Why are Technology One shares crashing 4% today?

Technology One (ASX: TNE) shares are trading in the red this morning as investors rush to sell up their shares.

At the time of writing, the shares are down 3.63% to $27.60 a piece. At one point this morning, the shares were trading as low as $27.27.

Today’s tumble means the stock has fallen 9% over the past month and is 16% lower than trading levels seen this time last year. The share price is, however, still 37% higher than a multi-year low recorded in mid-February.

Here’s what investors are reacting to.

Technology One’s latest update

Investors have been offloading their shares after the company announced its latest financial update.

Australia’s largest SaaS (software as a service) ERP business posted its 17th consecutive first-half profit result ahead of the market open this morning.

The tech company announced that its profit before tax has jumped 9% year-on-year to $89.1 million, profit after tax is up 6% to $66.8 million, and its annual recurring revenue (ARR) has jumped 17% higher over the same period. Technology One also noted net revenue retention of 114%.

Pleasingly, Technology One also reaffirmed its upgraded FY26 guidance. The company is targeting 18% to 20% of profit growth and 16% to 18% of ARR growth for FY26. It is also on track to meet its goal of $1 billion+ ARR by FY30. These guides are fully inclusive of AI, Showcase, and SaaS+ investments.

Management said the company expects improved margins and sustained double-digit growth, driven by its transition to SaaS+ and the continued rollout of next-generation AI ERP products. It is focusing on expanding in both domestic and overseas markets, particularly local government and higher education.

The result came in largely in line with market expectations. 

If the result was positive, why are the shares tumbling today?

Despite reporting record profit and ARR, TechnologyOne shares have slumped in early trade. There is no negative commentary in the release itself, and the company confirmed its upgraded guidance for FY26. It also reiterated confidence in its long-term targets.

Most likely, the share price reaction reflects broad weakness in the tech sector, and some profit-taking after the company’s strong gains over the past 12 months.

What do brokers think of the stock?

TradingView data shows that most analysts are optimistic about the outlook for Technology One shares this year. Out of 16 analysts, 10 have a buy or strong buy rating. Another four rate the stock as a hold, and two have a sell rating.

At the time of writing, the average $31.60 target price implies a potential 15% upside, and the maximum $36.50 target price suggests the shares could climb another 32%.

The post Why are Technology One shares crashing 4% today? appeared first on The Motley Fool Australia.

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Motley Fool contributor Samantha Menzies has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Technology One. The Motley Fool Australia has recommended Technology One. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.