What Does Technology One Ltd (ASX:TNE) Report in Its First-Half FY26 Results?

Sonal Goyal

19 October 2026 05:00 PM AEDT

What Does Technology One Ltd (ASX:TNE) Report in Its First-Half FY26 Results?

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Key Highlights

Technology One reported H1 FY26 profit before tax of $89.1 million, up 9%, and total revenue of $322.7 million, up 11%.
ARR was $598.0 million, up 17%, with UK ARR of $53.0 million, up 23%.
The company reaffirmed FY26 guidance given at its February AGM, including profit before tax growth of 18% to 20%.

Technology One Ltd (ASX:TNE) shares were priced at $31.135 during the trading session on 19 October 2026, down 2.43%. Technology One is an enterprise resource planning (ERP) software-as-a-service provider that describes its model as SaaS+. On 19 May 2026, the company released its results for the half year ended 31 March 2026, together with a reaffirmation of its FY26 guidance. The price data relates only to the 19 October 2026 session and is separate from the release date.

Half-year financial results

Statutory profit before tax was $89.1 million, up 9%, and profit after tax was $66.8 million, up 6%. Total revenue was $322.7 million, up 11%, with SaaS and recurring revenue of $299.2 million, up 13%. Total expenses were $233.6 million, up 12%.

Annual recurring revenue was $598.0 million, up 17%, and net revenue retention was 114%. UK ARR was $53.0 million, up 23%. The Rule of 40 result was 55%. An interim dividend of 8.0 cents per share was declared, up 21%.

Free cash flow was $20.3 million, down 15%, and cash and investments were $245.5 million, up 16%. Research and development investment before capitalisation was $84.1 million, up 22%, equal to 26% of total income.

Underlying measures and currency

The company presented underlying results to show the effect of currency movements and the cost of its Showcase event, where AI products were launched in October 2025. On that basis, it reported ARR growth of 19%, net revenue retention of 116% and profit before tax growth of 21%, with the margin improving 2 points to 30%.

The release explains that the UK business is now a larger part of the group, so exchange rate movements, including the Australian dollar against the pound, can have a greater effect on statutory results. The company also stated that profit would have been about $105 million, at a 32% margin, if its continuing investment in SaaS+ were excluded.

Guidance and AI strategy

The company reaffirmed FY26 guidance that it upgraded at its February AGM: profit before tax growth of 18% to 20%, ARR growth of 16% to 18%, a profit before tax margin expansion of 2 points from 30% to 32%, and free cash flow equal to net profit after tax. The company stated that guidance includes its investments in AI products, the Showcase event and SaaS+.

On AI, the release describes a strategy consisting of Plus, Guide and in-product AI, launched in October 2025. The company said the Showcase event attracted double the attendees and up to ten times the sales pipeline compared with the prior event.

Measures and definitions used in the release

The release defines the Rule of 40 as the sum of ARR growth and the 12-month rolling free cash flow margin before tax, and notes that it is a non-IFRS measure that is unaudited. Net revenue retention was reported at 114% on a statutory basis and 116% on a constant currency basis. The company also stated that its aim is to continue doubling in size every five years, and that it has completed its transition to a fully SaaS business.

R&D investment of $84.1 million before capitalisation was equal to 26% of total income, and the release states that the full-year guidance is inclusive of AI product investment, the Showcase event and SaaS+.

Sector backdrop

ERP software for government, education, local government and other large organisations is generally sold on multi-year subscriptions, so investors and analysts often look at annual recurring revenue, retention rates and the pace of customer migration from on-premise systems. The release refers to the shift of customers to SaaS and to the introduction of AI products as current themes. Companies with international operations, such as Technology One in the UK, also report currency effects that can change growth rates between statutory and constant currency measures.

Risks shareholders should weigh

The press release and the wider operating environment point to several considerations that shareholders may wish to weigh:

Profit before tax growth of 9% in the half was lower than the full-year guidance range, and the company described profit as phased towards the second half.
Free cash flow fell 15% in the half, although guidance targets free cash flow equal to net profit after tax for the full year.
Foreign exchange movements, particularly the Australian dollar against the pound, can affect statutory ARR and profit as the UK business grows.
The company continues to invest in AI products, the Showcase event and SaaS+, which affects profit margins.
Guidance depends on conversion of a sales pipeline, and outcomes can differ from guidance ranges.

What's next

The company's FY26 guidance remains the main forward reference in the release, covering profit before tax growth of 18% to 20%, ARR growth of 16% to 18% and a margin target of 32%. The release also points to continued investment in AI products, the UK expansion and the SaaS+ model, and states an ambition to deliver ERP in 30 days to customers.

FAQs

Q: What was Technology One's ARR at the half year?

A:ARR was $598.0 million, up 17%, according to the 19 May 2026 release.

Q: What interim dividend did the company declare?

A:An interim dividend of 8.0 cents per share, up 21% on the prior corresponding period.

Q: What FY26 guidance did the company reaffirm?

A:Profit before tax growth of 18% to 20% and ARR growth of 16% to 18%, with a 32% profit before tax margin target.

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