Technology One Limited

I'd like to hand the conference over to your host today, CEO, Mr Edward Chung. Thank you, sir. Please go ahead.

Good day, everyone, and thank you for the introduction. Today, I have Stuart McDonald, our COO, and Cale Bennett, our CFO, with me today. Welcome to our 2025 results presentation for the full year. These materials will also lodge with the ASX this morning. Today, I'm going to take you through the highlights of our results. Kale will then take us through the detailed financials, followed by Stuart, who will take us through our significant achievements. Then I'll provide an update on Build in the Future and our long-term outlook and our outlook for FY26. For the 16th consecutive year, we've delivered record ARR, record revenue and record profit, and we beat our guidance that we set in May this year. Our ability to deliver these results for the last 25 years as a listed company, and in fact since inception in 1987, is due to our clear vision, strategy, culture and ongoing investment in R&D, which is highlighted in our leading average total shareholder return, over this 26-year period of approximately 16% per year, four times greater than the ASX 200 total shareholder return over that same period. We started the year celebrating 25 years on the ASX and finished it off by being admitted to the ASX 50 index. SAS+, our game-changing offering, which combines our vertical-specific and mission-critical SAS ERP and implementation with the fastest implementation times in our market, delivers. It's fueling our growth, together with our significant investments, and highlight for the year was the UK. And our team's grit and determination over many, many years to take on the established players and win has resulted in ARR growth meeting our expectations up 18%. This is in turn enable us to deliver PBT growth of 19% to $181.5 million. Those that follow us know that we surpassed 500 mil ARR in the first half of FY25, 18 months earlier than planned, an incredible achievement for our company. But more importantly, we set a new long-term target, an ambitious target of a billion dollars plus ARR by FY30. I want to remind everyone of our strategy because it's this strategy which enables our strong, consistent growth. We exist to make life simple for our community, and it's very powerful and meaningful to us and our customers. And you notice there's nothing in there about ERP software. It's because it's about what ERP software makes possible. We take the complexity out of ERP and turn it into clarity, and this enables our customers to do their job even better. councils reinvesting in roads, housing and services, universities delivering world-class student experiences and world-class research, and for government, health and community services and asset-intensive industries, all of these essential industries operating better, scaling faster and serving more. Every innovation we deliver puts more resources, more time, more money back to where they belong. Our passion is to solve the complex. We don't do easy, otherwise everyone would be doing it. ERP is hard. Student management of property and rating, which is the mission-critical products for higher education and local government, is hard, and we're one of only a handful of vendors worldwide. Payroll is hard. The power of one is hard. Moving an entire customer base of 1,300 customers customers from on-premise to SaaS without skipping a beat is hard. Rewriting an entire code base four times over the last 38 years is hard. And some people say that SaaS Plus is impossible. My point is when you add it all together, there is no one doing what we do. And we create mission-critical products and solutions that power local government, universities and TAFEs, governments, hospitals, large infrastructure providers. They are our community and our team choose to work here rather than any other company. Our staff work here and they love it because they live and work and play in the communities they serve. They have a really deep connection. Our core beliefs are our non-negotiables, and they underpin our strategy. And our strategy hasn't changed dramatically over the last 38 years, but how we execute this strategy evolves quite a lot as we respond to shifts in technology, feedback from our customers, competitors, and the market generally. And it's this clear strategy that resonates with the market, and it's why we win against our competitors. Once we land a customer, they expand with us over many, many years by taking more products and more modules to streamline their business. It's why they stay with us forever and what fuels our consistent, strong growth. And you see this in our ARR growth. Now, here are the major elements of our strategy. The first is one experience for our customers. We believe in a fully integrated ERP solution. We provide very deep and broad functionality. In 1987, we started with one product. In 2008, we had 11 products. And today we've got 20 products with over 500 modules, and we continue to invest in even more functionality for our customers. All on one platform with one user experience, one upgrade path, one security posture, one source of the truth. No one comes close to our focus and commitment to our vertical markets. We have the deepest functionality for our vertical markets. We are hyper-focused on just a handful of industries, and we're not all things to all people. And we bring 38 years of sector-specific knowledge, which is built into our products and our solutions. We compete and win against the best of breed players. We're ERP, but much, much more. In short, we never follow the standard path. We don't fight in the red ocean. We create the blue ocean by having ERP for core defined vertical markets. And as I said, these are mission critical products and best practice solutions, which power universities and TAFEs, local governments and governments, hospitals, large infrastructure providers. And we're an innovation-driven company, and we believe in evolution. We leverage new and emerging technology at each generation for our customers, and we invest in the range of 20% to 25% of revenue every year into R&D. And this is equated to over a billion dollars of investment into our ERP, into our products, and into our modules. And we have a track record for investing in the future, and the success we're having now comes from the R&D investments that we made over five years ago. Our fourth generation ERP, we call it CIA, is available any device, anywhere, anytime. And as I said, we've successfully re-engineered our whole ERP, not once, but four times over the last 38 years. Think millions of lines of code. And finally, this fourth generation has the highest level of security accreditation in the industry. We provide the most trusted SaaS platform. We are the first global SaaS ERP provider to achieve IRAP protected, no carve outs to any of our products or modules. And we know it's not feasible for any individual organization to keep up with the increasing costs and complexity of cybersecurity unless they've adopted a SaaS-first strategy. We spent hundreds of millions of dollars building the world's most trusted SaaS ERP that's secure, reliable, and efficient. And we're going to continue to invest millions of dollars to set the bar higher each year. Now, with the Power of One, we build, market, sell, implement, and support our SaaS ERP for 1600 customers globally. And for us, the Power of One is special and it's unique. Firstly, it's a big IP engine. At every stage, we get feedback from our staff and our customers, and we make the product better. We have a direct relationship with the customers. We own that customer relationship. And we all know ERP is hard and it's complex and there'll always be issues from time to time. And in the old model or the traditional model of a separate vendor and a separate implementation partner, when things go wrong, the implementation partner blames the vendor and the vendor blames the implementation partner and it's the customers that are impacted. Now, with the power of one, we are 100% accountable for our customers' outcomes, and it's one of the reasons we maintain 99% customer retention over the last 38 years. Now, SAS Plus is a game changer in our industry. For us, it's the next logical evolution of SAS, where Tech One delivers the entire outcome faster with minimal risk and a single annual fee to our customers. SAS Plus delivers faster time to value as we continue to dramatically drive down implementation timeframes, removing the need for traditional long, drawn-out, and risky implementations. Our goal is to deliver ERP in 30 days, not the thousands of days like the traditional systems integrators. And through the power of one, TechOne is the only SaaS ERP provider able to deliver on this compelling proposition because we own all parts of the value chain. With our mission-critical products, our industry-specific IP built up over the last 38 years, and our own in-house, highly skilled and talented consulting team. We've invested over a billion dollars in our ERP today. And the success we're having today comes from the investments we made five years ago. And the success we'll have in future comes from the investments we are making now. And when you think of game changing technology, a few things come to mind. iPhones changed the market for mobile phones. Tesla changed the market for vehicles. Uber changed the market for how to grab a cab. And now we've got AI. And tech one is changing the market. We have two not-so-secret secret weapons. The first is SAS+. No one can do what we do because as I said, we have industry specific and mission critical software that leverages our deep experience and IP in very specific markets like local government, higher education and government, and our own talented in-house consulting team. all in one fee with the fastest implementation times in the market versus the traditional plain vanilla ERP without mission critical software for anyone and the system integrators or the big four who are motivated by billable hours and making implementations longer. And number two, technology is moving faster than ever, especially in the age of AI. We're at the cutting edge and the leading edge of the next evolution of VRP. We launched Plus in our October showcase, and the customer feedback, it's been phenomenal. An independent researcher who we know said to me at one of the showcases that we've totally leapfrogged the competition. With Plus, we know we're onto a winner, and we're going to talk about that later. So when you have SaaS Plus and Plus together, we create significant value for our customers, and that translates into significant value for Tech One. And these investments enable us to continue to double in size every five years. Our addressable market is huge and growing. Today, we have over $554 million ARR, and that new long-term target of $1 billion plus ARR by FY30. And you're going to hear me say over and over, SaaS Plus is a game changer and it's powering our growth. And Stuart's going to get into a lot more detail later. As a result, our outlook for FY26 is also strong. Now, in FY25, we delivered strong profit and ARR growth, beating our guidance. And an increasingly common metric to assess SaaS companies is the Rule of 40. And the Rule of 40 typically measures recurring revenue growth and cash profit margin. However, there's really no strict definition. And in fact, many companies use slight variations of the Rule of 40. And we got some feedback recently that the more correct method is to use our ARR growth percentage plus our pre-tax free cash flow margin. Previously, we conservatively used post-tax, which means our Rule of 40 result is even better. Now, strong profitable growth is nothing new to TechOne, and you can see for the 12 months to 30 September 2025, we recorded a Rule of 40 result of 59. And that puts us in the top quartile globally against our software peers. And because it's a common metric and we're going to be measured on it anyway, we've added it to all of our metrics. And importantly, we expect to remain in top of class, which is above 40. Cale will now take us through the detailed financials.

Thanks, Ed. Once again, we are incredibly proud of the results we've delivered in FY25. SAS Plus continues to resonate with the market, driving a strong top line with ARR up 18% to $554.6 million after surpassing the $500 million mark at the half. We've also delivered another strong sales result in the UK with UK ARR up 49% and UK new sales ARR up 52%. SAS and recurring revenue is up 19% to 553.2 million. Recurring revenue represented 91% of total income in FY25. At the PBT line, we beat our guidance of 13% to 17% to deliver 19% PBT growth to record $181.5 million in FY25. With such a strong result and great confidence in our future, our Board has determined a final ordinary and special dividend of $0.30 in aggregate to take the total FY dividend to $0.366, up 63% year-on-year. More on that shortly. In all, we have met or exceeded our expectations across all metrics in FY25, an unequivocally strong result. I'll now take you through the financials, beginning with the income statement. Profit before tax has increased 19% to $181.5 million, another record for the business and ahead of our guidance, given at the half of 13% to 17% growth. SAS and recurring business grew 19% to 553.2 million in FY25. Total income was up 18% to 610 million for the year. Traditional new project consulting revenue was up 6 million in the year as our team continues to deliver on the backlog of T&M work previously sold. Total expenses grew 18% to 428.5 million, primarily driven by SAS platform costs and investments in people. We have undertaken modernization efforts during FY25, which has necessitated increasing infrastructure costs as we ran new and old side by side. We did not expect similar run rate increases in future periods. Our net capitalized R&D costs are up 28% or 6.9 million as our R&D team pushed hard into Showcase, getting plus and in-product AI use cases live. When we began the SAS Plus transition, we indicated we would be mindful of the impacts on profitability. With SAS Plus now being our default go-to-market motion globally, the investment in our long-term strategy has equated to 2.7% of margin in FY25, which is the equivalent of $17 million of revenue foregone. This has resulted in a PBT margin consistent with last year at 30%, but we remain convinced that our SAS Plus strategy will deliver in the long term, and our focus on increasing the PBT margin to 35% remains unchanged. In the meantime, as previously communicated, we will continue to deliver profit growth. While profit before tax was up 19%, net profit after tax was up slightly less at 17%. The effective tax rate for the year was 24%, up from 23%, primarily driven by the growth in our R&D tax incentive claim being lower than our profit growth. Given the quantum of profit increases, we believe the tax rate will trend towards an effective tax rate of 25% in future periods. Turning to the balance sheet, cash and investments have increased 15% to $319.6 million over the last year. This strong cash uplift year on year was despite an outflow of $44 million for the CourseLoop acquisition and $30 million spent acquiring 750,000 shares on market for the Employee Share Trust. As I mentioned at the full year results last year and again at the half year results, cash flow was assisted in FY25 by creditor payments brought forward into FY24 in the order of $20 million. That is evident in the increase in trade payables change year on year. In all, a strong uplift in cash during the year. Deferred revenue has increased by 48.1 million, consistent with our business growth and annual in advance billing schedule. Net assets have increased 71.4 million over FY25 to 450.7 million. Throughout our history, Technology One has consistently invested in R&D to enable us to deliver the most impactful products to our customers. As anyone who has attended our showcase knows, FY25 was a special year. We invested 25% of total revenue or 153.7 million in R&D in FY25 with 55% or 84.4 million capitalised. This is at the top end of our optimal range as our R&D pushed hard to deliver our artificial intelligence product enhancements and plus for Showcase. This was in addition to continued product development and investments in SAS Plus and ERP in 30 days. Our acquisition of CourseLoop also added to our R&D spend as we integrate their operations. Going forward, we expect to target R&D investment in the 20% to 25% of revenue range, which we continue to believe is the optimal investment level. Onto the cash flow now. In FY25, free cash flow generated was 184 million, up 65 million or 55% on the PCP. In addition to the increase in our profit before tax, our working capital position improved by 46.8 million due to our annual in advance billing growth and the benefits of the pull forward creditor payments into the previous corresponding period. This hasn't been repeated in FY25. This provided a tailwind to our Rule of 40 in the order of five points. Our income taxes paid have increased in the year in line with our tax rate and profit growth from previous periods. The investment and financing activities includes both the cash outflow for the Corsloop business of $43.7 million and $30.4 million paid to acquire shares in the Employee Share Trust, a capital management initiative announced last year. TechOne's balance sheet is very strong, with no debt and a significant cash position. High levels of recurring revenue, strong cash flow generation, and a strong new business pipeline provides us with confidence in the future. In FY24, we outlined three paths we are taking to improve certainty and evolve our approach to managing our capital base. Firstly, our dividend payout ratio was set to 55% to 65% of MPAT. Secondly, we reiterated that we were looking at IP-related acquisitions and acquired CourseLoop, a class-leading curriculum management solution to build out our One Education offering. And finally, we announced that we will begin purchasing shares on market through our Employee Share Trust to satisfy staff equity issuance requirements. In FY25, we spent some $30.4 million purchasing 750,000 shares, and we expect to spend more in FY26. As our business continues its positive path, we will evolve our approach to capital management, maintaining a disciplined approach to balancing the needs and opportunities of the business with rewarding shareholders. Given our outstanding year, confidence in the future and significant capacity on our balance sheet, the Board has decided to reward shareholders by determining a special dividend of 10 cents per share in addition to the final ordinary dividend. With confidence in our trajectory and healthy cash generation, the Board has decided to lift the ordinary dividend payout ratio from 55% to 65% to 65% to 75% of MPAT in future periods. We are incredibly proud of our results in FY25. Our board has determined a final ordinary dividend of 20 cents per share, in addition to the special dividend of 10 cents per share, both of which are franked at 65%. This puts our total dividend up 63% for the year to 36.6 cents per share. We are extremely pleased that our ongoing success enables us to continue rewarding our shareholders incrementally. I'll now hand over to Stuart to take us through some of the notable achievements in FY25.