TechnologyOne’s AI Advantage

Australia | May 29 2026

SaaS company TechnologyOne posted a slight revenue miss in its first half, but brokers shrug this off, focussing on the company’s AI software.

• TechnologyOne's interim slightly missed on revenue
• Record annual recurring revenue in the half
• Customer wins in government and education
• Nothing but praise and applause from analysts

By Greg Peel

TechnologyOne ((TNE)) is Australia’s largest enterprise Software as a Service (SaaS) company with offices across six countries.

Enterprise software integrates processes such as finance, human resources, supply chain management, customer relationship management, analytics, and communication into a unified system, enabling organisations to operate efficiently and make data-driven decisions

TechnologyOne’s global SaaS solution provides a deep functionality for governments, education, health and community services, asset intensive industries, and financial services.

The company’s first half FY26 (September year-end) result was broadly consistent with consensus forecasts and guidance, albeit the group called out FX headwinds which weighed on an otherwise solid set of numbers.

A revenue increase of 11.5% year on year was around -3% below consensus while 12% earnings growth was in line. 

Annual recurring revenue (ARR) of $598m was up 17% year on year, representing $43.4m of incremental ARR growth half on half. Management noted its underlying ARR growth during the half represented a record in constant currency terms, with FX causing a -2% headwind.

UK ARR grew 23% to $53.0m (9% of total ARR). UK new sales ARR was flat year on year at $4.1m, which Morgans understands was due to the timing of a large education customer win, which landed in early April.

The Good

Customer momentum was strongest in TechnologyOne's core verticals, Morgan Stanley notes, reinforcing the depth and defensibility of the company’s sector-leading enterprise resource planning (ERP) model.

Local government ARR grew 27%, underpinned by Australian council wins at Cardinia, Liverpool, Salisbury and Ryde, while education ARR grew 15%, supported by a landmark ten-year, full-suite agreement with James Cook University in Australia on top of UK wins at University of Suffolk and Royal Holloway.

The standout commercial proof point, Morgans Stanley suggests, was City of Townsville, which returned after previously moving to a competitor, signing a new ten-year SaaS Plus agreement at a higher contract value than its prior deal.

Morgan Stanley views this as strong evidence that SaaS Plus is improving win rates and expanding contract value.

Saas Plus is the company’s agentic AI ERP platform.

The Less Than Good

TechnologyOne’s headline operating metrics were largely in line with consensus but this was not enough to impress the market, RBC Capital notes, which overlooked an even stronger underlying print and instead focused on a range of shortcomings.

The share price initially fell -5% on the result release.

Those shortcomings, RBC suggests, were no large win across London boroughs or the Australian federal government, a lack of detail on SaaS Plus customers/ARR, an optically slower UK growth rate (23% year on year versus 49% in FY25), and a revenue miss.

RBC doesn’t think any of the shortcomings are necessarily deal-breakers, and with guidance reaffirmed despite FX headwinds, believes the first half underlying performance was strong, providing a set-up for success across the second half and FY27.

It is understandable if the market was expecting a little bit more, RBC believes, as TechnologyOne has been “relatively unscathed” by the tech sell-off and now trades at a premium versus peers.

To put “relatively unscathed” into context, around last October, Wall Street, and markets across the globe, suddenly panicked, fearing the rapid development of AI would render SaaS companies redundant. By February, TechnologyOne shares had fallen -50%.

Many other SaaS companies lost a lot more value, and TechnologyOne has since recovered around half that loss as management upgraded guidance for FY26 and repeated its targets and confidence for the year(s) ahead.

Bell Potter’s analysts consider TechnologyOne the best positioned tech stock on the ASX to benefit from, rather than be disrupted by, AI.

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