The TechnologyOne Ltd (ASX: TNE) share price has jumped 6% after reporting its FY24 result.
TechnologyOne provides global software-as-a-service (SaaS) enterprise resource planning (ERP) solutions.
TechnologyOne FY24 result
Here are the highlights from the 12 months to 30 September 2024:
- Revenue grew 17% to $515.4 million
- Net revenue retention (NRR) of 117%
- Expenses grew by 16% to $362.6 million
- Net profit before tax rose 18% to $152.9 million
- Net profit after tax grew 15% to $118 million
- Cash flow generation rose 14% to $119 million
- Full-year dividend per share increased 16% to $0.2245
The ASX tech share said that its NRR of 117% beat the long-term target of 115%, meaning its existing clients paid 17% more than they did in the prior year. This is a key part of its plan to double every five years.
TechnologyOne also said that its profit before tax growth of 18% beat its guidance of between 12% to 16%.
The business also reported that its total annual recurring revenue (ARR) reached $470.2 million, up 20% year on year. The government vertical grew by 41% and local government grew by 22%. In the UK segment, its UK sales ARR rose 70% to $8.7 million and total UK ARR jumped 31% to $34.7 million.
It has a goal of reaching at least $1 billion of ARR by FY30.
One of the biggest reasons for TechnologyOne’s success, in my opinion, is its impressive investment into software research and development to ensure it can provide the best offering for existing and new clients. Its R&D investment was $128 million before capitalisation, being 25% of revenue.
CourseLoop acquisition
After the year end, TechnologyOne acquired CoureseLoop, a company that serves the higher education sector.
The ASX tech share said TechnologyOne OneEducation has, according to the company, become the world’s first SaaS platform to encompass the entire student lifecycle into a single unified ERP solution.
Final thoughts on the TechnologyOne share price
I’d call TechnologyOne one of the best ASX tech shares, with a strong client base, growing revenue, rising margins and a growing dividend. I wish I had bought shares in the past.
I think the company can continue growing profit for a long time to come, so the TechnologyOne share price may still be a good investment for the long-term, but I’d prefer to be able to invest at a lower price/earnings ratio (p/e ratio), but great businesses usually don’t fall too far.
