TechnologyOne (ASX:TNE) expects profit growth for the full year of up to nine per cent, up to six per cent less than previously announced.
In publishing half year results, the Brisbane-based software vendor said it was expecting continuing profit growth of 10 per cent to 15 per cent.
“TechnologyOne now expects its full year profit growth to be between seven per cent and nine per cent compared to previous guidance of profit growth of 10 per cent to 15 per cent,” TechnologyOne CEO, Edward Chung, said.
“This is because of the slower than anticipated return to profitability of our consulting business. The underlying profit growth excluding significant events is expected to be approximately 20 per cent.”
The ASX-listed vendor posted a loss in its consulting business of $314,000, or down by $4.1 million compared to the same period in the previous year.
The vendor expected things to improve over the course of the year forecasting as much as $8.2 million in consulting profit for the full year. However, based on preliminary results, TechnologyOne announced consulting profit to be $5.4 million.
According to the company this also represents an additional negative impact of $2.8 million on the profit and loss statement.
“Given the strength of our sales pipeline, and our closure rate, we had expected that we could substantially overcome this shortfall, but unfortunately a number of significant deals for which we are preferred and for which contracts have been negotiated, have not been able to be closed by year end,” Chung said.
The company’s founder and executive chairman, Adrian Di Marco, said this has been the most challenging year for the 30-year-old business.
“TechnologyOne’s cloud business has continued to grow strongly with cloud profit up 200 per cent plus. TechnologyOne’s expected results, excluding significant events (ie. BCC and Evolve previously discussed at the half year), is for underlying profit to be approximately 20 per cent,” Di Marco said.
The full year audit results should be published on 21 November.
In May, when TechnologyOne announced its half year results, the company said that the ongoing issues with the Brisbane City Council (BCC) had impacted the company’s results by $2 million.