TechnologyOne has reported record half-year results, boosting full-year profit growth guidance to 13%–17%, driven by its pioneering SaaS+ ERP platform and strategic expansion.
- Profit before tax up 33% to $81.9 million
- Annual Recurring Revenue (ARR) grows 21% to $511.1 million
- UK ARR surges 50%, led by major local government wins
- Acquisition of CourseLoop enhances higher education ERP offering
- Interim dividend increased by 30% to 6.6 cents per share
Record Half-Year Performance
TechnologyOne Limited (ASX: TNE), Australia's largest ERP Software as a Service (SaaS) provider, has delivered a standout half-year performance for the six months ending March 31, 2025. The company posted a 33% increase in profit before tax to $81.9 million, alongside a 21% rise in Annual Recurring Revenue (ARR) to $511.1 million. This marks the 16th consecutive year of record growth in both revenue and profit, underscoring TechnologyOne's sustained market leadership.
CEO Ed Chung highlighted the milestone of surpassing $500 million in ARR eighteen months ahead of schedule, setting a new ambitious target of exceeding $1 billion ARR by fiscal year 2030. This rapid growth is largely attributed to the company’s innovative SaaS+ offering, which integrates vertical-specific ERP solutions with streamlined implementation, significantly reducing deployment times and costs for customers.
SaaS+ and Market Expansion Driving Growth
The SaaS+ model, launched two years ago, combines TechnologyOne’s mission-critical ERP products with a single fee that covers implementation, eliminating traditional complexities and risks. This approach has resonated strongly, particularly in the local government and education sectors. Notably, the UK market saw a 50% increase in ARR, fueled by key wins such as the Islington London Borough Council, marking the company’s entry into larger-scale UK local governments.
In education, ARR grew 27%, with significant contracts like TasTAFE reinforcing TechnologyOne’s dominance in the TAFE sector. The government sector also contributed robustly, with a 28% ARR increase, including a landmark win with the Australian Energy Regulator, the first federal agency to adopt TechnologyOne’s OneGovernment SaaS+ solution.
Strategic Acquisition and Innovation Investment
TechnologyOne’s acquisition of CourseLoop in November 2024 for $60 million further strengthens its higher education portfolio. CourseLoop’s Curriculum Management product complements TechnologyOne’s existing student lifecycle solutions, creating the world’s first unified SaaS ERP platform covering course design through to graduation. Integration is progressing on schedule, enhancing the company’s competitive edge in this sector.
The company also ramped up research and development spending by 21% to $68.8 million, focusing on expanding SaaS+ capabilities and pioneering technologies such as Artificial Intelligence, App Builder, and Digital Experience Platforms tailored for local government and higher education. These investments are critical to sustaining long-term growth and innovation.
Financial Strength and Outlook
TechnologyOne’s financial discipline is evident in its strong free cash flow of $24 million, more than doubling from the previous period, and a 23% increase in cash and investments to $211.9 million. The company declared a record interim dividend of 6.6 cents per share, up 30%, reflecting confidence in ongoing profitability.
Importantly, TechnologyOne upgraded its full-year profit before tax growth guidance to 13%–17%, underpinned by robust ARR growth and the continued transition to SaaS+. While this transition may impact short-term revenue and margins, it is a strategic move to build a more resilient recurring revenue base. The company’s Rule of 40 metric, a combined measure of growth and profitability, stands at an impressive 49.4%, placing it in the top global quartile among ERP peers.
Chair Pat O’Sullivan and CEO Ed Chung emphasized the company’s resilience amid global uncertainties, driven by mission-critical software offerings in stable sectors and a diversified revenue base spanning multiple regions and verticals. With a clear pipeline and ongoing investments in talent and technology, TechnologyOne is well positioned to double in size every five years and achieve sustained margin expansion.
Bottom Line?
TechnologyOne’s record half-year and upgraded guidance signal a confident march toward $1 billion ARR and sustained SaaS+ leadership.
Questions in the middle?
- How will the transition from traditional implementations to SaaS+ affect near-term margins and revenue?
- What are the integration risks and growth prospects following the CourseLoop acquisition?
- How sustainable is the UK market momentum amid increasing competition in local government ERP?