Technology One (ASX: TNE) eyes 10-15% growth in FY23 PBT as SaaS platform scales up globally

Highlights

• Technology One is a SaaS ERP solution providing company that caters to universities, local councils, government agencies and corporations
• During the first half of FY23, the SaaS annual recurring revenue of TNE grew by 40.5%
• TNE shares closed 1.16% lower at AUD 14.52 apiece on 18 August 2023

TechnologyOne Limited (ASX:TNE) is an Australian company which offers SaaS enterprise resource planning (ERP) solutions which assist in transforming the way businesses interact with their communities and customers. The technology company operates globally through six countries and caters to universities, local councils, government agencies and corporations.

The enterprise software organisation is witnessing continuous demand for its global SaaS ERP solution. During the first half of the financial year 2023 (1HFY23), the company saw a 27% increase in large-scale enterprise SaaS customers. Due to these factors, the company reported a 24.5% YoY increase in net profit to AUD 41.2 million and a 16.9% YoY surge in revenue from ordinary activities to AUD 201 million.

During the stated period, the SaaS annual recurring revenue grew by 40.5% to AUD 316.3 million.

Top 10 shareholders of TNE

The top 10 shareholders of TNE have approximately 37.55% shareholding in the company, and the top four shareholders have nearly 20.18% stake . Mactaggart (John Dugald) and Masterbah Pty. Ltd. have the maximum stake with holding of ~7.67% and ~4.43%, respectively.

Recent business update

Through an ASX-filing dated 15 August 2023, the company shared that it has appointed Edward Chung as its managing director, effective from the same date. Edward Chung joined the company in May 2017 as CEO.

Outlook  

TNE expects growth will sustain in FY23. Net profit before tax is expected to increase by 10-15%, and around 40% of SaaS ARR is anticipated for the period. By FY26, the company estimates that ARR will surpass AUD 500 million.

The company also mentioned that its profit margin will expand as its SaaS platform is scaling globally and new customers are being added.

TNE is presently focused on investments in talent, new initiatives and UK growth.

Share performance of TNE

TNE shares closed 1.16% lower at AUD 14.52 apiece on 18 August 2023 with a market cap of AUD 4.76 billion. In the last 12 months, TNE stock price zoomed by almost 20%, and the year-to-date gain is 10.5%. However, in the last one month, the share price has dropped by 7.98%.

The 52-week high of TNE is AUD 17.12 apiece, recorded on 29 May 2023, and the 52-week low is AUD 10.37 apiece, recorded on 3 October 2022. Worth mentioning here is that the existing share price of TNE is nearly 40% higher than its 52-week low.

Note 1: Past performance is neither an Indicator nor a guarantee of future performance.

Note 2: The reference date for all price data, and currency, is 18 August 2023. The reference data in this report has been partly sourced from EODHD/Others.

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