Technology One Limited · ASX:TNE
Technology One — H1 FY2024 Earnings Presentation
58 slides from Technology One's earnings presentation, May 21, 2024
Slide 1: Half Year Results Ended 31 March 2024
2024 2023 Half Year Results Results Ended 31 March 2024 Ended 31 March 2024 21 May 2024 Commercial in confidence 01
Slide 2: Disclosure Statement
Disclosure Statement TechnologyOne Ltd Full Year Presentation – 21 May 2024 TechnologyOne Ltd (ASX: TNE) today conducted a series of presentations relating to its 2024 Half Year results. These slides have been lodged with the ASX and are also available on the company’s website: www.TechnologyOneCorp
Slide 3: Agenda
Agenda ! Highlights !! Financial HighlightsResults ! Significant Achievements ! Financial Results ! Outlook for Full Year !! Long Significant Achievements Term Outlook ! Building the Future ! Outlook for FY24 03
Slide 4: H1 FY24 Results: ARR growth 21%, profit growth 17%
H1 FY24 Results ARR Profit growth growth 21% 17% 04
Slide 5: SaaS+ UK Profitable DXP company history
SaaS+ UK Profitable DXP ASX 100 On Prem to SaaS 4Th Gen ERP 2012 2006 Cloud 1999 UK 1991 ASX listing Finance One 1987 2024 05
Slide 6: Clear Strategy
Clear ERP software – Deepest functionality Global SaaS Strategy Mission critical products In 2008, we had 11 products, for the markets we serve Mission critical products which Solution – One Global Code Line Our SaaS customers in 2023, we have 16 products power our customers unlock significant benef
Slide 7: Transition to SaaS - Careful reduction of legacy licence fees
Transition to SaaS - Careful reduction of legacy licence fees & * ! " #" $ ) ' ! " #" $ +'#,2$344$5$6"7,89$6)8":8"$;""$./01 & " #" $ ! $392.9m ) & ! " #" $ !"#$%&'()#$*"('&"$+,-$./01 + * ! " #" $ ) % ! " #" $ + " #" $ ! ) " #" $ ! % * ! " #" $ ( " ! # " $ % " #" $ ! ' " ! # " $ ) * ! " #" $ & " ! #
Slide 8: Cohort Analysis
Cohort Analysis Average ARR per customer by Cohort 2012 2013 2014 2015 2016 2017 2018 2019 2020 Cohort Year 2021 2022 2023 08
Slide 9: Clear Strategy
Clear ERP software – Deepest functionality Global SaaS Strategy Mission critical products In 2008, we had 11 products, for the markets we serve Mission critical products which Solution – One Global Code Line Our SaaS customers in 2023, we have 16 products power our customers unlock significant benef
Slide 10: Total ARR Growth of 21%
Total ARR Growth of 21% Record Total ARR $423.6m 10
Slide 11: Profit Before Tax Growth of 17%
Profit Before Tax Growth of 17% Record Net Profit before tax of $61.5m !"#$%"& !"#$%'( !"#$%'" !"#$%'' !"#$%') !"#$%'* 11
Slide 12: Surpass $500m+ ARR by FY26
Surpass $500m+ ARR by FY26 12
Slide 13: !"#$%&'()*+),-../0)122)34)567-
!"#$%&'()*+),-../0)122)34)567- 13
Slide 14: We continue to invest in R&D to build future platforms for growth
We continue to invest in R&D to build future platforms for growth. We will continue to double in size every 5 years 14
Slide 15: Game changer and key platform for growth
is a gamer changer and a key platform for growth Outlook for FY24 is strong Discussed later in more detail 15
Slide 16: H1 FY24 Results Summary
H1 FY24 Results Summary H1 FY24 H1 FY23 VAR VAR Outlook for FY24 is strong $m $m $m % Total ARR 423.6 350.6 73.0 21 SaaS & Recurring Revenue 223.1 183.9 39.2 21 Profit ARR Total Revenue Profit Before Tax 244.8 61.5 210.3 52.7 34.5 8.8 16 17 growth growth Profit After Tax 48.0 41.3 6.7 16 17% 21% Cas
Slide 17: Agenda
Agenda ! Highlights ! Financial Results ! Significant Achievements ! Outlook for Full Year ! Long Term Outlook 17
Slide 18: H1 FY24 Profit and Loss
H1 FY24 Profit and Loss Record revenue and PBT. Exceeded ARR targets (highest quality revenue). These strong results includes our SaaS+ investment. These results include the Excluding impact this, Net of SaaS+ on Profit Before Tax revenue profitmargin is ~1% and margin. better would have Margin been
Slide 19: H1 FY24 Profit by Segment
H1 FY24 Profit by Segment Profit Company Strong Before Tax $129.9m, profit of $61.5m,up up 16% $17.5m 17% pcp Operating segment analysis Geographic segment analysis Up 22% Up 35% $10.8m $13.1m Down 19% Down 67% Down 45% $2.0m ($2.0m) $2.2m !"#$%& !'($"& !'$(& !%$*& !)($'& !*$'& !+,$#& !-($'& !"$(& !
Slide 20: Balance Sheet: Remains Strong
Balance Sheet: Remains Strong Significant cash holdings and no debt provide balance sheet flexibility for growth 20
Slide 21: Cash Flow
Cash Flow Cash Flow Generation will be strong for the full year and align with NPAT 21
Slide 22: Dividend track record continues: Interim dividend up 10%
Dividend track record continues: Interim dividend up 10% Increased profit enables ! H1 NPAT before tax up 17%,dividend uplift uplift enabling dividend ! Strong balance sheet supports dividend ! Payout ratio 34% (FY23 interim: 36%) ! Dividend franked to 65% (H1 FY23: 60%) ! Dividend paid every year s
Slide 23: Agenda
Agenda ! Highlights ! Financial Results ! Significant Achievements ! Outlook for Full Year ! Long Term Outlook 23
Slide 24: True SaaS ERP
True SaaS ERP Deepest functionality for the markets we serve POWER OF A SINGLE INTEGRATED ERP SOLUTION 24
Slide 25: True SaaS ERP
True SaaS ERP Deepest functionality for the markets we serve POWER OF A SINGLE INTEGRATED ERP SOLUTION 25
Slide 26: True SaaS ERP
True SaaS ERP Deepest functionality for the markets we serve POWER OF A SINGLE INTEGRATED ERP SOLUTION 26
Slide 27: True SaaS ERP
True SaaS ERP Deepest functionality for the markets we serve POWER OF A SINGLE INTEGRATED ERP SOLUTION 07
Slide 28: Total ARR and Average ARR per Customer
Total ARR and Average ARR per Customer &2--+ &-)(+ &0--+ &(--+ &-)1+ !"#$%&'((&)*+&,-.#"/*+ !"#$%&'(( &1--+ &-)*+ &*--+ &(*1)2+ &1/*)/+ &1*-).+ &*0.)0+ &-),+ &**,)/+ &,--+ &*-*)0+ &,.1)/+ &,01)/+ &,*.)-+ &,-.)/+ &'()*+ &-+ &-)-+ 34,( 34,0 34,2 34,. 34,' 34,/ 34*- 34*, 34** 34*1 5,634*( 789:;6!<<6=>?
Slide 29: All verticals performed strongly
All verticals performed strongly Significant room to grow in future years Vertical Market Analysis ARR of $423.6m1, Up 21% | From $350.6m, H1 FY23 Our APAC market penetration in any single )*!&+,-!.'/0+1! vertical does not exceed 15%2 .#230&1 )*!#/,-!.#'021! .#3'1 )*!&#,-!.#30+1! .2&0(1 )*!#',-!.(0/
Slide 30: H1 FY24 United Kingdom
H1 FY24 United Kingdom New Sales ARR ~40% higher than H1 2023 UK ARR up 36% to $28.8m versus pcp UK profit of $1.0m 100% of consulting delivered via SaaS+ model 35.0m 30.0m $2.7m $3.2m 25.0m $1.9m !UK sales team >15 20.0m $1.6m !First Student+ customer win 15.0m !Strong LG Pipeline 10.0m 5.0m $17.5m
Slide 31: Largest core financials and HRP deal in UK Edu history
! Largest core financials and HRP ! Intense competitive sales process ! Replace Oracle deal in UK Edu history ! largest Asset Management deal in ! Very large value contract ! Direct Award history ! OneGov Solution ! SaaS+ ! SaaS+ differentiated to win ! Cyber security key differentiator ! Short Sale
Slide 32: Customer Journey – QLD LG
Customer Journey – QLD LG $6.2M+ Total Potential ARR Human Resource Management $2.7M Human Resource Management Future ARR Human Resource Management Human Resource Management DXP LG $3.5M $375k Current Customer Product 11 Relationship ARR Management $210k Strategic Asset Product 10 Management $465k R
Slide 33: Cohort Analysis - LG
Cohort Analysis - LG !"#$%&#'!((')#$'*+,-./#$'01'2.3.$-'4567 !%#""$ !)#%"$ !)#""$ !(#%"$ !"#$%&#'!((')#$'*+,+$-'*./-+0#$ !(#""$ !'#%"$ !'#""$ !&#%"$ !&#""$ !"#%"$ !"#""$ *+,-'"&' '"&' '"&( '"&) '"&% '"&. '"&/ '"&0 '"&1 '"'" '"'& '"'' '"'( 2&-'"') *+,+$-'1#%$ 33
Slide 34: Customer Journey – LG
Customer Journey – LG Pre-SaaS Flip – Ave ARR CAGR 9% SaaS Post-SaaS Flip – Ave ARR CAGR 40+% YEARS SaaS FY13 FY14 FY15 FY16 FY18 FY19 FY20 FY21 FY22 FY23 34
Slide 35: Product sales accelerates; SaaS Flips complete
Product sales accelerates; SaaS Flips complete )**)#$+,-. /012345 !"#$%&& !&#$%&& !"#$%&' !&#$%&' !"#$%&( 35
Slide 36: Closing ARR and Net Revenue Retention
!"#$%&'(%")*+,'-..'"+)'!"#$%&'(%")*+,'/01#+ '.&*8)*9#*:;&9<-+=&>.&<>0<*+&#<$=&="+/$%& !$+0*#&"1&223452674 #$+0*#&:-*&#"&?=:&"1&@=5)+*/>.*&A?@@BC& >/)$9#D $600m 119% 117% 120% 114% 114% 114% $500m 110% 111% 110% 108% 110% 1.8% !$+0*#&"1&24&"+&%*.. $400m 100% 1.4% $300m 90% 1.0% 1.0% 80% $423.6m 0.8%
Slide 37: SaaS+ lifts ARR by 40%
SaaS+ lifts ARR by 40% Solution as a Service 37
Slide 38: Path to ERP in 30 days
Path to ERP in 30 days Powered by Days to implement 30 2024 2025 2026 2027 2028 38
Slide 39: R&D Significant Investment for future
R&D Significant Investment R&D investment of $112.0m up 21% Continuous R&D staff investment for future 440 new Fastest features Adoption growth Build an app Google to faster without outcome having to code experience R&D 24% of investment revenue2 of $56.9m1 1 R&D expenditure before capitalisation 2
Slide 40: H1 FY24 Summary
H1 FY24 Record profit, revenue, and Cash and Investments SaaS & recurring Revenue Summary ARR up 24% pcp to up 21% pcp $172.0m to $223.1 m UK Sales ARR Profit Before Tax NRR of 117% up 40% pcp up 17% pcp above target of to $2.7m to $61.5m 115% R&D investment Surpass $500m+ Total ARR up 21% Interim D
Slide 41: Agenda
Agenda ! !"#$%"#$&'( ! )"*+*,"+%(-.'/%&' ! 0"#*"1",+*&(2,$".3.4.*&' ! !"#$%%&'(%)'*"$$'+,-) ! 56*#(7.84(9/&%66: 41
Slide 42: Outlook
Outlook Strong ARR growth Planned reduction of lower Full year NPBT of 15% to 20% quality one-off Traditional margin growth of 1% Consulting Fees replaced with high quality SaaS+ revenue ! The markets we serve are resilient. ! SaaS+ is creating significant TechnologyOne provides mission critical sof
Slide 43: Outlook for 2024 Full Year Net Profit Before Tax
Outlook for 2024 Full Year Strong consistent and steady profit growth Net Profit Before Tax growth of 12% to 16% 43
Slide 44: Agenda
Agenda ! Highlights ! Financial Results ! Significant Achievements ! Outlook for Full Year ! Long Term Outlook 44
Slide 45: Multiple Platforms for Growth
Multiple Platforms for Growth 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 $4b ARR Solution as a Service is a gamechanger, lifts ARR by 40% Strategic acquisitions Continuing growth in new
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Slide 47: Appendices
Appendices ! Appendix A – Transition to SaaS - Careful reduction of legacy licence fees ! Appendix B – Consulting Profit ! Appendix C – R&D Disciplined and Transparent ! Appendix D – Long History of Strong Cash Flow Generation ! Appendix E – Results Analysis and Key Metrics ! Appendix F – Drivers fo
Slide 48: Appendix A: Transition to SaaS - Careful reduction of legacy licence fees
Appendix A: Transition to SaaS - Careful reduction of legacy licence fees !"#$%&'((&)*+&,-.$/0&,1/-2/-&3--*&)*+&4-#&56"71#&8-7"6-&!$9&:;<= !&""#"$ !)&"#"$ !+*"#"$ !)%"#"$ ;74<@#ABB#C#D3E<FG#D9F3HF3#$33#>+/? !+""#"$ 234#567894#:38763#;<=#>+/? !)""#"$ !%*"#"$ !("#"$ !%""#"$ +"'&-&/ !'"#"$ !)*"#"$ +""'
Slide 49: Appendix B: Consulting Profit
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Slide 50: Appendix B: Consulting Profit (continued)
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Slide 51: Appendix C: R&D Investment
Appendix C: R&D Investment R&D Investment as % of revenue '.J '0J ',J '*J '*J '*J '*J (89':;"#,-/#;-'4!</7' )*-& )(-, 54% Capitalised '1-( '0-. ')-" ''-" "1-0 '.-. ',-* 46% Expensed ''-. ')-. "&-) "&-* ",-" 0)1,-%) 0%1,-%) 0)1,-%% 0%1,-%% 0)1,-%+2 0%1,-%+ 0)1,-%& * H1 FY23 revenue excludes one off c
Slide 52: Appendix C: R&D Disciplined and Transparent
233%+)*4'/6'.FG'G*>H*3?*+%)'F'I#"+>3"#%+& ,-.*/01($ !"#$#('(2-3+(&*$4$ 8(19(&*$ :+-1*6)0*6-&$ :+-1*6)0*6-&$ =(*$;<3(&)($ %&'()*+(&* 5036*026)(7 5036*026)(7 ;<3(&)( 8(16-7 *>1-?@>$8"A 5.63337 5.63337 , 5.63337 %89:; 5.63337 BCDE !!"##$ %&"'$' $%(%) &*"%+, $ %'"$!- BCDD ,+"&,! $#"#-# $%(*) +*"%## $ -$
Slide 53: Appendix D: Long History of Strong Cash Flow Generation
Appendix D: Long History of Strong Cash Flow Generation Cash Flow Generation1 will continue to grow as NPAT2 grows NPAT and Cash Flow Generation !)%"#"$ !)""#"$ !("#"$ !'"#"$ !&"#"$ !%"#"$ !"#"$ %""" %"") %""% %""* %""& %""+ %""' %"", %""( %""- %")" %")) %")% %")* %")& %")+ %")' %"), %")( %")- %"%"
Slide 54: Appendix E: Results Analysis and Key Metrics
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Slide 55: Appendix F: Drivers for Long Term Growth
Appendix F: Drivers for Long Term Growth Increase Product Penetration Increase Market Penetration Expand Geographies 16 Licensable products1 6 Vertical markets1 APAC & UK1 Over 500+ licensable modules 6/7% !"#,&-./)' !"#$%&'()*+ !==/.% +,-./0% 8/9:9,0$% ;(<* >,./,=-?/$% @-,9,A-9:% 1-,2034$% Diversif
Slide 56: Appendix G: Scientia Acquisition Accounting Impacts
Appendix G: Scientia Acquisition Accounting Impacts Scientia was an excellent acquisition: The sellers did not achieve their aggressive earnout targets, but ! A world class Timetable and Scheduling product, with a exceed our business case on many facets: broad customer base and strong cash flows. !
Slide 57: Appendix H: Glossary
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 Cash Flow les
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