​TechnologyOne SaaS segment grows as UK business slides

Company reported AU$51 million in after-tax profit for FY18.

Australian enterprise software firm TechnologyOne has published its financial results for the 2018 financial year, reporting AU$51 million in after-tax profit -- a 15 percent increase year over year.

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Licence fees contributed AU$65.3 million to the company's revenue, while its Software as a Service (SaaS) segment saw a 175 percent increase in profit over the last year to AU$7 million.

For the 12 months to September 30, 2018, revenue totalled AU$299 million, comprising of AU$169 million in annual recurring revenue.

TechnologyOne ended the year with 347 "large scale" enterprise customers, securing 77 during the 12 month period.

See also: Why one Australian council used cloud to keep pace with customer demand | The desire to be mobile sent Noosa Shire Council to the cloud | TechnologyOne signs three New Zealand government agencies

"Today, TechnologyOne is a SaaS company , though the market is yet to fully appreciate this fact given we started as a traditional 'on premise' software company," CEO Edward Chung said on Tuesday.

"We continued to dominate in the local government sector, where we closed 11 new major deals with AU$80 million in contract revenue. We have more than 300 council customers and are continuing to grow fast."

During the year, TechnologyOne said it continued to make "significant investments" in the United Kingdom for future growth.

The UK segment reported a AU$4.1 million loss, a jump from the AU$1 million loss reported a year prior.

"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," Chung said while delivering the company's half-year results.

"We continued to invest strongly in the UK and remain excited about the significant opportunities for the coming years," he added on Tuesday.

The 44 UK-based customers include 14 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.

TechnologyOne invested over AU$54 million in research and development this year.

"We continue to invest in new exciting ideas and innovation including artificial intelligence and machine learning, which we will ship in our 2019A release in the first half of 2019," company founder Adrian Di Marco told shareholders on Tuesday.

For the first half of the 2018 financial year, TechnologyOne reported net profit after tax of AU$10.4 million, a 1 percent increase year over year.

Revenue from ordinary activities was AU$120 million.

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