TNE provides cloud-based business management solutions, including finance, HR, payroll, student and asset management systems, primarily to government, education and regulated industries. The stock rallied ~8% after hosting its AGM earlier this month where it painted a positive outlook supported by strong numbers – details Here. There was no significant mention of AI but while it’s a Saas business much of its operation will be out of sight to AI Bots.
Technology One’s software sits behind secure, login-protected systems and manages large volumes of sensitive data for governments, universities, councils and enterprises. As a cloud-based ERP platform, it handles financial records, payroll and HR data, student and citizen information, procurement and other mission-critical operations. While it isn’t a consumer “paywall” business, it stores highly confidential organisational data in encrypted cloud environments that are accessible only to authorised users.
The stock has more than halved from its 2025, but the move only takes it to a ~10% valuation discount (relative to the last 5 years), and it’s still not cheap, trading on ~50x with top line revenue forecast to grow at ~30%. We believe the security side of the business will help TNE defend its moat, but we want to see a clear AI strategy before buying the stock at current levels.
- We believe TNE should ultimately benefit from AI, but we need to see more evidence of how they will defend/enhance their position in an AI world.
MM is cautiously bullish towards TNE ~$23
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