EM – FY21 report: TechnologyOne (ASX: TNE) share price falls despite 43% increase in SaaS sales

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Home »Today’s ASX News» FY21 Report: TechnologyOne (ASX: TNE) Share Price Falls Despite 43% Increase in SaaS Revenue

Enterprise software provider TechnologyOne Ltd (ASX: TNE) share price is despite the publication of a positive FY21 result in the red.

To add some color, license systems expire after a fixed term and cause one-time upfront costs for the customer.

Customers like SaaS because they receive two updates per year and save about 30% of the total cost of ownership. Plus, TechnologyOne is doing better as its earnings are far more reliable compared to last year.

As a result, SaaS revenue rose 43% to $ 192.3 million, at the expense of a 39 percent decline the legacy licenses.

Management announced the end of on-premise solutions by October 2024, informing customers and the market that TechnologyOne will become a pure SaaS business.

“We expect that 90% of all of our remaining on-premise customers are moving to our SaaS solution and driving the growth of our SaaS business. ”

Annual recurring revenue increased 16% to $ 257.5 million, driven by onboarding 100 corporate customers.

“This year we have continued to win new, large corporate customers from our competitors. 30 organizations replaced our competitors’ systems, including systems from Oracle, SAP, Microsoft, Tribal and Workday. ”

Total spend for the year decreased 1%, although research and development (R&D) decreased 13% to 77 million US dollars are up.

The most notable part of the FY21 results was management’s confidence in meeting its mid-range goals, particularly a doubling over the next five years.

TechnologyOne expects one to be in the next four years Revenue growth of 15% per year while increasing the PBT margin to 35%.

After that, the company is on track to achieve recurring annual revenue of $ 500 million by fiscal year 26.

The share price is up over 63% this year, so it’s not too surprising to see a small decline today after the results were released.

Nonetheless, the bottom is moving are heading in the right direction and have a long growth path ahead of them, especially after the recent Scientia acquisition.

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