Transforming business, making life simple.
Introduction
TechnologyOne is an Australian software company that provides enterprise solutions for government, education, and healthcare verticals. Founded in 1987, it went public in 1999 and has grown rapidly, doubling revenue and profits every few years.
Most of its sales come from Australia, with key products including student management, financial systems, and capital planning software.
Originally offering on-premise software, TechnologyOne began shifting to cloud-based solutions in 2015. This transition sped up in 2020, with over 90% of its on-premise business expected to be on the cloud by 2026.
Chris Andrews
Founder and Portfolio ManagerWhat makes the company different
TechnologyOne specializes in software for government, education, and healthcare verticals, offering an all-in-one solution instead of multiple separate systems. Its products cover 80% of industry needs out of the box, saving customers over 30% in costs.
Unlike competitors, it provides full enterprise software on any device, anywhere. Its simple, user-friendly design sets a new industry standard, giving it a strong competitive edge and market leadership.
Resilience and recurring revenues
TechnologyOne is resilient for two key reasons: 68% of its revenue comes from recurring subscriptions, providing steady income, and it has a 99%+ customer retention rate, as its mission-critical software makes switching providers difficult.
Management
At SilverCross, we value shareholder alignment. As founders and co-portfolio managers, we have invested our own capital in the fund. We also seek companies with strong insider or family ownership, as they tend to prioritize long-term success over short-term results.
TechnologyOne reflects this approach. When we first invested in 2020, the founder and chairman Adrian Di Marco held about 6% and one of TechnologyOne's founding shareholders, John Mactaggar, about 8%. Adrian Di Marco unfortunately announced his retirement as Chairman in 2022 after a 35 year tenure. His retirement was carefully planned with the current CEO Ed Chung taking over as CEO in 2017 after already 10 years with the company. Pat O'Sullivan was brought in as deputy chairman in March 2021 before replacing Adrian as Chairman on his retirement in June 2022.
Entry barriers, market share and pricing power
TechnologyOne’s software is mission critical, making it costly and difficult for customers to switch. High switching costs create a strong barrier to entry, leading to a 99%+ customer retention rate.
TechnologyOne is the market leader in enterprise SaaS in its sectors. For example, its software supports a significant portion of local governments in Australia and New Zealand with over 70% of residents living in areas where the local council uses TechnologyOne's solutions. Its simple, user-friendly interface, accessible on any device, combined with a constant focus on innovation, is a key driver of its success, driving market share gains even against giants like Oracle, SAP, and Microsoft.
Growth prospects
TechnologyOne plans to double its revenue every 4–5 years, with cloud and recurring revenue expected to grow at 15%+ annually. This growth will come from four main areas: gaining 25–50 new customers each year, selling more products to existing customers, converting on-premise clients to the cloud, and expanding in the UK, which is three times the size of the Australian market.
The company also expects its profits to grow faster than sales, aiming for a 35%+ profit margin (up from 27% when we first invested). This will be driven by more cloud revenue, slower growth in R&D costs, and the UK business growing its profitability as it scales.
ESG
At SilverCross, we seek to invest in companies whose core product or service has a net-positive impact on society. TechnologyOne’s software helps businesses become more efficient and reduce waste, like cutting over-production and unnecessary transportation. It also reduces paper use by offering mobile solutions for tasks like library or equipment requests.
The company is committed to sustainability, working to be Climate Neutral and reducing energy use. Its e-waste program helps recycle old equipment and supports local communities.
In 2016, TechnologyOne created the TechnologyOne Foundation, aiming to lift 500,000 children out of poverty. It joined the '1% Pledge' corporate philanthropy movement and so will donate 1% of profits, products, and employee time to charity, which aligns with global sustainability goals.
Investment case
TechnologyOne was on our radar for a while, but valuation kept us from investing. In early 2020, its share price dropped 32% due to market panic from COVID-19, creating an attractive entry point.
At SilverCross, we try to take a step back during these times of panic to assess the long-term outlook for a business rather than the short-term impact of an event. We saw TechnologyOne’s cloud transition as a challenge in the short term but a big long-term advantage, making the business more agile, scalable, and better at cross-selling products. The pandemic also accelerated digital adoption in government sectors, benefiting TechnologyOne. With strong innovation and high-margin cloud growth, we believe it can continue doubling in size every 4–5 years and we hope to remain shareholders for years to come.
How to invest
Participations in the Fund are available to professional investors and investors who have the knowledge and experience to assess the characteristics and risks of the Fund. The Fund is available for sale in the Netherlands, the United Kingdom, Switzerland and Belgium in EUR, USD and GBP share classes. The Fund is available as an AIF in the form of a Dutch FGR (“Fonds voor Gemene Rekening”) and as a UCITS in the form of an Irish ICAV (“Irish Collective Asset Management Vehicle”).
The minimum initial investment amount is Eur 100,000. Any subsequent investments must exceed Eur 25,000.
Before making any decision to invest in SilverCross Global Small-Cap Fund, we strongly recommend reading the Prospectus.
SilverCross Global Small-Cap Fund may be distributed through IBS Asset Management BV or through a licensed EU / EVA financial institution. Investors wishing to invest through their own advisor can do so by providing them the following ISIN code: NL0010832242.
All income generated by the Fund is treated as fiscally transparent. This means any income such as dividends and interest are taxed based on your individual tax position. We recommend consulting with your tax advisor about the potential tax consequences. Upon request, a list of all income received by the fund is available for your tax affairs.
For investors whose investments are treated in ‘Box 3’, the value of the Fund as of 1 January of each calendar year must be submitted to the tax authorities without any further requirements relating to income generated by the Fund.
Subscription Procedure
Please note that your subscription will be processed the first Transaction date following the receipt of the investment amount, which is weekly on Wednesdays, or the first business day thereafter if the Dutch stock market is closed. The Investment Manager has the discretion to determine additional Transaction dates at any time.
Transparency
The Fund Manager encourages potential investors to view an investment in the Fund as a long-term holding. Therefore, in case an investor wishes to sell its participations within 90 days after purchase, an anti-dilution levy of 3.0% of net asset value per participation will be incurred by the investor. This penalty serves to discourage frequent trading in Fund participations. This penalty is waived as of May 1st, 2023.
The Fund Manager is allowed to suspend or limit subscriptions or redemptions in the interest of existing participants. For more information about situations in which this can occur, see the Prospectus.