all customers have been going through upgrades to the SAAS version of the software and module upgrades were part of projects which is why ARR has grown from existing customers. TNE also increase their SAAS by the greater of CPI and AIIA index (it salary index) so the number is greater than 5%
so these increases are completely understood, but there are only a few that are left to do the upgrade so there isn’t much of that existing customer upside left. These customers tend to only take new modules (you call them enhancement modules but they are effectively new functionality) when they have projects around them as it is complex software. Also most of these deals were sold as 7 to 10 year contracts and all modules were negotiated in to most. They were big projects that fatigue most organisations.
the issue is they had significant growth over all the years these upgrades were happening as the uplift from On premise to SAAS is a significant multiple. They won’t be getting this anymore so they have to get new name clients and this is something they haven’t got a lot of recently. Of course the revenue will grow from existing customers as it is sticky software and it is indexed, but there are customers who are still paying TNE while implementing other software and intend to go live with competitors before the software sunset if September 2024 when the old on premise software is unsupported.
I know they will grow, but will it be enough to justify their SP? Knowing a lot of their customers, I am not sure.
TNE Price at posting:
$15.77 Sentiment: Hold Disclosure: Held
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