TechOne readies to reap rewards as on-prem customers transition to SaaS ERP platform

TechnologyOne said it expects by FY24, total revenue will be growing by more than 15% per annum as its on-premise business wraps up.

TechnologyOne anticipates that its annual recurring revenue (ARR) will climb to more than AU$500 million by FY26, after posting its SaaS ARR grew by 43% to AU$192 million during the 2021 financial year and helping more on-premise customers transition to its SaaS platform. 

For the year ending 30 September, TechnologyOne profit after tax increased just over $9 million to AU$72.7 million.

Total revenue came in at AU$312 million, 4% higher year-on-year. Of that, revenue from its SaaS and continuing business pitched in AU$294 million, 9% more than last year, while the company's legacy licence business made up the remainder.

According to TechnologyOne, the growth its SaaS ARR experienced was entirely organic, as demand for its Global SaaS ERP solution continued to increase.

"We added approximately 100 enterprise customers this year to our Global SaaS ERP solution, and we now have 637 large scale enterprise customers, with hundreds of thousands of users, making it the largest single instance SaaS ERP offering in Australia," the company said.

At the same time, during FY21, TechnologyOne announced the end of its on-premise business by October 2024, which will see its remaining on-premise customers transition to its Global ERP SaaS ERP Solution.

"We expect 90%+ of all our remaining on-premise customers to move to our SaaS solution, driving the growth of our SaaS business," the company noted.

Off the back of its combined announcement of its on-premise business and the success of its SaaS ARR, TechnologyOne reported total ARR was up 16% to AU$257.5 million, putting the company on track to hit its target of more than AU$500 million ARR by FY26.

"Our SaaS business continues to grow quickly. The quality of this revenue stream is exceptionally high, given its recurring contractual nature, combined with our very low churn rate of ~1%," the company said.

"Combined with our announcement of the end of our on-premise business, this is driving our annual recurring revenue growth."

TechnologyOne also expects that by FY24, total revenue will be growing by more than 15% per annum as its on-premise business wraps up.

The FY21 report also noted the company invested $77 million in R&D, which is up 13% compared to last year. The company attributed the investment increase, which typically sits at an 8% benchmark, was due to "new and exciting areas", including its Digital Experience Platform for local government and higher education, as well as in cyber security for its Global SaaS ERP solution.

During the year, the cloud service provider made its first international acquisition, purchasing UK-based Scientia, for an expected cost of around £12 million.

"This acquisition forms part of our strategic focus to deliver the deepest functionality for Higher Education and it will accelerate our growth and competitive position in the UK as well as have significant benefits in the Australian higher education market," TechnologyOne stated.

The deal is expected to give a boost to the company's UK business, which delivered SaaS ARR of AU$9 million and profit of AU$1.6 million for FY21.

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