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Date : 01/06/2023

TechnologyOne Delivers Stellar Half-Year Results, Setting the Stage for Sustained Growth

TechnologyOne Ltd (ASX: TNE), a leading provider of enterprise software solutions, has recently announced its impressive half-year results, showcasing strong growth and exceeding market expectations. The company’s robust performance in its Software-as-a-Service (SaaS) business, coupled with its expansion in the United Kingdom, has raised its share price. With a positive outlook and a clear growth strategy, TechnologyOne is well-positioned to continue its upward trajectory.

TNE: Strong Financial Performance

TNE shares are trading at $16.76 and its current market cap is approximately 5.44 Billion AUD.

TechnologyOne Ltd shares forecast

  1. TechnologyOne experienced a 22% increase in revenue, reaching $210.3 million.
  2. The company’s Software-as-a-Service (SaaS) annual recurring revenue (ARR) grew substantially, surging by 40% to $316.3 million.
  3. TechnologyOne achieved a remarkable 24% rise in profit before and after tax, amounting to $52.7 million and $41.28 million, respectively.
  4. Shareholders were pleased to see a 10% increase in the interim dividend per share, reaching 4.62 cents.
  5. Total expenses for the company grew by 21% during the specified period.
  6. TechnologyOne experienced a significant 20% jump in cash and equivalents, reaching $139.1 million.

During the first half of the fiscal year, TechnologyOne achieved remarkable financial results. The company reported a revenue increase of 22% to $210.3 million, demonstrating solid top-line growth. The SaaS annual recurring revenue (ARR) witnessed significant growth, surging by 40% to reach $316.3 million. This substantial increase in recurring revenue further strengthens TechnologyOne’s financial stability and long-term prospects.

Profitability also soared, with profit before tax and profit after tax experiencing a 24% increase, amounting to $52.7 million and $41.28 million, respectively. Furthermore, TechnologyOne rewarded its shareholders by declaring an interim dividend of 4.62 cents per share, representing a 10% increase from the previous year.

TNE: SaaS Business and UK Expansion Drive Growth

TechnologyOne’s SaaS business was a major driver behind the company’s impressive results. The number of large-scale enterprises’ SaaS customers increased by 27% to 903 during the first half, underscoring the growing demand for the company’s software solutions. This expansion in the customer base, coupled with the strong Net Revenue Retention (NRR) rate of 119%, reflects TechnologyOne’s ability to win and retain customers in a highly competitive market.

The company’s success extended beyond its home market, as its UK division showcased significant growth. In the first half of FY 2023, the UK business generated almost the same amount of new ARR as it did throughout the previous fiscal year, resulting in a 29% year-on-year increase in profit before tax to $3 million. These promising results highlight TechnologyOne’s ability to penetrate and thrive in international markets.

TNE: Exceeding Expectations

TechnologyOne’s exceptional performance during the first half surpassed market expectations. Analysts projected a 14% revenue increase to $196.6 million and a 17% jump in profit before tax to $49.9 million. However, the company outperformed these estimates, delivering higher revenue and profitability figures. The market response has been overwhelmingly positive, with the company’s share price experiencing a significant surge.

TNE: Positive Outlook and Growth Strategy

TechnologyOne’s management remains optimistic about the company’s growth prospects. The company expects continued strong growth over the full year, with a projected net profit before tax growth of 10% to 15%. This optimistic outlook is supported by the expected 40% growth in SaaS ARR for the full year.

CEO Edward Chung emphasized the company’s strategy to aggressively grow its SaaS business while reducing the legacy license fee business gradually. This strategic shift is expected to further bolster the recurring revenue base and drive long-term growth.

TechnologyOne aims to surpass $500 million in ARR by FY 2026, building upon its current base of $350.6 million. To achieve this ambitious target, the company plans to continue investing in research and development (R&D) to develop innovative platforms to sustain its growth momentum. With its global SaaS ERP solution, TechnologyOne anticipates realizing economies of scale, leading to expanded profit margins of at least 35%.

Conclusion:

TechnologyOne’s outstanding half-year results have positioned the company as a standout performer in the technology sector. The strong growth in its SaaS business and its expansion in the UK have propelled the company’s financial performance beyond market expectations. With a positive outlook and a clear growth strategy, TechnologyOne is well-positioned to achieve its long-term targets and deliver sustained growth. As the company continues to innovate and expand its customer base, investors can anticipate continued value creation and potential share price appreciation.

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