ReadyTech (RDY) $1.21

RDY -29.77%:  hit hard today after a 1H FY26 result that came in below expectations, with investors losing patience as strategy execution continues to lag near-term earnings delivery.

1H26 Highlights

• Revenue +5.6% to $61.6m; subscription revenue $51.8m (84% recurring)
• Expenses +10% y/y as the company continues to invest heavily in product, sales and AI capability
• Flagship momentum evident (Skills Tasmania, Victorian Justice win), but longer implementation timelines are pushing earnings contribution further out
• FY26 guidance trimmed; FY27 targets withdrawn, increasing earnings uncertainty
• Cash EBITDA margins expected to remain in the low-mid teens in FY26

At a headline level, the result showed modest top-line growth but weaker profitability and increased uncertainty around the medium-term outlook. Revenue up 5.6% to $61.6m, was driven by enterprise flagship wins in government and justice, but this was offset by ongoing churn in mature segments, longer sales cycles, and higher investment spend. More concerning for the market was the decision to withdraw FY27 targets and cut FY26 revenue guidance to $125–127m, alongside confirmation that margins will remain subdued in the low-to-mid teens.

• Overall, with sales cycles lengthening and near-term margins under pressure, RDY now needs to prove that its “Clearer, Faster, Stronger” strategy can translate into tangible earnings leverage, not just pipeline momentum.