TechnologyOne (ASX: TNE) lifts 1HFY23 dividend by 10% YoY; shares rise

Highlights:

• TechnologyOne Limited (ASX: TNE) published its 1H FY23 report ended 31 March this year.
• During the period, profit after tax rose by 24% to AU$41.3 million from pcp.
• For the interim period, TNE’s board declared a distribution for the half-year, elevated by 10% on pcp to 4.62 cps.

Australia’s biggest enterprise software company TechnologyOne Limited (ASX: TNE), increased 2.904% and was trading at AU$15.765 on Tuesday, 23 May 2023, at 3:44 pm AEST after it released its 1H FY23 results.

Let’s get apprised of the ASX technology stock-TNE’s interim report.

On Tuesday, TNE published its 1H FY23 results ended 31 March 2023, wherein the company noted a 22% increase in total revenue to AU$210.3 million from pcp. During the period, profit after tax rose by 24% to AU$41.3 million, and SaaS ARR grew 40% as QAN improved the number of large-scale enterprise SaaS consumers by 27% to 903.

TNE’s SaaS and continuing business presently have revenue of AU$200.0 million for 1H FY23, increasing by 18%. It represents 98% of TNE’s business, reflecting a massive shift from its legacy business.

NRR is the net amount of new annual recurring revenue won and maintained from the current consumers, which was 119% for the twelve months ended 31 March versus 114% in pcp. This was exceptional given best practice in the ERP market is between 115% to 120%.

TNE’s UK business generated almost similar amount of new ARR in 1H FY23 as it performed in FY22. It delivered profit before tax of AU$3.0 million during the reported period, rising by 29%.

For the interim period, TNE’s board declared a distribution for the half-year, which was elevated by 10% on pcp to 4.62 cps against 4.20 cps in pcp. The distribution amount is payable on 16 June 2023, and it has an ex-dividend date of 1 June and a record date of 2 June 2023.

On the FY23 outlook front, strong SaaS growth of nearly 40% is expected. The investments in talent, UK growth and new initiative such as SaaS+ and planned legacy licence fee decreased from AU$10 million and AU$2 million (AU$8 million reduction).  

For the long-term outlook, the company is on track to exceed total ARR of AU continue $500 million plus by FY26 from their current base of AU$350.6 million. The company is continuing its substantial long-duration investments in R&D activities to create platforms for development to twice in size every five years.

The economies of scale from its global SaaS ERP solution will also observe continuing profit before tax margin expansion to 35% plus.