Enterprise SaaS veteran TechnologyOne had a bumper 2020

• Underlying Profit Before Tax of $86.1m, up 13% 
• Revenue of $269.8m, up 12%
• SaaS Annual Recurring Revenue of $134.6m, up 32%
• Total Dividend of 12.88cps, up 8% 

Coronavirus has been kind to enterprise software company TechnologyOne (ASX: TNE), with the country’s market leader announcing its annual results to September 30 today with revenue, underlying profit and dividend all rising significantly.

The ASX veteran, which listed in 1999, reported Profit Before Tax was $82.5m, up 8%, with underlying profit up 13% at $86.1 million, and total revenue rising 4% to $299 million. But the company says that figure is “not a true indication of the growth of our business, as it includes our Legacy Licence business, which we are aggressively reducing, as we grow our SaaS business”. Net Profit After Tax was $62.9m.

The Legacy Licence business fell by 34% ($14.7m), as TechnologyOne moved customers to its SaaS side, which rose by nearly a third to $134.6m in annual recurring revenue (ARR). The SaaS ARR was organic, without acquisitions.

“If we remove the Legacy Licence business from both FY19 and FY20, our Revenue from SaaS and Continuing Business, which is a key measure of the strength of our business, has grown 12%,” the company said hitting $269.8m.

Meanwhile the UK arm hit break-even as UK regionalisation of the company’s Global SaaS ERP solution is neared completion, and the UK SaaS ARR rose by 22% to $7.5m.

“When COVID-19 hit, our solution enabled our SaaS customers to seamlessly shift to remote working,” the company told the ASX.

“COVID-19 has reinforced the significant value proposition of our Global SaaS ERP solution which provides mission critical systems and enables our customers’ staff to work on any device, anywhere, anytime, seamlessly without interruptions. This has also resonated strongly with the market driving our continuing strong results.”

TechnologyOne added 104 enterprise customers in the 12 months to September 30 to its Global SaaS ERP solution and now had 539 large scale enterprise customers, plus hundreds of thousands of users, making it the largest single instance SaaS ERP offering in Australia. The include more than 300 local government customers alongside strong growth in the higher ed sector.

R&D investment jump

TechnologyOne invested $68.1 million in R&D this year, up 13%, far higher than its 8% benchmark, which the business expects to return to next year.

The company said it invested in a new digital experience platform for local government to ship next year and has focused on extending the functionality and capabilities of its Global SaaS ERP solution.

Reported profit was hit by “once-off increase in legal provisions, due to an unexpected judgement against TechnologyOne in a civil employment case”. The matter is ongoing.

The balance sheet grew strongly with net assets up 33% to $142m, with cash and cash equivalents of $125.2 million up 19%. The dividend for the full year was increased to 12.88 cents per share, up 8% on the prior year.