TechnologyOne reconfirms profit growth of 10-15% for full year, posting 100+ per cent cloud growth

Australia’s largest enterprise software company, TechnologyOne (ASX:TNE) today announced its results for the half year ending 31 March 2016, posting a result which is in line with market guidance provided at the start of this financial year. Revenue was up 12 per cent to $101 million.

TechnologyOne’s Executive Chairman, Adrian Di Marco said TechnologyOne will see continuing strong growth over the full year, based on the strength of its sales pipeline. The company is well positioned for continuing profit growth of 10 to 15 per cent over the 2016 full year, and is preferred supplier for a number of large contracts to close in 2H FY2016.

TechnologyOne’s cloud business continued to grow rapidly, with Cloud Services fees up by more than 100 per cent on the previous year and 21 new customers signing up for its cloud service.

Since delivering Cloud 5.0 at the 2015 full year, the company is now focused on migrating all cloud customers onto its 5.0 architecture.

“Cloud 5.0 introduces the start of our mass production Software as a Service (SaaS) offering, which is massively scalable with significant economies of scale,” said Mr Di Marco.

“We are now part of an elite group of companies globally delivering true enterprise software as a service, making our software the premier enterprise cloud offering in Australia and New Zealand. We are also the only enterprise provider offering a fully configurable solution, with a mass production line of servers running our software for our customers.

“Our enterprise software as a service offering is massively scalable, resilient and fault tolerant, and we keep investing in and improving our software.”

Mr Di Marco said the market was still seeing hosting providers masquerading as cloud, and can expect to see a decline of these in the next four to five years as the market increasingly understands the benefits of a true cloud SaaS offering.

“According to Gartner’s hype cycle, I believe we’re in the peak of inflated expectations for cloud, with all kinds of ‘hosted cloud’ solutions flooding the market over the last couple of years," Mr Di Marco said.

“As we approach the trough of disillusionment, we expect to see hosted cloud solutions become a thing of the past.

“In the current market, many of our multinational competitors are offering half-baked hosted cloud solutions which have been retrofitted for cloud, rather than completely re-engineered to take advantage of the cloud.

“Survivors in the cloud market must offer highly scalable, efficient and cost-effective offerings based around SaaS.”

The company received continuing public recognition for the strength of its SaaS solution, as follows:

  • Awarded Amazon Technology Partner of the Year
  • Awarded UK Cloud Award – ERP Cloud Product of the Year
  • Preferred supplier for UK Government G-Cloud panel
  • Preferred supplier for Australian Government Cloud Services panel
  • Selected for Australian Government Shared Services for SaaS

Research and Development (R&D) continued to be a significant investment for TechnologyOne at $21.8 million for the half year, up 13 per cent.

“R&D represents 22 per cent of revenue, which exceeds the average of our competitors by approximately 10 per cent,” Mr Di Marco said.

“It is absolutely critical that we continue to invest in our future. The success of our SaaS cloud offering in particular, has been because we have invested heavily in R&D, and are focused on driving our technology forward.”

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About TechnologyOne

TechnologyOne (ASX:TNE) is Australia's largest enterprise software company and one of Australia's top 200 ASX-listed companies, with offices across six countries. We create solutions that transform business and make life simple for our customers. We do this by providing powerful, deeply integrated enterprise software that is incredibly easy to use. Over 1,000 leading corporations, government departments and statutory authorities are powered by our software.

We participate in only eight key markets: government, local government, financial services, education, health and community services, asset intensive industries, project intensive industries and corporates. For these markets we develop, market, sell, implement, support and run our preconfigured solutions, which reduce time, cost and risk for our customers.

For 28 years, we have been providing our customers enterprise software that evolves and adapts to new and emerging technologies, allowing them to focus on their business and not technology. Today, our software is available on the TechnologyOne Cloud and across smart mobile devices.

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