科技一号（TNE）：眼见为实

2025E2026E2027E601.2676.6768.20.250.300.3745.5x38.4x32.3x179.7212.5260.1 Wei Sim * | Equity Analyst+61 477773438 | wei.sim@jefferies.comJennifer Xu * | Equity Associate+61 293642894 | jennifer.xu@jefferies.comJohn Campbell * | Equity Analyst+61 439052387 | jcampbell1@jefferies.comTom Chapman * | Equity Analyst+61 438499671 | tom.chapman@jefferies.comSource: Company data, JEFe The Long View: TechnologyOneInvestment Thesis / Where We DifferTechnologyOne (TNE) is Australia's largest ERP SaaS company, the world-first SaaS+ company, and an ASX100 company, with locations across sixcountries. Key end-markets include local, state, and federal governments& education markets. The differentiation of its product strategy leads thesuccess of the majority of the business in APAC and the growing presencein the UK.Key to significant valuation upside is the UK business. The market is ~3×larger than the domestic market; based on Q&A at TNE's inaugural investorday in July 2024, we think TNE succeeding in the UK has yet to be factoredinto the company's outlook.Base Case,AUD44, +19%Continuedgrowth of ARR in the UK,NRRmaintaining at levels ~115-120% and successfultransition to SaaS+ business model.Sustainability MattersWith the transition from traditional consulting to Saas+, how would TNE keep or improve their currenttraditional consulting team?TNE previously announced that 1% of profit is used for Foundation Program in communities and directdonations to charities helping disadvantaged youth find pathways to success. Will they provide anupdate in the financial report later this year?Sales team and R&D team are growing constantly with the development of the business, what theupdate of a gender equality rate for these those core business teams?Please see important disclosure information on pages 8 - 13 of this report.This report is intended for Jefferies clients only. Unauthorized distribution is prohibited. Upside Scenario,AUD64, +73%Stronger-than-forecastARR growth coupledwith positive operating leverage driving higherterminal EBITDA margin. Downside Scenario,AUD28, -24%Slower growth driven by stalling of UK andweaker NRR.CatalystsFull-year results in November.Further positive news in relation to progress inthe UK market.Newsflowon further wins in key verticals,especiallyon larger or more prestigiouscontracts. 2 SaaS+ driving accelerating growthTNE's average ARR/customer has accelerated since the adoption of SaaS+. SaaS+ was firstimplemented in 2022. The first customer renewals for the platform will start to come throughfrom FY27. As detailed in our prior research, the second term of a SaaS+ contract sees a materialuplift in profitability as integration costs fall away. (See SaaS+: Stronger for Longer).Chart 4 - Average ARR/customer CAGR has doubled since SaaS+.Source: 1H FY25 ppt, JEFChart 5 - Unit economics of contract profit under SaaS vs. SaaS+.4.8-1.02.03.04.05.06.07.08.09.0Term 1 (yr 0-5)A$mSource: Jefferies estimates1H25 net retention ratio has remained at close to near highs while churn is at historical lows.Chart 7 - TNE NRR (Net Retiontion Ratio) at near highs.Source: 1H FY25 pptPlease see important disclosure information on pages 8 - 13 of this report.This report is intended for Jefferies clients only. Unauthorized distribution is prohibited. 4.25.6Term 2 (yrs 6-10)SaaSSaaS+ 8.2Chart 6 - Drivers for Long Term Growth.Source: 1H FY25 pptChart 8 - TNE Churn rate at historical lows.Source: 1H FY25 ppt Growth drivers for key verticalsLocal Government•UK LG is divided into three tiers: district, unitary and boroughs (from low to high)•In UK currently have 28 district councils, 6 unitary councils and won Islington as their firstborough in January.•Other borough opportunities in pipeline could lead to new win announcements.Education•Continue to win off Tribal recent wins including TasTAFE.•Every state TAFE system in Australia, excluding South Australia and New South Wales, nowuses TechnologyOne to manage students.•Only ERP provider globally to offer software, so broad in the higher education market.•Addition of CourseLoop further strengthens market leadership.Growth in (Federal) Government•TNE saw the fastest growth in ARR in government vertical.•AU Federal Government introduced a new procurement panel for ERP solutions. AER(Australian Energy Regulator) was the first opportunity awarded via the Panel and it wasawarded with SaaS+•SAP previously owned the top-end of town, while TNE did smaller end.•Given prior (smaller) contracts TNE has reference-ability.•Federal government digital transformation want to buy Australia first which favours TNEover SAP, WDAY and ORCL.Chart 9 - TNE 1H25 ARR growth by vertical.Source: 1H25 PPTPlease see important disclosure information on pages 8 - 13 of this report.This report is intended for Jefferies clients only. Unauthorized distribution is prohibited. ERP in 30 days•Power of One biz model is double-edged sword. It provides superior customer experiencebut is not infinitely scalable