Australia’s TechnologyOne tumbles on missing annual profit estimates

(Reuters) -Shares of TechnologyOne are headed for their worst day in nearly 23 years on Tuesday after reporting annual ​profit short of analyst expectations, as its shift to a ‌software-as-a-service delivery model weighed on near-term margins.

The Australian enterprise software provider’‌s stock sank 16.6% to trade at A$16.68 per share, on track for its weakest session since late November 2002, as of 0250 GMT. The company’s shares were the biggest laggard on ⁠the benchmark index, which ‌is down 1.7%.

The Brisbane-headquartered firm posted a rise in annual profit after tax to A$137.6 million ‍($89.29 million) for the fiscal year ending September 30, falling short of the A$139.9 million consensus from Visible Alpha.

The company’s shift to ​SaaS+, which bundles enterprise software solutions and implementation in a single ‌fee, shaved 2.7% off margins, keeping its profit-before-tax margin flat at 30%.

Total revenue for the year rose to A$610 million, and annual recurring revenue (ARR) reached A$554.6 million, up nearly 18% from last year.

TechnologyOne’s UK operations, ⁠which boosted earnings last year, saw ​profit nearly halve to A$1.5 million ​from A$2.9 million last year, even as ARR leapt 49% compared to last year to A$51.8 million,‍ as the company ⁠further invested in growth in the region.

The company declared a final dividend of 20 Australian cents a share, down from 22.45 ⁠cents a year earlier, and added a special dividend payout of 10 cents.

($1 ‌= 1.5411 Australian dollars)

(Reporting by Kumar Tanishk in ‌Bengaluru; Editing by Ronojoy Mazumdar)