Shares of Australian software company TechnologyOne Limited (AU:TNE) rallied to an all-time high after it reported 18% year-over-year growth in its annual pre-tax profit of AU$152.9 million, surpassing the company’s guidance of 12-16% growth. Following the results, TNS stock surged nearly 12% at writing, bringing its year-to-date growth to an impressive 95%.
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TechnologyOne delivers SaaS solutions to corporations, government agencies, and local councils across Australia, New Zealand, and the UK.
TechOne Thrives with SaaS+ and UK Market Growth
TechnologyOne credited its 15th consecutive year of profit growth to its global SaaS ERP solutions, innovative SaaS+ offering, and strong performance in the UK market. The company’s ongoing investment in the UK market is gaining significant momentum, which is expected to continue.
Notably, TechOne reported annual recurring revenue (ARR) of AU$470 million, marking a 20% increase compared to the previous year. Meanwhile, its UK sales ARR grew 70% to AU$8.7 million, with total UK ARR increasing 31%. Moving ahead, the company projects its ARR to surpass AU$500 million by the first half of FY25. The company previously announced its long-term goal of AU$1 billion in ARR by FY30.
Regarding shareholder returns, the company’s annual dividend for FY24 rose to 22.45 cents per share. This reflects a 15% increase compared to last year.
UBS Analysts Weigh in on TechOne Results
Analysts from UBS were impressed with TechOne results and described them as “strong.” They also noted that given the impressive growth, pre-tax profit is expected to increase by around 20% annually in the coming years.
Analyst Tim Plumbe from UBS has a Buy rating on TNE stock with a price target of AU$26.20. This implies a downside of 13% from the current levels. The downside is mainly due to the strong share price growth observed so far in 2024.
Is TNE a Good Buy?
According to TipRanks, TNE stock has a Moderate Buy consensus rating based on two Buys and one Hold recommendation. The TechnologyOne share price target is AU$24.17, which is 19.7% below the current trading level.
