TechnologyOne FY25 Profit Up 19%, ARR Hits $554.6m, UK ARR Soars 49%

Strong Financial Performance and Growth Momentum

TechnologyOne Limited (ASX, TNE) has delivered a standout FY25 result, with profit before tax climbing 19% to $181.5 million and annual recurring revenue (ARR) expanding 18% to $554.6 million. Notably, the company surpassed the $500 million ARR milestone 18 months ahead of schedule, underscoring the accelerating adoption of its SaaS+ platform and international expansion, particularly in the UK where ARR jumped 49%.

The company’s financial discipline is evident in its robust balance sheet, maintaining zero debt and a strong cash position of $320 million. This financial strength supports ongoing investments in innovation and shareholder returns, including a total dividend payout up 63% to 36.6 cents per share, boosted by a special dividend of 10 cents.

Innovation and R&D Driving Future Growth

TechnologyOne continues to invest heavily in research and development, with R&D expenditure rising 20% to $153.7 million, representing 21% of total revenue. This investment fuels the company’s AI-enabled ERP solutions and the evolution of its SaaS+ offering, which it describes as a game changer lifting ARR by 40%. The integration of AI across its product suite aims to simplify enterprise resource planning and enhance customer value, positioning TechnologyOne at the forefront of digital transformation in regulated sectors.

The company’s strategic focus on innovation is complemented by its commitment to rapid implementation, exemplified by its “ERP in 30 days” initiative, which promises faster time to value and reduced risk for customers. This approach supports strong customer retention, with a net revenue retention rate consistently in the 115-120% range and a churn rate below 1%, reflecting sticky customer relationships and high satisfaction.

Geographic and Market Expansion

While APAC remains TechnologyOne’s core market, accounting for over 80% of revenue, the company is making significant inroads in the UK, with a fully localised team and strong customer references. Key wins include the Royal Borough of Greenwich adopting the SaaS+ solution to modernise local government operations and the University of Hertfordshire expanding its partnership to support student management growth.

TechnologyOne’s diversified vertical focus spans local government, education, health, asset-intensive industries, and financial services, with all sectors showing solid ARR growth. The company sees substantial whitespace in its addressable market of $13.5 billion, with plans to double in size every five years through organic growth, strategic acquisitions, and continued innovation.

Outlook and Strategic Ambitions

Looking ahead to FY26, TechnologyOne projects continued profit growth and margin expansion, targeting a profit before tax margin exceeding 35% in the long term. The company’s bold ambition is to reach over $1 billion ARR by FY30, driven by its Solution as a Service platform, ongoing R&D, and geographic expansion.

Management’s confidence is underpinned by a strong pipeline, disciplined capital management, and a clear strategy to build, grow, and buy its way to market leadership. The company’s sustained focus on embedding AI and accelerating customer adoption of mission-critical products positions it well in a competitive SaaS ERP landscape.