Brisbane-based TechnologyOne (TNE) belied the recent weakness in its share price by revealing a better than expected 2015-16 result yesterday and higher dividends for shareholders.
The shares surged as a result.
The shares had dipped around 9% in the past three months, including a fall of 1.3% on Monday as the market went negative on the impending full year profit announcement.
But the company revealed yesterday that revenue jumped 14% to $249 million in the September 30 financial year, while net profit climbed 16% to $41.3 million, both of which results were ahead of analyst expectations.
It was also ahead of the company’s own guidance, which was for 10%-15% profit growth.
Investors revised the gloom and chased the shares higher. They jumped more than 11% to $5.89, partially reversing that slide in the past three months.
TechOne says it is Australia’s largest enterprise software company and boasts that its annual revenues have climbed for an unbroken stretch of 17 years.
Directors declared a final dividend of 5.09 cents, plus a special final dividend, as in the previous year, of 2 cents a share.
The total annual ordinary dividend (including the special payout) rose to 9.45 cents a share up 8% from 2014-15. That’s a payout ratio of 72%, down from 76%.
The company said its strong result was underpinned by the "substantial growth" of its "software as a service", or SAAS, business, which more than doubled for the second consecutive year. License fees also jumped by 14 per cent to $56 million.
The company said it expects its cloud business to be profitable by 2017, and that the company’s profit margin will improve to 25% from 21% at te moment.
The company had cash and cash equivalents of more than $82 million at the end of the year, up $7 million from the previous period. “This year we added more than 60 major new corporate customers to our expanding customer base,” the company said in yesterday’s profit report.
"Of these new customers, 12 of them were for the replacement of our competitors’ systems including systems from Oracle, SAP, Microsoft." The group’s cloud business, TechnologyOne Cloud made a $2.2 million loss in 2015-16, largely due to investment in building the product. The company said it had originally expected its cloud business to break even in the 2017 financial year but it now expects it will make a $1 million profit.
"We’ve experienced huge growth in SaaS, with our largest wins in 2016 all coming from SaaS," executive chairman Adrian Di Marco said. “This growth is across all industries, from federal government to local government, education and financial services, which speaks volumes about the market shift towards a cloud first, mobile first world,” he said yesterday.
