No bears: software firm shrugs off AI ‘apocalypse’ fear
An Australian software company serving hundreds of governments, universities and councils has boosted earnings after incorporating artificial intelligence into its products.
Technology One, whose local listed rivals include WiseTech Global and Xero, made a net profit of $66.8 million in the six months ending March, up six per cent on the previous half.
“The adoption of AI and the feedback we are receiving are exceeding our expectations,” CEO Ed Chung said in a statement Tuesday.
Technology One’s suite of AI-driven products, including Plus and Guide, allows users to record and report, as well as predict, learn and simplify their operations.
“Plus understands every aspect of the customer’s organization – people, processes and performance – and responds in real time,” Mr. Chung said.
The technology is compatible with cloud-based enterprise resource planning software products that are pre-configured or custom offerings for local councils, universities and government.
Its core offerings include financial information management, human resources, payroll, and student management. A new product that can scan thousands of invoices was recently added.
Technology One’s share price fell almost four per cent to $27.55 after the results were announced, before the decline rose to around $27.30 by the afternoon.
Companies like Technology One and its peers abroad, whose businesses revolve around software as a service, or SaaS, have been under pressure this year.
Investors are examining their reactions to the so-called SaaS apocalypse, the rise of advanced artificial intelligence agents like Claude that could disrupt business models by creating autonomous, bespoke software.
But Technology One has weathered economic waves in the 38 years since its founding and emerged “stronger each time,” Mr. Chung said, noting that artificial intelligence will accelerate its business model.
“The bear case (disruption scenario) is not our case,” he said at an investor briefing.
“We started researching agency AI two years ago and wanted to see how much agency AI we could produce for our customers.
“We are very, very early in the fifth generation, the artificial intelligence generation, but we are at the forefront of this technology in our industry.”
In the first half, Technology One reported a number of customer wins, including a 10-year agreement with James Cook University in Queensland and strong growth in the local government sector.
Companywide annual recurring revenue increased 17 percent to $598 million.
First-half profit on a pre-tax basis was in line with the company’s expectation of $89.1 million.
RBC Capital Markets analyst Jackson Lee said the result was “solid” overall but noted the London borough council had not seen a big gain for some time.
Technology One reaffirmed its guidance for full-year pre-tax profit growth of 18-20 percent.
The Brisbane-based company will pay a higher interim dividend of eight cents per share, up 21 per cent.
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