While TechnologyOne (ASX:TNE) has maintained as steady presence in the UK since opening an office near London in 2006, the company’s UK operation could be poised for sustained growth following a refocusing of its earnings growth trajectory around a Software as a Service (SaaS) strategy.
While the group’s consistent year-on-year growth has been underpinned by diversified revenue base across regions, products, and verticals, its SaaS-Plus offering, combining vertical-specific and mission-critical SaaS ERP and implementation, is shaping up to be a game-changer for the group.
While SaaS and recurring revenues now represent 91% of total operating revenue, the UK business - where all contracts are SaaS-Plus - looks to be on the ground floor of a major growth upside.
After years of laying foundations in the education and local government sectors, since winning its first London Borough contract at Islington, the UK business currently represents around 8% of group Annual Recurring Revenue (ARR).
There are clear signs that with the UK business now on a tear, the group’s UK operations appear well-positioned for sustained momentum.
False starts in the UK are behind it
The continued deliberate refinement of TechnologyOne’s UK journey has been of particular interest to Australian Eagle Trust, Long-Short Fund, which previously bought and sold the stock on what turned out to be a false start in the UK operations.
However, the fund believes the 2021 acquisition of education-tech company Scientia for £12 million has been a step-change for the group’s higher education offerings, particularly in timetabling and student management.
According to Sean Sequeira, who jointly established Australian Eagle Asset Management in 2004, 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,” said Sequeira.
“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.”
UK on a tear
In the first half of 2025, TechnologyOne’s ARR in the UK reached $43 million, up 50% year-on-year, outpacing group ARR growth of 21%.
Meanwhile, new sales ARR in the UK climbed 61% to $4.3 million, reflecting a significant increase in government verticals and strong education traction.
Sequeira attributes these gains to the SaaS+ platform’s rapid-deployment model, which reduces 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.
Structural improvements underpin competitive advantage
Interestingly, it appears that TechnologyOne’s gains are being driven less by favourable market conditions and more by meaningful structural improvements to its product suite.
The successful integration of Scientia – which offers academic timetabling software to universities and further education colleges worldwide - into TechnologyOne has challenged the market share of rival entities Tribal Group and Unit4.
As a result, universities are adopting TechnologyOne’s integrated ERP over specialised systems.
In local government, the cost-effective deployment of the group’s OneCouncil enterprise resource planning solution [delivered as software as a service] is eroding Civica and Capita’s share, particularly in unitary authorities.
What’s becoming increasingly more evident, notes Sequeira, is that TechnologyOne’s innovative SaaS+ model is setting it apart from SAP and Oracle’s complex offerings, which can overwhelm smaller clients with costs and time to implementation.
Sequeira believes the group’s improving competitive advantage has resulted in global (mainly Australian) 13% revenue Compound Annual Growth Rate (CAGR) over the past 25 years.
He expects this 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,” he said.
“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.”
TechnologyOne has a market cap of $13.4 billion; the share price is up 97% in one year and up 30% year to date.
While the stock's 200-day moving average is trending upwards and highlights long-term investor interest in the stock, the 20-day moving average is falling as upwards momentum wanes.
Consensus is Hold.
This article does not constitute financial or product advice. You should consider independent advice before making financial decisions.