TechnologyOne Limited is an Australian-based company that is engaged in the development, marketing, sales, implementation, support, and distribution of financial management and enterprise software solutions. The Company has operations in New Zealand, the United Kingdom, the South Pacific, and Malaysia.
TechnologyOne (TNE), a holding within the value component of the ASX Growth portfolio and Australia’s leading enterprise software company and global pioneer in SaaS+ ERP solutions, has reported an impressive first-half performance for FY25. The company announced a 33% jump in profit before tax to A$81.9 million, well above expectations, while net income climbed 31% to A$63 million. This strong result was driven by solid growth in their recurring revenue base and ongoing expansion of their SaaS+ business.
Annual Recurring Revenue (ARR), a key measure of the company’s subscription income, rose 21% year-on-year to A$511.1 million, reaching this milestone a full 18 months ahead of schedule. This demonstrates TechnologyOne’s rapid growth and increasing customer adoption of its cloud-based ERP solutions. Notably, the company’s UK operations recorded a 50% increase in ARR, highlighting strong international momentum.
The firm’s “SaaS+” model, combining vertical-specific ERP software with fast, single-fee implementations, continues to fuel growth by simplifying the traditionally complex and costly ERP deployment process. This approach not only shortens the time to value for customers but also supports TechnologyOne’s ambitious goal of delivering ERP implementations in just 30 days.
With strong performance across key sectors such as local government, education, and healthcare, TechnologyOne has expanded its market penetration while maintaining high customer retention rates, achieving a net revenue retention of 118%, which is above the industry benchmark. Their recent acquisition of CourseLoop further enhances their education sector offering by adding curriculum management capabilities to their student lifecycle software suite.
TechnologyOne’s ongoing commitment to research and development remains evident, with R&D investment up 21% to nearly A$69 million in the first half. This investment supports continuous innovation, including advancements in artificial intelligence, app-building platforms, and digital experience solutions tailored for government and education markets.
Encouraged by the strong half-year results and pipeline, TechnologyOne has upgraded its full-year profit before tax growth guidance to between 13% and 17%. The company expects to continue growing its ARR strongly and is on track to double the size of its business again by FY30, surpassing A$1 billion in ARR. Over the long term, TechnologyOne aims to expand its profit margins beyond 35% by capitalising on economies of scale from its global SaaS+ platform.
For investors, TechnologyOne’s disciplined balance sheet, record free cash flow generation, and a 30% increase in interim dividends to 6.6 cents per share underscore the company’s strong financial health and confidence in sustained growth ahead. TNE remains an active buy/hold recommendation in the ASX Growth portfolio, which will next rebalance on June 16th 2025.
