The TechnologyOne Ltd (ASX: TNE) share price is pushing higher this morning following the release of its full year results.
In morning trade, the enterprise software company's shares are up 1.5% to $9.14.
How did TechnologyOne perform in FY 2020?
In FY 2020, TechnologyOne delivered a 4% increase in total revenue to $299 million. This was driven largely by its software-as-a-service (SaaS) business, which continues to growth strongly.
During the 12 months, the company reported SaaS Annual Recurring Revenue (ARR) of $134.6 million. This was a 32% increase on the prior corresponding period and up 22.1% from $110.2 million in the first half.
This was driven by the addition of 104 enterprise customers to its Global SaaS ERP solution, bringing the total to 539 large scale enterprise customers, with hundreds of thousands of users. Management notes that this makes it the largest single instance SaaS ERP offering in Australia.
On the bottom line, thanks to a combination of its SaaS growth and good cost control, the company's underlying profit before tax came in at $82.5 million. This was up 13% year on year and compares favourably to its guidance range of 8% to 12% growth for FY 2020.
Also growing was TechnologyOne's reported cash flows. It generated cash flow of $66.4 million, up 49% year on year. This led to its cash and cash equivalents increasing by 19% to $125.2 million.
In light of its positive performance and strong balance sheet, the TechnologyOne board declared a full year dividend of 12.88 cents per share. This is an increase of 8% year on year.
Outlook.
Management is expecting to see strong continuing growth in SaaS ARR and profit in FY 2021. Though, it stopped short of providing any firm guidance.
It also spoke very positively about its long term growth potential.
It commented: "As our SaaS business continues to grow quickly, the quality of this revenue stream is exceptionally high, given its recurring contractual nature, combined with our very low churn rate of <1%. Today our Total Annual Recurring Revenue (ARR) has hit $222m and is set to exceed $500m in the coming years."
Management was equally positive on its earnings growth prospects.
"Underlying Profit Before Tax margin increased to 29%, compared to 27% pcp. We see margins continuing to improve to 35%+ in the coming years driven by the significant economies of scale from our single instance multi-tenanted Global SaaS ERP solution. We are on track to double the size of our business once again in the next five years," it concluded.
