TechnologyOne achieves AU$19 million net profit as SaaS fees grow by a third

The company is on track to deliver 8% to 12% net profit increase for the full year.

TechnologyOne has reported it has delivered its 11th year of record profit, revenue, and software-as-a-service (SaaS) fees for the half-year.

For the period to 31 March 2020, the Australian SaaS company highlighted it achieved net profit of just over AU$19 million, up 6% year on year from AU$17.9 million. In APAC, profit up was 5% from AU25.4 million to AU$26.7 million.

Meanwhile, profit was down in the UK, but improvements were made with net loss for the region reducing by 18% to AU$800,000 for the half-year. The company said it is on track to break even in the UK by the 2020 full year.

TechnologyOne also reported SaaS annual recurring revenue was up by a third from AU$82.7 million to AU$110.2 million, attributing the boost to the 22% increase in the number of enterprise SaaS customers to 475.

"Our SaaS business is growing very fast, even in the midst of COVID-19," TechnologyOne CEO Edward Chung said.

"Our SaaS customers have hundreds of thousands of users, making ours the largest multi-tenanted ERP SaaS offering in Australia.

See also: SaaS, PaaS, IaaS: The differences between each and how to pick the right one (TechRepublic)

Total revenue came up in at AU$138.4 million, up 7% from last year's AU$129.3 million.

Of that, its SaaS business made up AU$51 million, a 36% boost from AU$37.6 million year on year, and on-premise slid 8% from AU$61.8 million to AU$56.7 million. The company said, however, it expected the drop in on-premise revenue due to expectations that more customers would move to SaaS.

The company added it expects more than 80% of on-premise customers to move to SaaS by FY22, with plans to achieve its target of 1,000 enterprise customers by then.

Expenses for the half-year was up 7% to AU$112.5 million, while income tax accounted for just shy of AU$7 million.

Looking to ahead to the full year, TechnologyOne has predicted it will achieve profit growth of between 8% to 12% for the full year, SaaS AAR will be up 31% to AU$133 million, and on-premise licence fees will reduce by 40% to AU$23.5 million.

Chung said despite COVID-19, it has had minimal impacts on the business and therefore the company is on track to deliver strong growth for the full year.

"With a strong pipeline, a high proportion of locked in recurring revenues, no debt, and a strong balance sheet, we are well positioned to deliver continuing strong growth over the full year," Chung said.

"Having said this, COVID-19 is an evolving situation, and we have reflected this in our full year guidance of net profit before tax up 8-12%."

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