The Objective Corporation Limited (ASX: OCL) share price has been amongst the best-performers on the Australian share market on Monday.
In afternoon trade the shares of the provider of content, collaboration, and process management solutions are up over 10% to $3.10.
This means they have now gained 17% this year and are trading within a whisker of their 52-week high.
Why is the Objective Corporation share price racing higher today?
Investors have been snapping up the company's shares today after it released a positive trading update this morning.
According to the update, Objective Corporation expects to deliver revenue of $62 million and net profit after tax of $9.1 million in FY 2019. This equates to a decline of 1% and an increase of 23%, respectively, compared to FY 2018.
Whilst this revenue figure may appear disappointing, it is worth noting that this is the result of a large consulting project in the prior period that was not repeated in FY 2019.
Positively, this revenue has almost been replaced in full with higher margin software revenue, which has led to the strong profit growth this year.
Objective Corporation reported strong subscription revenue over the period. Revenue for its ECMaaS software grew 23%, Connect increased 27%, Keystone rose 21%, and Trapeze increase 20%. This ultimately led to the company reporting a 15% increase in annual recurring revenue of $46.6 million.
Looking ahead, management appears confident in the company's outlook for FY 2020.
Objective Corporation's CEO, Tony Walls, said: "The increasing proportion of subscription revenue provides significantly greater predictability around future revenue and earnings, allowing us to better plan and manage our resources. During FY2020 we will continue to utilise the strong cash flows generated by the business to invest in our existing product portfolio, as well as introduce new products through acquisitions where strategically aligned."
He added: "Our expanding range of solutions all sharing the Objective iQ interface provides numerous opportunities to grow revenues within our existing customer base. The repository agnostic framework of our products continues to expand our addressable market. Leveraging this platform, we expect all business units to be contributing to profit by close of FY2020."
Elsewhere in the sector on Monday, the Praemium Ltd (ASX: PPS) share price has zoomed higher following the release of a positive quarterly update and the Xero Limited (ASX: XRO) share price is trading almost 3% lower amid general weakness amongst tech shares.
