Technology One Limited

Thank you for standing by and welcome to the Technology One FY26 half-year results presentation. All participants are in a listen-only mode. There'll be a presentation followed by a question and answer session. If you would like to ask a question, you'll need to press the star key followed by the number one on your telephone keypad. If you would like to ask a question via the webcast, please type it into the ask a question box and click submit. I would now like to hand the conference over to Mr. Edward Chung, CEO. Please go ahead.

G'day everyone and thank you for the introduction. This morning we've got Stuart McDonald, our COO, and Cale Bennett, our CFO, presenting directly with me but from various different parts of our business. Welcome to our 2026 half-year results presentation. These materials were lodged with the ASX this morning. The DNA of our business is that we set ambitious goals and we deliver, whether that's moving 1,200 customers from on-premise to SaaS without missing a beat for our customers or our growth, or whether that's entering the UK to take on the established players and become the de facto solution for local government and higher education, or whether that's to take on the establishment with their long, complex, traditional, risky implementations and invent SaaS Plus. We set big goals and we deliver. There's huge momentum and confidence in the business today in our SaaS Plus strategy, which is fueling the results you're about to see and allows us to continue to invest in the future. Now, with our AI strategy, the adoption, the feedback, it's surpassing our expectations. All of this also gives us confidence in the pipeline, and we don't guide up unless we can see it day in, day out, year in, year out. Now our people, they challenge us and they challenge the market, which makes us better. More than 65% of them are shareholders with you and me. On behalf of the 1600 people that make up TechOne, a few of them you can see behind us, I'm proud to present the following results. We're generally conservative by nature. For those who know us, we talk about heartbeats and rhythms all the time in our business. And for as long as I can remember, our heartbeat and rhythm was 10 to 15% profit before tax growth. And we're able to do this because we're disciplined, we're focused, and we have a history of delivering. Now, as we've transitioned to SaaS and now a SaaS Plus company, we've been able to carefully and surgically increase that heartbeat and rhythm, increasing our guidance range from 10 to 15%. to 12 to 16% in FY24 to 13 to 17% in FY25. But we did something different this financial year by providing our guidance three months earlier than we usually do in our February AGM. And at this time, we also upgraded our profit guidance range because of the visibility and momentum in the business, which gave me confidence to guide up early. we reaffirm our upgraded full year FY26 profit guidance. That's ARR growth of 16 to 18%, targeting the top end of the range. Net profit before tax growth of 18 to 20%, again targeting the top end of the range. PBT margin, an expansion of two points from 30% to 32%. And full year cash flow generation equal to net profit after tax. That's a 100% cash conversion. The results we're achieving today is from the investments we made five years ago, and our continuing strong results will be driven by the investments we're making today, such as our AI strategy, including Plus and Guide. There are no carve-outs. Our guidance is fully inclusive of all the investments we're making. The numbers we're committing to absorb every dollar of strategic investment we make in the future in our business inside that committed earnings envelope. H1 has come in exactly where we said it would. ARR growth of 17% squarely within our 16 to 18% four-year guidance range with strong momentum heading into H2 and beyond. PBT growth in the high single digits, and that's in line with the phasing we flagged at our AGM. As we explained then, half one profit growth would sit in the high single digits because of the planned investment in Showcase, where we're bringing forward the launch of our new AI products. So half one has landed exactly on plan with no surprises. Now taken together, the half delivers exactly what we committed to at the AGM and we remain confident in delivering the upgraded four year guidance. That's a top end of 18 to 20% PBT growth and a top end of 16 to 18% ARR growth Again, with that margin expansion to 32% and full year free cash flow equal to net profit after tax. We have clear visibility and confidence through H2 and we will deliver the full year step up as we flagged in the past. You know, we don't talk statutory compared to underlying, it's just not our way. And to repeat, we're very pleased with our half one results that met our expectations and guidance. Our half-won results include significant investments in Showcase, where we launched our AI products, and because of the strong growth in our UK business, an unusually big impact on ARR resulting from foreign exchange impacts as the Australian dollar strengthened against the pound. So to give investors additional transparency into the underlying engine of the business, what we refer to the heartbeat of the business, this is how Half One results on a constant currency basis, as well as normalising profit for the significant Half One investment in Showcase. This view of the business shows ARR growth of 19%, NRR of 116% and profit before tax growth of 21% and margin improvement to 30%. On top of all of that, profit would have grown to 105 million and 32% margin if we excluded our continuing investment in SAS+. Our DNA is to deliver strong results and to invest significantly in the future so we can continue to deliver these results day in, day out, year in, year out. The results you see are coming from our strategy. The foundation of this strategy comes from staying true to our vision, our purpose, and our mission. These three things shape every decision at Tech One. They're not slogans. They're how we choose what to build, who to hire, who to serve, and what to ignore. The reason this slide matters to investors is this is the foundation that's compounded into 38 years of consistent growth and the confidence for the future, as I've already highlighted. Over the past 38 years, we at Tech One have ridden the economic waves and have come out stronger each time because of the significant investments we have made in technology and people, as well as our conservative nature. We leverage the latest technology for the benefits of our customers. It's why we're called TechOne. We're the only enterprise company at scale that's rewritten our ERP four times. That's millions of lines of code, and that's genuinely rare. The first generation leveraged relational database because it was a simple way of storing and reporting. The second generation leveraged PCs because it was a simple way to deliver through that graphical user interface. The third generation leveraged the internet because it was a simple way to connect our customers with their customers. The fourth generation, SaaS, we made life simple for our customers as we delivered our software as a service. And now the fifth generation is leveraging AI to simplify ERP with no clicks, no screens, just a conversation. Our strategy has led to our history of innovation. We started with one product all the way back in 1987, and we've built products, or we've made numerous key IP acquisitions, such as property and rating. Property and rating runs a council. You know, you get your rates from the software, register your cat or dog, put in a development application, or perhaps apply for health license to run a cafe, and much, much more. Now every time we acquire a company, we rewrite the acquired code into our single global code line, delivering one look and feel, one security posture, one upgrade path, one integration approach, one source of the truth. Next, we became hyper focused on a small number of vertical markets, mainly higher education, local government and government, also focused on health and community services, asset and project intensive industries and corporate and financial services. This allowed us to build deep, deep functionality out of the box for these markets to create a significant competitive advantage. Now we've been in the UK for over 20 years, but about five to eight years ago, we completed many, many years of hard work and product localization in customer reference and scaling our business. The flywheel has turned in the UK and we are now the de facto partner in the UK for local government and higher education and growing very fast. We launched DXB, that's what we call our digital experience platform for local government and higher education. Now these products move past the traditional sort of back office users of ERP, you know, think about the accountants or payroll clerks or town planners, to the tens of thousands of students in a uni or the hundreds of thousands of residents of a council, opening up a new and unsurfaced market for us. Now, through the power of one, we became the world's first SaaS Plus company, removing the need for traditional, complex, long, risky implementation models, incorporating all into single fee, into one single annual recurring revenue fee. We do it all, and we call it Solution as a Service, or SaaS Plus for short. Even more compelling, though, for our customers is our strategy and commitment to deliver ERP in 30 days, not the thousands of days like our competitors. Now, this is our strategy in action, long-term investments in R&D by staying close to our customers and solving their problems, differentiating and growing. Now, some of you might remember this slide representing how we evolved and grew our products from one product in 1987 to 20 products today. Each product has over 20 modules, that's over 600 modules in total. And we now have our AI strategy where we've added Plus and Guide, which Stuart's going to take you through in greater detail. Now, we compete against the traditional ERP vendors like the ones you see at the bottom of this slide. They provide software that might help you automate your finance processes or human resource processes. It's very generic functionality and it doesn't include the deep market functionality that TechOne provides to the verticals of local government or higher education and that those markets require to operate their businesses. We call generic ERP plain milk. And we also compete against the best of breed providers who provide that single application. They're very focused on what they're doing very deeply, those in the middle of the slide. Take property and rating or student management or enterprise asset management or enterprise content management. The argument for best of breed is that you get specialist or advanced capabilities tailored specifically for that function, but then you have to piece it together with sticky tape and chewing gum and it doesn't really work in a SaaS world and it's even worse in an AI world. We're really neither, we're different. We're the only SaaS ERP provider that delivers deep mission-critical solutions for verticals we serve, and we deliver it in a SaaS Plus model. We've followed the path less traveled, and we've carved out vertical niches and specialty that results in strong, consistent ARR growth. And you can see their cumulative growth at 18% per annum. 99 plus percent customer retention for 38 years, and a very long-term historical profit growth of 10 to 15%, which has now carefully and slowly increased to 18 to 20%, which I've discussed. We call it strategy, some in the investment community call it a moat. In summary, here's the moat before AI. We built verticalized software for the most demanding customers in the world, mission-critical apps that only a handful of vendors globally can provide. We serve highly regulated industries. We've got the highest level of cybersecurity certification. We serve some secret agencies, but that highest level, it's built into all of our software. A world's first SaaS Plus model with fast go-lives removing the need for that traditional, long, complex and expensive consulting. And 99 plus percent customer retention and 38 years of consistent execution. Okay, let me remind you of our pricing. The bear case is on the left of this slide, and it's a real bear case for many companies. AI agents replace knowledge workers. Customers need fewer seats. Vendors lose revenue per user. Multiples rewrite downwards. That's the sell-off that you're seeing in 2026 in one column. The bear case is not our case. In the middle is how we derive value now. We don't sell seats we never have. We sell rateable properties, which scales with rateable numbers, not headcount. So as communities grow, we grow with them. We sell on student numbers. So as unis enroll more students, we grow with them. Now AI. For more than five years, we've been working with AI and we've been leveraging it to solve some problems, both internally and externally. But two years ago, we began investigating agentic AI, and we wanted to see how far we could productize agentic AI for our customers. And we're at the very, very beginning of this fifth generation, the AI generation, but we're at the forefront of this tech in our industry. The adoption, the feedback, it's surpassing our expectations. And the new opportunities we can see, it's very exciting. Stuart's gonna take you through this in further details and invite you all to a product demonstration and hosted by Chandon, our CTO this Friday. This is just the beginning of this journey and the opportunity for us is enormous. Now, one of the many new opportunities of value for us and for our customers is in-product AI. It has interactions, and we have Plus, which has conversations. You would call these transaction-based revenue. As interactions and conversations are used more, that's as AI agents do more work. Remember, agents are faster, more complete, higher quality, and cheaper for our customers. We grow with that too. Another new opportunity is how we've commercialised Guide. As residents and students, that's our customer's customer, have more conversations with their council and their uni through our software, we grow with that too. But we've introduced a new innovation to take friction away for our customers, and that's advertising revenue built in. And further, advertising revenue shared with our customers, so what used to be a cost centre for our customers is now a revenue centre for our customers. Now look at that polarity for a moment. In a per seat world, every AI agent that replaces a human is revenue deletion. In our world, every AI agent that does work for a customer is a revenue event. The same wave that's terrifying horizontal SaaS, that's a tailwind for us. That's why our moat deepens. And here is our new opportunity in Plus and Guide, and here's how it increases our moat. We have new transaction revenue from customer conversations with Plus. We have new transaction revenue from customer interactions in our in-product AI, new revenue from our resident and student conversations with interactions in Guide, and new advertising revenue from Guide. we've invested a billion dollars plus in our ERP today. The success we're having today is from our investments five years ago, and the success we have tomorrow is from the investments we're making right now. And these investments enable us to continue to double in size every five years. Over to Cale in our Hackspace, who will now take us through the financials for the first half of the year.

Thanks, Ed. Once again, we are incredibly proud of the results we have delivered in the first half of FY26. The strength of our portfolio business came to the fore this period, with local government in Australia a standout performer in the first half. A total of $87 million in ARR was added over the past 12 months, resulting in ARR growth of 17%. Typically, ARR growth is always stronger in the second half, so the strong performance in first half gives us great confidence in our path to the full year. UK ARR growth came in at 23%. Stuart will unpack the UK in greater detail a bit later. SAS and recurring revenue is up 13% to 299.2 million, with recurring revenue now representing 93% of total income, highlighting a 25% uplift in the quality of our revenue from only three years ago. As Ed mentioned, this gives us greater visibility and confidence for the future. SaaS and recurring revenue growth at 13% reflects timing of new contract signings in the half, which was weighted to the end of the period relative to the PCP. At the PBT line, we met our guidance of high single digit growth to deliver 9% PBT growth to $89.1 million. With such a strong result and great confidence in our future, our board has determined a record interim ordinary dividend of $0.08 per share, up 21% on the PCP. In all, we have met or exceeded our expectations across all metrics in the first half of 26, an unequivocally strong result. To highlight the strong ARR performance in the first half, we added $43.4 million in ARR. This is a first half record for the business and only slightly behind the overall record we achieved in the second half of FY24. If we view this result on a constant currency basis, our first half of 26 would have been a record half for any period over our 38 years. clearly showing continued strong momentum in our growth trajectory and providing us with continued confidence that we will achieve the guidance for both ARR and PBT for full year 26. Our sales team delivered exceptionally well, executing on our strategy. In the first half of FY26, we delivered strong profit and ARR growth, meeting guidance. We made the commitment in previous halves to keep our rolling 12-month Rule of 40 above 40%. With another strong half of ARR growth up 17% and a free cash flow margin of 38%, we have again delivered an outstanding 55% for the Rule of 40. I'll now take you through the detailed financials, beginning with the income statement. Profit before tax increased 9% to $89.1 million, which is in line with the guidance we provided at our IGM. Total SAS fees were up 14%, while SAS and recurring revenue grew 13% to $299.2 million in the first half of 26. As mentioned, SAS and recurring revenue growth at 13% reflects timing of new contract signings in the half, which was weighted to the end of the period relative to the PCP. Traditional new project consulting recorded a decrease in revenue, as expected, as we work through the backlog of legacy contracts. This revenue is primarily driven by implementations not sold as SaaS Plus, such as government work sold on the old framework prior to its updating to accommodate SaaS Plus. Within our total expenses, a net variable cost of 42.7 million, an increase of 5% on the PCP. This increase was driven by an increase in our SaaS platform costs as customers leverage more of our products. Our operating costs are up 13% to $190.9 million during the half. These are primarily people-based costs. As we have called out, our investment in Showcase of $9 million represents 37% of the $24.3 million increase. The PCP did not have a comparative marketing event and as such, to get a like-for-like picture of the cadence of the business, it's important to factor that in when looking at the increased cost base. We will continue to invest for the future. Our total expenses grew 12% to $233.6 million in the half. Excluding Showcase, total expenses only grew 7% against our ARR growth of 17%. Net profit after tax was up 6% to $66.8 million. The effective tax rate for the half was 25%, which is where we expect it to land for FY26. Turning to the balance sheet, cash and investments have decreased by 74.1 million to 245.5 million over the half, consistent with significant dividend payments and our second half weighting to cash collections due to the annual billing alignment with contract anniversary dates. Capitalised development has increased by 15 million in the half, which is primarily driven by salary costs of our R&D team working on our products. Other non-current assets have fallen during the half, driven by a reduction in our deferred tax asset attributable to share-based payments, given the fall in our share price. Our deferred revenue has fallen 42.3 million in first half 26, as we earned the revenue for which we were paid in advance in previous periods. Net assets have decreased by 22.6 million over the first half of 26 to 428.1 million. Our balance sheet provides us with the opportunity to drive future growth. Throughout our history, TechOne has consistently invested in R&D to enable us to deliver the most impactful products to our customers. As anyone who attended our showcase knows, the first half of FY26 was a big one for our R&D team. In the first half of FY26, we invested 26% of revenue or 84.1 million in R&D with 54% or 45.1 million capitalised. This is consistent with previous periods. The team delivered 26 A and a half, releasing it in early April. Going forward, we expect to target investment in R&D in the 20 to 25% of revenue range, which we continue to believe is the optimal investment level. Onto the cash flow now. In first half of 26, free cash flow generated was 20.3 million, which is a strong result given the second half weighting of our cash flow due to the annual contract anniversary date cycle. You will recall in first half 25, we benefited from pulling forward creditors into the second half of 24, which was not repeated in the second half of 25. Our income taxes paid have increased in line with our tax rate and profit growth. Dividend payments were up significantly, driven by the increased final dividend and special dividend for FY25. The total cash increased 33.6 million or 16% to 245.5 million over the past 12 months. We are incredibly proud of our results in the first half of 26. Accordingly, our board has determined an interim dividend of $0.08 per share franked at 75%. This represents a record interim dividend with increased franking. We will maintain this franking level going forward. While the interim dividend is up 21%, this only represents a payout ratio of 40%. Consistent with our cash flow profile, we will weight the dividend to the second half to ensure we land in our stated payout ratio of 60 to 75%, clearly showing our confidence for the future growth in profitability. In summary, our past execution has afforded us a very strong and clean balance sheet. Momentum in the business through the first half of FY26 gives us great confidence in our ability to continually achieve our numbers going forward. I'll now hand over to Stuart.