TechnologyOne posts record $48m interim profit driven by big contract wins, recurring revenue growth

TechnologyOne posts record $48m interim profit driven by big contract wins, recurring revenue growth

TechnologyOne CEO Ed Chung

Enterprise software group TechnologyOne (ASX: TNE) has notched up its 15th successive record half-year profit result driven by a strong take-up of services by existing clients and big contract wins in the public and education sectors.

The Brisbane-based TechnologyOne posted a bottom-line profit of $48 million for the six months to the end of March, up 16 per cent from a year earlier, as revenue surged 20 per cent to $240.82 million.

Australia’s largest enterprise resource planning (ERP) software group says revenue growth was supported by record SaaS (software as a service) fees amid a strong take-up of its offering by existing customers.

“We are one of only a few companies globally that have successfully transitioned from a traditional on-premise software company to a SaaS company, with all but a few customers now live on SaaS,” says TechnologyOne CEO Ed Chung.

“Our existing customers continue to expand their use of our global SaaS ERP solution, taking additional products and modules to streamline their operations, as shown by our net revenue retention (NRR) of 117 per cent.”

Chung says that TechnologyOne is on track to top $500 million annual recurring revenue (ARR) by FY25, a target that the company brought forward when announcing its full year results for FY23. Total ARR in the current period is tracking at $423.6 million, up 21 per cent.

Net Revenue Retention (NRR), which is the net amount of new ARR from existing customers, was 117 per cent for the 12 months to 31 March.

Chung describes this as an “outstanding result given that best-in-class in the ERP market is considered between 115 per cent and 120 per cent".

The company expects to meet its 115 per cent target for the full year, which if consistently achieved will lead to a doubling of the business every five years.

“These are strong half-year results for TechnologyOne and validate the strength of our SaaS strategy, which continues our strong growth trajectory in both Australia and the UK,” says Chung.

“Our organic growth has continued in the first half through being chosen as a partner by many of the most forward-thinking councils in Australia and New Zealand, such as Newcastle City Council and New Plymouth District Council.”

TechnologyOne has also secured “strong wins” with TAFE WA while continuing to grow in the UK education market through the signing of new customers during the half, among them Solent University Southampton.

“Government departments in APAC are increasingly turning to TechnologyOne with first-half wins at ASIC and the Department of Primary Industries,” says Chung.

“These organisations are selecting TechnologyOne as their ERP provider, due to our deep industry knowledge, local presence, innovative delivery models and our focus on putting our customers and community first.”

TehnologyOne expects strong growth for the FY24 full year with guidance of 12 to 16 per cent growth in profit driven by ARR growth of 15 to 20 per cent. The full-year profit is expected to be buoyed by a 1 per cent lift in pre-tax profit margins.

TechnologyOne is paying a record interim dividend of 5.08c per share, up 10 per cent from a year earlier.

Enjoyed this article?

Don't miss out on the knowledge and insights to be gained from our daily news and features.

Subscribe today to unlock unlimited access to in-depth business coverage, expert analysis, and exclusive content across all devices.

Support independent journalism and stay informed with stories that matter to you.

Subscribe now and get 50% off your first year!

Four time-saving tips for automating your investment portfolio
Partner Content
In today's fast-paced investment landscape, time is a valuable commodity. Fortunately, w...
Etoro
Advertisement

Related Stories

Cash transporter Armaguard receives $50m lifeline to stay afloat

Cash transporter Armaguard receives $50m lifeline to stay afloat

As cash processing, storage and transport company Armaguard struggl...

Cettire loses $411m in value as shares plummet 48pc

Cettire loses $411m in value as shares plummet 48pc

All of the extraordinary share price gains made by Melbourne-based ...

Fines of $10 million will force supermarkets to rethink exploiting suppliers, but more could be done

Fines of $10 million will force supermarkets to rethink exploiting suppliers, but more could be done

Suppliers of food and other products have been complaining for year...

From Just Jeans to Dotti, Myer proposes merger with Premier's apparel brands

From Just Jeans to Dotti, Myer proposes merger with Premier's apparel brands

Myer's (ASX: MYR) new executive chair Olivia Wirth has wasted l...