Technology One Limited Announces Record Profit: Up 22 Per Cent

TechnologyOne comes of age as dominant supplier of enterprise software in the Australian market 

Listed software developer, Technology One Limited (ASX: TNE), today announced a record full year Profit Before Tax of $19.8 million, an increase of 22 per cent
over the prior comparative year to June 30.

This result meets market expectations that the company set at the start of the financial year of growth between 15 and 20 per cent. It also validates the company’s ambitious business choice not to pursue a niche market like many other Australian software vendors but instead develop enterprise applications, which represent one of the biggest software markets in the world.

It is an exceptionally strong result given TechnologyOne continued to invest significant funds in its aggressive research and development (R&D) program and has expanded its products, services and geographical reach.

Analysis of Performance
Highlights of the full year results are as follows:

• Net Profit Before Tax (NPBT) up 22 per cent to $19.8m, an increase of $3.5m
• Net Profit After Tax (NPAT) up 20 per cent to $14.8m, an increase of $2.5m
• Revenue up 18 per cent to $78.4m, an increase of $11.9m
• R&D expenditure remained strong up 9 per cent to $13.8m, an increase of $1.2m and representing 18 per cent of Revenue
• Expenses excluding R&D and depreciation up 19 per cent to $44.8m, an increase of $7.2m

“This strong result reflects the continued strong demand for our products as evidenced by the 27 per cent increase in new licence fees to $18.3m,” said Adrian Di Marco, Executive Chairman, TechnologyOne.

TechnologyOne supplies software to almost 50 per cent of Australian Universities, over 100 local government authorities as well as many of Australia’s largest commercial organisations and government departments .

“We are now one of the dominant providers of enterprise solutions in Australia and New Zealand, with a strong and established position in the General Commercial, Financial Services, Local Government, State and Federal Government and Higher Education markets.”

TechnologyOne Financials continued to underpin TechnologyOne’s business, coupled with continuing strong growth from TechnologyOne Student Management and TechnologyOne Property/Rating & Local Government.

Mr Di Marco said the company has a substantial advantage over its competitors which have failed to deliver a new generation product to compete with TechnologyOne’s new Connected Intelligence (Ci) product.

“The functionality and usability of our fully integrated, ‘out of the box’, enterprise suite of software solutions is winning us business over the traditional global ERP providers.”

“Customers are looking for enterprise software that ‘works out of the box’ and does not require costly code customisation. They are also looking for software that is easy to use and minimises training requirements. Our new Ci series of products has delivered on this,” said Mr Di Marco.

“Our competitors’ product offerings are now quite old, and they are still promising to deliver new generation offerings sometime in the future. This is causing confusion and a significant level of dissatisfaction among their customers, who do not have a clear path forward.”

“Our ‘TechnologyOne Evolve’ strategy guarantees our customers a simple and straightforward evolutionary path forward with regular software releases that provide new features, functions and technology to provide our customers with the long term security and functionality they are looking for.”

“Our new generation Ci product is proof of the success of our ‘TechnologyOne Evolve’ strategy as all the customers of our previous client/server product have been able to simply and easily migrate to our new generation product.”

Growth for the new financial year will be primarily driven by the TechnologyOne Financials, Property & Rating, Business Intelligence and Works & Assets products. The Student Management business is expected to continue to be strong once again this financial year. Also as existing customers move to our new Connected Intelligence series of products, additional sales of products into our customer base are expected to increase substantially this year.

“Looking out a few years we see enormous opportunities in the HR/Payroll area where organisations are looking to move away from 'point solutions' to deeply integrated enterprise solutions,” he said. “Further down the track we expect this product to be a significant contributor to our profit.”

“We are particularly excited about the long term opportunities in the area of Business Intelligence, Works & Assets and CRM products.”

“We also see long term opportunities to further expand the geographies we operate in, possibly to the USA and/or China.”