Image source: © Jirsak | Megapixl.com

Highlights

  • TechnologyOne offers SaaS ERP solutions to businesses to assist them in transforming the way they get connected with their customers.
  • SaaS annual recurring revenue increased by 40% year-on-year in 1HFY23.
  • By FY26, the company intends to achieve annual recurring revenue of AUD 500 million.

TechnologyOne Limited (ASX: TNE) is a software and services company offering SaaS ERP solutions that empower businesses to transform how they communicate with their clients and customers. TechnologyOne solutions run on a single code line and therefore offer significant economies of scale to its customers.

In the first half of the financial year 2023 (1HFY23), the company registered a 16.9% rise in revenue over the previous corresponding period to AUD 201 million. The profit after tax increased by 24.5% year-on-year to AUD 41.2 million. Meanwhile, its SaaS annual recurring revenue jumped 40% year-on-year in the first half of FY23. As per the company, this growth was driven by the continuous demand for SaaS ERP solutions. The number of large-scale enterprise SaaS customers surged by 27% during the period.

Net margin increased to 20.5% in 1HFY23, compared to 19.3% in 1HFY22. However, the EBITDA margin dropped to 34.8%, compared to 35.3% in the previous corresponding period. Here are other key financial metrics of TNE since FY21:

Business update

In the recent business update, the company shared that Director Richard Anstey has acquired additional 4,000 ordinary shares for a consideration of AUD 60,629.94. With this, Anstey now holds 20,000 ordinary shares in the company.

In another update, the company revealed that JL Mactaggart Holdings Pty Ltd had decreased its shareholding in the organisation to 7.7% as of 14 June 2023 from 8.4% earlier.

Top 10 shareholders of TNE

The top 10 shareholders have approximately 37.55% shareholding in TNE, and the top four have a total shareholding of 20.18%. Mactaggart (John Dugald) has the highest stake in the company, with a shareholding of around 7.67%.

Outlook

In FY23, the company expects a 10-15% year-on-year increase in net profit before tax and an over 40% jump in SaaS ARR. TNE aims to achieve an ARR of more than AU$500 million by FY26.

In the long run, the company expects that its growth will be driven by global expansion, SaaS ERP solutions, winning new customers and a boost in product adoption by current customers.

According to an ASX filing, TNE is focused on continuously investing in staff and new growth areas like SaaS+, App Builder, DXP and its UK business.

TNE share performance

Shares of TechnologyOne closed 1.57% higher on 14 July at AUD 15.53. The stock has risen by over 36% in the last one year and recorded a rise of 14.95% in the past six months. In one month, the stock price has fallen by 2.14%.

The 52-week high of TNE is AU$17.12 per share, and the 52-week low is AU$10.39 per share.

Note 1: Past performance is neither an Indicator nor a guarantee of future performance.

Note 2: The reference date for all price data, and currency, is 14 July 2023. The reference data in this report has been partly sourced from REFINITIV.