TechnologyOne turns first cloud profit, signs 112 new customers

TechnologyOne's cloud business has turned a profit for the first time after adding 112 new customers in the 2017 financial year.

The Brisbane-based software vendor's annual subscription revenue was up 17 percent for the year to $139 million, which is comprised of $120 million in annual license fees, up 10 percent, and annual cloud subscription revenue of $18.6 million, up 84 percent.

New cloud customers include the Department of Industry, Flinders University, Cumberland Council and Moreton Bay District Council, bringing the total number of TechOne's cloud customers to 270.

The cloud business produced a $2.5 million profit this year, compared to a $2.2 million loss last year, which TechOne founder and executive chairman Adrian Di Marco put down to the company's single instance, mass production, software-as-a-service offering achieving critical mass.

"Providing a single comprehensive enterprise software system, as a service, to thousands of customers simultaneously from a single software instance provides an economy of scale, and long-term strategic benefit that has never been achieved before in the enterprise software market," Di Marco said.

"Our customers lose nothing by going to our offering and gain everything – they still have their data in their own database, and are still able to configure our offering to meet their exact business requirements."

Di Marco also took shots at competitors that offered hosted enterprise systems, specifically calling out US rival Workday.

"Unlike companies such as Workday, TechnologyOne is providing a full end-to-end enterprise system as a service, and our customers' data is safe, in their own database – it is not all mashed together in a multi-tenanted data store that relies on security to keep their data safe and that throws away all the advantaged of a relational database that we have come to rely on."

TechOne's overall revenue was up 10 percent to $273 million, and net profit was up 8 percent to $44.5 million. The company aims to reach $345 million in revenue by 2022, with $143 million in cloud subscription revenue.

Chief executive Edward Chung said TechOne would continue its dominance in the local government market after closing 10 new deals totalling $40 million in the last quarter.

"The strength and diversity of our underlying business has allowed us to continue to grow strongly. Adjusting our results to exclusive 'one-off' significant events this year, our underlying profit growth was even stronger, in excess of 22 percent. Looking to the 2018 year, with these headwinds removed, this sets TechnologyOne up for another strong performance in the 2018 financial year."

TechOne is claiming $50 million in damages against the Brisbane City Council, after a drawn-out IT systems replacement project turned sour, leading to the council cancelling the deal in July.