Why fund managers call TechnologyOne's sell-off a software paradox
TechnologyOne keeps delivering strong results in defensive government and education markets, yet its shares have been dragged down by a broader technology sell-off.
21 Jul 2026 · 6 min read
In short
TechnologyOne's annual recurring revenue grew 18% to $555 million in FY25, surpassing its $500 million target 18 months ahead of schedule.
UK annual recurring revenue grew 49% year on year to A$52 million, including a second London borough client win through its SaaS+ model.
Shares fell 17% in a single day in November 2025 despite an in-line result, reflecting broader deteriorating sentiment toward technology stocks.
Enterprise software provider TechnologyOne has been caught in what Alphinity Investment Management's March 2026 Article called a software paradox: strong financial results dragged down by a broader technology sell-off, even though the company sells mission-critical resource planning software into defensive government and education end-markets that Alphinity argues are less exposed to AI disruption than the market is pricing.
A UK growth story validating years of investment
Selector Funds Management's November 2025 Monthly Report detailed a landmark FY25 result: annual recurring revenue grew 18% to $555 million, surpassing the company's $500 million target 18 months ahead of schedule, with customer retention at 99% and local government and higher education revenue up 22% and 24% respectively. The report highlighted the UK as an emerging growth engine, with annual recurring revenue there up 49% year on year to A$52 million, including a second London borough client win through the company's SaaS+ combined licence and implementation model.
The market undervalues the mid-teens, consistent growth the business can produce ... without having to take material risks.
— Alphinity Investment Management, Article, October 2025
Spheria Asset Management's December 2025 Monthly Report detailed a sharp market overreaction to that same result: shares had rallied strongly ahead of the release, and against deteriorating sentiment toward technology stocks late in the year, the market appeared positioned for an even stronger outcome, causing a 17% single-day fall despite the result being broadly in line with expectations, including 42% constant-currency UK growth. Pendal Group's November 2025 Newsletter offered a similar read on an earlier leg of the sell-off, arguing the market's focus on a slowdown in Asia Pacific annual recurring revenue growth reflected a supply-constrained FY25 rather than a genuine ex-growth signal, with new AI-enabled products setting up sustained future growth.
What managers are watching next
Forager Funds' March 2026 Quarterly Report detailed a subsequent upgrade to profit before tax growth guidance of 18-20%, reinforcing the thesis that TechnologyOne's mission-critical systems in highly regulated environments create durable switching costs that have taken decades to earn and are very difficult for new providers to break down. With Spheria Asset Management noting a net cash balance of $320 million and a valuation of around 30 times FY27 EV/EBIT that it considers reasonable relative to Australian technology peers, the pace of UK client wins and the durability of Asia Pacific growth remain the two threads managers are tracking most closely.
Questions
Why does Alphinity Investment Management call TechnologyOne's sell-off a paradox?
Alphinity Investment Management notes TechnologyOne has reported strong financial results and operates in defensive government and education end-markets less exposed to AI disruption, yet its shares have still been dragged down by the broader technology sector sell-off.
How is TechnologyOne performing in the UK market?
TechnologyOne's UK annual recurring revenue grew 49% year on year to A$52 million in FY25, according to Selector Funds Management, including winning a second London borough client through its combined SaaS+ licensing and implementation model.
Why did TechnologyOne's share price fall 17% despite a solid result?
Spheria Asset Management notes the stock had rallied strongly ahead of its FY25 result release, and against deteriorating broader technology sector sentiment, the market appeared positioned for an even stronger outcome, leading to the sharp single-day fall despite results being broadly in line with expectations.
33 managers, 55 comments, with each manager's latest recorded position.
See TNE