TechnologyOne shares jump on record annual profit, special dividend

The technology group’s investors will receive a special dividend on the back of its record annual profit.

TechnologyOne will reward investors with a special dividend after lifting annual net profit by 22 per cent to a fresh record and flagging a strong growth pipeline.

Shares in the nation’s largest enterprise technology rose 5.1 per cent, or 63c, on Tuesday to close at $12.98 after the company said its profit had jumped to $88.8m for the 12 months to September 30, up 22 per cent from $72.6m booked in the previous year.

Revenue jumped 18 per cent to $369.3m, from $312m, while earnings before interest, tax, depreciation and amortisation lifted 22 per cent, to $151.8m.

TechnologyOne chief executive Ed Chung said the result was partly due to investment in research and development.

“We also exceeded our ambitious annual recurring revenue (targets and ended legacy licences,” Mr Chung said. “I’m proud to announce that we have successfully completed our strategy ahead of schedule.”

The company’s annual recurring revenue lifted 25 per cent to $320.7m over the year and was now on track to exceed $500m by 2026, he said.

Meanwhile, the group doubled down on research and development, lifting spending over the year by 19.6 per cent to $92.2m.

TechnologyOne saw particularly strong growth in overseas markets, with “record growth” in its global software-as-a-service enterprise planning software.

The UK division reported revenue of 95 per cent to $17.5m, while profit jumped 50 per cent to $2.4m as sales and marketing spend doubled. “The UK are very exciting for us and we’ll continue to focus on them, but contrary to what most people believe, there’s so much runway in Australia and New Zealand,” Mr Chung said.

“We detailed it for the very first time in these results to show that there’s over $2bn of ARR white spaces just in our existing customers. With all the investment in research and development that we’ve made, we will double that annual recurring revenue from $2bn to $4bn with just our existing customers taking on more modules and products.”

Locally, the company closed 20 deals in the local government sector with a value of $63.7m.

In the higher education sector, the company reported closing 10 deals with the Queensland University of Technology and the University of Technology Sydney with a value of $47m.

Off that result, investors will receive a total dividend of 17.02c per share, 60 per cent franked, up 22 per cent on the prior year.

That figure includes a final dividend of 10.82c per share and a special dividend of 2c.