is through end-to-end digital service delivery in a way that has been, you know, brings our end-to-end business process from everything from citizens through government agencies and back again. I think the big promise with AI, though, really comes through productivity, and I think the productivity the benefits of productivity that are coming through AI is really what's driving the opportunity. When sort of people talk to me about, you know, what is AI going to do for enterprise software companies?
I wouldn't say this is particularly narrow to GovTech and RegTech, but what's it going to do? It's going to drive real opportunity because customers are going to come to us, and they are coming to us, looking to embrace AI for genuine productivity. I think for me, I haven't seen this productivity drive probably for a couple of decades, when we really started to embrace the benefits of the web. I think whilst cloud has done a lot in terms of getting SaaS vendors to take responsibility for the complete end-to-end solution and allowing customers to remove many of those costs from their organization, the big driver with AI, for me, is really all about productivity, and we'll get to see some of that in a couple of slides' time.
Just to give some context to why AI is going to be a big thing for Objective. First of all, I feel like we've been training for what AI can bring and what LLMs, in particular, can bring, really for the past couple of decades. Those of you that know us know that all of our solutions are underpinned by great record keeping. There are a lot of standards that customers need to adhere to with respect to record keeping. Equally, not only are those records important from a statutory perspective, but records and information always goes on the journey through organization. You can see that middle layer there, not only are we the system of data record, but we're the system of workflow record.
When we come to what AI is doing, it's really all about bringing that human context, bringing the customer domain expertise into what we're doing. You know, if you look at the productivity for most of the things that I'm sure that all of you are doing with AI, but certainly our customers are doing with AI, it's really that productivity element. Being able to ask questions of the data that's stored within Objective systems, being able to interrogate that data through private AI, being able to interrogate that data through highly cleansed records to absolutely minimize or remove the prospect for hallucination. The other thing that's happening also, especially within the government-regulated environment, is to make sure that we've got great systems of AI record.
What I mean by that is, you know, what were the records that were used to actually inference over to deliver the AI results? Does the particular individual have access to all of the information or only part of the information? When they only have part of the information, can they make sure that the AI is only inferencing over information that they have that they have access privileges to? Then making sure that we're keeping an audit record of those AI answers, because all of these, You won't be able to point to systems where you say, "AI told me," you'll have to have a record of what AI told you at that time that you relied upon.
You know, this is a big part of why Objective is in the ideal place to make the most of delivering customers AI productivity. On the right-hand side of this slide also pulls out, I guess the elements that we see of why, again, AI is relevant, and why Objective will win in the AI world. First of all, I know many of you will have been at our Investor Day and heard about Objective Intelligence, and if you weren't, I'm gonna summarize what we saw there in a couple of slides' time. We have been investing in this platform for quite a number of years now, and it's a platform that delivers a cost-controlled, model-agnostic AI capability.
As I've mentioned, we are a trusted information source for our customers. We give context in terms of we have mission-critical workflows. All of our customers are highly regulated. They have regulations and compliance that they need to adhere to. We work in a secure environment, so I think it's broadly known that we're very active in the defense and intelligence industries, and those protections and those access controls are well tested in those environments. There's been a lot said about pricing. Again, per-seat pricing has been one of the things that people have been talking about with respect to the poor outlook for SaaS-based companies.
I think, you know, most SaaS-based companies have made the transition to other forms of pricing. Whilst per seat still works for some of the capabilities that we that we rely upon or our customers rely upon, many of our pricing models now are built around customer value. Finally, we've got a great in-house talent pool with respect to AI, but I think most organizations would say that today as as the capability becomes more prevalent. Just to give you a little bit of context, we are delivering AI results now for customers. It's not a thing that we're working on. I've just sort of highlighted 4 of those use cases here.
The first one there is to support an inquiry that we're doing for one of our large customers up in Scotland as an example. On the right-hand side, talking about cleansing data for Microsoft Copilot, which we've been doing with the Welsh Government. A couple of other organizations that are using private RAG and using redaction. These are all things that we are doing today, not things that we're working on or capabilities we're thinking about releasing. These are genuine production uses of AI that Objective's delivering for its customers today. Just to recap on Objective Intelligence, for those of you that weren't at the Investor Day, Objective Intelligence is this layer that we have been building that's central to all of our applications.
At the center is data and workflows, as I've mentioned. Accessing that data and workflows are all of our software solutions, those software solutions use this single point of engagement out to the service providers and model providers. This allows us to really control where our information's going or where our customer's information's going. I have completely ignored from this infographic where we're doing on-prem AI with local GPUs, I guess I'm not sort of giving the full color around how we're controlling the cost of the use of AI here at Objective. To give you, again, some context, we recently processed 4 billion tokens at an aggregate cost of AUD 4,000.
It's pretty clear that Objective Intelligence is not only delivering this broad-scale capability, but is also doing it in a way that keeps cost control central to our customers' well-being. And just to give you a sense of it, here is our primary applications that are all benefiting from OI today. Most of our solutions have RAG as part of the solution today. We do a lot of automated document intelligence, where we're interrogating the content of documents. We've got some of our key Planning and Building applications that utilize computer vision, which some of you will have seen before today, to do things like plan compare in Trapeze to look at application submission and evaluation in Objective Build.
Natural language processing, which has really become, you know, I think, part and parcel of what most people expect from a key RAG solution today. Just to sort of wrap up this section and to make it a little less infographics and words, I thought I'd step you through our Objective RegWorks or a couple of screens from Objective RegWorks as it sits today and how it's benefiting from OI. This is implementation at the Department of Mines, and this is an investigation case. As you can see at the top of the screen there for community dust and noise complaint at the Willow Creek drilling. You can see the Ask OI pane down the bottom.
It's clearly an NLP, natural language processing interface, where you can choose to summarize the investigation, summarize the latest inspection notes, what's the compliance history of the location, for example, and summarize the key evidence of the investigation. In this case, the user is asking to summarize the case, and Objective Intelligence, having access to the complete case file, really summarizes the case for you. Now, historically, this would have taken someone to go into each of the documents that makes up the case file, pulling out the relevant pieces and summarizing them into an overall case view. This may take several hours, or historically may have taken several hours. In this case, OI is doing it for you.
The answer to that might be, or the next question of that might be, we just want a high-level summary of each of the breaches. That looks like, you know, you get this type of result, where you've got the combination of all the information from the case file, that's actually being overlaid with the regulations. Against each of the regulations, we're getting the key breaches that are occurring within this particular case. You can see here, excessive dust emissions, noise levels exceeding the allowable level, incomplete or missing logbook entries for the mitigation activities, and inadequate maintenance of the suppression equipment. Again, these are all things that would take hours and hours, if not days, to do under the non-AI methods. Finally, has the site operator responded to the complaint?
Yes, here, the site operator has responded to the complaint and provided several documents, and here's the link to the correspondence back with the operator in terms of addressing the particular investigation. Again, if we think about these things in the context of productivity, which I firmly believe is what AI delivers our customers more than anything else, these are really good examples of where, you know, this is delivering real-world productivity. It's fair to say, in each of our domain-specific solutions, Information Intelligence, Planning and Building, and Regulatory Solutions, they're alive and well, and the bulk of the innovation that's going on and the investment in R&D that's going on in these areas, in these lines of business, is really to drive these productivity efficiencies through AI.
Let's move on and talk about the line of business overview. First of all, let's pick on Information Intelligence. The last 12 months has really been very interesting around Information Intelligence. Those of you that are up with our story will know that this has been quite an evolution as we've moved from content solutions to this Information Intelligence platform. It delivers a broad range of capabilities, and customers now can buy these capabilities as a single product suite on top of this platform. We've also been doing a lot of conversions to cloud, and the rate at which we're converting is accelerating.
We've now got over 20,000 users. You can see the, some of the customers on the right-hand side here, that have moved from on-prem solutions to our Nexus Cloud platform. You can see the, the range of, I guess, commercial outcomes, where the uplift case is somewhere between 1.5 and 2.5, what the on-prem would be. I think overall, it's probably, on average, north of certainly the 2x case. This has been delivering incredible value for customers. I think they're seeing the benefit of moving to Nexus Cloud progressively. To pick out some of the highlights, first of all, the top, the sales revenue is up 5%, but the ARR growth is 10%.
This, again, is a testament to how we've been driving down the cost of deployment for customers, and highlights that case. Again, I've touched on, I'll touch on, I guess, some relevant points from these dot points here. I've spoken about the line of business being renamed. I've spoken about the momentum that we've had in customers moving from on-prem to the cloud. There's been a lot that we've been doing on the AI side. It, with 3Sixty in particular, and if you can imagine that the things that you saw for the RegWorks solution, they've been even multiplied even further on the Information Intelligence side of the organization. We also brought out some new things in with Objective Connect, things like digital signatures.
Customers have long been asking for something that's robust, but more cost-effective, than things like DocuSign, which we delivered, and tag-based access control, which has been a strong driver for us for export control markets, which is a new market for us with Connect. Finally, Objective Keystone, where we've been doing a lot more work in climate-related disclosure, and fund management documentation. You can expect some interesting new developments there as the rest of the sort of comes to light. We've got some new and exciting big customers coming on board on the Keystone platform, internationally.
If we move on to Planning and Building, I guess the key difference between now and a year ago was we added IsoPlan into this end-to-end solution. I think that's been a very, very successful, not only acquisition, but also integration for us, which I'll talk about in a moment. Again, our customers have been certainly well engaged on the what we've been doing from the end-to-end process. Not only engaging with applicants, but also other industry participants that are perhaps outside the local councils. If you look at the footprint, it's been a really robust expansion. We've got a broad footprint for Trapeze, as we've long spoken about.
I'll talk about the Build expansion shortly, but we've certainly got our foundation partners, and our foundation customers that are well entrenched in the ongoing Build process, not only in New Zealand, but certainly here in Australia. IsoPlan, which I guess has the bulk of New Zealand, customers and the cluster of Southeast Queensland. We're starting to see far more interest in IsoPlan across the country as well, and I'm sure it's not going to be long before we see our first IsoPlan customers, here in New South Wales. If I just talk about some of the highlights of the half, sales revenue was up 39% on the prior half, with ARR up, 29%, very, very strong.
We've been migrating customers at a pace, at a very rapid pace ahead of the June 30 sunset date for GoGet. We've now got 40 councils that are now live on Builder and Migration, and that together represents more than 50% of New Zealand councils by number. We've moved all councils to the aligned pricing model from June 30. In terms of Build Australia, we've got the foundation customers have been very much across this solution on the way through. As many of you know, they've been getting their regular 6 weekly updates, and we are pretty much on track for our go-live with Build AU at the end of next month. We've also expanded the foundation partners from just New South Wales to include partners in Queensland, Victoria, and WA.
As word has spread about what we're doing, we've had just far more engagement, and I guess I'd say it's been demand pull, as opposed to us really actively going out there and engaging these other states. As I mentioned, Isovist has been rapidly integrated into this solution for us. Customer success, and go-to-market functions have been completely engaged, and for us, it's really been a strong, again, another strong showing of our M&A playbook. We also released remote inspections. I think we had a video of what we're doing with remote inspections at our Investor Day. You can jump on our website and have a look at how remote inspections has been working, but that's also now rolling out across New Zealand at quite a rapid rate.
We have, I think, the first 15 councils that are in process of going live or contracting at the moment. It's been a very strong uptake for those that are, I guess you'd say the more progressive councils in New Zealand, the feedback has been fabulous. We're really pleased with the way that that's rolled out for us. Finally, Objective Trapeze has had a lot of enhancements that give us broader use across the organization and just make that a more valuable solution for customers. If I move on to the Regulatory Solutions line of business, just a summary again of what this solution does. It is really regulator in a box.
Licensing and registration, compliance and monitoring, enforcement regimes, investigation, prosecution, and education. All of these capabilities are being assisted with AI deployment. You got to see a little bit of that on one particular use case earlier. Again, the team has done an incredible job with getting our brand out there and our capability out there. Over the past 12 months, our brand recognition and our recognition generally in the market, as the software for regulators has been extremely strong. Strong, in fact, that we've also been up in Canada very recently. The Canadian government, in particular...
has been taking a little bit of a dislike to a number of the U.S. software vendors, and they've been looking not only across the U.K., where obviously we're very active, but also to Australia and New Zealand for what's being done software-wise in those marketplaces. We've had a very warm reception in Canada, not only just for RegWorks, but for our other solutions as well. I think it's just a matter of time before you'll see more activity up there from us. We think Objective RegWorks has quite an unbeatable value proposition for this market, so domain-specific workflows and features, onboarding far faster and with less risk than with generic capabilities.
We've got feature parity on the things that matter with the generic platforms. It's really seen as this regulator-in-a-box. That's the cut-through that I think we're seeing at every industry event that we've been to for the last 12 months or more. Just some highlights. Sales revenue up 8%, ARR up 9%, probably slightly softer with a bias to the second half is I guess where we are in FY26. Not only have we done the activity in Canada, but we've also recently been IRAP certified here in Australia, which really puts us in a strong position for a lot of the federal government activity that's underpinning our pipeline going forward.
We've spoken about Accelerate before, which is our methodology for deploying at speed, there is a huge driver for how to make customer onboarding faster, cheaper. Those two things is really so we can bring on more customers, you know, across the globe, and we can allow our partners to accelerate their deployment of more customers across the globe as well. I guess the other highlight of the first half was really the Gambling Commission going live. That's our first high-profile reference site in the U.K. Many of you will know that the gambling is a huge industry in the U.K. I believe it represents 9% of GDP. Extraordinary. The Gambling Commission plays a very important role in that U.K. economy.
Equally, it's seen as one of the best gambling regulators in the world, we're seeing an increasing amount of engagement with other gambling regulators in other countries off the back of what we've been doing with the UK. There's also a broader range of solutions that we've been delivering. The Firearms Registry continues to get in New Zealand, continues to get great plaudits in the community. Even people that originally were skeptical seem to have come around to that solution, which is great to see. In Victoria, the Social Services Regulator achieved 98% of registrations online within statutory timelines, and I think for a regulator, that's an outstanding stat.
They are just some of the things that are going on within our lines of business, some of the highlights. As you can see, they've all grown revenue, they've all grown ARR, they all have investments going on with AI, and they're all making great progress with their customers. Let's just have a look at the outlook as a point of wrap-up. First of all, the strat plan. You've seen this shape of the plan on the page before from us. I don't think anything has particularly changed here between FY 25 and FY 26, and I think if you look into FY 27, you know, you'll see pretty much the same thing again.
We think it is very good for our customers and certainly our employees, to understand the things that we think are underpinning the driving of Objective Corporation for them. If we look at the four, I guess, components of our outlook, we've spoken about our target of 15% ARR growth many times before, and I guess to say where we're seeing ARR growth at the moment is in this range of 10%-14% on a constant currency basis. I guess we're a percent off in terms of that range versus the 15%. I guess it's probably fair to say we're taking a somewhat more conservative approach to onboarding new customers in Q4.
We're going to make sure that our first three customers get the love that they expect and need to make sure that they're onboarded, rather than driving more and more revenue in Q4. That's probably a change in approach that we wanna have, and that's probably a slight slowdown to speed up in FY27. We'll maintain our strong EBITDA margin without any doubt, and you've seen that come through in the first half. I've spoken about AI. There's no doubt that we're gonna be able to leverage a leadership position that all of our customers are talking to us about delivering for them AI projects. Certainly, this will be no different over the next six months and leading into 2027.
I'm pretty sure at the half year, I'll be able to share with you a lot more of the things that customers are achieving. I guess there's a little bit of nervousness with some customers about being named at this point in time, but I think I've probably named the Scottish Government, the Welsh Government, earlier in the presentation. We'll be able to talk about a lot more at the full year. Our R&D investment continues at a clip. There's been a lot of people talking about they're going to cut their R&D investment because AI and IDEs are making them so much more efficient. That isn't the way we're seeing the world.
I think where the way we're seeing the world is we've had large backlogs of AI opportunities and innovation opportunities, I should say, over a long period of time. We'll be using the efficiency that we get out of AI coding tools to allow us to deliver that innovation faster, and I think that's the outlook that I've shared internally and with our customers. I'm expecting to do more, a lot more with the same team that we have today. I know it's sort of come down from 30% - 28%. I think those of you that have sort of looked at that chart before, that I would not expect that our R&D investment is gonna continue to track down materially over the next 12-24 months.
Finally, focusing at the moment, just on organic opportunities. I think there's so much going on in the lines of business that we already have, that's really taking up a lot of our focus. That's not to say that we still aren't engaged on M&A. I think what's happened over the past 2 months, with valuations, we wanna see that sort of shake through to private markets and shake through to vendor expectations. I think it's prudent in terms of the responsible deployment of capital, I think it's just prudent to take our time with the things that we've got in our M&A pipeline at the moment. That's it. That's the half that's been, I think, really, really strong numbers.
A really strong case for how we're gonna prosper in the world of what AI is doing for us. Again, just to underpin that with Objective, with its systems of record and systems of workflow record, and its requirement to keep, you know, keep records of all things AI for our customers, puts us in a really strong position. I look forward to sharing with you more stories over the next six months and beyond. Thanks very much. I think, are we now opening up to questions, Ben?
The first question, or the first person I've got here on stage is Jules Cooper. I think I have Jules there. Just, yeah, tech issue, but Jules, you there?
Yep, I'm on. maybe on. Yep, sure. Thanks for taking my questions, guys. First one, just with regard to Build. Obviously, you noted some of the. Can you guys hear me okay?
Yeah.
Yep. Okay, cool. Just with regard to Build, obviously, a little bit of a pushback in that version from the foundation versus the revenue impacting, you know, the guidance as you mentioned. Can we give a little bit more in terms of, you know, where those foundational customers are at, maybe how many you've got, how we should sort of think about that timeframe, and just maybe also a little bit more detail or color around the initial feedback from that customer cohort?
We've got around 15 foundation customers. We've got, we know who the first 3 are going to be, I can't name them at this point in time. We're really holding them back, but I think it's prudent. I've been releasing software for often over my career, and I've just sort of said to the team, I think we, you know, first of all, we'll give our foundation customers, you know, financial benefit certainly first year ARR for being, I guess, on the journey with us. Secondly, it's really important that we have a concept here called First Five. We're making that first 3 for Build Australia.
It's really important those three customers have an incredible experience with us, as they onboard, and they then tell their fellow foundation customers and beyond. Again, having done this many, many times, I just think that's more prudent than us going and signing up 15 customers in three months, and then, you know, if there's any issues, we've got to do it 15 times rather than three times. I think that's really just needs to be part of our brand promise. I think it's a little bit irresponsible of us to just try and drive a purely financial ARR outcome for the final quarter versus, "Let's make sure these customers have a great experience.
Yep. No, that's very fair. In terms of, I guess, from a pricing and revenue standpoint, or sorry, I should say pricing model going forward, has there been any changes or feedback? I know historically, obviously, we're expecting it to be materially higher than NZ because of those, some of those restrictions. Has there been any changes to that in terms of the go-to-market strategy on pricing?
No. I think we're, you know, obviously, it's the solution's priced to value. We're still, I guess, finalizing the ultimate pricing structure for Australia. I think we take some inputs from what we've seen in New Zealand over the past three months, sorry, three years rather, as we've seen some of the transactions rates moderate, so that we don't get caught up in some of that, as we roll out in Australia.
Got it. No, that's great. just second part, just with regard to, the content or the old content division, should I say, Intelligence Solutions. Within this period as well, you talked around guidance. I mean, as we started back in, let's say, the full year, there were some pretty large renewals and things that were probably expected in the period. I know you can't give exact context, as you mentioned, but is that fair to say that, some of those potential renewals that were expected for this period have been deferred or haven't come through? Have they been allocated as of yet?
Yeah, that's a great question, Jules. I should have addressed this with the outlook discussion. It's we have got one or two material move to the clouds as opposed to renewals, but move to the cloud opportunities, which quite frankly, should have closed in H1, have not yet closed. I just don't have the level of conviction that they will close in the current half to be being as bold as to say they're definitely gonna close. I'd rather just be a little bit more cautious. Often the question is, well, if they move to the right, will that mean that next period's higher?
I normally say no, but probably in this case, the answer would be yes. It's just that I just don't have confidence in the timing.
Yeah, got it. As we look, final one on Reg, RegTech, obviously that was probably a little bit softer than expectations, but I think you did a great job on the investor day in terms of some of the opportunity there. The pipeline looked extremely strong. Can you just maybe flesh out a little bit, is that pipeline still there? Has there been a slowdown in conversions? What are you sort of seeing in the marketplace, in terms of RegTech?
Look, the pipeline is absolutely still there. I don't think that the first half delivery was softer than expected.
Sorry, more the full year, I meant, just playing into full year guidance.
The full year ARR growth is certainly gonna be better for Regulatory, certainly gonna be stronger than last year. I don't think there's any question in our minds about that.
Yeah.
I think, you know, what we're seeing, you know, it's still a relatively new domain, and so, you know, as we've experienced with other applications, that takes longer to get those opportunities through the funnel.
Yeah.
Again, we're just being, we're probably being a bit cautious with the words, but certainly, I expect it to have a strong second half.
Great. Ben, just final one. Can you just chat on operating leverage, right, just in terms of how we should be thinking about, you know, obviously, you mentioned 26, we can see that, the numbers, but more so as we head into 27 and beyond, how investors should be thinking about operating leverage and cash flow generation in the core business?
Yeah, thanks, Jules. Look, the same story that we've had previously continues. Even in this half, we've demonstrated with the 40% EBITDA margin and the strong free cash flow generation, that, you know, we're able to grow at that sort of 12%-13% on the subscription revenue line and still maintain that margin. In going into next year, we would expect that we would continue to see that margin improvement as we, you know, add the ARR and don't add the, you know, add the same cost base at the same rate.
Yeah. Currency, just quickly-
Oh, yeah.
Can you just touch off on that, if that's possible?
Yeah, we've had a bit of a negative move on currency, which, yeah, does seem to continue. This is why we've moved to the constant currency basis to try and take that out. There's been quite a bit of volatility in it. You know, it was worth a bit over AUD 1 million in the first half, and not really aware it'll land in the second half, but, you know, at least that much.
Great. Thanks, guys.
No problems. Thanks, Jules. This is a text question from Evan Karatzas at UBS. He just wanted some, the Planning and Content Solutions ARR was flat to a touchdown from where we were at, June 2025. What are some of the factors in driving that? As he's called out, it seems to FX played a decent part, and we've touched on that. Is there anything, is there anything else we should be looking to in terms of expected churn or anything else out of the ordinary?
The only thing that was out of the ordinary was churn was probably slightly higher. We did churn also some Connect customers off that we wouldn't have expected to 'cause we had a missing capability, but that capability has now been built into the product. We would expect to recover some of those in the next 12 months. Apart from that, no. I mean, to be fair to our team, the Information Intelligence team exceeded their bookings target in the first half, you know, it was quite strong.
I think, I think you touched on this through there, but Evan had a similar question around sort of the breakdown of the line of business growth, and where that, you know, the incremental IRR, to get us that, you know, sort of AUD 12 million-AUD 16 million in incremental IRR, where that come from between the lines of business. Yeah, maybe between. I, I think my response to it would be, I, you know, as I think as you've touched on, Planning and Building and, Planning and Building has got the characteristics around Build AU, so the heavy lifting is gonna be done by Content Solutions, when you talk in dollar values, and also, with the contribution from Regulatory.
Are you answering?
No
or are you telling me?
Only color to that, Tony.
Look, we're expecting a strong contribution from the Information Intelligence line of business. I think, you know, I think historically everyone sort of thought that was a mature business. I've never been of that belief, and I think what's happening with AI, you know, the benefits that have been driven by AI are predominantly for today, the productivity benefits, putting from a customer perspective, are really around LLMs of textual data. If you think about that in the context of Objective, we've been building these incredibly valuable to customer data sets for them for the last couple of decades.
Of course, Objective is the first port of call, when it comes to, "Hey, how can we leverage, all of the information that's in our Objective system?" It's been a very, very positive conversation about, you know, how we see sort of how we see the Information Intelligence line of business being driven. I mean, AI is the big driver. Productivity for customers is a huge driver, and with AI also becomes the requirement for more records. I think those attributes really put that line of business, which I think people considered mature, in a really, really strong position. Not just for existing customers, but we're seeing an influx of requests from people that historically we wouldn't have seen as traditional customers.
Equally, just within the traditional marketplace, you know, more and more people are looking at Objective as the strong performer in this space. I think it's all to play for.
Thanks, Tony. gonna give Jules another go. Yeah, we've had some problems getting Jules on stage. I've got a text question here from... What proportion of the R&D spend has been going to AI coding? Can you talk about how these tools affects the headcount and your thinking on hiring?
Yeah. Look, it's hard to put an exact number on what percentage is going to AI. A lot, but that's not a very helpful. That's not a numeric number, I appreciate. You know, a great deal of it's going towards what we can deliver with AI across all lines of business. I did address the headcount issue earlier. I think just with the innovation opportunities available to us, at any point in time, we've got, you know, three years of roadmap of things that we want urgently, and so we will be using, you know, the programming coding efficiency of the AI IDEs to go and address that. There's probably less upward pressure on hiring.
There's probably less upward pressure on salaries because a lot of people are seem to be removing coding staff, from their development groups. That's not what we're planning on doing at Objective at this point in time.
Yeah, having a bit of a problem getting other people on stage. I think we might have to say that we'll throw it up there.
All right. Thanks, everyone. I really appreciate your interest, and I look forward to updating you during the half, and certainly at the full year. Thanks again.