TechnologyOne Ltd (ASX: TNE) shares are under heavy pressure on Tuesday.
At the time of writing, the ASX 200 tech stock is down 15% to $29.97.
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Why is this ASX 200 tech stock being hammered?
Investors have been selling the enterprise software provider's shares despite delivering another record result in FY 2025.
TechnologyOne has now delivered 16 consecutive years of record profit, record revenue, and record SaaS fees.
For the 12 months to 30 September, the ASX 200 tech stock posted an 18% increase in total revenue to $610 million and an 18% lift in annual recurring revenue (ARR) to $554.6 million.
Management advised that this was underpinned by net revenue retention of 115%. This remains industry-leading and means that existing customers are spending more than they were a year ago.
This ultimately led to the ASX 200 tech stock reporting a profit before tax (PBT) of $181.5 million, which is up 19% year on year and above its May guidance range of 13% to 17% growth.
Net profit after tax rose 17% to $137.6 million and its free cash flow came in 55% higher at $184.2 million. The latter equates to a powerful 134% of profit.
In light of this profit growth, the TechnologyOne board declared a final dividend of 20 cents per share, up 15% on last year, and a special dividend of 10 cents per share. This brought its total dividends to 36.6 cents per share in FY 2025, which is up 63% year on year.
Commenting on its performance, the ASX 200 tech stock's CEO, Ed Chung, said:
The success we are having today is from our investments 5 years ago, and the success we will have in future is from the investments we are making now. 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 catch a cab and now that we have Ai and SaaS+, TechnologyOne is changing the market for ERP and unlocking value for our customers.
TechnologyOne has reaffirmed its ambition to achieve $1 billion+ ARR by FY 2030. This is almost double what was achieved in FY 2025.
So why is its share price down?
Despite reporting record profit, ARR, cashflow and dividends, TechnologyOne shares have slumped in early trade. There is no negative commentary in the release itself, and the company outperformed its guidance, declared a special dividend, reiterated confidence in its SaaS+ strategy, and long-term targets.
Most likely, the share price reaction reflects broad weakness in the tech sector today, profit taking after strong gains over the past 12 months, and fears over a potential AI bubble.
