The reboot: TechnologyOne’s UK redemption story
TechnologyOne (ASX:TNE), has been a steady presence in the UK since 2006 but its recent transformation under a focused Software as a Service (SaaS) strategy has changed the firm’s earnings growth trajectory. After years of laying foundations in the education and local government sectors, the company is delivering robust growth and structural improvements that are now recognised by the market. With accelerating Annual Recurring Revenue (ARR) growth and a supportive digital transformation backdrop, TechnologyOne’s UK operations are poised for sustained momentum.
One false start but not the second time
TechnologyOne’s UK journey has been one of deliberate refinement and has been of particular interest to us at Australian Eagle. Indeed, we had previously bought and sold the stock on what turned out to be a false start in the UK operations. However, the 2021 acquisition of Scientia for £12 million sharpened TechnologyOne’s higher education offerings, particularly in timetabling and student management. Meanwhile, the launch of the SaaS+ platform – a preconfigured, cloud-native Enterprise Resource Planning (ERP) solution, has streamlined its value proposition for councils and universities.
By focusing on core strengths – education and local government – TechnologyOne has directed resources to markets where it holds competitive advantages. This disciplined approach has yielded wins with universities like Buckingham and Chester and councils like Blackpool and Derby, nearly doubling its local government customer base since 2020.
Results in the UK on an improving trajectory
In the first half of 2025, TechnologyOne’s UK Annual Recurring Revenue (ARR) reached A$43 million, up 50 per cent year-on-year, outpacing group ARR growth of 21 per cent. New sales ARR climbed 61 per cent to A$4.3 million, reflecting a significant increase in government verticals and strong education traction.
These gains stem from the SaaS+ platform’s rapid-deployment model that has reduced implementation costs, thereby appealing to budget-conscious public sector clients. TechnologyOne seems to be capturing share from legacy players like SAP, Oracle, Civica, Capita, and Tribal Group.
Competitive advantage driving outlook for continued revenue growth
TechnologyOne’s gains are driven not only by favourable market conditions but by meaningful structural improvements to its product suite. In UK higher education, Scientia’s integration into TechnologyOne has challenged the market share of Tribal Group and Unit4, with universities adopting TechnologyOne’s integrated ERP over specialised systems. In local government, OneCouncil’s cost-effective deployments are eroding Civica and Capita’s share, particularly in unitary authorities.
TechnologyOne’s innovative SaaS+ model sets it apart from SAP and Oracle’s complex offerings, which can overwhelm smaller clients with costs and time to implementation.
This strong but improving competitive advantage, which has resulted in their global (mainly Australian) 13 per cent revenue Compound Annual Growth Rate (CAGR) over the past 25 years, is expected to continue to drive sustained growth in Australia through newer levels of government contracts now available and deeper penetration in core markets. This, combined with the potential for strong growth in the UK, supports confidence in the company achieving its target of doubling revenue every five years and at higher margins.
While we have been holders of the stock for a while, a longer-term perspective for the stock is required given the consistency and quality of the earnings along with a large and growing total addressable market.
Disclaimer:
The Montgomery Small Companies Fund, Australian Eagle Equities Fund, The Montgomery Fund, and the Montgomery [Private] Fund own shares in TechnologyOne.. This article was prepared 18 July 2025 with the information we have today, and our view may change. It does not constitute formal advice or professional investment advice. If you wish to trade any of these companies, you should seek financial advice.
Sean Sequeira jointly established Australian Eagle Asset Management in 2004. Sean was appointed Australian Eagle’s Chief Investment Officer in 2016. In addition to stock selection and analysis, Sean is responsible for all aspects of the investment process. Sean is head of Australian Eagle’s portfolio risk committee and process integrity committee. He is also one of the three investment team members that make up the portfolio construction committee.
This post was contributed by a representative of Montgomery Investment Management Pty Limited (AFSL No. 354564). The principal purpose of this post is to provide factual information and not provide financial product advice. Additionally, the information provided is not intended to provide any recommendation or opinion about any financial product. Any commentary and statements of opinion however may contain general advice only that is prepared without taking into account your personal objectives, financial circumstances or needs. Because of this, before acting on any of the information provided, you should always consider its appropriateness in light of your personal objectives, financial circumstances and needs and should consider seeking independent advice from a financial advisor if necessary before making any decisions. This post specifically excludes personal advice.
