Australian Bureau of Statistics reported that the monthly Consumer Price Index (CPI) indicator rose 2.7 per cent in the 12 months to August 2024. Annual inflation in August, down from 3.5 per cent in July was also the lowest since August 2021.
Though Australia's central bank, RBA, has preferred to keep rates unchanged at 4.35%, the inflation figures falling within RBA;s target range of 2% to 3% have raised hopes of investors in ASX 200 Stocks of an interest rate cut coming this year. The tech sector, usually responds positively to this. One among such high growth stocks that has been on a consistent growth path is
Technology One Limited (ASX: TNE)
Technology One Limited in its half-year results for the period ended 31 March 2024 reported total revenue of $244.8 million, a 16% increase from the prior corresponding period (PCP). Total Annual Recurring Revenue (ARR) rose by 21% to $423.6 million in the half year. The SaaS business continues to grow robustly, with Profit After Tax for the half increasing by 16% to $48 million compared to the first half of FY23.
Net Revenue Retention (NRR), which measures the net amount of new ARR from existing customers, was 117% for the 12 months ending 31 March 2024. This was an extremely good result, since best-in-class in the ERP market is between 115% and 120%.
Cash flow generation for Technology One is typically weighted to the second half, aligned with customer payment anniversary dates, often resulting in negative cash flow in the first half. However, this half-year, the company achieved a broadly break-even cash flow generation result, with cash and cash equivalents increasing by 24% over the preceding twelve months.
Given the Group’s strong financial performance in the first half of FY24, Technology One decided to pay a dividend of 5.08 cents per share for the half-year, an increase of 10% from the prior year.
The company maintained a cash position of $103.2 million as of 31 March 2024.
It is one of the best growth stocks to buy now as it continues to prioritize a strong operational focus on its R&D initiatives, with key investments planned for platforms such as SaaS+, App Builder, and the Digital Experience Platform (DXP). These investments can advance the functionality and capabilities of its global SaaS ERP solution. This strategy aligns with the company’s long-term goals to transition to a SaaS+ model, which will reduce the need for traditional long, complex, expensive, and risky implementations. This shift is expected to add substantial utility for customers while also enhancing value for Technology One by significantly de-risking its operations and enhancing economic viability.
Although the company has recently experienced a decline in profits, it is important to note that this reduction is primarily due to the company's current transition phase. While this may appear negative in the short term, it is expected to add significant value and provide tangible financial benefits over the medium term.
Source: Company’s Report
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