2020 Half Y 2020 Half Year R ear Results esults En Ende ded d 31 31 M Marc arch 20 h 2020 20 19 May 2020 Commercial in confidence Disclos Disclosur ure e Sta State temen ment Tec echn hnolog ologyOne yOne Ltd Ltd H Half alf Y Yea ear P r Prese esenta ntation tion – 19 19 M May 2 ay 202 020 TechnologyOne Ltd (ASX: TNE) today conducted a series of presentations relating to its 2020 Half Year results. These slides have been lodged with the ASX and are also available on the company’ s website: www.TechnologyOneCorp.com The information contained in this presentation is of a general nature and has been prepared by TechnologyOne in good faith. TechnologyOne makes no representation or warranty, either express or implied, in relation to the accuracy or completeness of the information. This presentation may also contain certain ‘forward looking statements’ which may include indications of, and guidance on financial position, strategies, management objectives and performance. Such forward looking statements are based on current expectations and beliefs and are not guarantees of future performance, and involve known and unknown risks, uncertainties and other factors, many of which are outside the control of TechnologyOne. TechnologyOne advises that no assurance can be provided that actual outcomes will not differ materially from those expressed in this presentation. This presentation includes the following measures used by the Directors and management in assessing the on-going performance and position of TechnologyOne: EBITDAR, EBITDA, EBIT, ARR, Churn, Cash Flow Generation. These measure are non-IFRS under Regulatory Guide 230 (Disclosing non-IFRS financial information) published by the Australian Securities and Investment Commission and have not been audited or reviewed. ARR (Annual Recurring Revenue) was previously referred to as ACV (Annual contract Value). 1
Agenda Agen da • Results • Significant Achievements • Outlook for Full Year • Long Term Outlook Record Half Year Record H alf Year Net Net Profi Profit Before Tax t Before Tax of $ of $25 25.9m, .9m, up up 6% 6% 2
TechnologyOne Global SaaS ERP Solution Continuing strong demand transforms our customers’ business, and makes life s life simple imple for t for them hem Our V Ou r Vision ision Any De Any Device, vice, Anytime, Anytime, Anyw Anywher here e set a number of years ago, has allowed us and our customers to navigate COVID-19, quickly and easily 3
COVID-19 is highlighting the substantial difference between ‘cloud hosting’ and SaaS Everything is available on our Global SaaS ERP Any device, Anytime, Anywhere COVID-19 will accelerate the move to SaaS Technolog Tech nologyOne yOne Global Saa Global SaaS S ERP ERP customers cus tomers "So pleased that we implemented a true SaaS Finance and HR system from TechnologyOne. In planning this we could have had no idea that anything like the Coronavirus would happen, but it being a modern SaaS solution built for remote working by all in the council has been a massive bonus for us. The move to remote working has been quick and trouble free. The change of system is also driving better data and better information.“ Horsham District Council, UK "I'm relieved that Council uses SaaS including TechnologyOne corporate systems and GIS. It has made it easier for staff to work from home. Our systems can be accessed using a web browser.“ Noosa City Council 4
Our SaaS busines Our SaaS business s continues to grow continues to grow strongly strongly SaaS SaaS ARR ARR $110m up 33% $110m up 33% ARR (Annual Recurring Revenue) 475 475 enterprise enterprise custome customers rs on on Tech Technolog nologyOne yOne SaaS SaaS Up Up 22% 22% from from 389 389 enterprise enterprise customers customers pcp pcp Target 1000 enterprise customers by 2022 5
Total Annual Total Annual Recurring Recurring Revenues Revenues wi will ll increase increase to to $500+m $500+m in FY in FY24 24 1 1 Total ARR in FY19 was $202m SaaS continues to drive SaaS continues to drive our busines our business s Outlook for FY20 is strong Outlook for FY20 is strong Discusse Discussed late d later r in in mor more de e deta tail il 6
Interim Inte rim dividend dividend up 10% up 10% We remain co We remain confident about t nfident about the he outlook outlook for t for the full y he full year ear Dividend Dividend up 10% up 10% H1 Dividend last five years Compound growth 10% 1 ) 3.47 cps, up 10% (60% franked 3.47 Payout ratio of 58% 3.15 2.86 2.60 2.36 FY16 FY17 FY18 FY19 FY20 Notes: 1 Dividends are not fully franked as a result of tax benefits from the R&D Tax Concession and the TechnologyOne Share Trust • • We have continuously paid a dividend since 1996 (through Dot-Com and GFC) • The Board continues to consider other Capital Management initiatives including acquisitions 7
H1 Results Summary H1 Results Summary Var r % H1 H1 FY20 H1 H1 FY19 Var r $’ 000 000 $’000 $’000 138,398 129,287 9,111 7% Revenue In line with expectations, not indicative of the Full Year results 51,053 37,550 13,504 36% SaaS Fees Recognised Our SaaS business continues to grow strongly 56,708 61,780 (5,072) (8%) On Premise Initial Licence Fees 5,451 10,981 (5,530) (50%) In line with expectations, refer next slide Annual Licence Fees 51,257 50,799 458 1% Expected as customers move from On premise to SaaS Platform 30,223 29,195 1,028 4% Consulting Services Refer slide: Consulting Profit Other Revenue 413 763 (350) (46%) 112,458 104,806 (7,652) (7%) Expenses In line with expectations Variable Expenses 20,972 19,324 (1,649) (9%) Capitalised Costs – Commission (1,751) (957) 794 83% As required by AASB15 Operating Expenses (Before Capitalisation) 106,429 100,444 (5,985) (6%) Capitalised Costs – Development (13,193) (14,005) (812) (6%) Refer slide: R&D Reconciliation Capitalisation (15,352) (14,005) 1,347 10% Amortisation 2,159 0 (2,159) (100%) 25,940 24,481 1,459 6% Profit Before Tax In line with expectations, not indicative of the Full Year results Profit margin 19% 19% Other Cash Flow Generation 1 9,936 (6,214) 16,150 260% Refer: Cashflow Cash 83,769 68,177 15,591 23% ARR Recognised 102,311 88,349 13,962 16% ARR Recognised includes SaaS Fees & On Premise Annual Licence Fees ARR Total 211,556 184,718 26,838 15% SaaS ARR 110,162 82,673 27,489 33% Our SaaS business continues to grow strongly Annual Licence ARR 101,395 102,045 (651) (1%) Expected as customers move from On premise to SaaS Platform 1 Cash Flow Generation is Operating cashflow less capitalised development costs Continued Continu ed our our agg aggress ressive ive trans transition ition to our SaaS opera to our SaaS operating ting mode model l ‘On Premise’ initial licence fees down 50% ($5.5m) in H down 50% ($5.5m) in H1 as 1 as planned planned Toda Today, y, 85%+ 85%+ is is recu recurring rring sub subscript scription ion reve revenue nue Based on FY20 opening ARR and excludes Consulting Revenue, which follows from new business wins. Recurring subscription revenue includes SaaS Fees and Annual Licence Fees 8
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