$500m recurring revenue goal ‘locked and loaded’, says TechOne boss Ed Chung
The boss of Queensland tech giant TechOne says the company is on track to smash its revenue goals a year earlier than planned, and is now eyeing $1bn in recurring revenue by 2030.
Ed Chung says his Queensland tech giant has little to do to reach a $500m recurring revenue goal by next financial year, a roughly 25 per cent increase from current levels.
Brisbane-based TechOne on Tuesday reported a profit after tax of $102.9m for the year to September 30, up 16 per cent on the previous year. TechOne’s total revenue for the year was $441.4m, representing a growth of 19 per cent or $72m from the previous 12 months.
Annual recurring revenue grew 23 per cent to $392.9m, the majority of which had come from Software-as-a-Service (SaaS) products.
TechOne had updated previous guidance of reaching $500m in annual recurring revenue (ARR) by the 2026 financial year, with the company now on track to surpass that figure in the next 18 to 24 months, according to Mr Chung, TechOne’s CEO.
Asked how TechOne planned to reach that goal, Mr Chung said it had basically already been met thanks to the company’s previous investments in R & D.
“To be honest, I think this year’s results help us get there … I call it the cake and eat it too results,” he said. “The $500m ARR by FY25, that’s locked and loaded, to be honest. That’s going to happen. All the investments we have made in the last few years will make that happen.”
Mr Chung was confident TechOne would not only reach that goal to deliver just over $100m more in recurring revenue but the company would be able to double that within the next five years.
“I’ll put it to you this way, by the time we hit that $500m ARR (it will have taken about 38 or 39 years), we’re then going to double that again in the five years after that and so all the investments we’re making right now will allow us to get there,” he said.
In FY23, expenses grew to $311.5m, up about $60m from the $257.1m the company recorded the previous year. Spending on research and development also grew to $112m, representing 26 per cent of revenue.
Asked if increasing that investment was part of the plan to double ARR, Mr Chung said the company would likely retain that amount of revenue as it was already quite a lot. The previous year the company had spent $92.2m on R&D.
TechOne’s UK business also performed strongly, with growth of 52 per cent over the past 12 months, with an annual recurring revenue of $26.5m. That arm also delivered $3.7m in profit, up from $2.4m the previous year.
Mr Chung outlined TechOne’s hunting plans for the year, with a particular interest in acquiring businesses in the education and government space in the UK.
Businesses it would look to acquire needed to meet four key criteria: be in higher education or local government, have a unique product or IP, be in either Australia or the UK and have attractive financial metrics.
“It’s got to pass all of those or most of those for us to complete an acquisition. If it’s in the UK that’s a little bit more special,” he said.
The company will pay a final dividend of 11.9c per share plus a special dividend of 3c.
TechOne shares closed 2.1 per cent down at $16.07 on Tuesday. The stock has rallied 30 per cent since this time last year.
To join the conversation, please log in. Don't have an account? Register
Join the conversation, you are commenting as Logout