Slide 1: 2023 Half Year Results
23/05/2023 2023 Half Year Results Ended 31 March 2023 23 May 2023 Commercial in confidence 1
Slide 2: Disclosure Statement
23/05/2023 Disclosure Statement TechnologyOne Ltd Half Year Presentation – 23 May 2023 TechnologyOne Ltd (ASX: TNE) today conducted a series of presentations relating to its 2023 Half Year results. These slides have been lodged with the ASX and are also available on the company’s website: www.Techno
Slide 3: Agenda
23/05/2023 Agenda. • Highlights • Financial Results • Significant Achievements • Outlook for Full Year • Long Term Outlook 3
Slide 4: Clear Strategy
23/05/2023 Clear Strategy ERP software – Deepest functionality Global SaaS Mission critical for the markets we Solution – One products serve Global Code Line In 2008, we had 11 products, Mission critical products which Our SaaS customers in 2023, we have 16 products power our customers unlock signif
Slide 5: SaaS ARR growth of 40%, record SaaS ARR $316.3m
23/05/2023 SaaS ARR growth of 40% Record SaaS ARR $316.3m 5
Slide 6: Total ARR growth of 22%, record $350.6m
23/05/2023 Total ARR Growth of 22% Record Total ARR $350.6m 6
Slide 7: Surpass $500m+ ARR by FY26
23/05/2023 Surpass $500m+ ARR by FY26 7
Slide 8: Net Profit Before Tax Growth of 24%
23/05/2023 Net Profit Before Tax Growth of 24% Record Net Profit before tax $52.7m H1 FY18 H1 FY19 H1 FY20 H1 FY21 H1 FY22 H1 FY23 8
Slide 9: SaaS is the foundation of our growth
23/05/2023 SaaS is the foundation of our growth Outlook for FY23 is strong Discussed later in more detail 9
Slide 10: Agenda
23/05/2023 Agenda. • Highlights • Financial Results • Significant Achievements • Outlook for Full Year • Long Term Outlook 10
Slide 11: Interim Dividend up 10%
23/05/2023 Interim Dividend up 10% Confidence in the outlook Retaining significant fire power to invest in growth H1 Dividend last 10 years Half 1 4.62 cps, Up 10% up 10% (60% franked1) Up 10% Up 10% Up 10% Payout Up 10% Ratio of Up 10% Up 10% 36% Up 10% Up 10% Up 10% 4.62 4.20 Compound 3.82 3.47 Gr
Slide 12: H1 Results Summary
23/05/2023 H1 Results Summary Exceeded ARR targets (highest quality revenue). End of legacy licence business H1 FY23 H1 FY22 VAR VAR #039;000 #039;000 #039;000 % Revenue – SaaS & Continuing Business 200,037 169,480 30,557 18% In line with expectations SaaS Fees Recognised1 145,005 96,249 48,756 51% Our SaaS
Slide 13: Balance Sheet Strong
23/05/2023 Mar-23 Mar-22 Var Var Balance Sheet Strong #039;000 #039;000 #039;000 % Cash & cash equivalents 139,130 116,368 22,762 20% Prepaid expenses1 24,106 15,975 8,131 51% Trade and other receivables2 46,793 33,570 13,223 39% Cash & Equivalents $139.1m, up 20% Contract assets 24,040 24,392 (352) (1%) Oth
Slide 14: Cash Flow
23/05/2023 Cash Flow H1 FY23 H1 FY22 Var Var #039;000 #039;000 #039;000 % Profit Before Tax 52,747 42,570 10,177 24% Cash Flow Generation will be strong for full year Depreciation & Amortisation1 25,480 17,870 7,610 43% H1 Cash Flow Generation of $1.3m, lineball Share based payments and other non-cash items
Slide 15: Profit margin to improve to 35%+ in the next few years
23/05/2023 Profit margin to improve to 35%+ in the next few years FY22 Profit Before Tax Margin was 30% 32% Scientia Driven by the Impact significant economies of scale from our single instance global SaaS ERP solution 17% 18% 19% 21% 21% 21% 21% 22% 27% 29% 31% 30% 30% FY11 FY12 FY13 FY14 FY15 FY16
Slide 16: H1 FY23 Profit by Segment
23/05/2023 H1 FY23 Profit by Segment Profit Before Tax $52.7m, up 24% $10.1m Operating segment analysis Geographic segment analysis Up 26% Up 24% Up 24% $7.6m $10.1m $9.4m $37.2m $52.7m $49.7m 26% Up 69% $42.6m $40.3m Up 29% $29.6m Down $1.7m $4.3m $0.7m $10.5m $3.0m $6.7m $6.2m $2.3m $5.0m Software
Slide 17: Results Analysis and Key Metrics, H1 FY23
23/05/2023 Results Analysis and Key Metrics, H1 FY23 H1 FY23 H1 FY22 Var H1 FY23 H1 FY22 Var $’000 $’000 % $’000 $’000 % Revenue excl interest1 208,710 172,362 21% EPS (cents) 12.73 10.29 24% Expenses (excl R&D, interest, D & A)2 107,378 91,775 17% Dividend (cents per share) EBITDAR 101,332 80,587 2
Slide 18: Agenda
23/05/2023 Agenda. • Highlights • Financial Results • Significant Achievements • Outlook for Full Year • Long Term Outlook 18
Slide 19: All verticals performed strongly
23/05/2023 All verticals performed strongly Significant room to grow in future years Vertical Market Analysis ARR of $350.6m1, Up 22% | From $288.5m, H1 FY22 Up 23%, $23.3m $124.3m Our APAC market penetration in any single vertical does not exceed 15%2 Up 20%, $15.2m $89.4m Up 12%, $5.4m $51.5m Up 2
Slide 20: SaaS+ and the March deal
23/05/2023 Total • Asset & Fleet Booking “the product • Maintenance Scheduling and SaaS+ is • eContractorWork “revolutionary” and • Physical Asset Register • Work Billing will help us move • Work Requests into the • Work Schedule & Dispatch Opening ARR Current ARR 21st century.” (before the March (P
Slide 21: ~99% customer retention
23/05/2023 ~99% customer retention Customer Churn 10 years - Based on Total ARR1 As expected as result of End of On premise (EOOP), temporary higher churn of EOOP is 0.3% 1.6% 1.4% Target - 1% 1.0% 1.0% 0.8% 0.8% 0.6% 0.4% 0.5% 0.6% 0.4% FY13 FY14 FY15 FY16 FY17 FY18 FY19 FY20 FY21 FY22 FY23 (F*) 1
Slide 22: Full year Net Revenue Retention expected 115%-120%
23/05/2023 Full year Net Revenue Retention is expected to be 115% - 120% • Significant opportunity in our existing customer base • Our Global SaaS ERP is very broad with 400+ modules • Frictionless – open licence, all modules available on SaaS • Predictable, non-competitive transactional sales • Low
Slide 23: United Kingdom
23/05/2023 United Kingdom Significant investment for future growth UK ARR up 20% to $21.2m 157 Customers 15 120 Products People • Sales • Marketing • Finance • Legal • R&D 23
Slide 24: R&D Significant Investment for future growth
23/05/2023 R&D Significant Investment for future growth R&D First CTO investment of $49.4m up 19% R&D investment of $49.4m1 24.0% of Revenue UP 19.0% 24.0% of Continuous revenue R&D staff investment 1 R&D expenditure before capitalisation 24
Slide 25: H1 FY23 Summary
23/05/2023 H1 FY23 Summary Record H1 profit and revenue, SaaS ARR up 40% Revenue – SaaS & Continuing record SaaS ARR to $316.3m Business up 18% to $200.0m Profit After Tax Profit Before Profit before UK ARR Cash and Cash up 24% Tax up 24% tax margin of up 20% Equivalents to $41.3m to $52.7m to $21.2
Slide 26: Agenda
23/05/2023 Agenda. • Highlights • Financial Results • Significant Achievements • Outlook for Full Year • Long Term Outlook 26
Slide 27: Outlook for 2023 Full Year
23/05/2023 Outlook for 2023 Full Year We expect to see strong continuing growth Net Profit Before Tax growth of 10% to 15% 27
Slide 28: Outlook for FY23: Strong SaaS ARR growth of ~40%
23/05/2023 Outlook for FY23 Strong SaaS ARR growth of ~40% Investments in talent, UK growth and new initiatives such as SaaS+ (Solution as a Service) Planned Legacy Licence fee reduction from $10m to $2m ($8m reduction) Over the past 35 years we have continued to We will continue to benefit from imp
Slide 29: Agenda
23/05/2023 Agenda. • Highlights • Financial Results • Significant Achievements • Outlook for Full Year • Long Term Outlook 29
Slide 30: Surpass $500m+ ARR by FY26
23/05/2023 Surpass $500m+ ARR by FY26 30
Slide 31: Continue to double in size every 5 years
23/05/2023 Continue to double in size every 5 years 31
Slide 32: SaaS+ lifts ARR by 40%
23/05/2023 SaaS+ lifts ARR by 40% 32
Slide 33: Continue to double in size every 5 years
23/05/2023 Continue to double in size every 5 years Strong Net Revenue Retention (NRR) of 115-120% $2b of ARR whitespace in our APAC customer base R&D over next 5 years doubles APAC ARR whitespace from $2b to $4b ARR Solution as a Service is a gamechanger, lifts ARR by 40% Strategic acquisitions (e.
Slide 34: technologyone
23/05/2023 technologyone transforming business, making life simple
Slide 35: Appendices
23/05/2023 Appendices • Appendix A – Consulting Profit • Appendix B – R&D Disciplined and Transparent • Appendix C – Long History of Strong Cash Flow Generation • Appendix D – SaaS Customers and SaaS ARR • Appendix E – Drivers for Long Term Growth • Appendix F – Scientia Acquisition accounting impac
Slide 36: Appendix A: H1 FY23 Consulting Profit of $5.0m
23/05/2023 Appendix A: H1 FY23 Consulting Profit of $5.0m Profit as planned as we make the careful and strategic transition from traditional consulting to SaaS+ Leveraging the method and disciplines we proved to transition Consulting is responsible for Company Down 26% customers from legacy services
Slide 37: Appendix B: R&D Disciplined and Transparent
23/05/2023 Highly Disciplined approach to R&D Appendix B: We expense maintenance and research. We only capitalise development based on actual timesheets for eligible projects. R&D Disciplined and Transparent Capitalisation and amortisation are independently audited along with Financial Statements. B
Slide 38: Appendix B: R&D Disciplined & Transparent
23/05/2023 Appendix B: R&D Disciplined & Transparent R&D Investment as % of revenue* 25% 26% 24% 24% 24% 23% 22% R&D Investment (A$m) 28.0 25.7 52% Capitalised 23.1 22.1 21.7 18.5 15.4 22.7 23.7 48% Expensed 16.1 19.3 19.4 15.1 15.9 H1 FY20 H2 FY20 H1 FY21 H2 FY21 H1 FY22 H2 FY22 H1 FY23 * H1 FY23 r
Slide 39: Appendix B: R&D Disciplined & Transparent
23/05/2023 Appendix B: R&D Disciplined & Transparent Software R&D Development - Percent Amortisation Amortisation Net Expense Investment Capitalised Capitalised Expense Period through P&L (#039;000) (#039;000) % (#039;000) Years (#039;000) FY19 60,083 32,145 53.5% 555 5 28,493 FY20 68,102 37,069 54.4% 6,103 5 3
Slide 40: Appendix C: Long history of strong cash flow generation
23/05/2023 Appendix C: Long history of strong cash flow generation Cash Flow Generation1 will continue to grow as NPAT2 grows $100.0m $90.0m $80.0m $70.0m $60.0m $50.0m $40.0m $30.0m $20.0m Occasional large legacy $10.0m licences invoiced at year end, collected early in $0.0m new year 2000 2001 2002
Slide 41: Appendix D: SaaS Customers and SaaS ARR
23/05/2023 Appendix D: SaaS Customers and SaaS ARR 1000 $350m $316.3m 900 903 $300m 800 No. Of SaaS Customers $225.1m 700 $250m SaaS ARR ($m) $155.8m 714 600 $200m $110.2m 500 576 $82.7m 475 $150m 400 $59.3m 300 389 $100m 200 280 $50m 100 0 $0m H1 FY18 H1 FY19 H1 FY20 H1 FY21 H1 FY22 H1 FY23 SaaS Cu
Slide 42: Appendix E: Drivers for long term growth
23/05/2023 Appendix E: Drivers for long term growth Increase Product Penetration Increase Market Penetration Expand Geographies 16 Licensable products1 6 Vertical markets1 APAC & UK1 Over 400+ licensable modules SCM, New Zealand, T&S, 4.2% EB, 2.8% Asset Intensive, 6.7% 12.1% CPM, United 9.6% ECR, 1
Slide 43: Appendix F: Scientia Acquisition accounting impacts
23/05/2023 Appendix F: Scientia Acquisition accounting impacts Scientia was an excellent acquisition. A world class Timetable and Scheduling product, with a broad customer base and strong cash flows. The acquisition has opened the opportunity to sell our ERP (primary focus is Student Management)
Slide 44: Appendix G: Balance Sheet including Scientia adjustments
23/05/2023 Appendix G: Balance Sheet including Scientia adjustments Reported Adjusted March FY22 Balance Sheet has been adjusted for Mar-22 Mar-22 Var the finalisation of acquisition accounting for #039;000 #039;000 #039;000 Cash & cash equivalents 116,368 116,368 - Scientia. Prepaid expenses 15,975 15,975 -
Slide 45: Appendix H: Glossary
23/05/2023 Appendix H: Glossary Annual Licence ARR Annual Recurring Revenue relating to annual licence fees for On-premise customers APAC Asia Pacific - Includes Australia, New Zealand, Malaysia and the South Pacific ARR Annual Recurring Revenue Cash Flow Generation (CFG) Cash flow from Operating Ca
Slide 46: technologyone
23/05/2023 technologyone transforming business, making life simple