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Brisbane-based Software as a Service (SaaS) company TechnologyOne (ASX: TNE) has reported record first half profit for the 12th year running today on the back of an increase in revenue from its core product.
The company says its profit after tax of $28.2 million, up 48 per cent on the prior corresponding period, was bolstered by continuing strong demand for its Global SaaS enterprise resource planning (ERP) solution.
The solution, a cloud-based digital ERP platform that enables customers to run their business anywhere and on any device, now generates 85 per cent of total group revenue through recurring subscription fees.
Annual recurring revenue (ARR) from TNE's SaaS product rose by 41 per cent in the half to hit $155.8 million, however overall revenue saw modest growth of 5 per cent to hit $144.3 million.
"I am pleased to announce that we have delivered our 12th year of record first half profit and revenue and record SaaS fees," TechnologyOne CEO Edward Chung said.
"Our Profit After Tax for the half is up 48 per cent. And our SaaS ARR is up 41 per cent as we increased the number of large-scale enterprise SaaS customers by 21 per cent, to 576. Our SaaS business continues to grow strongly."
The results follow a half packed with milestones for TNE, during which the company was chosen by the Australian Department of Agriculture, Water and the Environment to streamline and modernise their business.
Additionally, TechnologyOne and the New Zealand Ministry of Business Innovation and Employment announced a new procurement framework which will pave the way for more than 20 NZ government agencies to transition to SaaS.
TNE's UK business continued to improve in the half, with profit before tax of $500,000 for the period.
"We see significant growth opportunities in the coming years," says TNE about its prospects in the UK.
"TechnologyOne is on track to deliver continuing strong growth over the full year in the UK."
Chung said the group's outlook was promising considering the resilience of the markets it serves.
"As in previous years, our first half result is not necessarily indicative of our full year. In particular, as we continue to aggressively grow our SaaS business we will also continue to reduce our legacy licence fee business, which will be down approximately $7 million over the full year," Chung said.
"While this has a significant immediate impact on our P&L over the full year, this is an integral part of our strategy to grow our SaaS business and the recurring revenue base.
"TechnologyOne is well positioned as the markets we serve are resilient. Our Global SaaS ERP solution is mission critical to our markets and enables any device, any time access from anywhere around the world. We expect to see our SaaS ARR continuing to grow strongly, up more than 35 per cent over the full year."
The company has declared shareholders will receive an interim dividend of 3.82 cents per security.
Shares in TNE are down 0.67 per cent to $8.94 per share at 11.05am AEST.
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