Objective Corporation Limited (OCL) Earnings Call Transcript & Summary

Well, good morning, and welcome to the investor results for the first half of FY 2023. And also welcome to our very first webcast. So hopefully, this is a great medium for you to have an update from us about what Objective's been doing and what the future outlook -- how it works for you. So I'm going to speak for probably about, I would say, about 25, 30 minutes and then give you the opportunity to also ask questions. So we'll come back to that at the end of the presentation and talk about how you get the opportunity to ask questions either on the line, verbally or via the chat [ bar ]. So we'll come back on that one. So first of all, always going to start with what [ we're all about here ] in Objective, and that is delivering outstanding digital government software, which drives stronger communities and nations. And I think regardless of what the form of stakeholder you are, I think remaining true to the mission is always important and something that we should always remind ourselves of. So if we talk about the agenda today, I'm going to cover off a little bit of a financial summary for the first half. Hopefully, you've had an opportunity to either download my lite shareholders, the Appendix 4D, the highlights of the financial results announcement. So there, they should all be available on the ASX now and hopefully, you've had the chance to digest some of those. So we'll cover off one of the highlights for the first half, and then we'll have a business line review and then just remind everybody about what we're focused on from a strategic point of view during FY '23. So first of all, let's talk about the highlights. Revenue of $55 million annual recurring revenue of $89 million. Our EBITDA of $13 million, obviously down slightly for reasons that I go through in the Shareholder Letter, which I'll touch on again. Net profit, in fact, was up slightly to $11 million. R&D [ persistent ], we'll talk about that at $13 million and 24% of revenue and cash up strongly, up 24% on where we were a year from now. So on balance, all of those results were in line with what our expectations were. And again, I've highlighted some of these things in the update that we did at the end of November. Just in terms of some of the stronger results, strong recurring revenue for ESM as a service, up 8%. I should probably also call out with that, that I think a lot of organizations when they go through the transition shows the upside or the downside as it rolls off on on-premise solutions or old ways to sort of contract the service. In our case, in fact, we're still growing on the revenue from on-premise solutions as well. But there -- we're certainly fixing that in terms of what we're doing in terms of growth on the model for Objective ECM. We'll talk some more about that. RegWorks, up strongly, 46%; Trapeze, 18%; and Connect 12%. So I would say these are the year-end ARR numbers or the period end ARR numbers, this is booked revenue. If we look at -- if you've been to one of the presentations before, you'll be familiar with this graph. So this is sort of the updated version of our transition to subscription. And I think the call-out here for us is, in the first half, we actually moved to a new high of [ 78% ] recurring. For those of you that are great students of the Objective story, you'll know that for the full year in FY '22, we're at 72%. So we're very confident that this is going to continue to grow as a total percentage of -- sorry, percentage of total revenue, but a good step up. And I guess in keeping with the things that we've been speaking about in terms of really being focused on the ARR growth, moderating or becoming more efficient in the service delivery for customers, and we clearly have been hit an all-time high in terms of this recurring revenue. A new chart, which I thought was also worthwhile for all stakeholders was really this consistent growth in year-end ARR, and I restate we're only at the half year-end in terms of where we are in FY '23. But everyone loves a new acronym. So we thought this was a one that was useful for everybody. But this is sort of a key metric that we look at as an organization. It doesn't always fit but into accounting periods, but is a good proxy over a 24-month time frame. And you can see here, since we're really committed to annual recurring revenue back in FY '17, this has been a very strong story. We've achieved a 20% compound annual growth rate in that number over that period of time. So again, if you're an [ Objective ] student thesis, you'll appreciate that new chart. R&D, which has obviously been at the core of our business since the sort of beginning of time. The story has continued. We're well above that 20% rate, 24%, $13.4 million spent in the half, well on track to be sort of in that same zone in the second half. I guess, very different to almost all other companies here in Australia. We do not capitalize any of our R&D expenditure. So roll straight through and has obviously that impact on our net profit after tax. But clearly, another strong story around investment in R&D. I think where this really shines through for me, though, is where we are with respect to our compounding R&D investment. I think if you've been a long-term shareholder, I think this has been a great message to shareholders in terms of how we generate future value. But also from a customer's perspective, when I travel and talk to customers, this often comes up is often raised by the customers. And I think you can see here off this chart that in fact, although we've been listed for 23 years now or coming up for a 23-year anniversary. In the last 2 years, 20% of the total R&D investment has been made in the last 2 years. So a really significant number. We'll break through $0.25 billion somewhere during the calendar year this year. But again, as I always say, look, not every dollar spent on R&D delivers the payload that we'd like. But there was a very, very high conversion of investment in R&D to products in future periods. So I think again, this bodes well for future periods as well. So if we talk about a couple of the highlights, I think, first of all, it's always good to remind ourselves of how the economic model works for us, everything starts with great R&D or as we often say, nothing good happens until someone invents a great product. And if we are committed to our R&D investment and also committed in terms of the outcomes that we want from that, it delivers outstanding software. But clearly, that's not enough. In this day and age, there's far more to it than just outstanding software. There's everything from the way we deploy solutions to the way we conduct support for all of our cloud solutions, while it's the uptime. All these things that we've sort of come to know is breathing with respect to delivering these solutions. And so delivering that outstanding customer experience end-to-end is very, very key to the organization today. And if we do a good job of that and get our pricing model right, that will give us the sort of financial vitality to allow us to startle over again and increase that R&D investment. And I think if you've been to any of our presentations, you obviously can read that in the other charts. You can see this has been at the heart of the organization for a long period of time. thing, if we look at the current period in terms of products, at the end of last year, end of FY '22, just I guess we're talking about this some 7 months ago, we had a very strong period during '22 of introducing new products, particularly Nexus. Objective Build got launched, Objective 3Sixty, got, I guess, acquired and then launched. And so we've really had a strong period of launching new products. And what generally follows that is a period of making ensure the new products are getting in probably for customers, making sure that we're getting good feedback. And that's really been a story over the last 6 months. So we've really been focused on hardening up what we've been delivering as opposed to necessarily rushing new products and new capabilities out the door. So we are getting great feedback on all the new products, and we're certainly working with customers to make sure that any issues that they've had have been well exercised through the product stack. So we're really -- the second half of the year will be a little bit different. But certainly, we are working on all of the products currently. Every product has a road map that objective and every product has new features and capabilities for customers. One of the things I also, I guess, wanted to call out, just to give -- for those of you that aren't sort of not familiar with our target market, is really a couple of the, I guess, macro themes that have been happening in government. Like first of all, if you look at the table on the left from Gartner, you can see there that government continues to spend a lot on software versus anything else. And whilst there was a device pickup in '21, which we know is from sort of working from home or working remotely. The one that is persistent is software, which is obviously the industry that we're in. The other chart on the right-hand side is something that we really experienced during the calendar year '22. I'm sure that in your line, you saw something similar, but there were an increasing level of vacancies that were occurring in the public sector. And it really -- whilst it started to moderate now, it really did impact the start of new projects. I think existing projects were continued to run and continue to get rolled out. But in terms of new initiatives, it was really one of those years where people were getting back engaged with the departments and agencies and certainly towards the latter part of the year, finally coming back to the office and then together and teams. So I [ met ] physical terms, not like soft teams. So if you can closely inspect the chart out here, you'll see, in fact, that some of that pressure is coming off. And we've seen that in our own activities as well. But we thought it was a relevant point to point out both of those, just the strength of how government is investing in digital systems, digital transformation as much as the public sector has suffered from staff shortages like everybody else. I think it's also worth while pointing out there's been a lot said about security. Clearly, we have the situation with [ Optus ] here in Australia. We also had the situation with Medicare. I think that they were just, I guess, more public situations than what had really been trending anyway. I think our objective, we've been committed to security for a very long period of time. We have a team dedicated to making sure all of our products are highly secure as well as our operating environment. You can see some of the things that we do on the left-hand side all of our data is encrypted, both in transit and at rest and when we say in transit, where it's on the network as well as at rest in databases. We certainly vet all of our employees before they join the organization. And we've really got a deep set of experience. On the right-hand side of this chart is just some of the accusations that we have. The 2 big ones, the ISO standards, 27001 and 9001 across all products and locations. But equally, for things like Connect, we've been IRAP certified for quite a number of years now. And in fact, we've got -- one of the companies that we work with in the cybersecurity space has, in fact, adopted Connect for their own use. Further than that, the [ DIS ] program with defense, we are credited on. And I guess 2 more local standards, the CSA Star program out of North America and the Cyber Essentials in the U.K. So we've really been very attentive and our teams have been very attentive to security. I mean, the -- we've seen countless breaches that have occurred in the cloud. I'm sure that today, you're seeing those still on a daily basis. And information we store is obviously very highly sensitive. I guess one of the other things that I've called out in the letter to shareholders has really been getting people back together. I won't necessarily call it getting people back in the office. That's probably more of an issue for [ DEXUS ]. But our big thing is really how do we bring our teams together. While virtual teams and video conference-based teams have been an absolute [indiscernible] during COVID. I think equally, it's fairly well documented that this has sort of come at the expense of perhaps company culture and other things. I know there's been a lot of restrictions on travel and some other companies. But I think from our perspective, we're hugely invested in our people, are hugely invested in the power of teams. And you can see here just some examples of where we've gotten together just as a company over the last 6 months. But with that, -- you can't save your way to success. And it's pretty clear that our travel costs have reverted to what they were pre-COVID. We're now probably 10x what we were a year ago in terms of travel costs, but really, it's a onetime rebalance. And I think it's just more important that we focus on bringing people together now. Customers in the same way. We did a [ 7 Collaborate Roadshow ], particularly for our content solutions customers earlier in the last half. And it was just so good to get out there amongst customers. We had a sort of north of a 50% attendance rate at those events. So again, connections that can't really be fostered when you're on teams calls and webinars. And then finally, I'll probably on a slide behind, but the people [ lymphographic ] is much stronger than a bunch of logos behind all those logos of people. And I often say that the most important meetings happen between the meeting room and the lift as opposed to being in the meeting room. And I think when we're all online with [ cameras ], we miss a lot of the softer nuances that have in terms of meeting with people, and that's why we're pretty going back to that way of working. So I'll take you through each of the 3 business lines, and we'll have a bit of a chat about how they're performing and what's coming up next. So first of all, I'm sure many of you are quite aware of our 3 business lines, the content and process business, the RegTech business and planning and building. So we'll start off, and we'll talk about where we are with content and process. So you can see the headlines there in terms of the numbers in the half. And I think, again, I've spoken at length about our drive to ARR. So we really did impact the top line revenue. So perpetual right [ years ] is already winding off materially in the last half, and I would expect to gain materially in the second half as we reach what is the retirement of perpetual right to use this license. For those of you without sort of talking at a bunch of jargon, ARR is really -- or recurring revenue is really what gives us the financial firepower to keep investing at the rate that we wish to invest and really sustain the business. And that's kind of -- we wanted to make the final shift for a number of years now. Customers haven't been quite comfortable with that shift. There's probably still a couple of customers that aren't completely comfortable with that shift, but it is the right thing to do for all stakeholders as it really is. And so we've pushed ahead with that and said that the end is coming at June 30 this year. But we had a go-live of our new Nexus product at SAFECOM as well as Gov365 at the city of Gold Coast. I mentioned the Collaborate Roadshow. We've been doing a lot of work on the new 3Sixty product, particularly with our customers, our new customers in North America. It's fair to say that we've stood up a significant development team across North America and Australia to really bring out the best in the solution that we've acquired there and really check ourselves up for the next couple of years. I've mentioned about the cyber security company that's been using Connect. I think it's always -- that's also a great sign than someone that you bought in to actually doing a security accreditation says it be like a [indiscernible]. They love what they saw and so they bought the solution. And so a great confidence booster. And then finally, Objective Keystone. We're on the cusp of actually moving Keystone into 2 streams. We retain the Keystone brand for all the work that we're doing within financial services around product disclosure statements, key fact statements and the like. And we're launching a new brand in the second half [ of the plan ], which will really talk to the needs of local government. The heritage is the Keystone product in terms of doing strategic planning, which feeds into things like [indiscernible]. So you'll hear more about that during the next half -- but there's been a lot going on in this space. Coming back to it, it was pretty clear from my perspective, with, I guess, the engagement with government in the first half that getting new projects going in the first half was a little bit challenging. But really since before Christmas, it is really accelerated and the second half in terms of new business growth in Content and Process Solutions looks particularly strong. So I guess that will be something for us to talk about in July. We'll move along to RegTech. And again, in terms of -- you saw me talk about earlier that RegTech in terms of the product revenue has grown by 46% in the half. Yet we're only seeing a 5% change here in terms of revenue. And that's really around the thing that I touched on in the shareholder letter is just how do we drive down the cost of deployment. And so -- which is obviously then reflected in the ARR percentage that comes through and the other chart that you saw. And so for us, this sort of underpins that. We've been really busy in the last half, particularly with New Zealand police and the new arms information system. It's been a great success so far. It's gone live on time. We've got a second delivery date at the end of June. And it really is a great community outcome and one that we're very proud of. Equally, we published a government regulatory technology report and that really established objective as a thought leader in this space. But we also had a lot of regulators come together in Australia to talk about the outcomes of that particular report. So successful was that, in fact, that we've run the same thing now in the U.K. and Ben [indiscernible], who leads our RegTech business will be in the U.K. for an event there early next week, which brings a lot of the U.K. regulators together. So we've got -- I think it's almost a standing room only at Australia House next week for that event. So just to that, a couple of other things have happened was we completed the buyers migration for the New South Wales Department of Transport, all those safety cameras that you see up and down the Eastern seaboard have all got software that we're working on with the team from transport. Some of that responsibility has now moved to the national heavy vehicle regulator and still producing fantastic outcomes. So I think people here [ feel ] a little bit if they get caught by mobile phone camera feel a little bit [ agreed ], but we certainly can't -- white label out anyone's registration for anyone that asked that question. Further than that has been an ongoing huge investment in R&D, particularly in RegWorks. As I mentioned earlier, it's all about how do we deploy more RegWorks given the demand, how do we deploy more RegWorks more efficiently for customers. This is particularly important to us when we go to other jurisdictions. So we're already talking to partners in both the U.K. and the U.S., and I'm very convinced that you'll see [ us sign up our first CPA ] regulator in this current half. And then finally, in terms of the business lines, looking at planning and building. We've talked about the number of councils signed up to Build previously. We've had a very strong interest in Build. We've got quite a number of councils deployed now. And we'll see -- I would expect north of 50% of the councils that we currently have as customers and some new ones migrating to build in the second half of this year. The response in terms of Build has been fantastic, probably stronger than I originally expected. And to be fair, we've slowed down the rate of deployment because I wanted to make sure that the customers as we bring them on to the new platform are getting a great experience so that over time, each and every customer that moves on to the platform is getting that great experience. And so we're probably taking a little bit more time than what we originally planned, but I think that's essential to delivering the outcomes that we want to do for customers. Equally, Trapeze been has been a fantastic product for us, probably personally one of our favorites just in terms of the fact that it's become a de facto down across the industry, both here in Australia as well as New Zealand. We've now got quite a number of international deployments outside of Australia and New Zealand as well. It is the de facto standard here. We have 3,000 planning professionals using Trapeze professionally today. And yes, more than 50% of the customer base or potential customer base here in Australia and well north of that number in New Zealand as well. So Trapeze continues to punch above its weight and the team does a great job. I do want to call out, though, that when we acquired MBS with the [ GoGet ] solution, we also brought along with it a couple of outsourced contracts. At the time, we did want to really separate out those 2 businesses, but they become as a bundled set. And those IT services contracts with [indiscernible], one's already rolled off last Christmas and the other one to kind of roll off this financial year. So I think we've outlined in the other commentary in the appendix for what the commercial impact of that is. And it's not that material, but it does skew these numbers. So you can see the top line here, we had a down of 3% in terms of revenue. But if we looked at the revenue increase or the booked revenue increase, -- it was really a 4% growth in terms of planning and building excluding those IT services contracts. I should state that [indiscernible] remain as customers for other products. It's just that those IT services contracts, which were noncore to us are concluding. And then finally, I guess just a bit of a restatement of strategically where we're headed. We always look at the business in terms of these 4 pillars. So first of all, engineering outstanding solutions, delivering more opportunities for customers, growing our family through acquisitions and then attracting new fans through digital marketing. And I think those things stay absolutely core to everything that we're doing today. We did state at the beginning of the financial year that we were really focused on these 4 areas. So ARR, which I've already spoken about market leadership, making sure that the new products that we were delivering were either the market leaders or the potential to be the market leaders in the jurisdictions that we're in. Our geographic expansion RegTech is already showing that it's going to be a big contributor in the U.K. in time to come. And also, the work that we're doing in North America, we've now gotten a number of employees on the ground there, and we're looking to leverage the existing partnership network that we've got in North America. And then finally, invest to grow. It's probably been the slowest period in terms of M&A for us for the last 5 years. We've continued to look at opportunities over time. We continue to look for those opportunities. But I think everyone is aware of what's happening in capital markets. And whilst we're very keen to make sure that we make the right investments, we're also keen to make sure that we invest an appropriate amount of shareholder money in pursuing that objective. So that's still firmly part of our sort of our execution as we sit here today, but it's quite -- in fact, quite likely that you won't see any actual M&A activity in terms of transactions until later on in the calendar year. And with that, I'm going to hand over to Ben, who will talk about how you can connect if you've got a question. Ben is going to talk to us.

Yes, I will. Sorry, just on my camera -- if you could ask a question in the chat. I will invite you to the stage and you'll have the opportunity to ask the question on the webcast. The first question we have is from [ Josh Kanata ], who I will invite to the stage now. For clarity, I'll just ask the question, and Tony, if you can address it. With regard to recession development, should we continue to see research and development hold at [ 24% ] of revenue into the coming years? And when may it return to the 20% target?

Yes. So look, I think we can say it hold. I'm not sure that 20% is necessarily the long-term target. I've gotten a trouble vote once before by saying it might go to 28%. I think that we will start to actually look at R&D as a percentage of different numbers as well. But I think that you would expect to see the run rate continue at about where it is. And I -- at this point in time, I can't see a day when it would drop below 20%.

Great. Tony and Ben, can you hear me okay now? It looks like you -- perfect. Do you mind if I jump through a few questions?

Sure. Perfect.

Just on revenue, can you sort of talk through the expectations on the first half, second half skew? And can you also confirm that the perpetual rights looks like it was about $1 million in the first half. So based on your previous commentary, that means there's maybe a couple of mills for the second half, just to talk through the skew and the perpetual right to use profile again.

Yes. You were very close $1.27 million. So yes, look, I think this year, more than any -- I think it's fair to say that there'll be a second half skew, particularly with ARR, we just know that first half was always going to be challenging just because what we saw happening with initiatives not getting started. As I said, the -- we probably had the most intense Christmas that we've had in many years responding to tenders and other things that were coming along. So yes, I think this year, you will see that skew. I think nothing has changed. I think sometimes people think [ of can computing, therefore ], it changes the skew. The decisions are made in exactly the same time as they always were, just because we changed our pricing model, and I guess our revenue recognition profile hasn't changed anything. The only thing that has changed is we get delayed gratification. So in the past, if we sold a deal then that $1 million would fall into this year, whereas now if we sell $1 million on June 30, we don't see any of it this year. And so -- but I think largely, we've worked through that over the last few years. I don't think that that -- the roll-off of the end of - [ and the right ] to use is affecting this year, as we've already addressed. But I just really feel with all the other things that we've got going on, it was a good time to roll these things through [ the P&L ].

Got it. And so just to clarify that because ARR is obviously the most important thing which we're all focused on. But in terms of just the actual reported revenue because of those things, is there like is the second half sort of similar east to the first in terms of the reported sort of revenue component? Or how does that sort of...

It improves. It improves because what you saw in the first half gets into second half numbers or the prorated amount. But clearly, if your second half weighted then you're really weighted to first half the following year, if you [ what I ] mean. So if you are -- in our case, we're rolling off -- we're clearly rolling off the last perpetual right to use hard. That has an impact this year. But as I keep reminding the team, the P&L starts working wonderfully again from the 1st of July, which is 4.5 months away.

Got it. That's great. And then just my other question was on OpEx. So following the R&D question. Just in terms of the OpEx, obviously, a bit of a step-up in the period. You've talked to getting back on the road travel getting out there and some of the headcount. How should we sort of think about that in terms of annualizing that sort of cost base into the second half and maybe into FY '24 as well, what sort of step-up we should include maybe to the OpEx potentially [ ex ] the R&D side of things anyway.

Yes. So we've largely stepped up the cost base now. I mean, I think every company, whilst we -- every company wants to get the efficiency of the technology and not have people travel and I get that and were the same. But equally, there's no substitute for meeting in person as I think we all know. We took the decision not to shackle everyone with ridiculous approval levels to travel. We have a bit of a culture to do what makes sense and spend the money as if we your own. And look, we're getting the outcomes that we would expect from that. So I think we've had a big step up a huge step up, in fact, in cost of travel. But it's a onetime step. Everyone's going to take it some time. We've just said, "Hey, we're going to take it now. ride and triple it back in over time. I know without [ knowing names ], even some of the largest companies in our space, basically had no travel last year was like leading right up to the and during January, and it's only started to sort of come alive now. So I don't think you're going to see a big step up in that. I think the other big one where there's a step-up or 2 areas where there's , first of all, payroll, which is obviously the one that impacts us the most in terms of EBITDA. And I think we're going to continue to see what was the salaries have stopped going up, they've plateaued in some cases, probably in the [ non-dev ] space had actually come down a little bit in terms of the market. There is still flat and remaining or neutral in terms of growth, but remaining at that higher rate. So I think there's a little bit of a trickle on effect that then continues to happen into next year as this plays out. I mean, we had a substantial lift in [ teleco payroll ] during the year as opposed to a number of people and a bit of that will come through into next year, but it will start moderating.

Thank [indiscernible] you are able to [indiscernible] by he's out. He's in relation to what the pathway of plan was to roll out objective building [ code ] and other jurisdictions.

Okay. Look, I think it's probably too early to talk about Australia. I think -- look, we are engaged with discussions with a number of states, but it's just too early to be talking about others and same with other parts of the world. Look, our focus is to make sure that New Zealand has a great experience, and then we'll roll out from there. We're probably doing more than I'm saying, but I don't want to get people ahead of where we currently are.

[indiscernible] other question was in relation to the transition from perpetual or [indiscernible] perpetual rights use license offering. Would that lead to [ a loss ] of customers.

Look, we've never let that happen. We would make sure that wherever a customer had a concern, we're find a way around it. So I have anecdotally heard of a couple of concerns not in any particular customer, but I don't think that subscription revenues are well liked in South Australia, but I'll be there next week, and I'll have a bit of feel for it. But -- so -- but there's a multiple ways to, I guess, meet customers' desires as well as sort of keep moving the agenda along. I think the reality is -- and you've had other jurisdictions of the states go, no, it must be subscription. So everyone's paying subscription for [indiscernible] 365, if they are using Force.com, if they're using Oracle, Dynamics, I mean you name it. I'm not sure I'm not sure who's actually selling perpetual right to use them all. So we're just really staying in lockstep with what everyone else is doing. But we wouldn't let it get into a situation where we were jeopardizing our customer relationship.

The next questions are from Christian Angelis of CCZ. The first one is talking through the dynamic results in the reduced tax rate in the half, which Christian I can just take on. So first half, there's a [ few doors ] to play. The tax rate is impacted by the contributions to the employee share trust which has resulted in a tax deduction during the period. That commenced last financial year, and we'll continue at least through FY '24 and potentially through FY '25. The -- that has been compounded by a adjustment for an under provisioning -- sorry, over provisioning taxes in FY '22, where [ we've ] been able to claim a greater amount in the R&D tax credits which were changed after the balance date at 30 June 2022. And so we've [ all tax return, which is now far ] we've been able to claim a larger deduction there. And so that's a catch-up for last period, which is why it's the tax rate is effectively down at 0. Christian second question was in relation to the share buyback and what any plans were around that current plans were around the share buyback.

Yes. So look, we clearly have that facility in place. We've had it in place now largely right through the last 5 years. It really just is a facility to give us optionality. I know we get [ tainted ] by everybody when we take free float out of the market, and we try to avoid that. But at the same time, if we get to points [ where ] people don't want our stock. We're more than happy to have it back. So as you can see, our cash -- free cash flow generation is very strong. We lifted 24%. 24% in the half. I think that's the right number to $54 million. And look, we're really keeping our capital safe for what we think is going to be some pretty interesting times in terms of M&A coming up. But at the same time, we've got the option to exercise that buyback if anything silly will happen.

This is the follow-up question, just from [indiscernible] regarding the movement in operating cash for the half and how that normalizes into year-end. I'll take that one. The important point you'll see in the operating cash flow section of the financial statements that there is fine [indiscernible] paid to the [ NCC ] of $1.4 million, which is reducing the operating cash flow. There's also a impact in this half from a significant number of people taking annual leave, which was built up through previous periods. And also, as you can see, the -- as we discussed, the increase in operating costs, but offset by the revenue growth. So as we would expect, there are -- as you would expect the full year cash flow number is going to be particularly [ weighted ] to the second half. That's when we collect the majority of our cash for the year. And we -- there's nothing in this half profile whilst it is down on the operating cash flow recognized in the first half FY '22. There's nothing in this half that would be taken on the trend we expect the full year number is now in line with prior year. The next question was from [ Cloud Walker ]. The question is, is it -- does the company lose sales opportunities? And if so, why does it lose?

Of course, where there's opportunities. I mean, that's the way that the game is played. I think the answer is probably complicated because it's on a product-by-product, probably region-by-region basis. But so much of what you do today is having your go-to-market people really engaged with customers and be helping customers build up a essentially a business case inside their organizations to go and acquire some software. And that's really what our team does today. We don't -- if you're sitting around waiting for tenders to come in and you are not the one shaping those tenders, then that's what we call ambulance chasing, whereas we still sort of contract operator way of doing things. The -- it's just really about going in and influencing. So look, sometimes we still bid on opportunities where we haven't influenced or we haven't educated the customer what we can do. But so often, if something comes out, we'll get a [ sniff ] that is really someone else has been in there educating the customer. And typically, the ones that you're at high risk of is where you haven't had any prior engagement with the customer. And if we go back and look at the statistics, I mean that would prove out to be the case. So it's more a case of -- to make sure that we win the majority or lose the least is making sure our teams are well engaged with customer prospects before they come out to market. That's probably the best way I can ask that question for you in the broadest context without going into individual products.

That concludes the questions that we have online.

All right. Well, look, thanks, everyone, for joining us today. We probably could have slightly got the tech to bring on the question -- the [ faces ] of the questions [ tonight ], and I think you can work out that Ben sitting to my left here and is able to answer the other more technical financial questions for you. But we really appreciate your attendance. And I know some of you that will catch up during the next couple of days on the institutional side. So hopefully, it was successful. We won't send you an e-mail asking for feedback, one of those things out on everything these days. But feel free to [ drop ] a note and tell us if the thing you like -- didn't like you can e-mail us at Investor Relations at objective.com. Thanks again, and we look forward to catching up with you at the full year.