Ladies and gentlemen, thank you for standing by, and welcome to the Technology One half-year results roadshow. For this presentation, Edward Chung, Chief Executive Officer, is here on the call in Brisbane. There'll be a presentation followed by a question-and-answer session. Participants on the phone who wish to queue for questions will need to press star followed by the one on your telephone. If you would like to submit a question online via the webcast, please type your question into the Ask a Question box and click Submit. I would now like to hand the conference over to your host today, CEO, Mr. Edward Chung. Thank you, sir. Please go ahead.
Thank you. Good morning, everyone, and thanks for the introduction. This morning I've got Stuart MacDonald, my COO here, and Cale Bennett, our CFO here. Welcome to the 2025 half-year results presentation. These materials were lodged with the ASX earlier today. For the 16th time, we've delivered record first-half ARR revenue on profit. For those that have followed us for a long time, you know that we have a new ambitious goal, and that's beating AUD 1 billion ARR by FY2030. We're on the path there. We surpassed AUD 500 million ARR in the first half of FY2025, 18 months earlier than planned, an incredible achievement for our company. SaaS Plus, our game-changing offering, which combines our vertical-specific and mission-critical SaaS ERP and implementation with the fastest implementation timeframes in our markets, delivers, and it's fueling our growth.
It's enabled us to deliver half-year profit before tax of AUD 81.9 million, underpinned by our ARR growth of 21%. I want to remind everyone of our strategy because it's this strategy that enables our strong and consistent growth. We have a vision, and that is to make life simple for our community. It's very powerful and meaningful to us and our customers. Our passion is to solve the complex. We don't do easy. ERP, student management, property and rating, payroll, it's all hard. The Power of One is very hard. Moving an entire customer base of 1,200 customers from on-premise to SaaS, that's extremely hard. Rewriting our code base four times over the past 38 years is hard. Some say SaaS Plus, well, it's impossible. When you add it all together, there is no one doing what we can do.
We create mission-critical products and solutions that power local governments, power unis and TAFEs, governments, banks, hospitals, and large infrastructure providers. They are our community. Our team can choose to work anywhere, but choose to work for us. Our staff live and play in the communities we serve. They have a real deep connection with the community. Over the last 38 years, we've evolved. This evolution includes the wins and mistakes we've made, and these mistakes create scar tissue. That scar tissue makes stories and lessons learned. We embody those stories and lessons learned in the Tech One way. In our core beliefs, in our values, our compelling customer experience, and our leadership philosophies, they guide everything we do. Our core beliefs, they're our non-negotiables, and they underpin our strategy.
Our strategy has not changed dramatically over the last 38 years, but how we execute the strategy evolves quite a lot as we respond to shifts in technologies, feedback from our customers, competitors, and the market generally. It is this clear strategy that resonates with the market, and it is why we win against our competitors. Once we land a customer, they expand with us over many, many years, taking more products and modules to streamline their business. It is why they stay with us forever and what fuels our strong, consistent growth. You can see this in our ARR growth. Here are the main elements of our strategy. The first is one experience for our customers. We believe in a fully integrated ERP solution, and we provide very broad and very deep functionality. When I think back to 2008, for example, we had 11 products.
Today, we've got 19 products and over 500 modules. We continue to invest in even more features and functions for our customers. No one comes close to our focus and commitment to our vertical markets. We have the deepest functionality for those vertical markets. We provide mission-critical products which power unis, power TAFEs, power governments, and hospitals. We compete and win against the best-of-breed players, and we're ERP, but we're much more than ERP. In short, we don't follow the standard path. We don't fight in what's called the red ocean. We create a blue ocean by having ERP for defined vertical markets. You know the markets as higher education, local government, government, health and community services, asset-intensive industries, and finally, financial services and corporates. We're an innovation-driven company, and we believe in evolution.
We leverage new and emerging technology at each generation for our customers. We invest in the range of 20%-25% of revenue each year into R&D. This is equated to over AUD 1 billion invested into our ERP, into our products, and into our modules. We have got a track record of investing for the future. Because if you look back, the success we are having today comes from the R&D investments we made over five years ago. Our fourth-generation ERP, we call it CiA. It is available on any device, anywhere, and any time. As I said a moment ago, we have successfully re-engineered our entire code base, enabling our customers to always be on the latest technology. No other ERP provider has been able to do this successfully once, let alone the four times that we have done over the last 38 years.
Think millions of lines of code. In our speak, we say tech is the way we think. Tech means we can solve the complex. Tech changes the way our customers work. Tech evolves rapidly, inviting new possibilities daily. Tech is the answer. Finally, this fourth generation has the highest level of security accreditation in the industry. We are the most trusted SaaS provider. We are the first and only global SaaS ERP solution to achieve IRAP protected with no carve-outs. Our competitors may have parts, but ours is across the full suite. We continue to invest millions of dollars and set the bar higher each year as we deliver the most trusted SaaS solution for our customers. We know, our customers tell us, it is not feasible for individual organizations to keep up with the increasing costs and complexity of cybersecurity unless they have adopted a SaaS-first strategy.
We spent hundreds of millions of dollars building the world's most trusted SaaS ERP solution that's secure, reliable, and efficient. Now, with the Power of One, we build, market, sell, implement, support, and run our SaaS ERP. Here's what makes the Power of One special and unique. Firstly, it's an IP engine. If we're bidding and we win or lose and get feedback, we put that feedback back into the product. When we want a customer and we're implementing, and if the implementation's slow or cumbersome, we put those improvements back into the product. When the customer's live and there might be some bugs in certain areas, we fix those bugs and it goes back in the product. Finally, when we're running on the SaaS platform, if there are performance issues or issues that we see, we put that back into the product.
The second part of the Power of One is the direct relationship. We own the customer from end to end. There is no one between us and the customer. There's no system integrators. We all know that ERP is complex, and there's always issues from time to time on ERP. In the old model, where you have a vendor and an SI, they both blame each other. The vendor blames the SI, the SI blames the vendor, and the poor customer's left holding the can in this old model. With the Power of One, we're 100% accountable. Now, with all of this, this is one of the reasons we've maintained a 99%+ customer retention rate over the last 38 years. SaaS Plus, it's a game changer in the ERP industry. For us, it's simple.
It's the next logical evolution of SaaS, where Technology One delivers the entire outcome faster and with minimal risk and in one single feed to our customers. SaaS Plus delivers faster time to value as we continue to dramatically drive down implementation timeframes, removing the need for those traditional, long-drawn-out risky implementations. Our goal is to deliver ERP in 30 days, not the thousands of days like traditional system integrators. Now, SaaS Plus can only happen through the Power of One. We own our product, we have 38 years of deep industry experience, and we have a highly skilled in-house consulting team. As I said a moment ago, we've invested over AUD 1 billion in our ERP to date. The success we're having today is from our investments made five years ago. The success we're going to have in the future comes from the investments we're making today.
These investments enable us to continue to double in size every five years. Today, we have over AUD 511 million in total ARR and a new long-term target to exceed AUD 1 billion ARR by FY2030. We are well positioned for future growth with multiple platforms of growth that drive that consistent growth and help us meet our targets. We have a total addressable market of AUD 13.5 billion. We have significant white space in our existing customers. As I said before, once we land a customer, there are many, many new products and modules that we can provide to those customers to streamline their business. This is evident in our strong net revenue retention. We have the target range there of 115%-120%. We know at 115% alone, we could continue to double in size every five years.
We continue to win new customers in Australia, New Zealand, and the U.K. Our R&D creates new products and modules such as DXP and App Builder. Over the next five years, it increases the white space even further. SaaS Plus, it's a game changer and increases ARR again by 40%. We continue to search for strategic acquisitions like CoreSlip for curriculum management and CNTF for timetabling and scheduling. The final piece here is our focus and our strategies are geared to grow our margins, the 35%+ over time. Thinking about acquisitions, on the 1st of November, we close the acquisition of CoreSlip, which broadens our market-leading One Education solution to include curriculum management. Just to remind everyone, our acquisition criteria is the following. Firstly, it's in our vertical markets with an emphasis on local government or higher education.
Secondly, it should bring new intellectual property, for example, a product. Third, the technical fit. Fourthly, the geography, and the U.K. is a bonus. Fifth, a similar culture to ours. And of course, sixth, the pricing consideration. Now, with the bolt-on of CoreSlip, our platform for education, called One Education, is now even richer, even deeper, even more mission-critical for the education market. As you'll hear us say over and over, SaaS Plus is a game changer, and it's powering our growth. As a result, our outlook for FY2025 is strong, and I'll discuss that a bit later. We have strong profit and ARR growth. And increasingly, a common metric to assess SaaS companies is the Rule of 40. And the Rule of 40 typically measures recurring revenue growth and cash profit margin. However, there's no strict definition. In fact, many companies use slight variations of the Rule of 40.
In Tech One, we interpret the Rule of 40 conservatively as our ARR growth percentage plus free cash flow margin post-tax. As I said, strong profitable growth is nothing new to Tech One. You can see for the 12 months to 31 March 2025, we recorded a result of 49%. That puts us in the top quartile globally against our ERP peers. Because it is common and we are measured on it anyway, we have added it to our metrics. Importantly, we expect to remain in top of class, which is above 40%. Cale is now going to take you through the detailed financials for the first half of the year.
Thanks, Ed. Starting with our results summary, I am pleased to confirm that we have exceeded our AUD 500 million ARR target 18 months early, consistent with what we said in November. We closed the half with AUD 511.1 million in ARR, including AUD 9.1 million in ARR from our acquisition of CoreSlip. ARR was up 21% over the last 12 months, driven by a net revenue retention of 118%, which is above our long-term target of 115%, the level at which our business will double every five years. This enabled recurring revenue growth of 19% and ultimately a profit before tax increase of 33% over the PCP. On all metrics, we have had a strong half. I'll now take you through the detailed financials, beginning with the income statement. Profit before tax increased 33% to AUD 81.9 million, which is a strong first half. Total SaaS fees were up 19%, while SaaS and recurring revenue grew 19% to AUD 265 million in the first half of 2025.
Traditional new project consulting recorded an increase in revenue as we worked through the backlog of work to get our clients live. This revenue is primarily driven by implementations not sold as SaaS Plus, such as government work sold on the old framework prior to its updating to accommodate SaaS Plus. Total expenses grew 14% to AUD 209.4 million in the half. As we've called out in the notes here, we want to be transparent that there is a timing benefit to our marketing costs of about AUD 6 million, which will fall into the second half. Within our total expenses are variable costs of AUD 49.4 million, an increase of 20%. This increase was driven by an increase in our SaaS platform costs as more customers increase their activity on the platform and our team transitions to a more efficient architecture.
Our operating costs, excluding capitalization, are up 14% to AUD 172.4 million in the half. These are primarily people-based costs, and noting the point I mentioned before about the marketing timing. We will continue to invest in the future. Net profit before tax was up 33%. However, if I exclude the impact of the marketing phasing mentioned previously, we would have delivered profit before tax up 21% in this half. Net profit after tax was up 31% to AUD 63 million. The effective tax rate for the half was 23%, which is approximately where we expect it to remain in future periods on current settings. As we mentioned at the full year results and the AGM, on the 1st of November, we acquired CoreSlip, which has become our 19th product, Curriculum Management.
In total, we acquired AUD 9.1 million in ARR, spending AUD 60 million, with AUD 44.5 million cash upfront, AUD 52.5 million in total cash, and AUD 7.5 million in equity. The thesis in acquiring CoreSlip was to strengthen our One Education offering, and that thesis is proving out. Based on customer demand, we've incorporated Curriculum Management into our Student Plus offering in the United Kingdom. We are the only ERP provider globally to offer a software suite so broad in the higher education market, and the addition of CoreSlip further strengthens our market leadership in the higher education vertical. Financially, the CoreSlip acquisition has an immaterial impact on our numbers, and we have presented our numbers throughout today on a statutory basis. There are no underlying carve-outs. The integration of the front end of the business is going well, and the code line integration is expected to take three years.
We're happy with the progress to date. Onto the balance sheet, and our balance sheet does remain strong. Cash and investments have decreased 24% as expected to AUD 211.9 million over the first half, given our second half-weighted cash collection profile. The change in cash is also consistent with our renewals profile, dividend payments, and the payment of AUD 45 million for CoreSlip. The CoreSlip acquisition has increased our intangible assets to AUD 106.4 million. Deferred revenue has decreased, rather, by AUD 38.6 million, consistent with our business growth and annual in-advance billing schedule. Net assets have increased AUD 36.4 million over the first half of FY2025 to AUD 415.7 million. Without the investments of past periods, our business would not have the strength we currently enjoy. The decision to invest in product, the cloud, and the SaaS platform years ago enables our business's growth today.
This is evident in our investment in our SaaS Plus architecture, which will drive significant benefits for the business into future years. We invested 24% of revenue, or AUD 68.8 million, in R&D in the first half of FY2025. We have delivered on our roadmap for innovative products and functional improvements to our existing products. We're making exciting investments, and Stuart will update on that later. Going forward, we expect to maintain our investment in R&D in the 20%-25% of revenue range. This is the right level of investment to continue to grow as we have done over the years. Revenue is expected to grow faster than our R&D spend in future periods. We continue to invest in our development team and their productivity to deliver more for our customers. Onto the cash flow now.
In the first half of FY2025, free cash flow was a +AUD 24 million, which is exceptionally strong given our normal second half-weighted cash generation profile. Our collections performance has remained strong, and the payments we brought forward in the fourth quarter of FY2024 have enabled us to deliver a strong operating cash result. Cash flow is increasingly predictable and stable, with the business now having completed its transition to SaaS. We expect free cash flow to approximately equal net profit over the full financial year. We're incredibly proud of the results in the first half of FY2025. Accordingly, our board has determined an interim dividend of AUD 0.66 per share, franked to 65%. This is up 30%. Now, while the interim dividend is up 30%, this only represents a payout ratio of 35%. Consistent with our cash flow profile, we will await the dividend to the second half to ensure we land in our stated payout ratio of 55%-65%, clearly showing our confidence for the future growth in profitability. I'll now hand over to Stuart.
Thank you, Cale. As both Ed and Cale highlighted, a fundamental belief at Technology One and a key driver of our continued success is our vertical market strategy. Initially, many of our products were marketed across various sectors. However, we quickly realized that we needed to create a differentiation with a vertical focus. Our customers recognize that 100% of our R&D investment directly benefits them, with over 80% of new technology, products, and features originating from their feedback and requests. As demonstrated on this slide, this targeted approach continues to deliver strong, consistent results.
By diversifying into distinct vertical markets, we've also got regional products that have built resilience against economic cycles, global crises, sector-specific disruptions. From the global financial crisis and COVID-19 to the current shifts in higher education worldwide, our unwavering focus on our vertical position has positioned us strongly. Our customers continually seek operational efficiency and cost savings, and Technology One remains uniquely positioned to support these critical objectives. Our vertical focus and commitment to the Power of One approach has made groundbreaking initiatives like SaaS Plus possible, delivering a complete ERP solution for one fixed price. Staying true to Technology One's spirit of achieving what others seem impossible, we've announced in 2024 that we could deliver a full ERP implementation to our customers in just 30 days. Yeah, 30 days, not the thousands of days it typically takes for our competitors.
Some have questioned why our initiative is so highly focused, suggesting that this leaves potential revenue on the table. However, our response is clear. Our mission is to serve our communities effectively, recognizing that we are spending ratepayer and students' money. We believe that these funds are better invested in improving infrastructure, hiring more teachers, and funding scholarships rather than being wasted on long, lengthy, costly implementations. Moreover, faster implementations mean our customers see tangible benefits much sooner, enabling us to deliver additional products and services more rapidly. As highlighted in our full year results, this initiative is our Manhattan Project, central to every strategic action we undertake, and it's instrumental in uniting our team more closely than ever before. ERP in 30 days is truly transformational. Market adoption of SaaS Plus continues to exceed our expectation.
In the U.K., SaaS Plus strongly differentiates us and has significantly driven our impressive results. In Australia and New Zealand, where we have an established customer base, SaaS Plus empowers customers with the full power of Ci A, eliminating the risk of project overruns in time or cost. This capability has notably increased our customer satisfaction scores. With more than 120 customers now SaaS Plus, this innovative offering, providing an industry-first single-fee model for a complete solution, is changing customers' conversations. The market now frequently asks questions of not, "What is SaaS Plus?" but, "Is that specific product or module available with SaaS Plus?" further distinguishing us from the market and continuing to grow our growth. Currently, 100% of our products, excluding the recent acquisitions, are available through SaaS Plus. We are actively transitioning the acquisitions into SaaS Plus to ensure a unified offering across all of our products.
Out of the more than 250 wins in the half, I'd like to highlight three briefly. First, TasTAFE. TasTAFE has been a financial customer of ours for many years. Their student management solution was previously provided by Tribal, the same solution that New South Wales TAFE is still trying to implement more than eight years later. TasTAFE recently went to market to replace Tribal, and I'm proud to announce that Technology One has been awarded this significant project. As a result, every state TAFE system in Australia, excluding South Australia and New South Wales, now uses Technology One to manage their student and the local government sector. We began modestly, securing small customers and, through consistent success and growing credibility, progressively expanding our presence within local government. In England, councils are categorized into three main types: counties and districts, unitary councils, and London boroughs.
Our early success was predominantly in the county district councils, and today we are proud to support 28 of these. Four years ago, we strategically targeted the significantly larger and more complex unitary councils, and today we have six of these. Our ultimate goal for our local government strategy was to always enter the highly prestigious local—sorry—London boroughs, traditionally dominated by Oracle. With our recent landmark win of the Borough of Islington, one of London's largest and most influential boroughs, we've achieved this critical milestone. This win validates effectively our long-term strategy and positions us strongly for continued growth and leadership in the U.K. market. Many federal government departments must procure solutions through a designated procurement panel. Since our innovative SaaS Plus solution was launched in 2023, we've had no opportunity to sell to these departments due to the absence of an appropriate procurement panel.
Recently, a new federal procurement panel was established, and we successfully included our SaaS Plus offering. I'm extremely pleased to announce that the very first contract awarded under this new panel was our SaaS Plus solution for the Australian energy regulator. This significant win clearly validates our SaaS Plus strategy once again. We are exceedingly proud of our continued and consistent era of growth. I'd like to highlight that from 2022 onwards, you can clearly see our growth rate accelerating. This acceleration directly correlates with the introduction of SaaS Plus offering, validating our strategic vision of SaaS Plus as a growth accelerator. Our history is defined by bold, aspirational targets that drive our focus and underpin our success. The two metrics shown on this slide clearly reflect that strategic focus and how we measure performance.
Best practice in our industry for net revenue retention ranges between 115% and 120%, and once again, we are firmly within this benchmark, achieving an impressive 118% for the half. It's important to note that sustaining an NRR of 150% annually over five years alone doubles the company's size, highlighting this metric as a critical component of our ERP strategy. Secondly, our churn rate of 0.3% continues to be within our target of less than 1%. While a churn rate of 0.3% is outstanding, our full year target still remains 1%. Over the past few years, I've consistently communicated our strategic investment in the U.K. and the expectation that returns were imminent. As this graph clearly shows, we've now turned that corner. I'm immensely proud of our U.K. team of over 180 dedicated members. We've established a long, strong challenger brand with a robust pipeline in local government and education.
Momentum is clearly with us, and we anticipate continued growth. I'll share further details on the U.K. wins and strategic direction at the full year results. Now, none of these results would be possible without the substantial and strategic investment in R&D. These investments are long-term commitments powering both new customer growth and net revenue retention. We are proud of our success and the clear strategy focus of SaaS Plus, ERP in 30 days, and DXP. At our showcase event in October, we will be announcing our AI strategy along with exciting new products. I'd again like to thank our world-class R&D team for building the robust product foundation that continues to drive our success.
Thanks, Stuart. So, to wrap up the results, quite simply, SaaS Plus delivers. We achieved our 16th half year of record ARR revenue and profit, total ARR up 20% to AUD 511.1 million, U.K. ARR up 50%, with sales ARR up 61%. You can see that flywheel is now turning. Profit before tax of AUD 81.9 million, up 33%. All of this enables us to continue our strong R&D investment for future growth of AUD 68.8 million, up 21%. Finally, an interim dividend of AUD 0.66 per share, up 30%. Turning to our outlook and guidance for the full year, the markets we serve, they're resilient, and Technology One, it's not impacted in any way by any of the current geopolitical issues. Technology One provides mission-critical software with deep functionality for the markets we serve.
Our global SaaS ERPs allow our customers to innovate and meet their challenges ahead with greater agility and speed without having to worry about underlying technologies because we make life simple for them. Our customers have been independently verified the cost savings of 40%+ by moving to Technology One. SaaS Plus is creating significant opportunities for us, and the pipeline for 2025 is strong. We will continue to benefit from improving margins because of the significa nt economies of scale that we achieve from our single instance global SaaS ERP solution. As I've said before, we've got a strong track record of achieving the top end of guidance or better. Last year, we stepped up our guidance from our historical 10%-15% growth range to 12%-16% growth.
We indicated that we'll continue to step this up as our business became more predictable as a 100% SaaS business with no legacy license fee overhang. With SaaS Plus, we go the next step to simplify our business again with no legacy consulting overhang. For the full year 2025, we guide profit growth of 13%-17%, underpinned by strong ARR growth. As I said at the outset, our people have a deep connection with our mission because they, their parents, their brothers and sisters, their family work, live, and play in the communities we serve. They live and breathe the Tech One way. They create and deliver the mission-critical products and solutions that power our customers. None of these results would be possible without the talented and committed people that make up Tech One.
Since 2017, we've measured ENPS, or Employee Net Promoter Score, and it's grown from - 17 to today, + 37. They also build their careers here, and last month, we were recognized by LinkedIn as one of the top 15 companies in Australia to grow your career. We'd like to thank each and every team member of Technology One team member across the globe. We'd also like to thank you, our shareholders and our community, for your continuing support. You can see we've got great momentum in our business, and we set our sights even higher now with AUD 1 billion plus ARR by FY2030. We provide mission-critical solutions for the communities we serve with our 19 products. From our Investor Day in July 2024, we provided detail of the significant headroom we have in the markets we serve with our existing products. That's AUD 13.5 billion in total addressable market, and we have multiple platforms for growth. We'll now hand over to our operator for questions.
Thank you. Ladies and gentlemen, we'll now begin our question and answer session. If you would like to queue for a question, please press star followed by one on your telephone and wait for your name to be announced. If you would like to cancel your request, please press star followed by two. If you would like to submit a question online via the webcast, please type your question in the Ask a Question box and click Submit. Edward will now start with the questions from the phone call. Your first question comes from Paul Mason from ENP. Please go ahead.
G'day, Paul. How are you going?
Hey. Hey, great. Not as good as your results, but pretty good. My question, I wanted to ask about SaaS Plus. We've been doing a bit of work on it. My initial impression from speaking to you guys was that it was more about the revenue model, but now that we've sort of done some industry work, it seems like there's actually a lot of technology that enables the faster implementation. I was hoping you could maybe expand on some of the things that are behind SaaS Plus from a technology perspective, like the templates that you guys are building and things like that, so that we can understand a bit more about the product differentiation that it provides as opposed to just the revenue model.
Yeah, it's way more than a revenue model. I might just do an introduction and then hand to you, Stuart. I think, Paul, if you firstly take a step back and look at our four generations, the current one or the last one being Ci Anywhere, when we went from our third generation Ci to Ci Anywhere, it's much more than just a technology shift. It's a total rethink about our whole organization, a total restructure in everything we do. If you're like, we're entering the fifth generation, we don't know what it's going to look like. SaaS Plus is at the heart of it, and it's a complete restructure, rethink in everything we do. Stuart, do you want to just get a bit more deeper into all the changes we're making in our organization?
Yeah, we're uniquely positioned because SaaS Plus can only work because we've got the vertical expertise. What we've been trying to do for the last few years is speed up our ability to implement so our customers can get the benefits faster, but then we can also do more projects with the same amount of people. That was the goal at the beginning. When we walk into a council for which we have 30 councils, we've already got the credibility to say, this is how a council runs. The scope is then well-defined, so we know how to execute to that. That repeatability is fantastic. That's the real benefit the customer sees. The commercialization side is an interesting secondary, but it's really getting faster and that repeatability for our customer base. It's working fantastically well. All of our customers only want to buy SaaS Plus. Actually, I'll give you an interesting point too.
Customers that bought product in the past, they're still waiting to implement. They're now coming back to us saying, can I rebuy that as SaaS Plus because I can actually get the implementation faster under the new model? The way we do that is it's a lot of one-percenters. We're looking at the methodology. We're making sure the scope is right. We will get a massive benefit from technology, but that technology play takes probably six to nine months to go through R&D to get to the other side. That is why you see it's going to take us to 2028 to get to 30 days. That is going to be some massive new technologies, leveraging a lot of AI, as we said at the last results.
It's the team looking at each part of how we sell, we implement, and we design our software to make sure we can get there as fast as possible. The commercial construct is great, but really that's secondary to what we're trying to achieve.
I might just add one thing and then hand to you. If you look at under the covers in Tech One, we've got a sales division, an R&D division, and a consulting division. One of the things that makes Tech One very successful is not only our deep industry expertise, it's the power of one. As part of SaaS Plus and ERP in 30 day, we've created tribes. Do you want to talk about tribes and how they're set up and what the intent for tribes is?
Yeah. Again, one step. If you look at the things that differentiated us, that we think we're the only ones that can really do this, not only do we have the vertical expertise, but it's our consultants. It's our people in the field that are doing this. We're getting that feedback loop as well. What we've done is we've looked at the issues related to adoption of software from every side. A salesperson, a pre-salesperson, a consultant, a developer, and a support person. We've built a tribe for each module. Let's assume there's 550 modules. There's a tribe of people that represent that to try and find more efficiency throughout every part of it. They all sit there as equals at the table trying to find out a faster way of getting an outcome.
We have seen massive improvement in the module side of the process. We are really down into the weeds looking at how do we implement that one process as fast as possible for our customer, but also the customer is also getting the benefits they always wanted much faster. We are not minimizing anything. It is not like we are watering this down and taking away functionality. In fact, we are trying to do just the opposite. It is a win for everybody. We get there faster, but you can start to see that our customer stats numbers from SaaS Plus are increasing because there is that expectation from the beginning as well as our delivery. That is all driven by the tribes working day in, day out to get that speed.
I suppose the last thing that I'll add, Paul, I know it's long, but this is very passionate for us, is the last thing I'll add is there's a slide that shows ERP in 30 days, and it might have started at 300, went to 220, and we're now at 126 days. The two lenses on this is the first is the customer goes live faster. They buy software to use it to streamline their business, not for long implementations. On the flip side, if we get a customer live faster, we can potentially come back, and if they're happy, sell them the next module, number one. It will increase the sort of momentum in our ARR business. On the flip side, we built our costs, if you like, over the original 300 days.
Every day we get faster, we can get consultants to do more implementations, but we get more margin out of that implementation. You can see there is goodness for the customer and there is goodness for us with SaaS Plus and ERP in 30 days. Might hand back to you. Sorry for your next question, Paul.
I will just ask one more because I have got a very long one there. Just maybe quickly some color on DXP is now being sold for a little while. Could you give us a bit of color on what the typical revenue uplift versus, say, a standard implementation that did not have DXP sort of looks like? I know there would be a lot of variation there, but just a few because it seems like it is getting more and more popular.
Yeah, no, it is very, very popular. If we go back to the original premise of DXP for local government and education, our goal was that DXP LG would have the equivalent price as Property and Rating for that vertical. Give a general customer, it's probably AUD 800,000-AUD 1.1 million is where you would fit as a Property and Rating customer in LG. We want DXP LG to get to that price point. The original design of DXP LG was three phases, and as those three phases roll out, we should get to that AUD 800,000 price point, which is where we want to go. It is also sold as a SaaS Plus, and all the consulting work, of which actually there's quite minimal work, but all that work is embedded into that one price. The adoption is fantastic.
Out of the gate, it sold like crazy, and we've actually probably started to slow it down a little to make sure that we're getting the next part of development working. But we're now having conversations internally of how do we port that across to the U.K. because we're seeing a lot of people asking for that in the U.K. now too.
Thanks, Stuart.
Awesome. Thanks a lot.
Thank you. Darcy, back to you.
Thank you. Your next question comes from Bob Chen from JP Morgan. Please go ahead.
G'day, Bob.
Hey, morning, guys. Just in terms of your guidance for the year, that's a 13%-17% range for PPT growth. Can you help us unpack what you've included to get to the top end and also potentially the bottom end in terms of what's under your control from a cost-based perspective, as well as what's more customer sales or sales-driven?
Yeah, I think if I take a big step back firstly to answer your question, Bob, probably yourself and most people in the market have said, surely we should be growing at 15%-20%. I'll say what I've said all the time is we agree. We agree. We are carefully and slowly stepping up from our long-term 10%-15% to 15%-20%. You can see those steps. I've said it, and now we're increasing it. We also have a track record of hitting the top end of that guidance, so read into that as you will.
If we hit th e bottom, that would be not good for us. We are always motivated and driven to hit the top end of the guidance. In this type of business, most things are locked now. Expenses are locked. Our ARR is locked, but timing of ARR can have an impact. If we sold at the end of this quarter versus the end of the next quarter, it can have a material impact. It is really timing of ARR deals that has an impact on profit delivered, if that makes sense, Bob.
Yeah, that makes a lot of sense. Just looking at your longer-term target, that sort of One Bill Plus by FY2030, you are sort of roughly tracking a little bit north of AUD 40 million ARR out of the half. How should we think about sort of that curve of that incremental ARR growth, especially as you start achieving your shorter ERP implementation programs?
Yeah, I think when we created that target, we start with a doubling in size every five years, and so you go from 500 to a billion. But then we're careful to say a billion plus because we don't want to signal to the market that that's slowing down growth, and that's not what we're driven by at all. I suppose the message for me, it's a billion dollars plus. I can't tell you what the curve looks like. We just can keep delivering in the cadence that we have been delivering for the last few years.
Okay, geat. Thanks, guys.
Thanks, Bob.
Thank you. Your next question comes from Kane Hannan from Goldman Sachs. Please go ahead.
G'day, Kane.
Hey, guys. Just a couple of quick ones as well. Just I think back at the AGM, you were talking about expecting a reduction in consulting revenue this year. Obviously, some strong numbers this half. Is that still how we think about the full year and it's more of a timing impact this half or just hope for some comments there, please?
Yeah, I think SaaS Plus is delivering, is delivering, meeting all of our wildest expectations. But Cale, you mentioned something about the backlog. Do you want to take that?
Yeah, Cale. Yeah, basically, as we called out, we do expect our new implementation revenue to fall off over time as we transition to SaaS Plus. But we're in the journey. We're fairly early in the journey here, and we do have a backlog of work that's either we sold not as SaaS Plus, which is the big part of it. If you have a look back at FY2024, we grew our government business 41%, and we have got to implement that. That, as Stuart said, that SaaS Plus has only just come onto the Australian government panel. All of that work was sold, not as SaaS Plus. We are just working through that work, and I guess we a re sort of doing the work that needs to be done to get our clients live. Excuse me. How the revenue hits our P&L, I guess, is secondary to getting our clients live under the deals that have been sold.
Yep, that makes sense. I suppose the commentary is on the pipeline, strong in 2025 and also 2026. I think from memory, you do not typically talk that far out sort of at the half year. Has something changed here? Is this the larger councils in the U.K. that might have a longer sales cycle or just something changed that let us talk about the 26 pipeline?
No, I would not really read into that. Stuart, you want to add anything?
Yeah. We have always had good visibility in our pipeline, and it is just the same good visibility, Kane.
Yep. And then just I suppose the decision to put rule of 40 in your metrics. I mean, is that about highlighting the strong performance in sort of your quarterline, or has there been any sort of evolution change internally about how you think about the trade-off of revenue growth and profit?
Yeah, I think we debated this one quite a bit and probably at a macro, sorry, at a high level. We are measured on it anyway, and so we thought we may as well put it out there. We have always focused on strong, profitable growth. If you look at our history as an indicator for the future, that's what we're driven on. No change to anything we're doing. We've put it out there, Kane, because we are measured on it. I should note also, there's no real standard rule. Pre and post-tax seems to be a bit of some companies do pre and post. We chose post. If we did pre, the number would blow your mind. It'd be even higher. We're just committed to keep our growth in profit and ARR in the similar levels that we've delivered in recent times.
Yep, awesome. Thanks, guys
Thank you. Your next question comes from Apoorv Sehgal from UBS. Please go ahead.
G'day, Paul
Hey, g'day, Ed, Stuart, and Cale. Clearly a very strong result. Just one sort of, I guess, nitpicky kind of question here. If we dig into the ARR metrics, ARR came in broadly as expected, NRR of 118%, very strong and probably a bit above mark et expectations. Churn was very low. It sort of does imply that new customer logo contribution was probably a little bit softer than usual. Is that a fair comment? How should we read that? Anything worth sort of calling out there?
Yeah, I'll start and then hand over to Stuart. At 21% total ARR growth, we're very happy. I might have said a couple of roadshows ago, I can't remember which one, but if you cascaded our metrics, profit growth is our number one metric, closely followed by total ARR growth and then all the other metrics underneath. Some halves or periods, we might have faster NRR, some we might have faster new logo. Stuart, do you want to add a lot more color to that?
The nine years I've been here, we always sell between 50-60 new logos, no matter what we do. It always falls in that spot. Some will be earlier in the half and the second half, but that's where we'll end up. At the same time, as a result of acquiring companies like CNT[guess], we acquired almost 90% of the higher education market in the U.K. We hold this new customer very clearly as a definition, which is a net new logo. We can't add that into our logo base, even though they have one small product in our whole portfolio.
At the same time, because we're getting more and more customers, we have more to sell into, so that pool just organically grows. What I can tell you is we're going to sell between 50 and 60 new logos. We will this year. We will next year. That's just the way it works. You're seeing all of the different diversifications of the business play out.
Thanks, Stuart. Paul, hopefully that makes sense. We are driven and motivated on that total ARR number. The other metrics are important, but just a little bit less important than total ARR, if that makes sense.
Okay, that's fair. Just my second and final question, just on the U.K. student management opportunity. If we go back to last November, I think back then you called out sort of Chester University being a big win. I think that was your third new SM customer win in a short period of time. Have there been any further student management wins in the U.K. in the last six months? Could you maybe talk to the pipeline of opportunities in the new term? Can we expect to see any new wins come through in the second half?
We will do very well for the full year. We have a very strong pipeline for student management deals. As well as what is happening now in the U.K., what we went in initially through our strategy was to focus on student management. You will see a lot more Chesters come through, which is student management with financials, or student management with timetabling scheduling, or now with CourseLoop. You are seeing a lot of that value of that ERP message. We will have a very strong full year related to student management in the U.K. The pipeline is very strong, but you also see a far more complex portfolio when we sell into that base.
Perhaps if I also add, what's nice about our business, generally speaking, is the diversification of revenue streams by regions, product, and verticals. In the U.K., the U.K. result was strong. It just happened to be this half was probably a bit more local government weighted. Last half was higher education. It's just nice to have both those prongs to our strategy.
Awesome. Thanks, guys.
Thank you .
Thank you. Your next question comes from Garry Sheriff from Royal Bank of Canada. Please go ahead.
G'day, Garry. Morning.
Good mo rning, Ed, Cale, and Stuart. Just to focus again on the U.K., two questions. One, there was a little bit of press around management change with the U.K. director resignation. Just want to try and figure out, has that role been replac ed? What was the reason behind that? And are there more people that you need, I guess, to satisfy your U.K. ambiti ns?
Yeah, we do not talk about the individuals, but think about it this way. We treat our business and we use analogies in our business like sporting teams. Some people will be here for two seasons. Some people will be 10 or 20 seasons, and it is up to them how long they choose to stay with us. The role that you might have read about, the EVP U.K., was very necessary for us as we sort of were in startup phase for a very long time. It has matured quite a lot.
We've got all the systems, process, disciplines in the business. It's really humming. We don't know if we need that role. We're just assessing if we need that role or just a different role going forward, Garry.
Understood. The next question just around, again, I know Kane and Apoorv talked about the opportunity set in the U.K . Clearly, it's large and growing. Near-term pipeline in terms of traction, do you think the wins are likely to be skewed towards the tertiary institutions near-term or local government? If it is the case, one or the other, why? Is it, again, sales cycle? Is it competitor weakness? Is it perceived product advantages? Just trying to get that census to, yeah, where we should likely see more traction, I guess, over the next year or two.
I think you're going to see one half results where there's going to be more focus on LG, then the next one will be Edu. I'll just keep playing back and forth a little bit. When we're selling LG into the U.K., a customer size is AUD 500,000. As we get to the boroughs, it will get to probably AUD 600,000-AUD 800,000. You can see the step change from where we were four years ago to AUD 160,000 deals. You can see those deals growing.
When I talk about education, we're talking AUD 1 million-AUD 2 million deals. You see a bit of a longer sales cycle, but also you get a much bigger win. You'll see the sales cycle related to these bigger deals, as well as because we're bringing in CourseLoop and timetabling scheduling and financials into that deal, it creates a little bit more complexity in the deal because there's more stakeholders. These are all good things. We don't need to push a deal, and that's not what we're trying to do. We're trying to do the right deal. We want to make sure that we're working with the customer. The other interesting thing to talk about just for a second is, as I think we all know, the education sector in the U.K. is in a challenging time. That's why they're coming to us. They're coming to us to save money, consolite, because we are a cost-saving exercise for them. That's why our pipeline is growing so fast.
Not only do we have the right technology and we have a SaaS Plus offering, so we de-risk it, but we save them materially as a result. All that's playing to our favor.
Very clear. Thank you all.
Thanks, Garry.
Thank you. Your next question comes from Josh Kannourakis from Barrenjoey. Please go ahead.
G'day, Josh.
Hi, guys. A few questions. Thank you. First one just on federal government in Oz. Obviously, you sort of made notes. You made note of the procurement panel there. Can you give us a bit of context about maybe just some of the opportunity that's coming up in that market and how you sort of see that part of the business scaling over the next few years?
Yeah, Josh, you know us well. Our strategy is to start small and grow out You would have seen over the years that we started to get bigger and bigger federal departments. We got, w e got innovation. It just keeps going. We will have some large top-end federal government departments in the near future. Really, we are being pulled up. As we all know, SAP has got a bit of a tone in federal government. At the same time, this Buy Australia is very much a federal program. Those two things are playing to our benefit, plus SaaS Plus and the success that we have had over the last 15 years-20 years at the smaller departments. It is all pulling us across. You will see us get larger, more complex customer base. That is just a testament to us just every day just doing the same thing and working to it and getting those successes and getting that customer success. We're in a really good place on the federal side, the best I've ever seen.
Yeah, it's kind of exciting, isn't it?
Yeah. Okay, great. No, that's helpful. Is there a way to look at sort of typical deal sizes in terms of ARR versus maybe the average in some of those markets?
Not realy, because again, we do a lot of deals, but they can be very small. You'll start to see one or two large deals coming out of federal government on a half and a full year basis, areas we wouldn't have played in three or four years ago. We just wouldn't have the opportunity. SAP had it all wrapped up, but they're pulling us in now.
Perfect. Second question, just on the U.K. On property and rating, or should we call it revenue and benefits over in the U.K., obviously an area you're not currently in, but you're still getting some pretty good traction in stepping up into s me of the larger councils. Can you just remind us a little bit about your strategy in that part of the market? You're obviousl y still getting in the mix at the moment, but how you think about that over time, a buy versus build approach in terms of looking to fill out your complete stack like you've got over here in Oz?
Yeah, do you want me to take it?
Yeah, there's only three providers in the U.K., and they've been around a long time, and they've stitched up the whole market, if you like. It's something we're interested in, Josh. I can't see a time where we'd bring our property and rating over. It might feel similar, but it's very different in how it operates. Perhaps over time, it's an M&A opportunity, but it's one of these long, long burns. You've got to find the right opportunity, right price, right market. Something that we definitely want. I'd say to you, watch this space. Nothing in the immediate short term.
Can I add to that too? Okay. Josh, just to add to that, there's a lot of other products inside local government that we can acquire or build to differentiate us even further. We always go back to kind of our knitting of property and rating and the residual of that. There's lots of different places we can go, and we're looking at all of them. We want to solidify our position in local government in the U.K. As Ed said, watch this space. There'll be something there that will help us keep growing that space.
Fantastic. Thanks, guys. Appreciate it. Well done.
Thank you. Time for a couple more questions? Yep.
Thank you. Yes. Once again, if you would like to ask a question, please press star followed by one on your telephone and wait for your name to be announced. Your next question comes from Andrew Gillies from Macquarie. Please go ahead.
G'day, Andrew.
Hi, Ed. Hi, Stuart. Hi, Cale. Most of my questions have been asked, but I'd just like to clarify on the U.K. opportunity again. I've heard you're getting some pretty strong engagement from industry bodies, particularly on the back of SaaS Plus. Can you maybe just outline how much easier distribution seems now in the U.K. relative to three years ago and how performance at potentially Chester and Southampton could serve as a catalyst? Is that something we should be thinking about in terms of that higher education space?
I wouldn't look at it as a catalyst. I'd just look at it as further validation of the strategy we're doing. You can see where we're going. We start small and we grow and we get a customer at the next level. We get a customer at the next level with different types of products and validate us. If you look at Bradford, they have all of our products with student management. They're validating us for EAM and supply chain and a whole bunch of parts that we weren't traditionally playing in in that space. You look at Chester that went and bought everything from us. Again, another validation. These all just add to the story. The pipeline for us is large, complex portfolio.
It is not just one product. We are not just selling financials into education. We are selling the depth and breadth of the ERP, which is very exciting. It will just keep going. The story will go for many, many years. It is delivering on the plans that we built about three years ago as we built the project.
Okay, a bit more on the SaaS Plus dynamic, which obviously is new. Our implementation multiples, I think at the investor day, you disclosed 0.8x. How is performance going against that? It sounds like you have made some progress towards implementation in 30 days. Is it safe to say that you are still performing around those levels?
I will give you a stat that I do not know if I am supposed to give, but I am going to give it to you anyway. In the U.K., the variance of all of our projects right now, the variance in days of all of our projects is seven days. You are talking projects that are 120, 130 days, and our variance from beginning to delivery is seven days. I would challenge any implementation of any product of scale to get even close to that. We are very, very good at delivering these projects now. Very, very good.
Perfect. Thanks, Stuart. That is clear. Just a quick follow-up for Cale, if I may, just on CourseLoop. How should we think about the profit contribution in the second half? I think you mentioned a three-year integration of the code base. To what extent does that potentially affect the ability to cross-sell? Does it not affect it? How should we think about that?
Yeah, so from an operational point of view, it won't affect how we go to market or any sort of the front-facing parts of the business. That's really about long-term operational efficiency in the back end, the code line integration. From a financial point of view in the second half, it's broadly immaterial. I guess, as we said, we've not carved out any of the numbers for CourseLoop because it really is not large enough for us to worry too much about. The business itself and the product itself is very front of mind for our customers, particularly in the U.K. So it's really validating what we thought when we bought CourseLoop. It's a great team. So we're very positive about its contribution to us in the long term.
Perfect. Thanks, guys. Cheers.
Thank you.
Thank you. Your next question comes from Ross Barrows from Wilson's Advisory. Please go ahead.
G'day, Ross. G'day.
Thank you. Hey, Ed, Cale, Stuart. Ed, maybe not to steal too much thunder from later in the year, but can you make any comments or maybe whet the appetite a bit more about the AI strategy and how we can think about that?
Yeah, we've got some really exciting AI developments underway. You would have heard me say in previous roadshows, newspapers that just like cloud and the hype cycle, everyone rode the wave. They're riding with AI. AI is really important and has some cool technologies to streamline business for our customers. We're going to do a showcase coming up. Do you want to talk about that?
Yeah, so we have a showcase event in October where we'll go to each of the capital cities and announce our products and our directive for the next few years. A little bit of insight. You should expect us to be using AI to drive efficiency in the products that you know us to have that's made us famous. I also think we've taken an interesting spin on it as well, which I think will actually change our market once again. It will be a game changer in what we're about to do, what we'll announce in October, and we're very excited. Just watch this space, and we'll leave you wanting.
Ross, we'll do what we did at the last showcase, which is invite the analyst community and some of the larger shareholders to come and see firsthand. Rather than me talk about it, CiA in action on stage being demonstrated to our customers.
Even more so with customers demonstrating it. Our early adopter customers demonstrating it on stage.
Sounds good. Thank you.
Thanks, Ross.
Thank you. Your next question comes from Wei Sim from Jefferies. Please go ahead.
Hi, guys. Thank you for the time and, yeah, congratulations on a cracking result. Yeah. Can you guys hear me?
Yes, sure can.
Okay. Great. Okay. So just two from me. The first one is in regards to slide 26 when we've showed that growth within the different verticals. The government one, that saw the strongest growth coming through. I wanted to know just in terms of that, is that all coming through from Australia or what's happening on the U.K. side on the government? It feels like we're doing very strong in the higher education, local government. We've won our first borough, but just some color on the outlook and strategy for the government sector within the U.K.
Yeah, so when we talk gov, we talk mainly state and federal gov, and I'm assuming that's the slide we're referring to. You'll see that come through from Australia and New Zealand. We've got a good presence in New Zealand that we don't really promote very much. You're seeing that number really come from Australia and New Zealand. We don't really do any gov in the U.K.
It goes back to the story that Stuart just answered a few moments ago around it's been a long, slow, steady burn, and we're starting to see the fruits of that now.
Yeah. We've got a strong customer base in the government sector, and again, they're pulling us upstream.
Okay, great. Next one is just on SaaS Plus. We've been doing the SaaS Plus strategy for some time now. Can you just remind me when we started doing SaaS Plus? And just in terms of the contracts, when would the first SaaS Plus contracts come under renewal?
Do you want to take that?
It's a really good question. I would assume we would have started selling behind the scenes in 2022, and they're usually a five-year contract, so in 2027.
Okay, great. The last one for me is just when we, yeah, this is going back a few years, but back in 2022, we had kind of like some presentations where we've talked about the average products per customer and how we expect that to build over time. I'd just be keen to get an update if you're able to disclose as to where we're tracking in terms of products per customer and, yeah, where we're going on that timeline.
It's an interesting one for us, Way, because we didn't actually measure our own business like that. The reason we replaced it with average ARR is because that's what we look at. If I go under the covers, I could sell a customer spatial, which might only be AUD 20,000 a year, or I could sell them student management for AUD 1 million or AUD 2 million a year. That's why average products or average models, it really wasn't meaningful for us. We look at average ARR. That's why we do it. Hopefully that explains it.
Yep. Okay, that's perfect. Okay, those are all the questions from me. Thanks.
Thank you. Thanks, Darcy. I think that's all we've got time for if I can throw back to you.
Thank you. Ladies and gentlemen, there are no further questions at this time, which does conclude our conference for today. Thank you for participating. You may all disconnect.