Technology One (TNE) H2 2024 earnings summary

Executive summary

• Achieved 15th consecutive year of record profit, with profit before tax up 18% to $152.9m and ARR up 20% to $470.2m, both exceeding guidance, driven by SaaS+ and strong UK performance.

• SaaS Plus and UK operations were key growth drivers, with UK sales ARR up 70% year-over-year and total UK ARR up 31% to $34.7m.

• Completed the acquisition of CourseLoop for $60m, enhancing the OneEducation platform and adding curriculum management, with expected ARR growth of 25% per year.

• Maintained a clear strategy focused on vertical markets: local government, education, government, health, and infrastructure.

• R&D investment grew 14% to $128.0m, representing 25% of revenue, supporting ongoing innovation and growth.

Financial highlights

• Profit before tax increased 18% to $152.9m, ahead of guidance; profit after tax rose 15% to $118.0m, with an effective tax rate of 23%.

• Total revenue reached $515.4m, up 17% year-over-year; SaaS and recurring revenue grew 19% to $466.3m; SaaS fees up 20% to $425.1m.

• Net revenue retention (NRR) reached 117%, above the 115% long-term target; churn rate at 1.3% or lower.

• Cash and investments increased 25% to $278.7m; net assets up to $379.3m; cash flow generation at 101% of EBITDA.

• FY24 total dividend of 22.45 cps, up 15%-16% on FY23, with a payout ratio of 62%.

Outlook and guidance

• On track to surpass $500m ARR by H1 FY25; new long-term target set at $1b+ ARR by FY30.

• Strong ARR and profit growth expected for FY25, with continued margin improvement from SaaS+ and economies of scale; profit margins expected to grow to 35%+.

• R&D investment to remain at 20%-25% of revenue, supporting ongoing innovation and growth.

• Acquisition of CourseLoop expected to be EPS accretive in FY26.