The TechnologyOne Ltd (ASX: TNE) share price has risen in recent weeks, but the business is still down 33% from its former all-time high in June 2025, as the chart below shows.
When a great business like TechnologyOne is down â and it’s down 18% in the last six months â I think it’s a great time to look at the stock as a potential opportunity.
The company describes itself as Australia’s largest enterprise software company, with a global presence. It has more than 1,300 subscriber customers which includes leading businesses, government agencies, local councils, and universities.
There are a few reasons why I think this business could be a top buy. Let’s get into it.
Great revenue growth
I think one of the most fundamental drivers of the TechnologyOne share price over time is whether its revenue is growing at a satisfactory pace.
Net profit growth is essential to send the underlying value of a business higher, with revenue being an important factor for that.
The world is becoming increasingly digital and this is a strong tailwind for TechnologyOne. The company is growing revenue in multiple ways.
Winning new subscribers is an important element â it has done very well in Australia and now it has its sights on markets like the UK, which has a similar sort of list of organisations such as councils, businesses, schools, universities and government. It recently won two important London councils, which I think bodes well for the future.
Another element of growth is how the company unlocks more revenue from its subscribers by investing in improving its software offering for customers. This is one of the main reasons why TechnologyOne is able to consistently deliver double-digit annual recurring revenue (ARR) growth each year.
In FY26, it expects to grow its FY26 ARR by between 16% to 18%, with the company targeting the top end of the guidance range.
Rising profit margins
As a software business, the company is able to tap into pleasing scale benefits where revenue can grow faster than expenses.
As I mentioned earlier, net profit is the ultimate driver of shareholder returns, so improving profit margins helps the business grow at a faster pace.
TechnologyOne expects to grow its profit before tax (PBT) in FY26 by between 18% to 20%. This impressive projection is, according to management, down to its software as a service (SaaS) offering and its products being turbocharged through AI.
The ASX share says that it’s delivering improving margins from significant economies of scale, with the profit before tax margin expected to increase to at least 35% in the long-term.
I think this bodes very well for the future as it builds towards its ARR target of $1 billion by FY30.
Compelling TechnologyOne share price valuation
According to the projection on Commsec, the business is forecast to deliver earnings per share (EPS) of around 50 cents in FY26 and 59 cents in FY27.
That means it’s currently trading at 57x FY26’s estimated earnings and 48x FY27’s estimated earnings.
While this isn’t as cheap as it was a few weeks ago, I think the business has an incredible future ahead and I think it’s undervalued by the market because of AI concerns. I think the company’s economic moat, reputation and customer service will allow it to stay ahead of any rivals and continue to grow profit.
The post Is the TechnologyOne share price an opportunity too good to pass up? appeared first on The Motley Fool Australia.
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Motley Fool contributor Tristan Harrison has positions in Technology One. 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.