ReadyTech (ASX:RDY) reported first-half FY 2026 results that management said came in below expectations, driven by strong growth in its flagship products that was offset by headwinds in mature and non-core offerings and longer customer decision cycles in parts of the business.
Founder and CEO Marc Washbourne told investors the company is responding with “deliberate action” to simplify the organization, sharpen commercial accountability, and concentrate investment into flagship products and AI-enabled differentiation. The company also introduced Bryce Thompson, who joined as CFO and delivered his first results briefing on the call.
H1 results and revised guidance
ReadyTech reported an underlying EBITDA margin of 28.4% and an underlying cash EBITDA margin of 12.2%. CFO Bryce Thompson said underlying cash EBITDA was AUD 7.5 million, and he attributed the margin profile in part to AUD 2 million of incremental strategic initiatives directed toward flagship product market fit, go-to-market capability, delivery capacity, and AI.
Given what management described as a softer first-half trajectory and current second-half visibility, ReadyTech revised FY 2026 revenue guidance to AUD 125 million to AUD 127 million and withdrew its FY 2027 financial targets. Washbourne said the withdrawal reflects prudence while the company sharpens execution and reshapes the portfolio, with long-term targets to be revisited once growth visibility improves. The company said it expects FY 2026 underlying cash EBITDA margins in the low to mid-teens.
Flagship momentum and operational challenges
Management highlighted several enterprise wins and product milestones during the half:
- Education: a 10-year agreement with Skills Tasmania, described as the company’s largest state government vocational education deal to date.
- Justice: a contract with the Workplace Injury Commission in Victoria, which ReadyTech called an important reference win in a regulated environment.
- Workforce: Ready Workforce was described as the best-performing flagship product, delivering a 24% CAGR over two years, supported by investment in an end-to-end platform.
Against that backdrop, Washbourne outlined several pressures that constrained first-half performance. In managed payroll, the company saw approximately AUD 1 million of revenue churn as customers sought to reduce costs in a tighter SME environment. In SME education, management pointed to private college funding shifting toward TAFE, contributing to downgrades and slower new activity.
The company also referenced disruption from the VETtrak cyber incident, which Washbourne said diverted management focus and impacted parts of the customer base. He said remediation and restoration were prioritized and that work is now “substantially complete.”
In local government, ReadyTech described a backlog of upgrade opportunities in Ready Community. While the sales pipeline remains healthy, management said conversion and implementation velocity needs to improve and will be a major focus in the second half.
Segment commentary
In Education and Work Pathways, ReadyTech reported revenue of AUD 21.1 million and EBITDA of AUD 9.5 million. Washbourne highlighted the Skills Tasmania win and said the company successfully transitioned to the long-term Inclusive Employment Australia contract in Work Pathways, increasing market share. He added that the Work Pathways pipeline includes over AUD 2.5 million in opportunities expected to progress in H2.
In Workforce, revenue grew 12.1% to AUD 18.5 million, with EBITDA stable at AUD 5.8 million as the company continued investing behind growth. Management said increased marketing investment and dedicated sales focus improved pipeline quality and conversion, while managed payroll services faced challenging SME conditions and churn in what ReadyTech described as a non-core area.
In Local Government and Justice, management said revenue growth was modest, reflecting the transition from product readiness to executing upgrades within Ready Community. Since the CouncilWise acquisition in early 2025, ReadyTech said it secured a combination of 15 wins and upgrades with AUD 3.1 million of first-year value signed in calendar year 2025. Segment margins were impacted by investment in leadership capability and enterprise sales capacity. In justice, ReadyTech reiterated the Workplace Injury Commission Victoria contract, and said that while revenue growth was softer than expected, the pipeline and reference wins support confidence in forward trajectory.
Pipeline, enterprise execution, and R&D
ReadyTech said it has a AUD 35.3 million “growth conviction pipeline,” comprising AUD 14.9 million in first-year subscription and AUD 20.4 million in services, noting that services revenue is often a leading indicator of future subscription revenue due to implementation-led enterprise contracts.
Management also disclosed that in calendar year 2025 it signed AUD 19.5 million in new enterprise contracts and major upgrades, including AUD 7.3 million in first-year subscription and AUD 12.2 million in services. Implementation time frames were described as ranging from 90 days to 18 months depending on complexity.
On investment, ReadyTech said it has invested AUD 59.9 million in R&D over the past three and a half years, with 97% directed toward flagship platforms. R&D averaged about 30% of revenue during the period, though management expects it to moderate as products mature and AI-driven development efficiency increases.
AI initiatives and portfolio simplification
ReadyTech emphasized its positioning in regulated verticals and noted it is now ISO 42001 certified for AI governance. Washbourne introduced “Orchestra,” described as a unified AI intelligence layer embedded within flagship products to provide domain-aware conversational insights grounded in each platform’s system of record. Management said uptake is expected to increase steadily in the second half.
Washbourne also outlined the company’s “Clearer, Faster, Stronger” strategy, which includes simplifying and rationalizing non-core products, centralizing operations, and consolidating offshore development capability. In the Q&A, he said rationalization could include accelerating customer migrations to flagship platforms, re-evaluating certain products, and potentially retiring non-core offerings over time, with more detail expected at full-year results.
Asked about sales-cycle delays, Washbourne said enterprise delays have been most concentrated in education where government procurement is involved and across the wider government portfolio, citing detailed and complex procurement processes. He said the company has not seen evidence that AI uncertainty is slowing decisions. On the Victorian TAFE tender referenced in market speculation, Washbourne said ReadyTech had “nothing to announce,” adding the opportunity remains live and the process has been extended, with the government not yet formally confirming an outcome.
About ReadyTech (ASX:RDY)
ReadyTech Holdings Limited provides technology-based solutions in Australia. It operates in three segments: Education and Work Pathways; Workforce Solutions; and Government and Justice. The Education and Work Pathways segment offers cloud-based student and learning management systems for education and training providers to manage the student lifecycle from student enrolment to course completion. This segment also provides platforms to help state governments to manage vocational education and training programs; software platforms for the pathways and back-to-work sector to manage apprentices and job seekers; and a competency assessment and skills profiling tools to track on-the-job training through a qualification.
