Summary
The fund managers believe that TechnologyOne Ltd (ASX: TNE) is well-positioned for sustained growth, driven by its strong recurring revenue model and successful transition to Software as a Service (SaaS). They highlight impressive financial results, including a 20% growth in Annual Recurring Revenue (ARR) and a target to exceed A$1,000 million in ARR by FY30. The company has demonstrated exceptional performance in new markets, particularly the UK, where ARR growth reached 50%. Despite some concerns over high valuation multiples, the fund managers see the potential for significant productivity gains from AI integration and a robust product offering, including the innovative SaaS Plus model, which streamlines implementation costs. This competitive advantage, coupled with a proven track record of doubling revenue every five years, positions TechnologyOne as a strong investment opportunity, especially as it continues to capture market share from legacy competitors.
Please note: The completeness, accuracy or current status of the investments referenced are not guaranteed.
Source: Trading View
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Commentary From The Managers
Montgomery Investment Management
21 July 2025
$40.10
Summary
- Montgomery Investment Management recognizes TechnologyOne’s transformation under a focused Software as a Service (SaaS) strategy, enhancing its earnings growth trajectory.
- The company has established a strong presence in the UK since 2006, with significant growth in the education and local government sectors.
- Accelerating Annual Recurring Revenue (ARR) growth is noted, supported by a favorable digital transformation backdrop.
- TechnologyOne’s UK operations are expected to maintain sustained momentum due to its disciplined approach and strategic focus.
- The acquisition of Scientia for £12 million in 2021 has sharpened its higher education offerings, particularly in timetabling and student management.
- The launch of the SaaS+ platform has streamlined value propositions for councils and universities, enhancing appeal to budget-conscious public sector clients.
- In the first half of 2025, UK ARR reached A$43 million, up 50% year-on-year, significantly outpacing group ARR growth of 21%.
- New sales ARR climbed 61% to A$4.3 million, reflecting strong traction in government verticals and education.
- TechnologyOne is capturing market share from legacy players like SAP and Oracle, driven by its competitive advantage and structural improvements.
- The integration of Scientia is challenging competitors in the higher education sector, while OneCouncil is eroding shares of Civica and Capita in local government.
- TechnologyOne’s innovative SaaS+ model simplifies deployment, contrasting with the complexity of offerings from larger competitors.
- Montgomery Investment Management continues to hold because of the expected sustained growth driven by a strong competitive advantage and a large total addressable market.
- The company aims to double revenue every five years, supported by deeper market penetration and new government contracts.
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Please note: The completeness, accuracy or current status of the investments referenced are not guaranteed.
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Commentary From The Managers
Montgomery Investment Management
21 July 2025
$40.10
Summary
- Montgomery Investment Management recognizes TechnologyOne’s transformation under a focused Software as a Service (SaaS) strategy, enhancing its earnings growth trajectory.
- The company has established a strong presence in the UK since 2006, with significant growth in the education and local government sectors.
- Accelerating Annual Recurring Revenue (ARR) growth is noted, supported by a favorable digital transformation backdrop.
- TechnologyOne’s UK operations are expected to maintain sustained momentum due to its disciplined approach and strategic focus.
- The acquisition of Scientia for £12 million in 2021 has sharpened its higher education offerings, particularly in timetabling and student management.
- The launch of the SaaS+ platform has streamlined value propositions for councils and universities, enhancing appeal to budget-conscious public sector clients.
- In the first half of 2025, UK ARR reached A$43 million, up 50% year-on-year, significantly outpacing group ARR growth of 21%.
- New sales ARR climbed 61% to A$4.3 million, reflecting strong traction in government verticals and education.
- TechnologyOne is capturing market share from legacy players like SAP and Oracle, driven by its competitive advantage and structural improvements.
- The integration of Scientia is challenging competitors in the higher education sector, while OneCouncil is eroding shares of Civica and Capita in local government.
- TechnologyOne’s innovative SaaS+ model simplifies deployment, contrasting with the complexity of offerings from larger competitors.
- Montgomery Investment Management continues to hold because of the expected sustained growth driven by a strong competitive advantage and a large total addressable market.
- The company aims to double revenue every five years, supported by deeper market penetration and new government contracts.
LHC Capital
30 June 2025
$41.01
Summary
- Technology One achieved A$500 million in annual recurring revenue (ARR) 18 months ahead of schedule.
- Shares increased by 48% during the quarter.
- LHC Capital continues to hold due to Technology One's sound execution of its business plan.
- Market-leading net revenue retention rates (NRR) and low customer churn rates.
- Record revenues, profits, and SaaS fees for the sixteenth consecutive year.
- Full year profit growth upgraded to 13-17%.
- New target of exceeding A$1,000m in ARR by FY30.
- First Federal Government department customer signed.
- Significant growth in the UK business with ARR up 50% year-on-year.
- SaaS Plus offering disrupts traditional ERP pricing strategies.
- Customers adopting SaaS Plus deliver 40% more ARR compared to traditional SaaS products.
- NRR expanded to 118% due to SaaS Plus adoption.
- Islington Council contract win validates tailored strategy for UK local government.
- All six verticals in Australia recorded double-digit ARR increases.
- Market share below 15%, indicating significant growth potential.
- Technology One continues to compound at a high rate supported by a recurring revenue base.
- Expected to double every five years as per updated ARR guide.
- Beneficiary of the AI revolution, anticipating productivity gains and improved profit margins.
- LHC Capital believes this positions for attractive returns over the medium term.
Yarra Capital Management
30 June 2025
$41.01
Summary
- Yarra Capital Management notes TechnologyOne Ltd (TNE) has shown strong revenue and earnings growth.
- The company has made encouraging progress in the UK market.
- Despite the positive momentum, high valuation multiples (50.8-times EV/EBITDA and 83.8-times FY26 P/E) are seen as prohibitive.
- Yarra Capital Management continues to hold an underweight position due to better relative opportunities in the high growth technology sector.
Yarra Capital Management
31 May 2025
$41.10
Summary
- TechnologyOne (TNE) has recently shown strong revenue and earnings growth.
- Yarra Capital Management notes encouraging progress in the US and UK markets.
- Despite the positive business momentum, valuation metrics such as 52-times EV/EBITDA and 97-times P/E are deemed prohibitive.
- Yarra Capital Management continues to hold an underweight position due to these valuation concerns.
- Better relative opportunities are identified in the high growth technology space.
Ten Cap
31 May 2025
$41.10
Summary
- Technology One (TNE) reached new highs after beating both revenue and EPS estimates in its half-year results.
- Its resilient SaaS model and deep domestic exposure continue to drive robust recurring revenue.
- Ten Cap continues to hold because of the strong performance and growth potential.
- Investment thesis remains positive due to consistent revenue growth and market position.
Wilson Asset Management
31 May 2025
$41.10
Summary
- TechnologyOne Ltd is Australia’s largest enterprise Software-as-a-Service (SaaS) company.
- Share price reached an all-time high of $41.35 in May.
- Strong results released on 20 May for the half year ended 31 March 2025 exceeded investor expectations.
- Reported a 19% increase in total revenue to $291.3 million.
- Net profit after tax rose by 31% to $63 million.
- Annual recurring revenue (ARR) grew by 21% to $511.1 million.
- Exceptional growth in the UK market with ARR increasing by 50% to $43.1 million.
- Strong financial results and upgraded full-year profit guidance boosted investor confidence.
- Wilson Asset Management continues to hold due to these positive developments.
LHC Capital
31 Dec 2024
$31.31
Summary
- Technology One demonstrated exceptional performance in 2024, achieving a total shareholder return of 105%.
- Financial results exceeded market expectations, with Annual Recurring Revenue (ARR) growth of 20% and a net profit before tax increase of 18%.
- The company continues to invest significantly in research and development, viewed as a core competitive advantage.
- Growth in the UK market is notable, with UK ARR increasing by 31% and several key customer acquisitions.
- The transition to a cloud-based ERP system has been successful, driving a significant revenue uplift.
- Customers utilizing cloud-based deployments are likely to purchase more modules, enhancing profit margins.
- The introduction of SaaS Plus is disrupting traditional ERP pricing models, bundling software and implementation costs into a single payment.
- Technology One's strong outlook for 2025 anticipates surpassing A$500m in ARR and aims for A$1,000m by 2030.
- Changes to the Long-Term Incentive (LTI) structure reflect confidence in future growth, with increased EPS growth targets for management.
- LHC Capital continues to hold because of the strong growth potential and the strategic advantages Technology One is establishing in the market.
Monash Investors
31 May 2024
$17.78
Summary
- Technology One (ASX: TNE) has shown a +9% increase following its half year results.
- TNE specializes in commercial software for accounting and administration, serving corporates, universities, councils, and government departments.
- The company is experiencing accelerating revenue growth as it transitions from legacy revenue based on license fees to a SaaS (Software as a Service) model.
- Technology One provided strong guidance for FY24, indicating robust future performance.
- The firm expects to double in size every 5 years, reinforcing confidence in its growth trajectory.
- Monash Investors continues to hold Technology One due to its promising outlook and strategic transition.
Elston
30 Sept 2023
$15.44
Summary
- Elston sold their investment in TechnologyOne due to its addition to the S&P/ASX 100 index.
- The decision was made as part of S&P’s March 2023 index rebalancing.
- Elston aims to remain true to their label as small cap managers.
- There is a mandated 12-month period to remove a holding after its inclusion in the S&P/ASX 100 index.
Please note: The completeness, accuracy or current status of the investments referenced are not guaranteed.
Frequently Asked Questions
Who has invested in TechnologyOne Ltd (ASX:TNE)?
Fund managers including Monash Investors, Yarra Capital Management, Elston, LHC Capital, Ten Cap, Wilson Asset Management and Montgomery Investment Management have invested in TechnologyOne Ltd (ASX:TNE).
Why have investment managers invested in TechnologyOne Ltd (ASX:TNE)?
Fund managers are investing in TechnologyOne Ltd due to its strong financial performance, robust revenue growth, and innovative SaaS offerings. The company has successfully transitioned from legacy revenue models to a Software as a Service (SaaS) model, resulting in accelerating annual recurring revenue (ARR) and significant market expansion, particularly in the UK and US. With a proven track record of doubling revenue every five years and achieving record profits, TechnologyOne demonstrates strong customer retention and low churn rates. Its unique SaaS Plus offering disrupts traditional enterprise software pricing, appealing to budget-conscious clients in the public sector. The firm’s strategic focus on core markets, combined with a solid outlook for continued growth and productivity gains from artificial intelligence, positions it favorably for long-term investment. Overall, the combination of consistent earnings, market leadership, and a large addressable market makes TechnologyOne an attractive option for fund managers.
What happened to TechnologyOne Ltd (ASX:TNE)?
In June 2025, fund managers LHC Capital and Montgomery Investment Management highlighted TechnologyOne Ltd's impressive performance, with shares rising 48% as the company achieved A$500 million in annual recurring revenue (ARR) ahead of schedule. LHC Capital praised TechnologyOne as "the ultimate compounder," noting record revenues and profits for the sixteenth consecutive year, alongside a promising new target of exceeding A$1,000 million in ARR by FY30. Montgomery Investment Management emphasized the positive transformation of TechnologyOne's UK operations, driven by its innovative SaaS+ platform, which has propelled ARR growth by 50% year-on-year in that market. Despite these successes, Yarra Capital Management expressed caution regarding the stock's high valuation multiples, indicating a preference for other opportunities within the high-growth technology sector.