)
Brisbane-based enterprise software company TechnologyOne (ASX: TNE) has powered ahead to its 17th consecutive first-half record profit, reaffirming its upgraded full-year guidance targeting the top end of 18-20 per cent profit growth.
TechnologyOne today posted pre-tax earnings of $89.1 million for the six months ended 31 March 2026 and revealed that annual recurring revenue (ARR) climbed 17 per cent to $598 million, putting the company within striking distance of its stated goal of reaching $1 billion in ARR by FY30.
Net profit after tax rose 6 per cent to $66.8 million, while total revenue grew 11 per cent to $322.7 million on the back of a 13 per cent lift in SaaS (software as a service) and recurring revenue to $299.2 million.
TechnologyOne CEO Ed Chung says growth across the group's business has been driven by the adoption of AI, adding that the feedback the company is receiving is "surpassing our expectations".
“We are generally conservative by nature and we talk about heartbeats and rhythms in our business all the time," says Chung.
"For as long as I can remember, our heartbeat and rhythm was 10 per cent to 15 per cent PBT growth.
"We were able to do this as we are disciplined, focused and have a history of delivering.
"As we have transitioned to a SaaS company and now a SaaS+ company, we have been able to carefully and surgically increase that heartbeat and rhythm increasing our guidance range from 10 to 15 per cent, then 12 to 16 per cent in FY24, and again 13 to 17 per cent in FY25.”
However, Chung says TechnologyOne did something different this financial year by providing guidance three months earlier than usual at its February AGM.
"At this time, we also upgraded our profit guidance range to 18 to 20 per cent and ARR guidance of 16 to 18 per cent, targeting the top of the range for both measures with a target PBT margin expansion of 2 points, from 30 to 32 per cent and full year free cashflow generation equal to net profit after tax representing 100 per cent cash conversion.
"The great visibility and momentum in the business gave us the confidence to guide up, and guide early and today we reaffirm that guidance.”
The 9 per cent statutory growth in pre-tax profit reflects an $8 million to $9 million of investment in the company's Showcase customer conference, which falls in the first half.
“Our PBT growth came in at 9 per cent, in line with the profit phasing we flagged at the AGM due to the planned significant investment in our Showcase event, where we launched our new AI products," says Chung.
"Customer feedback and excitement with the new products and solutions have been unprecedented.”
TechnologyOne's SaaS-first model now generates recurring revenue representing 93 per cent of total revenue.
Net revenue retention stood at 114 per cent, or 116 per cent on a constant-currency basis, indicating existing customers are consistently expanding their spend on the platform.
The UK operation continued its rapid expansion, with ARR in the region growing 23 per cent to $53.0 million.
TechnologyOne has steadily built out its presence across UK local government and higher education, mirroring the vertical-market strategy that dominates its Australian business.
Research and development investment surged 22 per cent to $84.1 million, representing 26 per cent of revenue, with 54 per cent of that spend capitalised.
The increased R&D outlay is directed at the company's artificial intelligence product suite, including its Plus and Guide offerings and broader in-product AI capabilities.
The company declared an interim dividend of 8c per share, up 21 per cent on the prior corresponding period.
Cash and investments on hand grew 16 per cent to $245.5 million, though free cash flow dipped 15 per cent to $20.3 million, reflecting the elevated first-half investment profile.
Across its core verticals, TechnologyOne continued to win and expand major contracts.
The City of Townsville signed a new agreement valued at three times the size of its previous deal, while the company added new SaaS customers across local government, higher education and health and community services.
)
