TechnologyOne (ASX: TNE) has delivered its 13th year of record profit underpinned by strong demand for enterprise customers and digitisation tailwinds.
The upbeat earnings result struggled to inspire the market, with TechnologyOne shares down -4.2% in early trade.
For the first-half ended 31 March 2022:
Revenue of $172m, up 19%
SaaS annual recurring revenue of $225.1, up 44%
Net profit of $33.2m, up 18%
Expenses of $129.9m, up 21%
R&D expenditure of $41.5m, up 20%
Cash and cash equivalents of $116.4m, up 16%
Interim dividend of 4.2 cents per share, up 10%
TechnologyOne’s SaaS and continuing business operations reflected more than 97% of first-half revenues as the business shifts away from the legacy licence model.
Earnings growth was supported by an increase in large-scale enterprise SaaS customers, up 24% to 714, the highest number to date for any comparable period.
Expenses rose 21% in-line with expectations. Though, R&D investment was described as “significant” and potentially above market expectations. The investments will go towards expanding the functionality and capabilities of the company’s global SaaS Enterprise Resource Planning (ERP) solution.
TechnologyOne generated $1.6m in cash flow in the first-half.
“Traditionally, cash flow generation for TechnologyOne is weighted to the second half, aligned with customer payment anniversary dates, resulting in negative cash flow in the first half,” said CEO Edward Chung .
“Cash flow generation will be strong over the full year, and we expect it to represent approximately 85% of net profit after tax. Cash flow generation will progressively align to NPAT by FY24.”
TechnologyOne is expected to deliver FY22 net profit growth between 10-15%.
Chung turned his attention to recent concerns about deteriorating economic conditions, high inflation and rising interest rates, pointing out that:
Customers in sectors such as government and higher education are resilient
Customers turn to software to achieve greater cost efficiencies
Subscription revenue contracts pass on inflation
Finance Writer & Social Media
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