TNE - Technology One

[Trav.]

I just notice that there was an announcement out today, so we can see who has been selling and hopefully that is the end of it.

 

[tinhat]

and another director buying, very nice as I might even break even on this trade

View attachment 105997

I've probably owned this stock at some stage. Why bother about breaking even when you can grab your cash and dash onto the next sure thing? No-one owes you (or me) anything. Remember that.

 

[Dona Ferentes]

12th year in a row of record first half profit and revenue and record SaaS fees.

TechnologyOne has reported an increase in profit for the first half of the 2021 financial year on the back of strong demand for its global software as a service ERP solution.

• Profit after tax reached $28.2 million for the period, up 48 per cent as its software as a service annual recurring revenue jumped 41 per cent to $155.8 million.
• Revenue from the company’s software as a service (SaaS) and continuing business rose 7 per cent to $140.6 million.
• TechnologyOne increased its first half dividend 10 per cent to 3.82 cents per share.

TechnologyOne chairman, Adrian Di Marco added: “Our results are due to the continuing strong demand for our global SaaS ERP solution. Today 85 per cent plus of our revenue is recurring subscription revenue.”

 

[galumay]

Not the best result really, FCF -ve, profit largely a result of capitalised R&D making NPAT look much more than it really is. I am losing conviction on my position in $TNE steadily.

 

[divs4ever]

Acquisition of Scientia - UK’s Leading Higher Education Software Provider

BRISBANE, 3 September 2021 – TechnologyOne (ASX: TNE), one of Australia’s largest enterprise Software as
a Service (SaaS) companies, today announced it has entered into an agreement for the acquisition of Scientia
Resource Management Limited (Scientia), a United Kingdom company servicing the higher education sector.
The likely consideration will be GB£12 million and includes an initial payment of £6m and further payments, based
on achieving progressive earnouts out to FY23. Total consideration will be in the form of cash payments funded
from internal sources. The acquisition is earnings neutral for FY21.
Edward Chung, TechnologyOne’s CEO said, “This acquisition forms part of our strategic focus to deliver the
deepest functionality for Higher Education and it will accelerate our growth and competitive position in the UK as
well as have significant benefits in the Australian Higher Education market.”
“Scientia’s market leading product Syllabus Plus provides advanced academic timetabling and resource
scheduling. Their products provide mission critical software for over 150 leading Universities across the United
Kingdom, and Australia including the University of St Andrews, University of Exeter, Monash University and the
University of Queensland”
“The acquisition further expands our Global SaaS ERP solution for Higher Education. The integration of the
Scientia’s advanced academic timetabling and resource scheduling capabilities, combined with our market leading
Student Management, HR & Payroll, Enterprise Asset Management and Finance capabilities, will provide smarter
decision-making eliminating underutilisation of space and resources that is paramount for Higher
Education across the globe in a post-covid world” Mr Chung said.
Adrian Di Marco the company’s founder and Executive Chairman said “This is our first international acquisition
and demonstrates our deep commitment to both Higher Education and the UK market. The unique IP and marketleading functionality of Syllabus Plus supports our vision of delivering enterprise software that is incredibly easy to
use and that substantially enhances our customers’ experience in the Higher Education sector. We are excited
about the opportunities this will bring to both our UK and Australian customers in the coming years.”
More details will be provided with our full year financial statements and results presentation.


===================================================================================================

DYOR

i hold TNE ( 'free-carried ' ) bought in @ $1.10 in November 2011

 

[qldfrog]

Acquisition of Scientia - UK’s Leading Higher Education Software Provider

BRISBANE, 3 September 2021 – TechnologyOne (ASX: TNE), one of Australia’s largest enterprise Software as
a Service (SaaS) companies, today announced it has entered into an agreement for the acquisition of Scientia
Resource Management Limited (Scientia), a United Kingdom company servicing the higher education sector.
The likely consideration will be GB£12 million and includes an initial payment of £6m and further payments, based
on achieving progressive earnouts out to FY23. Total consideration will be in the form of cash payments funded
from internal sources. The acquisition is earnings neutral for FY21.
Edward Chung, TechnologyOne’s CEO said, “This acquisition forms part of our strategic focus to deliver the
deepest functionality for Higher Education and it will accelerate our growth and competitive position in the UK as
well as have significant benefits in the Australian Higher Education market.”
“Scientia’s market leading product Syllabus Plus provides advanced academic timetabling and resource
scheduling. Their products provide mission critical software for over 150 leading Universities across the United
Kingdom, and Australia including the University of St Andrews, University of Exeter, Monash University and the
University of Queensland”
“The acquisition further expands our Global SaaS ERP solution for Higher Education. The integration of the
Scientia’s advanced academic timetabling and resource scheduling capabilities, combined with our market leading
Student Management, HR & Payroll, Enterprise Asset Management and Finance capabilities, will provide smarter
decision-making eliminating underutilisation of space and resources that is paramount for Higher
Education across the globe in a post-covid world” Mr Chung said.
Adrian Di Marco the company’s founder and Executive Chairman said “This is our first international acquisition
and demonstrates our deep commitment to both Higher Education and the UK market. The unique IP and marketleading functionality of Syllabus Plus supports our vision of delivering enterprise software that is incredibly easy to
use and that substantially enhances our customers’ experience in the Higher Education sector. We are excited
about the opportunities this will bring to both our UK and Australian customers in the coming years.”
More details will be provided with our full year financial statements and results presentation.


===================================================================================================

DYOR

i hold TNE ( 'free-carried ' ) bought in @ $1.10 in November 2011

Good idea, just afraid of any Aussie company buying some O/S business.
We are mostly the suckers in that game.
Anyone remember of a success that way for Aussie shareholders?

 

[divs4ever]

SOMETIMES that works out OK

but there are memorable instances of international acquisitions going badly

now with this one , i am assuming the benefit will be offering the new services/products to existing Australian customers , and MAYBE having access to new companies/customers in Australasia ( assuming the NZ education system isn't that much different to Australia )

of course one downside is the company acquired is all software ( and IP ) so it is pretty hard to value the new assets

 

[galumay]

I am of the view that these transactions are almost never value adding for SH's, especially Aus companies buying UK ones. In this case though the transaction accounts for about 0.6% of TNE's admittedly grossly inflated market cap - and as TNE is up nearly 2.5% today it looks good for SH's so far!!

The reality is its such a tiny acquisition it almost certainly will do no harm or good for TNE in the long run.

I continue to hold TNE, even though its one of my lower conviction positions, i particularly dislike their dodgy changes to accounting practices and their dishonest marketing of same.

 

[Dona Ferentes]

Anyone remember of a success that way for Aussie shareholders?

CSL

 

[qldfrog]

CSL

A long time ago.....

 

[qldfrog]

A long time ago.....

And went international, did not just bought an o/s company.. time will tell

 

[divs4ever]

am up roughly 900% on this

but runs up against geo-political risk by contracting for governments both Federal and Local , and most governments have a 'desire ' rather than a defined need , so always a chance of protracted disputes

looks a great little company from MY entry point , but a back-bone investment ?? not for me thanks

 

[galumay]

I continue to hold TNE, even though its one of my lower conviction positions, i particularly dislike their dodgy changes to accounting practices and their dishonest marketing of same.

I sold out yesterday, the price had just got so far ahead of any sensible valuation and combined with my low conviction about the business overall, it was time for me to exit. The growth required to support the current price by my reverse engineering is over 8% and that seems improbable to me.

I hate selling a position, especially where I have done as well as TNE, averaging a CAGR of 18% before dividends, and I may well come to regret it!

 

[finicky]

That's the spirit, get yourself a cash cushion from overvalued stocks

 

[galumay]

Trouble is @finicky is I sell all my overvalued stocks I will be 100%.

 

[finicky]

II hate selling a position

Having a look at this for something to do and vehemently agree with @galumay that this is a grossly overvalued stock. It's even worse than CDA was before CDA's high dive. I don't doubt that the quality stocks that galumay picks are all overvalued but taking some profit is not all or nothing; a value investor doesn't have to sell all stocks because the p/f is extremely overvalued across the board, nor sell 100% of one particular stock. Having some cash to spend amid the 2020 Wuhan crash transformed the experience for me because there were buying opportunities to brighten the gloom. If it had turned into a protracted bear market I would not have been forced to sell in the depths to meet other cash needs. "Cash, an undervalued asset" someone said; cash becomes highly valuable in a deflation of other assets.

Returning to TNE, I wish I'd owned it (it was a company that I almost invested in back in pre-internet days for most people, I'd never used a computer - I was checking it out in 'Shares' magazine at the local library and saw its increasing dividend and liked the sound of the founder in his interview). It's been a fantastic company but fwiw I would only pay a third of the current price and probably hesitate at that. With this attitude, I admit I would definitely have sold a big chunk of it well before now if a holder. I figure a ROE of 30% is a fair average number to work off, disregarding the very recent surge in ROE, so a multiple of 10x bv might be generous (vague credits from me for eps growth, cash, low debt, a progressive book value, history of low share issuance). Book value fy20 is 0.45. So fair value around $5? Maybe I don't ascribe enough for growth. Anyway, I don't count on continued growth in these times. As a caveat, my macro 'guru' @DaveHcontrarian on twitter is still foreseeing a final leg to the crack-up boom on the U.S market and last week bumped his S&P500 forecast up to 5,300.
P/E is 59 (from comsec av: fys 19-20). Looks like TNE could report fy21 full results next week? Nov 24 last year.

Looking at the monthly price chart, few warning signs yet that I can see? Except declining volume trend over the last one and a half years of bullish action and mild non confirmation from RSI momentum.

This ratio is now about 250% I believe, chart is from February.

 

[galumay]

My totally different approach to valuation gives a range around $4.50 @finicky, so pretty similar!

 

[finicky]

I would have said 4.50 too (10 x 0.45) but gave myself some leeway because it seemed extreme. Also a little improvement on bv of 0.45 is imminent with the fy21 result. Another stock, LBL, which I know you like as well, is also overvalued imo but not extremely so. I till hold some DTL, also overvalued. As you say, they all are that I can see.

 

[peter2]

@finicky Thanks for the notice about the upcoming FY21.
I'm currently in a short term trade (BO > 12.75) and will take the opportunity to sell on any price spike up near my T1 target.

Thanks also to ANZ-CMC.

 

[peter2]

TNE: Sold my position today as the down day erased any buffer there might have been in case of a selloff on the news tomorrow.

It will be interesting to see if others think that TNE is wildly overvalued and decide to take some profit on the news.
If it rallies strongly (argh) I won't be too disappointed as I've followed my trade mgt plan and minimised any risk of further downside.