Tuesday, 21 May 2019 12:21

TechnologyOne ‘on track’ to deliver full-year record profits and revenue Featured

By
TechnologyOne CEO Edward Chung TechnologyOne CEO Edward Chung

Enterprise software company TechnologyOne has reported continuing strong growth of its business, with net profit before tax for the half year to the end of March of $24.5 million, an increase of 130%, with chief executive Edward Chung buoyant about the company's performance.

And the ASX-listed company (ASX:TNE) is forecasting a lift in net profit before tax for the full year of $76.3 million, up from $71.6 million.

“TechnologyOne is on track to deliver continuing strong growth with net profit before tax over the full year of $71.6m to $76.3m,” said Chung.

Commenting on what he said was the 10th year of record profit, record revenue and record SaaS fees, Chung said, “Today, TechnologyOne is a successful SaaS company. Our results clearly show we have a strong SaaS growth engine. Our SaaS Fees Recognised were up 42% to $37.5m.

“We increased the number of large-scale enterprise SaaS customers by 39% to 389 (compared to 280 at 31 March 2018). These customers have hundreds of thousands of users, making ours the largest multi-tenanted ERP SaaS offering in Australia. Our SaaS ACV is growing very fast, up 45%.”

He said TechnologyOne’s SaaS offering was delivering “a compelling value proposition for our customers providing them ‘any device, anytime access from anywhere around the globe’, defence-in-depth security as well as a simple and cost-effective way to run their enterprise”.

“This allows our customers to innovate and meet the challenges ahead with greater agility and speed, without having to worry about underlying technologies. We take care of everything for our customers, making life simple for them. The economies of scale that we are delivering to our customers are unprecedented in the enterprise space.

“We continue to dominate in the local government sector. We have more than 300 council customers and are continuing to grow fast. TechnologyOne also continues to see strong growth in government.”

And Chung said the company continued to invest strongly in the UK and had seen strong momentum in the first half, with new customers acquired, and the UK loss reducing from $3.2m to $900k for the half-year. “We see significant growth opportunities for the coming years.”

“We will continue to grow quickly, and like we have in the past 32 years, we expect to double in size again in the next five years.”

TechnologyOne executive chairman Adrian Di Marco said, “TechnologyOne has consistently delivered strong and growing results since listing on the ASX in 1999. Our ability to deliver these results for 20 years has not relied on riding the cycle of the economy but it is because of our clear vision and strategy.

“Our ability to successfully undertake large-scale cutting-edge R&D and to successfully commercialise it has underpinned our success. There are few companies in Australia that come close to the level of creativity and innovation as TechnologyOne.

“We continue to invest in new exciting ideas and innovation including Artificial Intelligence and Machine Learning, which we will ship in our 2019A release in the first half of 2019.

“[The year] 2019 is a transition year to AASB15 and reporting as a SaaS company. Over the last few years we have made the transition to a SaaS company, reengineering our business, systems and processes, and retrained our entire organisation. This has been a significant and very complex undertaking.”

Key results reported by TechnologyOne are:

  • Net profit before tax of $24.5 million, up 130%
  • Revenue of $129.3 million, up 5%
  • Expenses of $104.8 million, down 7%
  • SaaS fees recognised of $37.5 million, up 42%
  • SaaS annual contract value (ACV) of $85.8 million, up 45%
  • Operating cashflow of $7.8 million, up 100+%
  • Cash and cash equivalents of $68.2 million, up 19%
  • Dividend of 3.15cps, up 10%
  • R&D expenditure (before capitalisation) of $27.8 million, up 7%, which is 22% of revenue

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Peter Dinham

Peter Dinham - an iTWire treasure is a mentor and coach who volunteers also a writer and much valued founding partner of iTWire. He is a veteran journalist and corporate communications consultant. He has worked as a journalist in all forms of media – newspapers/magazines, radio, television, press agency and now, online – including with the Canberra Times, The Examiner (Tasmania), the ABC and AAP-Reuters. As a freelance journalist he also had articles published in Australian and overseas magazines. He worked in the corporate communications/public relations sector, in-house with an airline, and as a senior executive in Australia of the world’s largest communications consultancy, Burson-Marsteller. He also ran his own communications consultancy and was a co-founder in Australia of the global photographic agency, the Image Bank (now Getty Images).

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