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​TechnologyOne pumps AU$25.6m into R&D during first half of 2018

The Australian enterprise software firm has reported AU$10.4 million in after-tax profit, after pumping AU$25.6 million into artificial intelligence and machine learning research and development.

TechnologyOne has announced its results for the first half of the 2018 financial year, reporting net profit after tax of AU$10.4 million, a 1 percent increase year over year.

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Revenue from ordinary activities was AU$120 million and the company expects total annual recurring revenue to reach AU$173 million by the end of FY18.

Cloud delivered the company AU$3 million in profit, an increase of 217 percent over the same period last year, on revenue of AU$11.9 million. The company's consulting business recorded a loss of AU$484,000 from revenue of AU$26.6 million.

The enterprise software firm boosted its enterprise cloud customer base to 280 during the period, with CEO Edward Chung telling shareholders on Tuesday this means his company is the "largest, single instance ERP SaaS offering" in Australia. The company has set a target of 1,200 enterprise customers by 2022.

During the six months ended March 31, 2018, TechnologyOne spent AU$25.6 million on research and development (R&D), and is expecting that figure to reach AU$54 million by the end of the financial year.

The investment in R&D is part of the company's Digital Strategy, which has a heavy focus on the use of artificial intelligence and machine learning.

"TechnologyOne will in the coming months release the next stage of our Digital Strategy, which will build upon the powerful foundations we have created -- our mass production SaaS platform and our Ci Anywhere technology," company founder and executive chairman Adrian Di Marco said.

"This will enable our customers to embrace the digital revolution that is now gaining momentum, simply and easily to digitally enable each and every stakeholder throughout their organisation ... substantially streamlining their business and improving their experience.

"Artificial intelligence and machine learning is an integral part of our digital strategy. We will now be able to roll out our enterprise system to tens of thousands of stakeholders quickly and easily as has never before been possible to truly enable the digital revolution."

Di Marco said the rollout of the company's digital strategy will create the platform for the next stage of growth.

Chung also said his company continued to make "significant investments" in the United Kingdom for future growth.

"We remain confident that the UK is an exciting and large market for our products and will become a significant contributor of profit growth in future years," he said.

UK-based customers include 15 universities, 13 local governments, 10 health and community service providers, and a handful of finance-related organisations.

The investment in the UK is an expansion of TechnologyOne's consulting business.

For the 2017 financial year, TechnologyOne reported AU$44.5 million in after-tax profit, on revenue of AU$273.2 million.

TechnologyOne's annual cloud subscription revenue was up 84 percent to AU$18.6 million, and annual licence fees came in at AU$119.9 million. Meanwhile, revenue from initial licence fees was AU$61.7 million and consultation revenue remained at its 2016 total of AU$71 million.

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