The Technology One Limited (ASX: TNE) share price has jumped higher this morning after the enterprise software company reported a solid half-year result.
At the time of writing its shares are up 2.5% to $5.67.
Highlights from today's release include:
- Half-year revenue increased 13% on the prior corresponding period to $113.9 million.
- Initial licence fees increased 30% to $24.1 million.
- Annual licence fees up 10% to $47.9 million.
- Cloud services fees up by 93% to $19.9 million.
- Half-year profit after tax jumped 10% to $8.1 million.
- First-half earnings per share of 2.5 cents.
- Half-year dividend up 10% to 2.6 cents per share.
Overall I thought this was a strong result from Technology One and I can't say I'm surprised to see its shares edge higher.
The performance of its cloud services segment was especially impressive. With more and more businesses moving to the cloud, I expect this segment to continue its strong growth for some time to come.
Should you invest?
Based on today's result Technology One's shares are changing hands at approximately 43x trailing earnings.
Whilst I think the company is a high quality one with a lot of growth ahead, I think its shares are fully valued now and offer limited upside potential.
For this reason I would suggest investors consider other software shares such as Altium Limited (ASX: ALU) and Hansen Technologies Limited (ASX: HSN).
I think both these shares are far better value for money right now and could provide investors with outsized returns over the long-term.
