Technology One profit drop

Listed ERP supplier drops profits.

Listed enterprise technology vendor Technology One has announced its results for the half year ending March 31, 2009. Total revenue for the half increased 13 per cent, or $6.4 million, to $55.9 million, while total license fees were up 10 per cent, or $1.2 million, to $13.3 million.

Profit for the half year was down a substantial 45 per cent, or $4 million, to $4.96 million compared to the same period last year.

The company stated that the profit drop was due to the flow-on effect from what it described as substantial growth the previous year. Expenses for the half were also up 26 per cent, while revenue was up 13 per cent.

“This was the result of significant investments that we began in 2008 to support the organisation’s continued growth, which we highlighted at the Annual General Meeting in February,” said Technology One chief executive Adrian Di Marco.

“Over the full year, expenses will track down to be within the 15 per cent to 18 per cent growth range, which will have a significant impact on achieving the company’s full year guidance.”

Di Marco said that one of the clear outcomes of the current financial environment is that companies are looking to drive greater efficiencies and are looking to reevaluate their ERP supplier relationships.

“We’re already seeing some of our competitors’ customers coming back to the market seeking alternative solutions,” he said

“Our strong position in the marketplace makes this potentially a good source of future revenue and in the last six months we’ve won five major deals where customers have moved to Technology One from solutions provided by multinationals Oracle and SAP.”

The company also increased spending on research and development – up 28 per cent for the half year. That figure represents 22.5 per cent of revenue, up from the normal 18 per cent of revenue.

The company has also gained traction in overseas markets, said Di Marco, with new deals in both the UK and Malaysia. “We’re making significant headway in the UK where we have now beaten our main competitor on five consecutive deals. We’ve signed a number of new high profile contracts in the first half, including University of Hertfordshire and Scarborough Borough Council.”

“These are strategically important as they will provide us with reference sites in two very important sectors – Higher Education and Local Government – both of which offer significant long term growth opportunities in the UK.” “We’ve also entered into a strategic partnership in Malaysia that has already seen us gain a contract with a major bank there, and we’re now a preferred vendor for the whole of government in Malaysia.”

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