Slide 1: 2023 Full Year Results
2023 Full Year Results Ended 30 September 2023 21 November 2023 21/11/2023 1 Page 1 of 57 21-Nov-2023
Slide 2: Disclosure Statement
Disclosure Statement TechnologyOne Ltd Full Year Presentation – 21 November 2023 TechnologyOne Ltd (ASX: TNE) today conducted a series of presentations relating to its 2023 Full Year results. These slides have been lodged with the ASX and are also available on the company’s website: www.TechnologyOn
Slide 3: Agenda
Agenda • Highlights • Financial Results • Significant Achievements • Building the Future • Outlook for FY24 Page 3 of 57 21-Nov-2023
Slide 4: 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 5: Total ARR Growth of 23% Record
Total ARR Growth of 23% Record Total ARR $392.9m Page 5 of 57 21-Nov-2023
Slide 6: Profit Before Tax Growth of 16% Record
Profit Before Tax Growth of 16% Record Net Profit before tax $129.9m FY16 FY17 FY18 FY19 FY20 FY21 FY22 FY23 Beat guidance of 10%-15% PBT growth 21/11/2023 10 Page 6 of 57 21-Nov-2023
Slide 7: Surpass $500m+ ARR by FY26
Surpass $500m+ ARR by FY26 Page 7 of 57 21-Nov-2023
Slide 8: Upgrades to $500m+ ARR by FY25
Upgrades to $500m+ ARR by FY25 Page 8 of 57 21-Nov-2023
Slide 9: 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 Page 9 of 57 21-Nov-2023
Slide 10: Foundation of our growth; Outlook for FY24 is strong
is the foundation of our growth Outlook for FY24 is strong Discussed later in more detail Page 10 of 57 21-Nov-2023
Slide 11: FY23 Results Summary
FY23 Results Summary Strong year drives momentum into FY24 FY23 FY22 VAR VAR $m $m $m % Total ARR 392.9 320.7 72.2 23% Profit ARR ARR Recognised 353.4 287.0 66.3 23% growth growth 16% 23% Total Revenue 441.4 369.4 72.0 19% Profit Before Tax 129.9 112.3 17.5 16% Profit After Tax 102.9 88.8 12.4 16% C
Slide 12: Agenda
Agenda • Highlights •• Financial HighlightsResults • Significant Achievements • Financial Results • Building the Future •• Outlook Significant for Achievements FY24 • Building the Future • Outlook for FY24 Page 12 of 57 21-Nov-2023
Slide 13: FY23 Profit and Loss
FY23 Profit and Loss Record revenue and NPBT. Exceeded ARR targets (highest quality revenue). Page 13 of 57 21-Nov-2023
Slide 14: Profit margin to improve to 35%+ in the next few years
Profit margin to improve to 35%+ in the next few years Driven by the significant ü Beat profit guidance economies of scale from our ü Strong ARR growth single instance global SaaS ü Strong NRR ERP solution ü Strong Cash Conversion ü Strong pipeline FY23 Profit Before Tax Margin is 30% excluding one
Slide 15: FY23 Profit by Segment
FY23 Profit by Segment Profit Before Tax $129.9m, up 16% $17.5m Operating segment analysis Geographic segment analysis Up 16% $17.5m Up 15% $16.2m Up 28% $21.4m Down 11% Down 11% Up 54% $1.7m $2.2m $1.3m $2.4m $3.7m $76.1m $97.6m $20.5m $18.3m $112.3m $129.9m $109.9m $126.2m $15.7m $14.0m Software C
Slide 16: Balance Sheet: Remains Strong
Balance Sheet: Remains Strong Significant cash holdings and no debt provide balance sheet flexibility for growth Page 16 of 57 21-Nov-2023
Slide 17: Cash Flow
Cash Flow Cash Flow Generation 103% driven by ARR growth, disciplined delivery and strong collections Page 17 of 57 21-Nov-2023
Slide 18: FY23 dividend up 15% to 19.52cps
FY23 dividend up 15% to 19.52cps Increased profit enables dividend uplift - Strong balance sheet supports dividend - Significant cash holdings retained for inorganic growth - Payout ratio 62% (FY22: 62%) - Dividend franked to 60% (FY22: 60%) - Dividend paid every year since 1996 3.00 2.00 CAGR: 13%
Slide 19: Agenda
Agenda • Highlights • Financial Results • Significant Achievements • Building the Future • Outlook for FY24 Page 19 of 57 21-Nov-2023
Slide 20: 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
Slide 21: Our 4th Generation Global SaaS ERP Fuels our growth
Our 4th Generation Global SaaS ERP Fuels our growth 21/11/2023 25 Page 21 of 57 21-Nov-2023
Slide 22: True SaaS ERP
True SaaS ERP Deepest functionality for the markets we serve POWER OF A SINGLE INTEGRATED ERP SOLUTION Page 22 of 57 21-Nov-2023
Slide 23: Total ARR and Average ARR per Customer
Total ARR and Average ARR per Customer $450.0m Ave ARR per Customer $400.0m $0.3m $350.0m $0.3m Total ARR $300.0m Total ARR CAGR: 18% $250.0m $0.2m $200.0m $0.2m $392.9m $150.0m $320.7m $257.5m $0.1m $221.9m $100.0m $202.5m $173.9m $153.9m $127.0m $0.1m $50.0m $107.9m $72.8m $84.2m $0.0m $0.0m FY13
Slide 24: All verticals performed strongly
All verticals performed strongly Significant room to grow in future years Vertical Market Analysis ARR of $392.9m1, Up 23% | From $320.7m, FY22 Our APAC market penetration in any single Up 32%, $35.7m vertical does not exceed 15%2 $148.2m Up 20%, $16.4m $98.9m Up 8%, $4m $53.6m Up 18%, $5.7m $37.3m
Slide 25: Full Department SaaS+ Selected over SAP
• Full Department • SaaS+ • Selected over SAP • Full One Education • OneGov – FMIS • Student Management – Replace Tribal • $2m+ per year ARR • Financials – Replace – Unit4 • HRP – Replace – Unit4 Page 25 of 57 21-Nov-2023
Slide 26: Market Leading NRR and Market Leading Churn
Market Leading NRR and Market Leading Churn Industry best in class Above target 119% Best in class $600m Achieved target 1% 116% 119% 120% 112% 113% 114% 112% $500m 110% 107% Target: 110% 1.4% 115% $400m 100% 1.0% 1.0% 1.0% $300m 90% 0.8% 0.8% 80% 0.6% $200m $392.9m Target: 0.4% 1% $320.7m 70% $257.
Slide 27: Cohort Analysis
Cohort Analysis Average ARR per customer by Cohort 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 Cohort Year Page 27 of 57 21-Nov-2023
Slide 28: Cohort Analysis – Post SaaS Transition
Cohort Analysis – Post SaaS Transition Average ARR per customer by SaaS Cohort* 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 Cohort Year * Cohorts ARRs have been rebased to zero at the time of their SaaS transition. Page 28 of 57 21-Nov-2023
Slide 29: Total ARR and Pre and Post SaaS Transition
Total ARR and Pre and Post SaaS Transition Higher Education Additional products Additional products and modules ARR Local Government and modules ARR SaaS ARR SaaS ARR Initial On-premise ARR Initial On-premise ARR FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY19 FY20 FY21 FY22 FY23 FY12 FY13 FY14 FY15 FY16 FY
Slide 30: Local Council Customer Journey from On-prem to SaaS+
Local Council Customer Journey from On-prem to SaaS Transition to SaaS+ SaaS + ARR Additional products and modules ARR Initial On-premise ARR SaaS ARR FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY19 FY20 FY21 FY22 FY23 Page 30 of 57 21-Nov-2023
Slide 31: United Kingdom
United Kingdom Significant investment for future growth UK ARR up 52% to $26.5m Profit of 3.7m, up 54% pcp Total ARR and Profit ü 2 Student Management $30.0m $3.7m $4.0m Deals Closed $25.0m $2.4m $3.0m ü Strong Sales Team Profit $1.6m $20.0m $2.0m ü Skilled Consulting Team Total ARR $15.0m $0.1m $1.
Slide 32: 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 540 new Fastest features Adoption growth Build an app Google to faster without outcome having to code experience R&D 26% of investment revenue2 of $112.0m1 1 R&D expenditure before capitalisation 2
Slide 33: Office upgrades, Share plan, Health labs
Office TechOne Health labs upgrades way refresh Share plan eNPS 21/11/2023 37 Page 33 of 57 21-Nov-2023
Slide 34: Agenda
Agenda •• Highlights Highlights • Financial Results • Financial Results • Significant Achievements •• Building Significant the Achievements Future •• Outlook Buildingfor theFY24 Future • Outlook for FY24 Page 34 of 57 21-Nov-2023
Slide 35: FY23 Summary
FY23 Record profit and revenue, Cashflow Generation up Revenue – SaaS & recurring record total ARR 36% to $104.6m Business up 22% Summary to $390.7m UK ARR Profit Before Tax Cash and up 52% up 16% Investments to $26.5m to $129.9m up 27% to $223.3m Additional Surpass $500m+ Total ARR up 23% NRR of 11
Slide 36: Agenda
Agenda •• Highlights Highlights • Financial Results • Financial Results • Significant Achievements •• Building Significant the Achievements Future •• Outlook Buildingfor theFY24 Future • Outlook for FY24 Page 36 of 57 21-Nov-2023
Slide 37: Upgrade to $500m+ ARR by FY25
Upgrade to $500m+ ARR by FY25 Page 37 of 57 21-Nov-2023
Slide 38: Continue to double in size every 5 years
Continue to double in size every 5 years Page 38 of 57 21-Nov-2023
Slide 39: 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 $4b ARR Solution as a Service is a gamechanger, lifts ARR by 40% Strategic acquisitions Continuing growth in new
Slide 40: Solution as a Service
SaaS+ lifts ARR by 40% Solution as a Service Page 40 of 57 21-Nov-2023
Slide 41: Acquisition Criteria
Acquisition Criteria Local Unique IP APAC SaaS Attractive Government and UK Financial and Regions Metrics Education Page 41 of 57 21-Nov-2023
Slide 42: Agenda
Agenda •• Highlights Highlights • Financial Results • Financial Results • Significant Achievements •• Building Significant the Achievements Future •• Outlook Buildingfor theFY24 Future • Outlook for FY24 Page 42 of 57 21-Nov-2023
Slide 43: Outlook for FY24
Outlook for FY24 Strong ARR and Profit growth to continue in FY24 • The markets we serve are resilient. • SaaS+ is creating significant TechnologyOne provides mission opportunities for us. The pipeline for critical software with deep functionality for the markets we 2024 is strong. We will serve. •
Slide 44: Making life simple for our community
technology Making life simple for our community
Slide 45: Appendices
Appendices • Appendix A – Transition to SaaS - Careful reduction of legacy licence fees • Appendix B – FY23 Consulting Profit • Appendix C – R&D Disciplined and Transparent • Appendix D – Long History of Strong Cash Flow Generation • Appendix E – FY23 Results Analysis and Key Metrics • Appendix F –
Slide 46: Appendix A: Transition to SaaS - Careful reduction of legacy licence fees
Appendix A: Transition to SaaS - Careful reduction of legacy licence fees Total ARR vs. Legacy Licence Fees vs. Net Profit Before Tax ($m) $400.0m $140.0m $350.0m $120.0m Total ARR & Legacy Licence Fee ($m) $300.0m Net Profit Before Tax ($m) $100.0m $250.0m $80.0m $200.0m $129.9m $60.0m $150.0m $112
Slide 47: Appendix B: FY23 Consulting Profit of $14.0m
Appendix B: FY23 Consulting Profit of $14.0m1 Profit as planned as we make the careful and strategic transition from traditional consulting to SaaS+ Company Down 11% APAC Down 23% Consulting is responsible for services in relation to our software Two focussed divisions • New Projects • Applications
Slide 48: Appendix C: R&D Disciplined and Transparent
Appendix C: Highly Disciplined approach to R&D 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. Because we a
Slide 49: Appendix C: R&D Disciplined & Transparent
Appendix C: R&D Disciplined & Transparent R&D Investment as % of revenue1 $120 26% 25% 25% 25.0% 23% $100 21% 20.0% R&D Investment (A$m) $60.6 $80 54% Capitalised $50.1 15.0% $60 $41.9 $37.1 $32.1 10.0% $40 $51.3 46% Expensed $42.1 5.0% $20 $35.1 $31.0 $27.9 $0 0.0% FY19 FY20 FY21 FY22 FY23 1 FY23 r
Slide 50: Appendix C: R&D Disciplined & Transparent
Appendix C: R&D Disciplined & Transparent Software Development - Percent Amortisation Amortisation Net Expense R&D Investment Capitalised Capitalised Expense Period through P&L (#039;000) (#039;000) % (#039;000) Years (#039;000) FY20 68,102 37,069 54.4% 6,103 5 37,136 FY21 77,005 41,858 54.4% 13,429 5 48,576 FY
Slide 51: 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 $120.0m $100.0m $80.0m $60.0m $40.0m $20.0m $0.0m 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
Slide 52: Appendix E: FY23 Results Analysis and Key Metrics
Appendix E: FY23 Results Analysis and Key Metrics FY23 FY22 Var FY23 FY22 Var $’000 $’000 % $’000 $’000 % Revenue1 excl interest 437,224 368,968 18% EPS (cents) 31.71 27.51 15% Expenses2 (excl R&D, interest, D & A) 204,495 174,980 17% Dividend (cents per share) EBITDAR 232,730 193,988 20% Ordinary d
Slide 53: Appendix F: Product Penetration
Appendix F: Product Penetration 7.00 6.50 6.00 5.50 5.00 4.50 4.00 FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY19 FY20 FY21 FY22 FY23 Products per customer (Excluding T&S) Page 53 of 57 21-Nov-2023
Slide 54: Appendix G: Drivers for Long Term Growth
Appendix G: 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 Asset T&S, 4.0% Intensive, New Zealand, SCM, 12.7% EB, 2.6% 6.6% 9.6% Financial Services & United K
Slide 55: Appendix H: Scientia Acquisition Accounting Impacts
Appendix H: Scientia Acquisition Accounting Impacts Scientia was an excellent acquisition: The sellers did not achieve their aggressive earnout targets, but ü A world class Timetable and Scheduling product, with a exceed our business case on many facets: broad customer base and strong cash flows. •
Slide 56: Appendix I: Glossary
Appendix I: 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
Slide 57: Making life simple for our community
technology Making life simple for our community