TechnologyOne Hits 17th Straight Record Profit With ARR Surging to $598m
TechnologyOne posts 17th consecutive H1 record profit as SaaS+ momentum drives ARR to $598m
TechnologyOne (ASX: TNE) has delivered its 17th consecutive first-half record profit, with the enterprise software company reporting ARR of $598.0m (up 17%), profit before tax (PBT) of $89.1m (up 9%), and a record interim dividend of 8.0 cents per share (up 21%) for the half year ended 31 March 2026. The H1 FY26 results landed exactly in line with guidance communicated at the February AGM, driven by SaaS+ momentum and the launch of TechnologyOne’s AI strategy. For the full year, the company has reaffirmed upgraded FY26 guidance of 18%–20% PBT growth and 16%–18% ARR growth, targeting the top of range for both measures.
CEO and Managing Director Ed Chung
“The DNA of our business is that we set ambitious goals and deliver for our community. Whether that is moving 1,200 on-premise customers to SaaS without missing a beat or whether it is entering the UK to take on the established players to become the de-facto solution or taking on the establishment of long, complex traditional implementations to invent SaaS+, we set big goals and deliver.”
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H1 FY26 by the numbers — record results across every key metric
Headline financial scorecard
| Metric | H1 FY26 Result | Change on PCP |
|---|---|---|
| Annual Recurring Revenue (ARR) | $598.0m | Up 17% (up 19% constant currency) |
| Profit Before Tax (PBT) | $89.1m | Up 9%; PBT margin 28% |
| Net Profit After Tax (NPAT) | $66.8m | Up 6% |
| SaaS and Recurring Revenue | $299.2m | Up 13% |
| Total Revenue | $322.7m | Up 11% |
| Net Revenue Retention (NRR) | 114% | 116% constant currency |
| UK ARR | $53.0m | Up 23% |
| Free Cash Flow | $20.3m | Down 15% |
| Cash and Investments | $245.5m | Up 16% |
| R&D Investment (before capitalisation) | $84.1m | Up 22% (26% of total income) |
| Interim Dividend | 8.0 cps | Up 21% |
| Rule of 40 | 55% | Top quartile globally among SaaS peers |
The “heartbeat” — underlying performance strips out one-off investment noise
Management provided constant currency and Showcase-normalised figures to give investors visibility into the true underlying momentum of the business. On this basis, ARR grew 19%, NRR reached 116%, and PBT grew 21% with a 2-point margin improvement to 30%. Excluding the company’s ongoing SaaS+ investment, PBT would have reached $105m at a 32% margin.
CEO and Managing Director Ed Chung
“To give investors additional transparency into the underlying operating performance (what is referred to by us as the ‘Heartbeat of the Business’) we have provided ARR and PBT results on a constant currency basis, as well as normalising profit for the significant H1 FY26 investment in Showcase. These underlying results show ARR growth of 19%, NRR of 116% and PBT growth of 21% with a margin improvement of 2 points to 30%.”
What is SaaS+ — and why it’s redefining TechnologyOne’s growth trajectory
Beyond SaaS: understanding the SaaS+ model
SaaS+ (Solution as a Service) is TechnologyOne’s all-inclusive, industry-specific ERP model where the company takes full accountability for outcomes, not just software delivery. Unlike traditional SaaS, which provides access to software only, SaaS+ covers implementation, support, and upgrades under a single, recurring agreement.
The commercial logic for investors is straightforward. SaaS+ replaces lower-quality, one-off traditional consulting revenue with high-quality recurring SaaS+ revenue, described in the announcement as representing a 40% uplift to new ARR. Management draws an explicit parallel to the company’s completed transition from legacy licence fees to SaaS, which drove TechnologyOne to its current scale.
The near-term trade-off is a 2-point PBT margin headwind from SaaS+ investment. Management’s view is that this is a deliberate, time-limited cost, with group PBT margins targeted at 35%+ over the long term as recurring revenue scales and the SaaS+ model matures.
AI as the fifth generation of ERP
TechnologyOne’s AI strategy comprises three components: in-product AI, Plus (agentic AI), and Guide. Plus functions as a digital twin for the enterprise, learning from an organisation’s people, processes, and performance data to identify trends, highlight risks, and recommend actions in real time through natural conversation. Guide is a conversational interface designed for residents of councils and students of universities to interact with their institutions without friction.
The company’s previously estimated total addressable market (TAM) of $13.5 billion is now described as expanding “exponentially” with the addition of these AI products. The commercial proof point from the October 2025 Showcase event is notable: double the number of attendees and up to 10 times the sales pipeline generated compared to the prior Showcase.
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Growth strategy intact — sector wins, UK expansion, and the path to $1 billion+ ARR
Sector-level momentum: local government, education, and UK
Key customer wins across TechnologyOne’s core verticals in H1 FY26 included:
Local Government (27% ARR growth):
- City of Townsville, a former customer that departed for a competitor and subsequently returned on a new 10-year SaaS+ agreement at increased value
- Cardinia Shire Council
- Liverpool City Council
- Salisbury City Council
- City of Ryde Council
Education (15% ARR growth):
- James Cook University, a landmark 10-year deal spanning the full TechnologyOne product suite, with AI partnership as a central commitment
- University of Suffolk (UK)
- Royal Holloway, University of London (UK)
UK (ARR $53.0m, up 23%):
- The UK local government sector is undergoing planned council amalgamations, which management identifies as a future accelerant for local government ARR growth in that market
- Statutory UK ARR growth of 23% reflects a 19% constant currency result, with the strengthening Australian dollar against the pound creating a reported FX headwind
On track for $1 billion+ ARR by FY30 — and guidance reaffirmed early
TechnologyOne’s stated ambition is to surpass $1 billion ARR by FY30, from the current base of $598.0m. Notably, FY26 guidance was provided three months earlier than usual at the February AGM, a signal management has attributed to the visibility and momentum within the business.
The reaffirmed FY26 full-year guidance includes:
- PBT growth: 18%–20%, targeting top of range
- ARR growth: 16%–18%, targeting top of range
- PBT margin expansion: 2 points (from 30% to 32%)
- Free cash flow conversion: 100% of NPAT
- Guidance fully inclusive of AI investment, Showcase costs, and SaaS+ investment
The H1 Rule of 40 result of 55% places TechnologyOne in the top quartile globally among SaaS peers, with management targeting a sustained rate above 40% long term. The balance sheet remains debt-free, with $245.5m in cash and investments and $84.1m committed to R&D in the half, representing 26% of total income.
CEO and Managing Director Ed Chung
“We did something different this financial year by providing guidance three months earlier than usual at our February AGM. At this time, we also upgraded our profit guidance range to 18% to 20% and ARR guidance of 16% to 18%, targeting the top of the range for both measures… The great visibility and momentum in the business gave us the confidence to guide up, and guide early and today we reaffirm that guidance.”
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