Shares in Brisbane-based TechnologyOne saw a small rally yesterday thanks to a sharp rise in interim earnings and a smaller rise in its half-time payout to shareholders.
The company told the ASX that the 48% rise in first-half payout was driven by growing demand for its software as a service (SaaS) business.
The company yesterday revealed a 48% profit increase to $28.2 million for the six months to March 31.
The jump in profit was struck on a much slower 5% rise in revenue to $144 million, underpinned by that continuing strong demand for the firm’s SaaS enterprise resource protection product.
The rise will see TechnologyOne pay an interim dividend of 3.82 cents a share, partially franked, up 10% from 3.47 cents a year ago.
There was a warning of a dip in revenue for the year from one fading area of business and the company indicated that while that fall would impact earnings growth, they would still be up on a year ago – just not at the 48% rate reported yesterday,
Perhaps that’s why the shares were off half a per cent to $8.94 for a while – still nearly a dollar under the most recent peak of $9.87 touched on April 23.
But investors took another look in the afternoon and the shares ended up 2% at $9.18.
The company said its 12th year of record interim profits followed a 21% rise in the number of large-scale enterprise SaaS to 576.
“Our Global SaaS ERP is the future of enterprise software,” the company told investors.
“It provides our enterprise customers a mission-critical solution to run their entire business on any device, anywhere at any time.
“It also allows them to innovate and meet the challenges ahead with greater agility and speed, without having to worry about underlying technologies. This makes life simple for them”.
“Momentum in the Federal Government sector continues with the company’s Global SaaS ERP, chosen by the Australian Department of Agriculture, Water and the Environment to streamline and modernise their business,” the company said in yesterday’s statement.
TechnologyOne and the NZ Ministry of Business, Innovation and Employment announced a new procurement framework that will pave the way for more than 20 NZ government agencies to transition to SaaS.
The company said its UK business has continued to improve, with profit before tax of $500,000 for the half-year.
And the company sees more of the same this half despite a forecast drop in revenue for the half from a declining area of business.
CEO Ed Chung said in Tuesday’s statement that: “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 $7m over the full year.
“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.”
“We also expect full year expenses to be broadly in line with last year, as we invest in new areas of growth. We are well positioned to deliver continuing strong growth over the full year.
“We have reflected this in our full year guidance of Net Profit Before Tax for FY21 of $94.3m to $98.6m. That is Profit Before Tax up 10%-15% per cent on FY20 Underlying Profit and up 14%- 20% on FY20 Reported Profit,” Mr Chung said.
“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%+ over the full year” he added.
