Technology One Limited (ASX: TNE) has reported its half year result for the six months to 31 March 2019.
TechnologyOne is one of Australia’s largest software as a service (SaaS) businesses with offices in six countries. It has been operating for more than three decades and now has over 1,200 businesses, government departments and statutory authorities as clients.
Technology One Results
Technology One reported that its revenue increased by 5% to $129.3 million. SaaS fees recognised rose 42% to $37.5 million and the SaaS Annual Contract Value (ACV) of $85.8 million was up 45% million.
Net profit before tax (NPBT) grew by 130% to $24.5 million with expenses down 7% to $104.8 million.
The research & development expenditure was up 7% to $27.8 million, representing 22% of revenue.
Technology One Dividend And Balance Sheet
The software business said that it was increasing its dividend by 10% to 3.15 cents per share.
Its balance sheet is also in better shape with cash on the balance sheet increasing by 19% to $68.2 million.
Technology One Management Comments
Technology One CEO Edward Chung said: “We increased the number of large-scale enterprise SaaS customers by 39% to 389. These customers have hundreds of thousands of users, making ours the largest multi-tenanted ERP SaaS offering in Australia.
“Our SaaS offering is delivering a compelling value proposition for our customers providing them ‘any device, anytime access from anywhere around the globe’, defence-in-depth security as well as a simple and cost-effective way to run their enterprise.”
Technology One Outlook
Mr Chung said that the software business is on track to deliver continuing strong growth with net profit before tax over the full year of $71.6 million to $76.3 million.
Is Technology One A Buy?
It has been one of the best performing ASX shares in 2019 with the share price up 50%. However, it’s now trading on an expensive valuation compared to its current earnings, so it would have to be quite a bit cheaper for it to get back to good value.
But, it is growing at a good pace and I can’t think of many good businesses that are trading at good value. Quality is expensive with how low interest rates are. If you want to find growth for your portfolio I think the rapid ASX growth shares could be good alternatives.
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