The Objective Corporation Limited (ASX: OCL) share price is ending the week in a disappointing fashion.
At the time of writing, the technology solutions company's shares are down 15% to $12.74.
This means the Objective Corp share price is trading within sight of its 52-week low of $12.50.
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Why is the Objective Corp share price being sold off?
Investors have been selling down the Objective Corp share price today in response to the release of a disappointing trading update after the market close on Thursday.
As management previously advised, Objective Corp has followed the lead of TechnologyOne Ltd (ASX: TNE) and switched its focus to a software-as-a-service (SaaS) model. This has seen the company stop offering purchase perpetual right to use (PRTU) licensing options to new customers.
Management expects this to boost its annual recurring revenue (ARR) in the coming years. However, this has had a negative impact on its sales revenue in FY 2023 and management is now guiding to softer than normal revenue growth.
In addition, the company notes that salary growth in the technology industry has been "very robust" over the past 18 months and it has spent heavily on travel costs to re-engage with customers.
In light of the above, FY 2023 revenue growth is going to be "single-digit rather than the double-digit figures that shareholders have come to expect" and its operating margin will decrease.
While this is disappointing, management remains very positive and highlights its very strong balance sheet (cash of $60 million and no debt), its highly cash generative business, and positive long term outlook. In respect to the latter, the company concluded:
The customer demand and fundamentals of our business remain strong. This will put us in a strong position to deliver outstanding headline numbers again from FY 2024.
