Slide 1: 2017 Mid Year Presentation
For personal use only 2017 Mid Year Presentation 4th July 2017 Adrian Di Marco Edward Chung Executive Chairman Chief Executive Officer 23 May 2017 FINAL-2 Commercial in confidence Disclosure Statement Technology One Mid Year Presentation – 4th July 2017 Technology One Ltd (ASX: TNE) today conducted
Slide 2: Agenda and Original Guidance
For personal use only Agenda ➢ 2017 Half Year Results Recap • Outlook for Full Year • Long Term Outlook Appendix • Significant Achievements • Strategic Initiatives • 2017 Half Year Results in Detail • TechnologyOne Overview Original Guidance Half year results in line with guidance Guidance provided
Slide 3: Our cloud first, mobile first strategy is driving our strong results
For personal use only Our cloud first, mobile first strategy is driving our strong results 3
Slide 4: Results Summary
Results Summary FY17 FY16 Variance % Revenue $113.9m $101.0m 13% For personal use only Initial Licence Fees $24.1m $18.5m 30% Total Consulting1 $32.9m $33.0m (0%) Refer slides: Total Consulting Annual Licence Fees $47.9m $43.7m 10% Cloud Service Fees $8.2m $4.3m 90% Expenses $103.6m $91.5m 13% R&D E
Slide 5: Updated Guidance For The Full Year
Updated Guidance For For personal use only The Full Year Profit growth of 10% to 15% for the full year • Pipeline for second half is strong • Continuing growth in Licences Fees expected in full year • Full year guidance will be discussed in more detail Half Year Results The half year results are dis
Slide 6: Outlook for Full Year
For personal use only Agenda • 2017 Half Year Results Recap ➢ Outlook for Full Year • Long Term Outlook Appendix • Significant Achievements • Strategic Initiatives • 2017 Half Year Results in Detail • TechnologyOne Overview Outlook for Full Year Outlook for the full year remains unchanged Assumption
Slide 7: Outlook For Full Year
Outlook For Full Year For personal use only • Substantial base of committed Annual Licence fees heavily weighted to the second half • Strong pipeline of opportunities in second half • We expect profit growth of 10% to 15% for the full year Assumptions • The current pipeline remains strong for the se
Slide 8: Long Term Outlook
For personal use only Agenda • 2017 Half Year Results Recap • Outlook for Full Year ➢ Long Term Outlook Appendix • Significant Achievements • Strategic Initiatives • 2017 Half Year Results in Detail • TechnologyOne Overview Long Term Outlook Long Term Outlook remains unchanged 8
Slide 9: Long Term Outlook: Net Profit Margin and R&D
Temporary hiatus due to Cloud loss of $2.2m on revenues of $10.1m Excluding Cloud business, margin is 23%. Cloud becomes profitable 2017 financial year, margin improvement to resume Long Term Outlook For personal use only Net Profit Margin Before Tax Focus is to 35% 29% 30% 25% substantially improve
Slide 10: TechnologyOne Cloud Services Growth To 2022
TechnologyOne Cloud Services3 Growth To 2022 $143m / year (recurring) in 2022, recalibrated by financial year For personal use only new revenue stream and does not cannibalise existing revenue streams #039;m Annual Contract Value - Compound Growth 69% per annum 160 $143.0M, UP 25% 140 120 recalibrated
Slide 11: Product Maturity
Product Maturity Tipping point when Profit exceeds Licence fees For personal use only 20 #039;m Contribute $16+m of additional Profit per year in 5+ years time 15 10 5 0 (5) CPM Financials & Student Asset Management Enterprise Content HR/Payroll Property Stakeholder Spatial Supply Chain Management Mana
Slide 12: Positioned well for the future
Positioned well For personal use only for the future… Agenda • 2017 Half Year Results Recap • Outlook for Full Year • Long Term Outlook Appendix ➢ Significant Achievements • Strategic Initiatives • 2017 Half Year Results in Detail • TechnologyOne Overview 12
Slide 13: TechnologyOne Cloud
For personal use only TechnologyOne Cloud Enterprise software as a service ✓ TechnologyOne Cloud 5.0+ introduced the start of our mass production Software as a Service offering ✓ Have now migrated majority of customers seamlessly from Cloud 1.0, 2.0, 3.0, 4.0, 5.0 to Cloud 6.0 ✓ Cloud 7.0 now releas
Slide 14: TechnologyOne Cloud Services Fee Growth To 2022
TechnologyOne Cloud Services Fee1 Growth To 2022 Additional $143m / year (recurring) in 2022 For personal use only new revenue stream and does not cannibalise existing revenue streams #039;m Annual Contract Value - Compound Growth 69% per annum 160 $143.0M Up 26% 140 $113.9M Up 15% 120 $99.0M Up 25% 10
Slide 15: Ci Anywhere
For personal use only Absolutely essential in a digital world Ci Anywhere Any device. Any where. Any time. Enterprise software, incredibly simple Ci Anywhere Enterprise software, incredibly simple Any device. Any where. Any time. ▪ 2016A & earlier releases progressively de-commissioned by mid 2017 ▪
Slide 16: Showcases and Consulting
Showcases For personal use only Insights, Inspiration, Innovation ✓ Following success of Evolve ✓ Create sales momentum for TechnologyOne Cloud and Ci Anywhere ➢ Solution showcases now planned for mid 2017 to early 2018 to continue momentum ▪ Australia, New Zealand and UK Capitalising on Evolve ✓ Ne
Slide 17: United Kingdom
United Kingdom For personal use only • United Kingdom $775k loss1 (vs 300k last pcp) • Licence Fees down 50% to $678k • A large University contract could not be finalized by March 30 th • Pipeline strong for the full year, and expect to grow licence fees by 33% to $4m • 4 new customers, all of which
Slide 18: UK Customers (44)
UK Customers (44) Local Government (12) Higher Education (14) For personal use only Adur & Worthing Borough Councils Carnegie College Aylesbury Vale District Council Ealing, Hammersmith and West London College Cambridge City Council Glasgow Clyde College Clackmannanshire Council Institute of Educati
Slide 19: Fast Track Subscription Licences
For personal use only Agenda • 2017 Half Year Results Recap • Outlook for Full Year • Long Term Outlook Appendix • Significant Achievements ➢ Strategic Initiatives • 2017 Half Year Results in Detail • TechnologyOne Overview Fast Track Subscription Licences ✓ Move away from perpetual licences • on Cl
Slide 20: Edward Chung Appointed CEO
Edward Chung Appointed CEO For personal use only • Long term carefully executed succession plan • Edward Chung was previously Chief Operating Officer - Long serving executive for 10+ years - Responsible for day to day operations of TNE globally • Adrian Di Marco continues in role of Executive Chairm
Slide 21: Agenda and Original Guidance
For personal use only Agenda • 2017 Half Year Results Recap • Outlook for Full Year • Long Term Outlook Appendix • Significant Achievements • Strategic Initiatives ➢ 2017 Half Year Results in Detail • TechnologyOne Overview Original Guidance Half year results in line with guidance Guidance provided
Slide 22: Our cloud first, mobile first strategy is driving our strong results
For personal use only Our cloud first, mobile first strategy is driving our strong results 22
Slide 23: Results Summary
Results Summary FY17 FY16 Variance % Revenue $113.9m $101.0m 13% For personal use only Initial Licence Fees $24.1m $18.5m 30% Total Consulting1 $32.9m $33.0m (0%) Refer slides: Total Consulting Annual Licence Fees $47.9m $43.7m 10% Cloud Service Fees $8.2m $4.3m 90% Expenses $103.6m $91.5m 13% R&D E
Slide 24: Updated Guidance and Impact of Evolve
Updated Guidance For For personal use only The Full Year Profit growth of 10% to 15% for the full year • Pipeline for second half is strong • Continuing growth in Licences Fees expected in full year • Full year guidance will be discussed in more detail Impact of Evolve User Conference Profit excludi
Slide 25: Dividend Up 10%
For personal use only Dividend Up 10% 3.00 Dividend UP 10% Compound Growth 10% Given strong profit growth for 2.50 Cents per share the full year, H1 dividend 2.00 increased 1.50 • 2.60 cps up 10% (declared, 75% franked1) 1.00 • Payout ratio of 101% 0.50 • Board will consider a special dividend at ye
Slide 26: Total Expenses Up 13%
Total Expenses Up 13% ($12.1m) For personal use only 2%, UP 13%, 106 7%, $2.1M $103.6M 104 $6.1M 102 100 2%, 98 2%, $1.6M 96 $2.3M #039;m 94 $91.5m 92 90 88 86 84 2016 Marketing Cloud Payroll Underlying Total Expenses Expense (1) Expense (2) Expense (3) Expenses (4) Expenses Major contributors to expen
Slide 27: Cash Flow
Cash Flow Mar-17 Mar-16 Var % $ '000 $ '000 Operating Cash Flow $2.6m, has increased from negative For personal use only $3.3m in prior year (up $5.9m) EBIT 10,325 9,420 905 10% Depreciation & Amortisation 2,098 2,297 (199) (9%) • Up $5.9m, 177% from Mar 2016 Change in working Capital (Increase) / D
Slide 28: Managing the transition to the cloud
We are managing the transition to the cloud carefully We are generating significant cash from the cloud For personal use only From the Balance Sheet on previous page… Mar 2017 Mar 2016 • Earned & Unbilled Revenue (non current) 3 ($6.505m) ($2.081m) Driven by cloud - Revenue recognized & to be billed
Slide 29: Results – Key Metrics
Results – Key Metrics For personal use only Half Year 2017 v Half Year 2016 2017 2016 Variance % Half Year 2017 v Half Year 2016 2017 2016 Variance % EPS (cents) 2.57 2.36 9% ROE Dividends (cents) Return on equity 7% 7% Standard 2.60 2.36 10% Adjusted return on equity1 11% 12% Balance Sheet ($‘000s)
Slide 30: Licence Fees continue to grow strongly, up 30%
Licence Fees continue to grow strongly, up 30% For personal use only 30 Licence Fees UP 30%, $24.1M 25 Compound Growth 8% 20 #039;m 15 10 5 0 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 • This exceeded expectations as a number of deals closed earlier than would normally be expected • New customer
Slide 31: Annual Licence and Cloud Service Fees
Annual Licence continues to grow strongly, up 10% For personal use only Annual Licence Fees 60 UP 10%, $47.9M 50 Compound Growth 14% 40 #039;m 30 20 10 0 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 • Compound growth over the last 10 years is 14% • Customer retention is important • Investing in Co
Slide 32: New Cloud Customers For 2017 (41)
New Cloud Customers For 2017 (41) Adur & Worthing Borough Councils Illawarra Credit Union Tasracing Pty Ltd For personal use only CEnet - Archdiocese of Hobart Inner West Council Thames Coromandel District Council CEnet - Diocese of Townsville Irrigo Centre Limited The Roman Catholic Archbishop of P
Slide 33: Licence Fee Contribution - Vertical Market
Licence Fee Contribution - Vertical Market Government, $2.1M, 8% For personal use only Corporate, $876K, 4% Project Intensive, $844K, 3% Financial Services, $633K, 3% Local Government, $8.6M, 36% Asset Intensive, $848K, 3% Health & Community Services, $3.1M, 13% Education, $7.1M, 30% Licence Fees $2
Slide 34: Australia's largest enterprise software company
Australia’s largest enterprise software company Continually profitable $46m+ For personal use only Invest For over 25 years R&D Back into Profit Formed in $53m Largest 1987 R&D centre Revenue 1000+ in Australia $249m employees 300+ developers Cash $83m Market Capitalisation 1000+ Corporate, governme
Slide 35: Financially Very Strong
Financially Very Strong For personal use only • Cash and Equivalents $82.6m • Return on Equity 30+% • Adjusted Return on Equity1 61% • Debt/Equity 0.02% • Interest Cover 683 • Continually paid dividends since 1996 (21 years) • Continually profitable since 1992 (25 years) As at 30th Sept 2016 1Adjust
Slide 36: The Competitive Landscape
For personal use only Technology One .. Additional Information The Competitive Landscape ORACLE SAP New expanding market coverage Workday $1,000m Current market coverage TechnologyOne Microsoft Business Solutions $100m SAP/Business One NetSuite Infor (Sun Systems) $30m Xero Reckon CLIENT TURNOVER MY
Slide 37: What makes us unique: Our enterprise vision
For personal use only What makes us unique What makes us unique… Our enterprise vision We are one of only a few global enterprise vendors • Suite of 14 products • Deeply integrated • Best of Breed functionality • Common platform • Consistent user interface The power of a single, integrated, enterpri
Slide 38: What makes us unique: The power of one
For personal use only What makes us unique What makes us unique… The power of one We do not use implementation partners or resellers We take complete responsibility for building, marketing, selling, implementing, supporting and running our enterprise solution for each customer to guarantee long-term
Slide 39: We focus on eight key markets
What makes us unique… For personal use only We focus on eight key markets… • Deep understanding and engagement in our markets • Deeply integrated preconfigured solutions • Proven practice • Streamlined implementations • Reduce time, cost and risk We sell to asset and service intensive organisations.
Slide 40: What makes us unique: The power of evolution
For personal use only What makes us unique What makes us unique… The power of evolution Substantial investment into R&D each year • New releases encompass new technologies, concepts and innovations • Configuration and not customisation Green screen Client server Web based Cloud computing & smart mob
Slide 41: TechnologyOne Cloud
TechnologyOne Cloud For personal use only Enterprise software as a service • We run our own enterprise software through the cloud • We take responsibility to provide a simple, cost effective and highly elastic model of computing • Unique mass production model delivers economies of scale and strategi
Slide 42: TechnologyOne SaaS Mass Production
✓ Economy of scale TechnologyOne SaaS - Massively scalable, Highly efficient , Cost effective ✓ Highly resilient & fault tolerant Mass Production ✓ Elastic - add capacity dynamically For personal use only ✓ Significant cost savings Future proof - We invest millions annually to make our production li
Slide 43: TechnologyOne Cloud Growth To 2022
Flow across many devices in the course of a day For personal use only We are delivering our entire enterprise suite on mobile devices Enterprise Software intelligently adapts to the devices TechnologyOne Cloud Growth To 2022 Additional $143m / year (recurring) in 2022 new revenue stream and does not
Slide 44: Cloud Services Fee Growth To 2022
TechnologyOne Cloud Services Fee3 Growth To 2022 $143m / year (recurring) in 2022, recalibrated by financial year For personal use only new revenue stream and does not cannibalise existing revenue streams #039;m Annual Contract Value 160 $143.0M, Compound Annual Growth 69% UP 25% 140 recalibrated reven
Slide 45: Other Facts
Other Facts For personal use only Diversity of revenue streams from multiple: • Products 14 • Vertical markets 8 • Geographies 12 - All states of Australia, New Zealand, South Pacific, Asia and UK Strong, very loyal blue chip customer base • We provide a mission critical solution – ‘sticky customer
Slide 46: Robust Revenue Model
Robust Revenue Model For personal use only Initial Buy Based on: No of Users, Initial Licence Implementation Service Annual Licence Annual Licence Annual Licence …. Products & Modules Buy Addn Users Initial Licence Annual Licence Annual Licence Annual Licence …. Additional Fee Buy Addn Modules Initi
Slide 47: Our Vision
Our Vision Clear and focused vision… Transforming business, For personal use only making life simple 47