Slide 1: 2018 Full Year Results
TechnologyOne SaaS Enterprise Software as a Service 2018 Full Year Results ended 30 Sept 2018 Edward Chung Chief Executive Officer 20 November 2018 Commercial in confidence FINAL Disclosure Statement TechnologyOne Ltd Full Year Presentation – 20 November 2018 TechnologyOne Ltd (ASX: TNE) today condu
Slide 2: Agenda
TechnologyOne SaaS Enterprise Software as a Service Agenda • Results • Significant Achievements • Adoption of AASB 15 • Outlook for New Year • Long Term Outlook TechnologyOne is now a successful SaaS company 2
Slide 3: TechnologyOne Enterprise SaaS delivering strong growth
TechnologyOne Enterprise SaaS delivering strong growth 9 consecutive years of… Record revenues Record licences Record profit Total Annual Recurring Revenue recognised of $169m, up 22% 1 Recurring Revenue Recognised in FY18 under current Australian Accounting Standards 3
Slide 4: Full year key metrics and dividends
UP 15% NPBT UP 22% ARR Recognized UP 41% 19 YEARS SaaS Platform ARR of consecutive record revenue $66.5m $169m $38m 16% 9% UP 14% 8% 14% Profitable since 1992 UP Annual Licence Fees $140m UP Revenue $299m Consulting Profit $6.0m UP Dividends 11.02 CPS UP Earnings Per Share 16.10 (CPS) UP 12% Cash &
Slide 5: Top End of Full Year Guidance Achieved
FY18 FY17 Variance % m m Revenue $298.6 $273.3 9% Initial Licence Fees $65.3 $61.7 6% Refer slide: Licence Total Consulting1 $63.2 $71.3 (11%) Refer slide: Total Consulting Other Revenue $1.5 $1.6 (9%) Total ARR Recognized $168.6 $138.6 22% Annual Licence Fees $139.6 $119.9 16% Refer slide: Annual L
Slide 6: We continue to double in size every 4 to 5 years
We continue to double in size every 4 to 5 years Net Profit After Tax up 15% COMPOUND GROWTH 14% UP 15% $51.0m $23.6m $27.0m $31.0m $35.8m $41.3m $44.5m $51.0m 2012 2013 2014 2015 2016 2017 2018 Over the last six years compound growth in NPAT has been 14% per annum. Margin improved to 22% Net Profit
Slide 7: Total R&D Expenses up 8%
Total Expenses Up 8% $16.9m versus Revenue up 9% UP 8% 250 UP 10% $16.9m $19.4m 200 150 100 50 $195.8m $215.2m $232.1m 0 2016 2017 2018 Total R&D Expenses up 8% UP 8% $4.1m COMPOUND GROWTH 8% UP 8% $54.0m $37.9m $41.0m $46.0m $49.9m $54.0m 2014 2015 2016 2017 2018 Ci - existing very successful ent
Slide 8: Operating Cash Flow
Sep-18 Sep-17 Var % Cash Flow EBIT $ '000 66,527 $ '000 58,019 $ '000 8,508 15% Operating Cash Flow strong at $48.6m Depreciation & Amortisation 4,276 4,237 39 1% Change in Working Capital v Net Profit After Tax of $51.0m (Increase) / Decrease in Debtors2 (6,558) (11,620) 5,062 (44%) Significant
Slide 9: Profit By Segment Analysis
Profit By Segment Analysis Net Profit Before Tax $66.5m, up 15% $8.5m 40.0 UP 25% 35.0 $6.5m 30.0 25.0 DOWN 11% 20.0 DOWN 12% ($1.6m) ($1.3m) 15.0 UP 100%+ UP 14% $4.4m 10.0 $756k 5.0 $9.7m $6.0m $7m $31.2m $12.7m 0.0 (5.0) Sales (1) Consulting (2) SaaS Platform (3) R&D Corporate FY16 FY17 FY18 (1)
Slide 10: Results Analysis and Key Metrics
Results Analysis and Key Metrics Full Year 2018 v Full Year 2017 2018 2017 Var% Full Year 2018 v Full Year 2017 2018 2017 Var% Revenue excl interest 298,650 273,525 9% EPS (cents) 16.10 14.18 14% Expenses (excl R&D, interest, D & A) 174,145 161, 094 8% Dividends (cents) EBITDAR 124,506 111,432 12% S
Slide 11: Licence Fee Revenue Growth
Licence Fee Revenue Growth $65.3m UP 6% $3.6m UP 6% $3.6m UP 9% APAC $5.0m Strong continuing growth Discussed later - Refer UK Slide Down 48% ($1.4m) $61.7m $65.3m $58.9m $63.9m $2.8m $1.5m Company APAC UK FY17 FY18 Licence Fee Contribution - Vertical Market Asset Intensive, $3.3m, 5% Financial Serv
Slide 12: Annual Licence continues to grow strongly: Up 16%
Annual Licence continues to grow strongly: Up 16% 160 140 120 100 COMPOUND 80 GROWTH 60 14% UP 16% 40 $139.6m 20 $43.1m $48.5m $55.3m $63.7m $72.8m $84.2m $95.3m $108.5m $119.9m $139.6m 0 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 • Customer retention is important – remains at 99+% • Ci Anywh
Slide 13: SaaS - Incredible pace of innovation
SaaS - Incredible pace of innovation PostGreSQL High performance cache PostGIS Enhanced resilience Micro services Mass Production IRAP (Unclassified) Containers Multi tenant software 200x Auto Scale NZ CSB ISO 27017 SOC2 Self Healing ISO 27018 ISO 27001 SOC1 Hosted Cloud Powered by Citrix SaaS 1.0 S
Slide 14: SaaS Platform Profit of $7m, up 175%
SaaS Platform Profit of $7m, up 175% Previous year SaaS Platform profit was $2.5m. Original Forecast for 2018 full year was a profit of $5m. TechnologyOne SaaS Platform1 Growing Strongly ARR of $38.1m, up 41% UP 41% Target ARR of $11.0m 40.0 $42+m end 2018 35.0 UP 56% $10.4m UP 69% 30.0 $11.1m 25.0
Slide 15: Annual Recurring SaaS Platform Fees; Consulting profit of $6m
Annual Recurring SaaS Platform Fees engine for significant profit growth in the coming years As previously stated focus has moved from ARR growth to profitable growth in coming years $143.0m UP 25% $114.6m UP 30% Annual Recurring Revenue - Compound Growth 69% per annum $87.9m UP 40% $62.8m UP 65% $3
Slide 16: United Kingdom
UK Consulting Profit by Quarter Total Q1 Q2 Q3 Q4 ($3.8m) ($1.1m) ($1.4m) ($0.8m) ($0.5m) Performance improved in second half of year. Substantial turnaround in FY19 12 projects have successfully gone live Red projects reduced from 20 to 4 United Kingdom Significant investment for future growth
Slide 17: Strong Customer Base in the UK (44)
Strong Customer Base in the UK (44) Critical mass is 50 customers Local Government (13) Higher Education (14) Adur & Worthing Borough Councils Carnegie College Aylesbury Vale District Council Ealing, Hammersmith and West London College Cambridge City Council Glasgow Clyde College Clackmannanshire Co
Slide 18: FY19 Adopt AASB15
Background to AASB 15 IFRS 15 is the international standard for “Revenue from Contracts with Customers”. In Australia it is referred to as AASB1 15. AASB 15 was issued by the AASB in December 2014 and replaces all revenue recognition requirements, including those as set out in AASB 118 “Revenue”. Th
Slide 19: Simple & Robust SaaS Revenue Model
Simple & Robust SaaS Revenue Model – Annual Recurring Subscription Revenue Year 1 Year 2 Year 3 Year 4+ Initial Buy Based on: No of Users, Yearly SaaS Fee Yearly SaaS Fee Yearly SaaS Fee Yearly SaaS Fee … Products & Modules e.g. $500k per year e.g. $500k per year e.g. $500k per year e.g. $500k per y
Slide 20: Outlook for 2019 Year
TechnologyOne SaaS Enterprise Software as a Service Agenda • Results • Significant Achievements • Adoption of AASB 15 • Outlook for New Year • Long Term Outlook Outlook for 2019 Year Continuing strong growth • The enterprise software market has been one of the most resilient sectors of the IT indust
Slide 21: Our focus this financial year
Our focus this financial year Successful transition to AASB15 / IFRS Drive ARR growth Continue strong momentum of transitioning our large customer base to our SaaS platform Consulting improve profitability Continue turnaround in the UK market Focus on our eight vertical markets Cross s
Slide 22: Foundations for long term growth
TechnologyOne SaaS Enterprise Software as a Service Agenda • Results • Significant Achievements • Adoption of AASB 15 • Outlook for New Year • Long Term Outlook Foundations for long term growth 14 Licensable products1 8 Vertical markets2 Diversified geographies3 Over 325 licensable modules Asset Int
Slide 23: Focus on Existing Customers
Focus on Existing Customers Harvest substantial growth in our customer base Estimate $420m of new ARR by FY2027 17.5 In FY18 we achieved 5.4 In FY17, Products 15 per customer 16 customers 15 have on 14 12.5 average 40% 12 of our 14 11 products 10 For the 7.5 8.1 products they do have, they 6.6 have
Slide 24: Continuing growth in the UK
Continuing growth in the UK The UK market is 3x the size of Australian market for our enterprise system Approaching critical mass in the UK over next 2 years UK return to growth in 2019 Illustrative models only Not to be used as guidance ARR is growing at approx. 20% per annum 84% 75% % of total Rev
Slide 25: Positioned well for the future
Profit margin to continue to improve to 25% in the next few years, and then continue to 30% Focus is to substantially improve PBT margins through: Net Profit Margin Before Tax 21% 21% 21% 22% 21% 19% 17% 17% 18% 17% 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 • SaaS Platform margin increasing
Slide 26: Summary
Summary Record Profit up 15%, with EPS growth up 14% Record Revenue up 9% Record Licences up 6%, with APAC licences up 9% Total Annual Recurring Revenue recognized up 22% SaaS Platform profit up 175% Total Consulting Profit up 14%, with APAC Consulting Profit up 39% Net Profit Before T