Technology One Limited · ASX:TNE
Technology One — H1 2016 Earnings Presentation
37 slides from Technology One's earnings presentation, May 24, 2016
Slide 1: 2016 Half Year Results
5/23/2016 2016 Half Year Results Half year ending 31 March 2016 24 May May 2016 2016 Commercial in confidence Commercial in confidence FINAL 1.0 Disclosure Statement Technology One Ltd Half Year Presentation - 24 May 2016 Technology One Ltd (ASX: TNE) today conducted a series of presentations relati
Slide 2: Agenda
5/23/2016 Agenda • Results • Significant achievements • Outlook for full year • Long term outlook Appendix • TechnologyOne Overview Original Guidance Half year results in line with guidance Guidance provided at the start of 2016 financial year1… “As in previous years, this year we see the sales pipe
Slide 3: Results Summary and Updated Guidance
5/23/2016 Results Summary Strong result compared to the same period last year, when Revenue was up only 3%. Strong growth to continue over the full year. As per guidance given at start of financial year that the FY16 FY15 Variance % sales pipeline was weighted to the second half. Revenue3 $101.0m $9
Slide 4: Dividend Up 10%; Total Expenses Up 16%
5/23/2016 Dividend Dividend Up 10% UP 10% 2.50 Compound Growth 10% Given strong profit growth for 2.00 Cents per share the full year, H1 dividend 1.50 increased 1.00 • 2.36 cps up 10% 0.50 (declared, 100% franked) • Payout ratio of 100% 0.00 2012 2013 2014 2015 2016 • Board will consider a special d
Slide 5: Total Expenses and R&D Expenses
5/23/2016 Total Expenses Up 16% ($12.9m) 8%, UP 16%, 95 $6.1M $91.5M 2%, 1%, $1.6M 90 5%, $0.9M $4.3M 85 $78.6M $'m 80 75 70 H1 2015 Acquisition Forex Cloud Underlying Total Expenses Expenses Expenses (1) Expense (2) Expense (3) Expenses (4) 1) Acquisitions: additional $4.3m in costs, with no contri
Slide 6: Balance Sheet and Cash Flow
5/23/2016 Balance Sheet Mar-16 $'000 Mar-15 $'000 Var $'000 % Cash & cash equivalents 45,420 51,703 (6,283) (12%) • Cash & Cash Equivalents1 $45.4m (vs. $51.7m, down $6.3m) Trade and other receivables 39,415 39,246 169 0% Earned and unbilled revenue 16,325 10,941 5,384 49% • Net Cash2: 14.57c/s (vs.
Slide 7: Results Analysis and Key Metrics
5/23/2016 Results Analysis 2016 2015 Variance Half Year 2016 v Half Year 2015 % $'000 $'000 $'000 Revenue excl interest 100,570 88,969 11,601 13% Expenses (excl R&D, interest, Depn & Amortisation) 67,460 57,538 9,922 17% EBITDAR 33,110 31,431 1,679 5% R&D Expenditure 21,756 19,229 2,527 13% EBITDA 1
Slide 8: Licence Fees and Major New Sales
5/23/2016 Licence Fees Licence Fees 25 In Line, $18.5M 20 Compound Growth 5% 15 $'m 10 5 0 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Licence fees line ball prior year, as was expected • At the end of the 2015 year we identified that the sales pipeline was weighted strongly to the second half
Slide 9: Annual Support Fees and Cloud Service Fees
5/23/2016 Annual Support Fees Annual Support Fees UP 15%, 50 $43.7M 45 40 Compound Growth 17% 35 30 25 $'m 20 15 10 5 0 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Annual Licence fees continue to grow strongly: up 15% • Compound growth over the last 10 years is 17% • Customer retention is impo
Slide 10: New Cloud Customers For 2016
5/23/2016 New Cloud Customers For 2016 (21) Australian Communications Media Authority Legal Practice Board Western Australia Brisbane South Primary Health Network Ltd New Zealand Racing Board CatholicCare Diocese of Broken Bay Ongo Partnership Ltd CBHS Health Fund Limited QLD Rural Adjustment Author
Slide 11: Profit By Segment Analysis
5/23/2016 Profit By Segment Analysis 8.0 $3.8m, Down 43% ($2.9m) 7.0 Headcount 124, Up 10% 6.0 5.0 $4m, Up 5% ($204k) $3.1m, Down 6% ($199k) Headcount 376, Up 20% FY14 4.0 Headcount 259, Down 4% FY15 3.0 $'m ($1.3m), Down 18% ($202k) Headcount 184, Up 12% 2.0 $694k, Up 100%+ ($514k) FY16 Headcount 4
Slide 12: TechnologyOne Cloud
5/23/2016 Agenda Results • Significant achievements • Outlook for full year • Long term outlook Appendix • TechnologyOne overview 2 Recognition for the TechnologyOne Cloud Amazon Technology Partner of the Year UK Cloud Award – ERP Cloud Product of the Year Preferred supplier for UK Govt G-Cl
Slide 13: Technology Adoption Curve; TechnologyOne Cloud
5/23/2016 The ensuing shakeout will be a cloud significant opportunity for us Technology Adoption Curve TechnologyOne Cloud Enterprise software as a service TechnologyOne Cloud 5.0 now being rolled out Significant leap forward – Mass Production Model Huge economies of scale, Shared instance ar
Slide 14: Ci Anywhere
5/23/2016 Ci Anywhere Enterprise software, incredibly simple Any device. Any where. Any time. 2 Feature Releases per year The ‘train’ always leaves the station ‘on time’ Continuous fixes throughout the year No Documentation Initiative TechnologyOne University Evolve to a Smarter Software D
Slide 15: New R&D Centre In Vietnam
5/23/2016 Ci Anywhere Enterprise software, incredibly simple Any device. Any where. Any time. 2016A now released to early adopters 2016B under development – critical for our Evolve User Conference Deliver all remaining functionality on this platform 2017 calendar year Significant competitive
Slide 16: Evolve Customer Conference; United Kingdom
5/23/2016 Evolve Customer Conference Engage, Enhance, Empower October 2016, Brisbane Convention Centre 1600 attendees, 3 days, 10 streams, 100+ events, 80 speakers, large exhibition area Create sales momentum for TechnologyOne Cloud Create sales momentum for Ci Anywhere We will capitalise
Slide 17: UK Licence Fee Growth to 2022
5/23/2016 UK Licence Fee Growth to 2022 $'m Licence Fees 35 $30.4M, UP 50% Compound Growth 63% 30 25 $20.3M, UP 50% 20 $13.5M, 15 UP 50% $9.0M, UP 50% 10 $6.0M, UP 50% $4.0M, $2.5M, UP 60% 5 $1.4M, UP 79% $0.6M, UP 133% UP 111% 0 2014 2015 2016 2017 2018 2019 2020 2021 2022 $745k loss $400k loss Bre
Slide 18: Corporate Governance
5/23/2016 Corporate Governance • TechnologyOne has always preferred a small and highly accountable Board (5 TechnologyOne members) is committed to continuous improvement of our Remuneration • Some independent Report advisors did not accept and as independent which Mr McLean Corporate causedGovernanc
Slide 19: Outlook For Full Year
5/23/2016 Outlook For Full Year • Substantial base of committed Annual Licence fees heavily weighted to the second half • Strong pipeline of opportunities in second half • We are now preferred supplier for a number of very large contracts, for which we are now in contract negotiations • We expect pr
Slide 20: Long Term Outlook
5/23/2016 Agenda Results Significant achievements Outlook for full year • Long term outlook Appendix • TechnologyOne overview Temporary hiatus due to Cloud loss of $2.5m on revenues of $4.1m. Long Term Outlook Excluding Cloud business, margin is 23%. Net Profit Margin Before Tax Focus is to 35
Slide 21: Controlled R&D Growth; Product Maturity
5/23/2016 Controlled R&D Growth 2011 Model for R&D Expense Growth (excluding acquisitions) 70 Historical Compound $67m 2015 growth was 7% Growth 16% 2011 Model, shows 60 savings of $20m/year 2014 growth was 6% Model Compound Growth 8% in year 5 (2016) 50 2013 growth was 6% $47m • In year 5, R&D will
Slide 22: TechnologyOne Cloud Growth To 2022
5/23/2016 TechnologyOne Cloud Growth To 2022 $143m / year (recurring) in 2022 $'m Annual Contract Value 160 $143.0M Compound Growth 69% Up 26% 140 $113.9M Up 15% 120 $99.0M Up 25% 100 $79.2M Up 50% 80 $52.8M 60 Up 65% $32.0M 40 Up 100% $8.0M $16.0M Up 100% 20 Up 264% 0 FY14 FY15 FY16 FY17 FY18 FY19
Slide 23: Long Term Outlook
5/23/2016 Long Term Outlook Clear strategy for continuing growth Resilient nature of the enterprise software market The breadth and depth of our product offerings Our enterprise vision Our focus on eight markets Our preconfigured solutions Our large customer base TechnologyOne Cloud
Slide 24: TechnologyOne Corporate Overview
5/23/2016 Agenda Results Significant achievements Outlook for full year Long term outlook Appendix • TechnologyOne overview TechnologyOne Corporate Overview 24
Slide 25: Australia's largest enterprise software company
5/23/2016 Australia’s largest enterprise software company Continually profitable Invest$41m+ For over 28 years Back into R&D $47m Profit Formed in 1987 Largest $219m R&D centre Revenue 1000+ in Australia employees 300+ $76m developers Cash 1000+ $1.1b Market Capitalisation Corporate, government and
Slide 26: Historical Performance
5/23/2016 Financially Very Strong • Cash and Equivalents $75.5m • Return on Equity 30+% • Adjusted Return on Equity1 63% • Debt/Equity 2% • Interest Cover 309 • Continually paid dividends since 1996 (20 years) • Continually profitable since 1992 (24 years) As at 30th Sept 2015 1Adjusted for net cash
Slide 27: The Competitive Landscape
5/23/2016 Technology One .. Additional Information Enterprise software as a service The Competitive Landscape New expanding market coverage ORACLE SAP $1,000m Current market coverage TechnologyOne Microsoft Business Solutions $100m SAP/Business One NetSuite Infor (Sun Systems) $30m Xero Reckon CLIEN
Slide 28: Our enterprise vision
5/23/2016 What makes us unique What makes us unique… Our enterprise vision We are one of only a few global enterprise vendors • Suite of 14 products • Deeply integrated • Best of Breed functionality • Common platform • Consistent user interface The power of a single, integrated, enterprise solution
Slide 29: The power of one
5/23/2016 What makes us unique What makes us unique… The power of one We do not use implementation partners or resellers We take complete responsibility for building, marketing, selling, implementing, supporting and running our enterprise solution for each customer to guarantee long-term success. Co
Slide 30: Preconfigured solutions
5/23/2016 What makes us unique… We focus on eight key markets… • Deep understanding and engagement in our markets • Deeply integrated preconfigured solutions • Proven practice • Streamlined implementations • Reduce time, cost and risk We sell to asset and service intensive organisations. We do not s
Slide 31: The power of evolution
5/23/2016 What makes us unique What makes us unique… The power of evolution Substantial investment into R&D each year • New releases encompass new technologies, concepts and innovations • Configuration and not customisation Green screen Client server Web based Cloud computing & smart mobile devices
Slide 32: TechnologyOne Cloud
5/23/2016 TechnologyOne Cloud Enterprise software as a service • We run our own enterprise software through the cloud • We take responsibility to provide a simple, cost effective and highly elastic model of computing • Unique mass production model delivers economies of scale and strategic benefits t
Slide 33: TechnologyOne SaaS Mass Production
5/23/2016 Economy of scale TechnologyOne SaaS Mass Production - Massively scalable, Highly efficient , Cost effective Highly resilient & fault tolerant Elastic - add capacity dynamically Significant cost savings Future proof - We invest millions annually to make our production line and softw
Slide 34: Ci Anywhere: Cloud first, mobile first world
5/23/2016 Ci Anywhere Enterprise software, incredibly simple • Embraces smart mobile devices including iPad, iPhone and Android • Allows users to flow across any and all devices during the course of their day • Consumer concepts deliver powerful enterprise software that is incredibly easy to use • B
Slide 35: Other Facts
5/23/2016 Other Facts Diversity of revenue streams from multiple: • Products 14 • Vertical markets 8 • Geographies 12 - All states of Australia, New Zealand, South Pacific, Asia and UK Strong, very loyal blue chip customer base • We provide a mission critical solution – ‘sticky customer base’ • 60%+
Slide 36: Robust Revenue Model; Historical Performance
5/23/2016 Robust Revenue Model Initial Buy Based on: No of Users, Initial Licence Implementation Service Annual Licence Annual Licence Annual Licence …. Products & Modules Buy Addn Users Initial Licence Annual Licence Annual Licence Annual Licence …. Additional Fee Buy Addn Modules Initial Licence I
Slide 37: Transforming business, making life simple
5/23/2016 Our Vision Clear and focused vision… Transforming business, making life simple 37