Technology One Limited · ASX:TNE
Technology One — Non-Deal Roadshow (December 2018)
44 slides from Technology One's roadshow presentation, Dec 10, 2018
Slide 1: TechnologyOne SaaS Singapore Roadshow
10/12/2018 TechnologyOne SaaS Enterprise Software as a Service For personal use only Singapore Roadshow Edward Chung Chief Executive Officer 10 December 2018 Commercial in confidence FINAL … TechnologyOne SaaS Enterprise Software as a Service Agenda Background TechnologyOne is now a SaaS company
Slide 2: Australia's largest enterprise software company
10/12/2018 Australia’s largest enterprise software company ASX 150 Public Company For personal use only Invest$54m Continually profitable over 27 years Back into R&D Profit Formed in $67m Largest 1987 R&D centre Revenue 1200+ in Australia $299m employees 315+ developers Cash $104m 1200+ Market Capit
Slide 3: Financially Very Strong
10/12/2018 Financially Very Strong For personal use only $ 104.3 Cash and M 28 Return on % 68% 0.01% Return Debt 167 Interest Cover Equivalents Equity on Equity* Equity Customer Strong Cash 23 27 Retention Dividends Continually Flow 99% YEARS YEARS continually profitable Operating paid since since C
Slide 4: TechnologyOne is now a successful SaaS company
10/12/2018 340+ enterprise customers on TechnologyOne SaaS Target 1000 enterprise customers by 2022 For personal use only TechnologyOne is now a successful SaaS company New customer business driven by SaaS In FY19 we will have $177+m in ARR 1Annual Recurring Revenue Represents 75% of our Revenue (ex
Slide 5: FY19 Adopt AASB15 SaaS Revenue Recognition
10/12/2018 FY19 Adopt AASB15 For personal use only SaaS Revenue Recognition Stronger, better business Revenue recognized on a daily basis Free cashflow does not change Minimal impact on P&L Simpler revenue model Improved predictability of earnings TechnologyOne is now like our SaaS peers
Slide 6: ARR is growing at approx. 20% per annum
10/12/2018 Illustrative models only Not to be used as guidance ARR is growing at approx. 20% per annum For personal use only 84% 75% % of total Revenue FY19: ARR at start of year is $177m, is 75% of total Revenue FY22: ARR at start of year is $311m, is 85% of total Revenue TechnologyOne SaaS Enterpr
Slide 7: Enterprise software vendor
10/12/2018 Enterprise software vendor For personal use only The power of a single integrated enterprise solution Financials Business Intelligence Asset Management Enterprise Content Management HR & Payroll Performance Planning Enterprise Budgeting Spatial Supply Chain Enterprise
Slide 8: One Global Code Line
10/12/2018 One Global Code Line For personal use only Massive economies of scale TechnologyOne SaaS Enterprise software as a service TechnologyOne SaaS – One Global Code Line Economy of scale - Massively scalable, Highly efficient , Cost effective One global code line Future proof - We invest tens o
Slide 9: SaaS - Incredible pace of innovation
10/12/2018 SaaS - Incredible pace of innovation For personal use only 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 C
Slide 10: Defence in Depth Security
10/12/2018 For personal use only SOC 1 SOC 2 U.K G-Cloud Audit Controls Compliance Controls Australian Federal Government Security PCI DSS 3.2 SAQ-D Standard Defence in Depth Security Our SaaS customers are always on the latest release New features, new functionality Bugs fixed on a continual ba
Slide 11: TechnologyOne Enterprise SaaS delivering strong growth
10/12/2018 TechnologyOne SaaS Enterprise Software as a Service For personal use only Agenda Background TechnologyOne is now a SaaS company What makes us unique FY18 Full Year Results Highlights Long Term Outlook Appendix FY18 Full Year Results TechnologyOne Enterprise SaaS delivering str
Slide 12: Total Annual Recurring Revenue recognised of $169m
10/12/2018 For personal use only Total Annual Recurring Revenue recognised of $169m, up 22% 1 Recurring Revenue Recognised in FY18 under current Australian Accounting Standards UP 15% NPBT UP 22% ARR Recognized UP 41% 19 YEARS SaaS Platform ARR of consecutive record revenue $66.5m $169m $38m 16% 9%
Slide 13: Total Dividend Up 8%
10/12/2018 Total Dividend Up 8% For personal use only Dividend last five years Dividends for the 2018 year: 2.00 2.00 2.00 Compound Half 1 2.86 cps up 10% (75% franked1) 2.00 Growth 2.00 Half 2 6.16 cps up 10% (75% franked1) Total 9.02 cps up 10% 8% Special 2.00 cps (declared, 75% franked1) UP 8% To
Slide 14: Margin improved to 22%
10/12/2018 Margin improved to 22% For personal use only Net Profit Margin Before Tax 21% 21% 21% 22% 19% 21% 17% 17% 17% 18% 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Margin improvement • Powered by TechnologyOne SaaS • Cost control TechnologyOne SaaS Enterprise Software as a Service Agenda
Slide 15: Foundations for long term growth
10/12/2018 Foundations for long term growth For personal use only 14 Licensable products1 8 Vertical markets2 Diversified geographies3 Over 325 licensable modules Asset Spatial. 3% CPM (EB, Intensive. Other. 2% International. 3% ECM. 7% PP, BI). Health 5% 21% Services. New Zealand.… 11% Diversified
Slide 16: Continuing growth in APAC and the UK
10/12/2018 For personal use only Continuing growth in APAC Local Government Education Government Health & Community Services Asset & Project Intensive Industries Financial Services & Corporates Continuing growth in the UK The UK market is 3x the size of Australian market for our enterpri
Slide 17: Positioned well for the future
10/12/2018 Illustrative models only Not to be used as guidance ARR is growing at approx. 20% per annum For personal use only 84% 75% % of total Revenue FY19: ARR at start of year is $177m, is 75% of total Revenue FY22: ARR at start of year is $311m, is 85% of total Revenue Positioned well for the fu
Slide 18: Questions?
10/12/2018 For personal use only Questions ? TechnologyOne SaaS Enterprise Software as a Service Agenda Background TechnologyOne is now a SaaS company What makes us unique FY18 Full Year Results Highlights Long Term Outlook Appendix FY18 Full Year Results 18
Slide 19: 2018 Full Year Results
10/12/2018 TechnologyOne SaaS Enterprise Software as a Service For personal use only 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 Technol
Slide 20: Agenda
10/12/2018 TechnologyOne SaaS Enterprise Software as a Service For personal use only Agenda • Results • Significant Achievements • Adoption of AASB 15 • Outlook for New Year • Long Term Outlook TechnologyOne is now a successful SaaS company 20
Slide 21: TechnologyOne Enterprise SaaS delivering strong growth
10/12/2018 TechnologyOne Enterprise SaaS delivering strong growth For personal use only 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 Standard
Slide 22: FY18 key results and dividends
10/12/2018 15% 22% 41% 19 YEARS For personal use only UP UP UP of consecutive NPBT ARR Recognized SaaS Platform ARR 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
Slide 23: FY18 vs FY17 financial summary
10/12/2018 FY18 FY17 Variance % m m For personal use only 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
Slide 24: Net Profit After Tax up 15%
10/12/2018 We continue to double in size every 4 to 5 years For personal use only 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.
Slide 25: Total Expenses Up 8% versus Revenue up 9%
10/12/2018 Total Expenses Up 8% $16.9m versus Revenue up 9% For personal use only UP 8% 250 UP 10% $16.9m $19.4m 200 150 100 $195.8m $215.2m $232.1m 50 0 2016 2017 2018 Total R&D Expenses up 8% UP COMPOUND GROWTH 8% UP 8% $54.0m $37.9m $41.0m $46.0m $49.9m $54.… 2014 2015 2016 2017 2018 Ci - exist
Slide 26: Cash Flow
10/12/2018 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% For personal use only Change in Working Capital v Net Profit After Tax of $51.0m (Increase) / Decrease in Debtors2 (6,558) (
Slide 27: Profit By Segment Analysis
10/12/2018 Profit By Segment Analysis Net Profit Before Tax $66.5m, up 15% $8.5m For personal use only 40.0 UP 25% 35.0 $6.5m 30.0 DOWN 25.0 DOWN 11% 20.0 12% ($1.6m) UP 15.0 UP 14% 100%+ $756k 10.0 $4.4m 5.0 $9.7m $6.0m $7m $31.2m $12.7m 0.0 (5.0) Sales (1) Consulting (2) SaaS Platform (3) R&D Corp
Slide 28: Results Analysis and Key Metrics
10/12/2018 Results Analysis and Key Metrics For personal use only 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 (cen
Slide 29: Licence Fee Revenue Growth
10/12/2018 Licence Fee Revenue Growth $65.3m UP 6% $3.6m For personal use only 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 In
Slide 30: Annual Licence continues to grow strongly
10/12/2018 Annual Licence continues to grow strongly: Up 16% For personal use only 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 impor
Slide 31: SaaS - Incredible pace of innovation
10/12/2018 SaaS - Incredible pace of innovation For personal use only 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 C
Slide 32: SaaS Platform Profit of $7m, up 175%
10/12/2018 For personal use only 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 $42+m end 2018 UP 56% $10.4m U
Slide 33: Annual Recurring SaaS Platform Fees
10/12/2018 Annual Recurring SaaS Platform Fees engine for significant profit growth in the coming years For personal use only As previously stated focus has moved from ARR growth to profitable growth in coming years $143.0m UP 25% $114.6m UP 30% $87.9m Annual Recurring Revenue - Compound Growth 69%
Slide 34: UK Consulting Profit by Quarter
10/12/2018 UK Consulting Profit by Quarter For personal use only 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 Signific
Slide 35: Strong Customer Base in the UK
10/12/2018 Strong Customer Base in the UK (44) Critical mass is 50 customers For personal use only 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
Slide 36: Background to AASB
10/12/2018 Background to AASB 15 For personal use only 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
Slide 37: Simple & Robust SaaS Revenue Model
10/12/2018 Simple & Robust SaaS Revenue Model – Annual Recurring Subscription Revenue Year 1 Year 2 Year 3 Year 4+ For personal use only 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
Slide 38: Outlook for 2019 Year
10/12/2018 TechnologyOne SaaS Enterprise Software as a Service For personal use only 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 r
Slide 39: Our focus this financial year
10/12/2018 Our focus this financial year For personal use only 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
Slide 40: Foundations for long term growth
10/12/2018 TechnologyOne SaaS Enterprise Software as a Service For personal use only 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
Slide 41: Focus on Existing Customers
10/12/2018 Focus on Existing Customers Harvest substantial growth in our customer base Estimate $420m of new ARR by FY2027 For personal use only 17.5 In FY18 we achieved 5.4 In FY17, Products 15 per customer 16 customers 15 have on 14 12.5 average 40% of our 14 12 products 10 11 For the 7.5 8.1 prod
Slide 42: Continuing growth in the UK
10/12/2018 Continuing growth in the UK For personal use only 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%
Slide 43: Profit margin to continue to improve
10/12/2018 Profit margin to continue to improve to 25% in the next few years, and then continue to 30% For personal use only Focus is to substantially improve PBT margins through: Net Profit Margin Before Tax 21% 21% 21% 22% 19% 21% 17% 17% 18% 17% 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 •
Slide 44: Summary
10/12/2018 Summary For personal use only 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 Pr