TechnologyOne announces 17 years of record revenues, continuing unprecedented growth of SaaS business

Australian tech giant TechnologyOne (ASX:TNE) today announced its results for the full year ending 30 September 2016, recording its seventeenth consecutive year of record revenues. The company’s cloud first, mobile first strategy is driving strong continued results.

The results exceeded market guidance for profit growth between 10 and 15 per cent, with Net Profit After Tax up 16 per cent on the prior full year period, to $41.3 million.

The company’s continuing success was underpinned by the strong growth of its Software as a Service (SaaS) business, which grew by more than 100 per cent for the second consecutive year. Licence fees also jumped by 14 per cent to $56m.

“We’ve experienced huge growth in SaaS, with our largest wins in 2016 all coming from SaaS,” said Executive Chairman Adrian Di Marco.

“This growth is across all industries, from federal government to local government, education and financial services, which speaks volumes about the market shift towards a cloud first, mobile first world.

“Organisations are rapidly gaining a more sophisticated understanding of the difference between SaaS and cloud hosting, and are clearly opting for the economies of scale and long-term strategic benefits only offered by SaaS providers.

“Hosting providers cannot keep pace with the evolving mass production capabilities of SaaS. That is why, rather than ‘lifting and shifting’ to the cloud we've made a huge investment in delivering our enterprise software as SaaS. We are one of only a few companies globally delivering enterprise software as a service”

“SaaS will signal the demise of much of the current IT industry. In 10 years, more than 50 per cent of the current IT providers will be obsolete. Much like mass production signalled the demise of the cottage industries during the industrial revolution, the IT industry is now going through a similar revolution - a digital revolution. Only those IT companies that can achieve massive economies of scale through SaaS will survive.” he said.

Just like today, we have giant power generators that power factories that mass produce goods; the IT industry of tomorrow will see giant Infrastructure providers such as Amazon Web Services that will power the software factories of the future. Successful IT companies will use SaaS to deliver mass production in the software industry. This model will change the landscape of the IT industry.

“SaaS is more than just a delivery model, it is a whole new way of approaching enterprise software from design and development, right through to implementation and support.

“Gone are the days of heavily customised solutions and complex projects.”

“We are one of the only enterprise software providers that offers a fully-integrated and configurable enterprise SaaS solution. Newcomers such as Workday cannot match the depth and breadth of functionality that we offer.”

Research and Development (R&D) continued to be a significant investment for TechnologyOne at $46 million for the full year, which is 19% of revenue fully expensed in the year it is incurred

“TechnologyOne’s continuing success validates our strategy, vision and ongoing investment in R&D, as we continue to focus on building beautiful software that is incredibly simple and easy to use.”

More information is available in the TechnologyOne director's report.

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About TechnologyOne

TechnologyOne (ASX:TNE) is Australia's largest enterprise software company and one of Australia's top 200 ASX-listed companies, with offices across six countries. We create solutions that transform business and make life simple for our customers. We do this by providing powerful, deeply integrated enterprise software that is incredibly easy to use. Over 1,000 leading corporations, government departments and statutory authorities are powered by our software.

We participate in only eight key markets: government, local government, financial services, education, health and community services, asset intensive industries, project intensive industries and corporates. For these markets we develop, market, sell, implement, support and run our preconfigured solutions, which reduce time, cost and risk for our customers.

For 29 years, we have been providing our customers enterprise software that evolves and adapts to new and emerging technologies, allowing them to focus on their business and not technology. Today, our software is available on the TechnologyOne Cloud and across smart mobile devices.

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