TechnologyOne's SaaS business continues to grow helping lift 2021 half-year profit by 48%
TechnologyOne continued to experience strong growth during the first half of the 2021 financial year, reporting 48% year-on-year growth in after-tax profit of AU$28 million.
The company attributed the positive results to the 21% uplift in the number of large enterprise Software-as-a-Service (SaaS) customers to 576. Some major wins during the first-half included contracts with the Australian Department of Agriculture, Water and the Environment, and the New Zealand Ministry of Business Innovation and Employments.
For the period to 31 March 2021, total revenue grew by 5% from AU$138 million to AU$144.3 million. Of that, AU$140.6 million was revenue from SaaS and continuing business, which grew 7% year-on-year from AU$132 million. The remainder of total revenue was from the company's legacy licence business, which almost halved during the half-year to AU$3.8 million, from the AU$6.2 million recorded during the same period last year.
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TechnologyOne predicted that revenue from its SaaS and continuing business will continue to grow at a rate of approximately 15% or more per annum as its legacy licence business is totally wound down over the next few years.
"Our global SaaS ERP is the future of enterprise software," TechnologyOne CEO Edward Chung said. "It provides our enterprise customers a mission-critical solution to run their entire business on any device, anywhere at any time."
For the half-year, the company also recorded a 5% reduction in expenses to AU$107.4 million, but assured it was not to the detriment of R&D expenditure that came in at AU$34.6 million.
"The primary driver for lower expenses in the first half is the significant efficiencies we are delivering as we gain scale on our SaaS platform. As we continue to win more customers and our SaaS platform continues to scale globally, our margin will continue to grow even further," the company stated.
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Looking ahead, Chung said the company will continue to "aggressively" grow its SaaS business as it continues to reduce its legacy licence business, which is expected to be down approximately AU$7 million over the full year.
"While this has a significant immediate impact on our P&L over the full year, this is an integral part of our strategy to grow our SaaS business and the recurring revenue base," he said.
He also noted that for the full year, expenses would be "broadly in line with last year" and the company was "well-positioned" to deliver growth, with the company's full-year guidance of net profit before tax for FY21 expected to fall between AU$94.3 million to AU$98.6 million.
"That is profit before tax up 10-15% on FY20 underlying profit and up 14-20% on FY20 reported profit," Chung said.
In October last year, the Australian cloud services company was ordered to pay AU$5.2 million to a former employee, after the Federal Court of Australia ruled that the company acted in contravention of the Fair Work Act 2009.