The Technology One Ltd (ASX: TNE) share price will be in focus next week when the enterprise software company reports its FY25 results on Tuesday, 18 November.
After a year of rapid innovation and continued growth in its Software-as-a-Service (SaaS) business, analysts are closely watching to see whether the market darling can maintain its track record of beating expectations and receive any management guidance on how its newly launched AI platform, "Plus", will impact future growth.
What are brokers saying?
Analysts at UBS are forecasting a pre-tax profit increase of around 18% for FY25, which would land at the top end of management's 13% to 17% guidance range. That growth is expected to be driven by the continued adoption of its SaaS+ model, which bundles software and implementation services, along with expanding margins and disciplined cost management.
The broker expects revenue to rise 17% to $593 million, with EBIT margins holding around 29% to 30%. UBS maintains a buy rating and a $44.50 price target, noting that while the valuation remains elevated, it's justified by the company's consistency and high-quality recurring earnings.
Jefferies, on the other hand, is also bullish, with a buy rating and a whopping $50 price target. The broker argues that the combination of AI features, SaaS+ tailwinds, and faster customer onboarding ("ERP in 30 Days") could compound new annual recurring revenue (ARR) growth by more than 40% over the medium term. It expects TechnologyOne's profit-before-tax growth to exceed 20% a year from FY26 onward.
Canaccord Genuity is similarly upbeat, lifting its price target to $45.60 and reaffirming a buy rating. It expects FY25 profit to come in at the top end of guidance, with "Plus" beginning to drive incremental ARR over the next few years as adoption grows. The broker believes the AI rollout will help sustain net revenue retention above 115%, providing the company with a clear runway to achieve $1 billion in annual recurring revenue (ARR) by FY30.
JP Morgan is more cautious, maintaining a neutral rating and $38.50 price target. The broker views TechnologyOne as a defensive tech name with a loyal customer base, but believes the next stage of growth hinges on scaling its UK business, which currently accounts for less than 10% of revenue.
Foolish bottom line
TechnologyOne's FY25 results will likely be less about the numbers (which are expected to be strong) and more about the outlook for FY26 and beyond.
Brokers seem to agree that the company's AI strategy, recurring revenue strength, and UK expansion position it well for another decade of compounding growth. While its shares trade on rich multiples (around 70x forward earnings), analysts say that the premium reflects its exceptional earnings quality and resilience.
If management again delivers at the top of guidance and provides an upbeat forward outlook, investors could see TechnologyOne's long-running growth story extend even further.
