The TechnologyOne Ltd (ASX: TNE) share price is in focus after the ASX tech share reported its FY25 half-year result.
TechnologyOne provides operations software for organisations like companies, government agencies, local councils and universities.
TechnologyOne FY25 first-half result
Let’s look at the result for the six months to 31 March 2025:
- Total revenue grew by 19% to $291.3 million
- Total expenses increased by 14% to $209.4 million
- Total annual recurring revenue (ARR) up 21% to $511.1 million
- Net profit after tax (NPAT) grew 31% to $63 million
- Interim dividend up 30% to $0.066 per share
The business reported a number of positive growth metrics which is helping its revenue and net profit.
The net revenue retention (NRR) was 118%, above its long-term target of 115%. Anything above 100% means the business is generating more revenue from its existing clients than last year. It also reported a low churn rate of 0.3%, suggesting customers love the software.
While total ARR rose 21% to $511.1 million, UK ARR soared 50% to $43.1 million. One of the wins was Islington London Borough Council, its first London Borough.
In the education sector, ARR grew 27% with strong wins including TasTAFE, which demonstrated its strength in the TAFE sector, according to management.
In the Government sector, ARR grew 28%, including an industry first win with The Australian Energy Regulator.
The business continues to invest heavily in research and development – it invested $68.8 million during the half, up 21% year on year. I think effective R&D spending is the key driver for the long-term future of the TechnologyOne share price.
Guidance increased
The business announced it was increasing its guidance for net profit before tax to grow by between 13% to 17%.
It’s expecting to see its ARR continuing to grow strongly over the full year. The company sees significant growth opportunities in the coming years by its global SaaS+ (software as a service) enterprise resource planning (ERP) solution, increased product adoption by existing customers, new customers and global expansion.
It’s on track to double its business again and surpass total ARR by FY30, from its current base of $511 million. It said continues to invest for the long-term in R&D to build platforms for growth.
The company believes the economies of scale from its software solution will help the profit before tax margin expand to at least 35% in the long-term.
Final thoughts on the TechnologyOne share price
I think the ASX tech share is one of the most compelling ASX growth shares, though its valuation has risen over the past year. It’s not a cheap bargain, but I think it could outperform the market over the long-term.
