Why is Technology One (TNE) down ~14%!
Technology One (TNE) is down ~14% trading into lunch time on Thursday after missing revenue growth expectations:
- Total recurring revenue growth of 18% was a miss to 21% consensus estimates.
- Pretax profit of $181.5mn was +19% YoY, in line with $181.5mn estimates.
- Also, the company released no specific FY26 guide.
When a stock is trading on 68x, 40% above its 5-year valuation, even after today’s fall, this rate of growth is a concern in a market comfortable to deliver value contraction to tech stocks that fail to meet lofty expectations.
The 53% growth in free cash flow is much stronger than the 36% growth expected by the market, but this was only due to in-advance billing growth and the pull forward of creditor payments. The subsequent special dividend of 10c part franked did little to placate investors.
- We are now adopting a neutral stance towards TNE.
MM is now neutral towards TNE
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