Insights

TechnologyOne (ASX:TNE) share price on watch after reporting strong first half growth

The TechnologyOne Ltd (ASX:TNE) share price will be on watch today following the release of its half year results…
The post TechnologyOne (ASX:TNE) share price on watch after reporting strong first half growth appeared first on The Motley Fool Australia. –

The TechnologyOne Ltd (ASX: TNE) share price will be one to watch closely today.

This follows the release of the enterprise software company’s half year results this morning.

How did TechnologyOne perform in the first half?

TechnologyOne was a strong performer during the first half of FY 2021, thanks largely to continuing strong demand for the TechnologyOne Global SaaS ERP Solution.

According to the release, for the six months ended 31 March, TechnologyOne reported a 5% increase in total revenue to $144.3 million. This was underpinned by a 41% jump in SaaS Annual Recurring Revenue (ARR) to $155.8 million thanks to a 21% increase in large-scale enterprise SaaS customers to 576.

Due partly to a 5% reduction in expenses thanks to significant efficiencies, the company’s profits grew at an even quicker rate. First half profit after tax was up 48% over the prior corresponding period to $28.2 million.

One slight disappointment was that its cash flow generation was negative $2.9 million. However, this is expected to be stronger over the full year and didn’t stop the TechnologyOne board from increasing its dividend by 10% to 3.82 cents per share.

Management commentary

TechnologyOne’s CEO, Edward Chung, commented: “I am pleased to announce that we have delivered our 12th year of record first half profit and revenue and record SaaS fees.”

“Our Global SaaS ERP is the future of enterprise software. It provides our enterprise customers a mission critical solution to run their entire business on any device, anywhere at anytime. It also allows them to innovate and meet the challenges ahead with greater agility and speed, without having to worry about underlying technologies. This makes life simple for them.”

Looking ahead, Mr Chung said: “As in previous years, our first half result is not necessarily indicative of our full year. In particular, as we continue to aggressively grow our SaaS business we will also continue to reduce our legacy licence fee business, which will be down approximately $7m 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.”

Outlook

Despite previously stating that its second half would be the stronger half in FY 2021, this isn’t expected to be the case any longer.

Management is guiding to a full year net profit before tax of $94.3 million to $98.6 million. This represents year on year grow of 10% to 15% on an underlying basis.

Looking further ahead, management is targeting ARR of over $500 million by FY 2026. And thanks to the economies of scale from its Global SaaS ERP solution, it also expects continuing profit before tax margin expansion to 35%.

Where to invest $1,000 right now

When investing expert Scott Phillips has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for more than eight years has provided thousands of paying members with stock picks that have doubled, tripled or even more.*

Scott just revealed what he believes are the five best ASX stocks for investors to buy right now. These stocks are trading at dirt-cheap prices and Scott thinks they are great buys right now.

*Returns as of February 15th 2021

More reading

5 things to watch on the ASX 200 on Tuesday

2 quality ASX 200 tech shares that might be buys

ASX 200 down 0.9%: Boral rejects takeover offer, Afterpay & PointsBet sink

2 quality ASX 200 tech shares to buy for May

The post TechnologyOne (ASX:TNE) share price on watch after reporting strong first half growth appeared first on The Motley Fool Australia.

Trade The World Anywhere & Anytime!

Mobile app platform with over 50,000 global listed securities across 12 markets (over 70% global market capitalisation), right from your Android or iOS device.

Integrated with exclusive trading idea and investment analysis tools to help you find actionable insight on virtually every financial instrument across our 12 global markets, to help you optimise your trading strategies.

Refer Your Friends

Tell your friends about Monex and gift them FREE access to our trading tools.

We respect your privacy and will only send this one email notification to your friends. 

Share With Your Friends

Share on facebook
Share on twitter
Share on linkedin

Monex Trading Tools Access and Usage Terms

The Monex Trading Tools (referred to as ‘tools’ hereafter) are available to you inside your client portal;


To activate access to the tools, you must have a verified and approved trading account and have made a deposit of at least AUD $1000.


An active and funded account with a positive trading balance is required to continue to have access to the tools;


Although the tools are available to you indefinitely, Monex Securities may at it’s discretion disable access to the tools in the future;


Monex securities reserves the right to change these terms and conditions from time to time, as it sees fit, without notice.

Important Notice
iOS & Android App - 12 International Markets & Over 70% Global Market Cap. $0 Brokerage On US Trades. Click Here!