Technology One Fuels Growth in UK Higher Education with Groundbreaking SaaS Platform

About Technology One

Technology One Limited (Technology One, the Group, ASX: TNE) is Australia’s largest enterprise software business and an ASX 100 company. The business was established in 1987 and listed on the ASX in 1999. Today Technology One’s specialty product focus areas are the Tertiary Education and Local Government sectors. The Group provides 1,300 government agencies, universities, and local council customers in Australia and the UK with enterprise software solutions that enable them to focus on their business and not technology.

Higher Education in the UK to drive earnings growth

According to the Universities and Colleges Admissions Service, a UK-based organisation that manages applications for UK Higher Education institutions, the number of people applying for Higher Education in the UK will jump by up to 30 per cent each year to 1 million people by 2030. This is a many times larger market than the total 1.6 million students enrolled in Australian universities in 2023. It is a significant statistic because it underscores the growth potential for Technology One’s One Education Software as a Service (SaaS) solution which is specifically designed to meet the unique requirements of the UK Higher Education sector.

Investing in general technology systems infrastructure, digitisation of administrative processes and student experience will bring benefits in everything from student wellbeing to identifying energy efficiencies on campus. One Education Software provides UK universities with real-time, holistic data-driven insights about their students to better understand and respond to student needs.

Total Annual Recurring Revenue sourced from the UK in FY24 was $34.7 million, up 31 percent versus the previous financial year. This amount represents just 7 percent of total Group revenue and again highlights the revenue growth potential from the UK Higher Education and Local Government markets.

Acquisition of CourseLoop

In November 2024 Technology One acquired CourseLoop for $60 million, comprising $44.5 million cash up front, plus $8 million over 2 years and $7.5 million in equity options. CourseLoop is an online curriculum management system through which universities manage curriculum data, including coursework and graduate research courses, areas of study and units.

Following the acquisition of CourseLoop, Technology One’s One Education Software has become the world’s first SaaS platform to encompass the entire student lifecycle – from course design to graduation – into a single unified ERP solution.

Integrating a Curriculum Management capability with Technology One’s Student Management, Timetabling and Scheduling, Human Resource and Payroll, Enterprise Asset Management and Financial capabilities will provide, for the first time, full visibility across the entire academic cycle. This will enable Higher Education institutions to create better courses that meet market demands, that students want to study, that are financially sustainable, and that deliver institutional differentiation. This acquisition makes Technology One’s Saas offering deeper and more unique than any other education software solution in the world and is expected to be earnings per share accretive in FY26.

TechOne’s financial metrics are extraordinary

Technology One has no debt and consistently increases profits with high cash flow generation that builds on the Group’s cash balance every year with a cash flow generation to net profit after tax ratio of 101 percent in FY24.

Cash and investments balance was $144 million in November 2021, $176 million at June 2022, $223 million at June 2023 and $279 million at June 2024. The annual dividend is consistently growing with the current payout policy at 55 to 65 percent of net profit after tax. The dividend is 65 percent franked.

The Group’s IP acquisition strategy is disciplined, and this is evidenced by the $60 million acquisition of CourseLoop which is generating $9 million annually in Annual Recurring Revenue, that is anticipated to grow at 25 percent per annum and be earnings neutral in year one and earnings positive in FY26.

In a clear sign of respect for the cost of capital, all equity required to satisfy staff-related equity needs is to be bought on market going forward instead of issuing new shares. This move eliminates shareholder equity dilution.

The markets the Group serves are resilient as it provides mission critical solutions to a sticky customer base with a 99 percent customer retention ratio and 90 percent of revenue now being SaaS and recurring.

These attributes and performance outcomes justify the high earnings multiple applied to Technology One’s shares and investors with a medium to long-term outlook can expect ongoing share value accretion over this period.